California Construction Industry Could Avoid Big Civil Penalties Claims: Union Employers Should Review the New Collective Bargaining Exemption to Potential PAGA Claims

By Scott C. Lacunza and Jonathan A. Siegel on

Unionized employers in the construction industry can potentially receive some well-needed relief from California’s Labor Code Private Attorneys General Act of 2004 (Labor Code Section 2698 et seq.), known as “PAGA,” in light of the Governor signing AB 1654. Unionized employers in California must review their collective bargaining agreements and evaluate whether they can take advantage of AB 1654.

In light of recent decisions which have made it more difficult to bring class action lawsuits against employers for wage and hour issues, especially if the employer utilizes arbitration agreements, and the procedural hurdles in bringing and certifying a class action, plaintiff’s lawyers are turning to non-class representative PAGA claims at an increased rate. In California, small compliance issues can grow into significant liabilities for civil penalties under PAGA.

Why? PAGA provides for the imposition of potentially harsh civil penalties in the event of a statutory violation. If no civil penalty for a particular Labor Code violation is specifically provided, the statute establishes the following civil penalty:

“If, at the time of the alleged violation, the person employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.”

A PAGA claim is commonly referred to as a “representative” action and, unfortunately, case law provides a plaintiff need not meet the class action certification requirements before proceeding with a representative PAGA claim. Significantly, 75% of the civil penalties recovered is distributed to the State of California, while the remaining 25% goes to the “aggrieved” employees.  An employee who prevails in a PAGA action is also entitled to an award of reasonable attorney’s fees and costs.

AB 1654 provides an exception to PAGA regarding employees in the construction industry. “Employee in the construction industry” is defined as “an employee performing work associated with construction, including work involving alteration, demolition, building, excavation, renovation, remodeling, maintenance, improvement, repair work, and any other work as described by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, and other similar or related occupations or trades.”

In order to qualify for the construction industry exception to PAGA, employees must be subject to a valid collective bargaining agreement that expressly provides:  (1) for the wages, hours of work, and working conditions of employees; (2) for premium wage rates for all overtime hours worked; and (3) for the employee to receive a regular hourly rate of not less than 30 percent more than the state minimum wage.

In addition, the collective bargaining agreement must do all of the following: (1) prohibits all of the violations of the Labor Code that would be redressable by PAGA, and provides for a grievance and binding arbitration procedure to redress those violations; (2) expressly waives the requirements of PAGA in clear and unambiguous terms; and (3) authorizes the arbitrator to award any and all remedies otherwise available under the Labor Code, provided that nothing in the new law authorizes the award of penalties under PAGA that would be payable to the Labor and Workforce Development Agency.

It is important unionized employers in California take advantage of this new law to see if it is appropriate or possible to negotiate language into their union contracts which could meet the new law’s exception requirements. Employers should reach out to the Jackson Lewis attorney they normally work with to evaluate the new possibilities of AB 1654.

California Law Pushes Virtue of Diversity Requiring Females on Boards of Directors

By Richard J. Cino, Susan E. Groff and Alyssa M. Toft on

California Governor Jerry Brown recently signed Senate Bill 826 into law which requires publicly-held corporations with principal executive offices in California to have a certain number of females on their boards of directors.

The new law sets forth phased requirements for these corporations. By the end of 2019, each covered company must have at least one female director. By the end of 2021, this number increases to three female directors if the company has six or more directors in total. (For boards with five or fewer directors, the numbers decrease.) To continue to read this blog please visit our post on the Corporate Compliance and White Collar Advisor blog.

New California Law Alert! Expanded Requirements for Talent Agencies to Provide Sexual Harassment and Eating Disorder Related Education and Training to Its Artists

By Susan E. Groff on

Governor Jerry Brown has signed into law Assembly Bill 2338 which requires talent agencies licensed by the California Labor Commissioner to provide materials related to sexual harassment prevention, retaliation, among others, to its artists. Additionally, the bill requires that prior to receiving a permit to employ a minor in the entertainment industry, the minor’s parent or legal guardian must participate in trainings related to sexual harassment prevention, retaliation, and reporting resources.

Assembly Bill 2338 amends the Labor Code to add several new statutory provisions. Under the statute, a talent agency must provide training and educational materials, where applicable, on sexual harassment prevention, retaliation, nutrition, and eating disorders to its employees and artists.  The statute provides that the materials be made available to artists in a language in which the artists understands, within 90 days of agreeing to representation by the agency or “agency procurement of an engagement, meeting, or interview, whichever comes first.” The agency also shall keep records of its compliance for three years.

Further, prior to issuance of a permit to employ a minor in the entertainment industry, an age-eligible minor and minor’s parent or legal guardian must receive and complete training in sexual harassment prevention.

Please contact Jackson Lewis with any questions about this new law and compliance with its provisions.

California Governor Vetoes Bill Prohibiting Mandatory Arbitration Provisions in Employment Contracts

By Sherry L. Swieca, Samia M. Kirmani and Abraham N. Saiger on

In a last-minute action on the September 30 legislative deadline, California’s Governor vetoed a bill that, among other things, would have imposed restrictions on the use of arbitration agreements for certain employment claims.

Under vetoed Assembly Bill 3080, beginning on January 1, 2019, employers in California would have been barred from requiring employees and independent contractors to sign arbitration or nondisclosure agreements as a condition of their employment (or continued employment). The bill also would have prohibited employers from retaliating against employees who refuse to sign such agreements.

Please find the rest of this article on our publications page here.

Claims of Workplace Harassment in California to Receive Greater Protections under New Law

By Susan E. Groff and Jessica B. Armijo on

Beginning January 1, 2019, new California law creates several new protections for employees bringing harassment claims.

Highlights of Senate Bill 1300 (SB 1300) follows:

Employer Responsibility for Nonemployees

SB 1300 mandates that an employer may be responsible for the acts of nonemployees with respect to any type of harassment (not just sexual harassment) against employees and other nonemployees working as interns or volunteers and service contractors.

Please find the rest of this article on our publications page here.

New California Law Requires Sexual Harassment Prevention Training for Supervisors and Non-Supervisors

By Susan E. Groff and Jessica B. Armijo on

California employers with at least five employees must provide sexual harassment prevention training and education to all supervisory employees and non-supervisory employees in California by January 1, 2020.

Since 2005, employers with at least 50 employees have been required to train and educate all personnel in supervisory positions in California in the prevention of sexual harassment. Senate Bill 1343 lowers the number of employees to five and includes non-supervisors in the mandate.

Please find the rest of this article on our publications page here.

Contracting Around Class Actions, a Win for Employers!

By Cristine M. Fitzgerald on

In O’Connor v. Uber Techs., Inc., 2018 U.S. App. LEXIS 27343 (9th Cir. 2018), a unanimous panel in the Ninth Circuit found that Uber’s arbitration agreements did not violate the National Labor Relations Act of 1935 (“NLRA”) and the question of arbitrability was designated to the arbitrator. The ruling provided a major victory to Uber, requiring each plaintiff to separately arbitrate his or her claims.

The O’Connor plaintiffs filed a putative class action against Uber for failure to remit gratuity paid by customers, and for misclassification of the drivers as independent contractors and failing to pay their business expenses. The O’Connor plaintiffs sought an order declaring Uber’s 2013 arbitration agreements unconscionable or, alternatively, requiring Uber to provide enhanced notice and opportunities to the putative class to opt out of arbitration. The district court granted the O’Connor plaintiffs’ alternative request and Uber provided drivers with updated licensing agreements on June 21, 2014, November 2014 and April 2015.

In a separate action, plaintiff Mohamed filed a putative class action against Uber asserting various federal and California law claims. The district court denied Uber’s motion to compel arbitration finding, among other things, that the existing arbitration agreements were unenforceable. On appeal in Mohamed v. Uber Techs., Inc., 848 F.3d 1201 (9th Cir. 2016), the Ninth Circuit reversed the district court’s order finding that the arbitrator must determine whether the agreements are enforceable and that the provisions were not adhesive or unconscionable under California law.

In April 2015, the district court granted the O’Connor plaintiffs’ motion for class certification, certifying a class of approximately 160,000 on the gratuity claim. In December 2015, the district court certified an additional subclass of drivers who accepted the agreements in 2014 and 2015. In the same order, it certified the original class and subclass on the expense reimbursement claim.

In December 2015, Uber issued new arbitration agreements to all drivers, causing the plaintiffs in the O’Connor, Mohamed and other similar matters to file separate motions to enjoin Uber from distributing and enforcing the new agreement and to prevent any further communications by Uber to class and putative class members. Initially, the district court granted plaintiffs’ motion, but after the Ninth Circuit’s ruling in Mohamed the district court vacated its order. The district court permitted Uber to issue the new agreement, but refused to vacate the order retroactively. This resulted in dozens of appeals (from four related actions pending in the same district court: O’Connor v. Uber Technologies, Inc., 3:13-cv-03826-EMC; Yucescoy v. Uber Technologies, Inc., 3:15-cv-00262-EMC; Mohamed v. Uber Technologies, Inc. 3:14-cv-05200-EMC; and Del Rio v. Uber Technologies, Inc., 3:15-cv-03667-EMC), which were consolidated.

In O’Connor, the Ninth Circuit rejected plaintiffs’ argument that the lead plaintiffs constructively opted out of arbitration on behalf of the entire class. The panel relied on the Supreme Court decision in Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018), finding that the arbitration agreements did not violate the NLRA, and reversed the district court’s order denying Uber’s motion to compel arbitration. The Ninth Circuit relied on its decision in Mohamed and reversed the district court’s order certifying the class, because the question whether the agreements were enforceable was designated to the arbitrator.

In light of the Ninth Circuit’s rulings, employers should examine any existing arbitration agreement or consider implementing an arbitration agreement that contains a class action waiver and provides that the arbitrator, and not the court, decide the issue of arbitrability and enforceability.

California Legislature Says Recordkeeping Violations Not Subject to Six-Month Statute of Limitations

By Tressi L. Cordaro on

Beginning in 2019, employers in California will now be on the hook for recordkeeping violations well beyond the six-month statute of limitations.  Bill Number AB 2334 (Occupational injuries and illnesses: employer reporting requirements: electronic submission) co-sponsored by California Labor Federation and California Professional Firefighters was introduced by Thurmond (D) earlier this year, passed the State legislature and was signed by the Governor on September 19, 2018.  The law goes into effect January 1, 2019. To read the full article, please visit our OSHA Law Blog here.

CAFA Amount In Controversy Is Not Limited To Damages Incurred Prior To Removal And Includes Future Attorneys’ Fees Recoverable By Statute Or Contract

By Damien P. DeLaney and Jessica C. Gregg on

In Fritsch v. Swift Transp. Co. of Ariz., LLC, No. 18-55746 (Aug. 18, 2018), the Ninth Circuit clarified, in a unanimous published decision, that, where a party may recover its attorney’s fees by statute or contract, the Court must include future fees as well as those already incurred in assessing whether a case meets the amount-in-controversy threshold under the Class Action Fairness Act (“CAFA”). To read the full article, please visit our Employment Class and Collective Action Update blog here.

Settling Plaintiff May Still Have Standing And Adequacy To Pursue Class Action and PAGA Claims

By Kathy A. Le on

A California federal judge recently certified a class of at least 843 Cinemark workers who allege Cinemark, a movie theater chain, failed to properly list overtime rates on employee wage statements, notwithstanding the fact that the purported class representative, Silken Brown, had settled her individual claim during the pending litigation. In opposing class certification, Cinemark raised challenges to Brown’s typicality as to the class and adequacy to represent the class as a result of Brown’s individual settlement. Please find the rest of this article on our Employment Class and Collective Action Update blog here.

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