California Legislature Keeps Employers Busy

Employment Law

California Legislature Keeps Employers Busy

Why it matters

The California legislature did not slow down over the summer months, passing several employment-related bills and sending them to Governor Jerry Brown’s desk for a signature. Among the measures that could become law are Assembly Bill 3080, which would prohibit workers from having to sign arbitration or nondisclosure agreements as a condition of employment, and Senate Bill 820, a proposal that would prohibit and make void any provision that prevents the disclosure of information related to civil or administrative complaints of sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. In addition, Senate Bill 3109 would void any provision that waives a party’s right to testify in a legal proceeding regarding criminal conduct or sexual harassment on the part of the contracting party, and Assembly Bill 1867 would expand record retention duties for employers with 50 or more employees. Other legislation includes Assembly Bill 1870, an extension from one to three years of the deadline to file an administrative charge with the Department of Fair Housing and Employment, and Senate Bill 1343, pursuant to which employers of five or more employees would be required to provide certain sexual harassment prevention training by Jan. 1, 2020. Governor Brown has until the end of September to take action on the bills.

Detailed discussion

The impact of the #MeToo movement continues in the state of California as legislators have responded with a series of legislative proposals. Below are some of the bills enacted this summer that are currently sitting on Governor Jerry Brown’s desk, waiting for a signature.

  • Assembly Bill 3080. The measure would prohibit an employer from requiring any applicant for employment or any employee to waive any right, forum or procedure for a violation of any provision of the California Fair Employment and Housing Act (FEHA) or other specific statutes governing employment. Any agreement entered into, modified or extended on or after Jan. 1, 2019, would forbid an employer from requiring, as a condition of employment, that a job applicant, employee or independent contractor not disclose instances of sexual harassment the individual suffered, witnessed or discovered in the workplace. Retaliation would be actionable under the bill, with injunctive relief and attorneys’ fees available for violations.
  • Senate Bill 820. Covering both private and public employers, the Stand Together Against Non-Disclosures (STAND) Act would prohibit a provision in a settlement agreement that prevents the disclosure of factual information relating to claims of sexual assault, harassment or discrimination in the workplace. Any such provision entered into on or after Jan. 1, 2019, would be void as a matter of law and against public policy. The measure did carve out an exception for a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity as long as the anonymity is requested by the claimant and a government agency or public official is not a party to the agreement.
  • Assembly Bill 3109. Pursuant to the measure, any contract or settlement agreement entered into on or after Jan. 1, 2019, that waives a party’s right to testify in a legal proceeding regarding criminal conduct or sexual harassment on the part of the other contracting party, or the other party’s agents or employees, would be void and unenforceable. The bill applies to testimony whether required or requested by court order, subpoena, or administrative or legislative request.
  • Assembly Bill 1867. Under this bill, employers with 50 or more workers would be required to maintain records of sexual harassment complaints for at least five years after the last day of employment of either the complainant or the alleged harasser named in the complaint, whichever is later. Violations would result in an order from the Department of Fair Employment and Housing (DFEH) mandating compliance.
  • Assembly Bill 1870. This bill would amend the FEHA to extend a complainant’s time to file an administrative charge with the DFEH from one year to three years for complaints alleging employment discrimination, including sexual harassment.
  • Senate Bill 1343. The measure would require an employer that employs five or more employees—including temporary or seasonal workers—to provide at least two hours of sexual harassment prevention training to all supervisory employees and at least one hour of sexual harassment prevention training to all nonsupervisory employees by Jan. 1, 2020, and once every two years thereafter. The DFEH would be tasked with making available one-hour and two-hour online training courses that employers could use.

To read A.B. 3080, click here.

To read S.B. 820, click here.

To read A.B. 3109, click here.

To read A.B. 1867, click here.

To read A.B. 1870, click here.

To read S.B. 1343, click here.

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FLSA Not an Obstacle to Enforcement of Arbitration Agreement

Why it matters

Like the National Labor Relations Act (NLRA), the Fair Labor Standards Act (FLSA) doesn’t stand in the way of an employer’s motion to compel individual arbitration, the U.S. Court of Appeals for the Sixth Circuit determined. Jonathan Gaffers worked for Kelly Services from home, providing “virtual” call center support. He filed an FLSA lawsuit, later joined by more than 1,600 co-workers, seeking back pay and liquidated damages for the time spent logging in to and out of the company’s network and fixing technical problems. The employer moved to compel individual arbitration, pointing to agreements signed by roughly half of the putative plaintiffs. The district court denied the motion, finding that both the NLRA and the FLSA rendered the arbitration agreements unenforceable. Relying on the Supreme Court’s recent decision in Epic Systems Corp. v. Lewis, the Sixth Circuit reversed. The plaintiff’s argument with regard to the NLRA was precluded by Epic Systems, the federal appellate panel said, finding the FLSA suffered a similar fate. Therefore, neither statute provided the workers with a way out of their individual arbitration agreements, the court said.

Detailed discussion

Kelly Services provides outsourcing and consulting services to firms around the world, including virtual call center support. Jonathan Gaffers worked for Kelly from his home, providing call center support. He filed a Fair Labor Standards Act (FLSA) suit against his former employer, claiming that Kelly underpaid him and his fellow virtual employees for time spent logging in to the network, logging out of the network and fixing technical problems. Gaffers requested back pay and liquidated damages, with more than 1,600 other employees joining the action.

Kelly responded to the suit with a motion to compel arbitration. About half of the employees Gaffers sought to represent had signed an arbitration agreement stating that individual arbitration is the “only forum” for employment claims, including unpaid-wage claims.

Gaffers countered that the National Labor Relations Act (NLRA) and the FLSA rendered the arbitration agreements unenforceable. A district court judge agreed and denied the motion to compel.

The U.S. Court of Appeals for the Sixth Circuit reversed. With regard to the NLRA, the panel was guided by the Supreme Court’s Epic Systems Corp. v. Lewis decision. In that case, the justices held that employers do not violate the NLRA by requiring class and collective waiver provisions in arbitration agreements that employees must sign as a condition of employment.

With the question of the NLRA decided, the Sixth Circuit turned to the FLSA. Gaffers argued that the FLSA’s collective action provision and the Federal Arbitration Act (FAA) are irreconcilable, with the former displacing the latter. Emphasizing Epic’s holding that a federal statute does not displace the FAA unless it includes a “clear and manifest” congressional intent to make individual arbitration agreements unenforceable, the panel said the plaintiff failed to make his case.

“The FLSA provision at issue provides that an employee can sue on behalf of himself and other employees similarly situated,” the court wrote. “In other words, it gives employees the option to bring their claims together. It does not require employees to vindicate their rights in a collective action, and it does not say that agreements requiring one-on-one arbitration become a nullity if an employee decides that he wants to sue collectively after signing one. Accordingly, we can give effect to both statutes: employees who do not sign individual arbitration agreements are free to sue collectively, and those who do sign individual arbitration agreements are not.”

For these reasons, the Supreme Court has already held that the Age Discrimination in Employment Act—a statute with the exact same collective action provision as the FLSA—does not displace the FAA, the Sixth Circuit said.

Gaffers’ policy-based argument did not sway the court either. “Whether modern arbitration practice is consistent with Congress’s goals for the FLSA is a question that only Congress can answer,” the panel wrote. “Our role is to interpret and analyze the statute’s text—not what Gaffers thinks Congress meant to say. And because the FLSA does not ‘clearly and manifestly’ make arbitration agreements unenforceable, we hold that it does not displace the [FAA’s] requirement that we enforce the employees’ agreements as written.”

The FAA’s savings clause was similarly unable to save the plaintiff’s claim. Although the clause allows courts to refuse to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract,” Epic prevented Gaffers from arguing that requiring employees to pursue individual arbitration was illegal.

“[A]s the court in Epic noted, one of arbitration’s fundamental attributes is its historically individualized nature,” the Sixth Circuit said. “So objecting to an agreement ‘precisely because [it] require[s] individualized arbitration proceedings instead of class or collective ones’ does not bring a plaintiff within the territory of the savings clause. If otherwise, Gaffers (and others) could use this contract defense to attack arbitration itself. That selective treatment is exactly what Epic says is not allowed.”

The court reversed denial of the employer’s motion to compel individual arbitration and remanded.

To read the opinion in Gaffers v. Kelly Services, Inc., click here.

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Medical Marijuana User Wins Discrimination Suit Against Prospective Employer

Why it matters

Ruling in a closely watched case, a federal court in Connecticut held that the refusal to hire a medical marijuana user because she tested positive on a pre-employment drug test violated state law. Diagnosed with post-traumatic stress disorder, Katelin Noffsinger took one capsule of a synthetic form of cannabis each night as prescribed. During the application process at a nursing facility, Noffsinger shared her medical marijuana registration. When her drug test returned positive for marijuana, her offer of employment was rescinded. Noffsinger sued under the Connecticut Palliative Use of Marijuana Act, which permits the use of medical marijuana for qualifying patients and includes a provision prohibiting employment discrimination. Ruling on the parties’ cross-motions for summary judgment, the court found the employer’s arguments based on the federal Drug-Free Workplace Act and False Claims Act unpersuasive. Nor was the court impressed with the employer’s contention that it did not discriminate against the plaintiff based on her status as a medical marijuana user, but rather that it rescinded the offer of employment based on her positive test result. The court did dismiss the plaintiff’s claim for negligent infliction of emotional distress as well as an award of attorneys’ fees or punitive damages. While not all states that permit marijuana use allow private rights of action or feature employment discrimination protections as Connecticut does, the decision demonstrates the continuing trend of favoring employees when courts consider the intersection of employment and state laws permitting the medical use of marijuana.

Detailed discussion

In 2012, Connecticut enacted the Palliative Use of Marijuana Act (PUMA). The statute permits the use of medical marijuana for qualifying patients with certain debilitating medical conditions. It also includes a provision that explicitly prohibits discrimination against qualifying patients and primary caregivers by schools, landlords and employers.

Katelin Noffsinger was diagnosed with post-traumatic stress disorder (PTSD) in 2012, and in 2015 her doctors recommended medical marijuana as a treatment. After receiving her registration certificate pursuant to the law, Noffsinger began taking one capsule of a synthetic form of cannabis each night as prescribed.

A recreational therapist, Noffsinger was recruited by Bride Brook, a nursing facility in Niantic, CT. The administrator of the facility offered her a position, and Noffsinger accepted. At a meeting to complete paperwork, Noffsinger showed her registration certificate and explained that she took her medication at night before bed and was therefore never impaired during the workday.

The administrator continued to process her paperwork, and Noffsinger provided a sample for a drug test. When the test returned a positive result, the administrator rescinded the offer.

Noffsinger filed suit alleging a violation of PUMA’s antidiscrimination provision as well as negligent infliction of emotional distress. U.S. District Judge Jeffrey Alker Meyer denied the employer’s motion to dismiss the suit last year, ruling that the federal Controlled Substances Act did not pre-empt the action.

The parties then filed cross-motions for summary judgment. Again siding with the plaintiff, the court held that she was entitled to judgment as a matter of law on her claim of employment discrimination under PUMA.

Relying on an exemption in the statute if discrimination is “required by federal law or required to obtain federal funding,” the employer argued that both the federal Drug-Free Workplace Act (DFWA) and False Claims Act (FCA) barred it from hiring Noffsinger. According to the nursing facility, the DFWA requires federal contractors to make a “good faith effort” to maintain a drug-free workplace by taking certain measures, such as publishing a statement regarding use of illegal drugs in the workplace and establishing a drug-free awareness program.

“I do not agree that the DFWA required defendant to rescind plaintiff’s job offer,” Judge Meyer wrote. “The DFWA does not require drug testing. Nor does the DFWA prohibit federal contractors from employing someone who uses illegal drugs outside of the workplace, much less an employee who uses medical marijuana outside the workplace in accordance with a program approved by state law.”

That the defendant elected to utilize a zero-tolerance drug testing policy in order to maintain a drug-free work environment does not mean that the policy was actually “required by federal law or required to obtain federal funding,” the court added.

Further, employing someone who uses medical marijuana in violation of federal law does not amount to defrauding the federal government in contravention of the FCA, the court said.

Judge Meyer also rebuffed the employer’s contention that PUMA prohibited discrimination only on the basis of an individual’s status as an approved medical marijuana patient but not on account of that person’s use of medical marijuana in accordance with PUMA.

“Both the language and purpose of the statute make clear that it protects employees from discrimination based on their use of medical marijuana pursuant to their qualifying status under PUMA,” the court wrote. “Under defendant’s restrictive interpretation of the statute, employers would be free to fire status-qualifying patients based on their actual use of medical marijuana—the very purpose for which a patient has sought and obtained a qualifying status. That makes no sense and would render the statute’s protection against PUMA-based discrimination a nullity, because there would be no reason for a patient to seek PUMA status if not to use medical marijuana as permitted under PUMA.”

Finding no genuine fact issues in dispute about why the plaintiff’s job offer was rescinded and no legitimate dispute that the defendant’s rescission of the offer was contrary to the plaintiff’s right not to be subject to discrimination because of her status as a qualifying patient under PUMA, the court granted summary judgment in favor of Noffsinger on her statutory claim.

However, Judge Meyer granted the employer’s motion for summary judgment on the plaintiff’s request for punitive damages and attorneys’ fees. The Connecticut Supreme Court has held that absent a clear statutory provision granting attorneys’ fees or punitive damages, courts may not grant such awards.

“In light of the fact that PUMA does not expressly provide for attorneys’ fees or punitive damages and in the absence of any other evidence that the Connecticut legislature intended to provide such a remedy, I decline to imply these remedies under the statute,” the court said.

Noffsinger’s claim of negligent infliction of emotional distress was also dismissed, as the record did not show that the defendant engaged “in any unreasonable conduct in the manner that it communicated with plaintiff,” the court wrote.

To read the opinion in Noffsinger v. SSC Niantic Operating Co., click here.

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