December 2015 - Laborsphere

Philadelphia Significantly Expands Its “Ban the Box” Ordinance

A growing number of jurisdictions around the country have enacted so-called “ban the box” laws, which limit employers’ ability to inquire about and/or consider applicants’ criminal records when making employment decision.

In 2011, Philadelphia enacted the Fair Criminal Records Screening Standards Ordinance, its version of “ban the box.” This past week, the ordinance was amended to significantly expand the scope of prohibited activity and the protections provided to applicants, in the following respects:

Covered Employers – The amended ordinance covers private employers employing any persons within Philadelphia, whereas the previous version applied only to those with ten or more employees.
Timing of Criminal Record Inquiry – Employers may now conduct a criminal background check only after a conditional offer of employment has been made, whereas previously employers were permitted to conduct the check after an application was received. Further, the revised ordinance prohibits employers not only from asking for specific criminal history information, but also about “the applicant’s willingness to submit to a background check” at a later date.
Individualized Assessment Requirement — The amended ordinance now imposes an “individualized assessment” requirement, pursuant to which an employer may only reject an applicant if his or her criminal record includes “conviction for an offense that bears such relationship to the employment sought that the employer may reasonably conclude that the applicant would present an unacceptable risk to the operation of the business or to co-workers and customers, and that exclusion of the applicant is compelled by business necessity.” In determining the “risk,” an employer must consider as part of the “individualized assessment” the nature of the offense; the time passed since the offense; the job duties of the particular position sought; the applicant’s employment history before and after the offense; any character or personal references provided by the applicant; and evidence of rehabilitation since the conviction.
Job Applications – The previous version of the ordinance prohibited employers from making any criminal history inquiries in a job application. The amended ordinance clarifies that the text of a job application may not include such an inquiry “whether or not certain applicants are told they need not answer the question.” Essentially, this provision means that multi-state employers cannot use applications containing a criminal history request even if the application specifically directs Philadelphia applicants not to answer the question.
Time Limits — Employers may only consider convictions occurring within the last seven years, excluding periods of incarceration.
Applicant Notification — Employers must provide written notification to applicants that are rejected based on their criminal background (including a copy of the applicant’s criminal history report), and must allow the applicant ten business days to provide “evidence of the inaccuracy of the information or to provide an explanation.”
Private Right of Action – The amended ordinance provides for an administrative complaint process, to be administered by the Philadelphia Commission on Human Relations, with a private right of action after administrative remedies have been exhausted. Further, in the event of a violation, a court “may grant any relief it deems appropriate,” including compensatory damages; punitive damages; reasonable attorneys’ fees; court costs; and injunctive relief.
Posting Requirements – Employers must post a summary of the ordinance’s requirements “in a conspicuous place on the employer’s website and premises” in a “form to be supplied by the Commission.” (Note that the Philadelphia Commission on Human Relations has not yet issued a sample poster for the revised ordinance).

Although styled as an “amendment,” the revised ordinance imposes significant new requirements on employers and, most importantly, provides applicants a private right of action in court in the event of a violation. In advance of the ordinance’s effective date of March 14, 2016, employers should carefully review their current screening and application processes to ensure compliance with not only Philadelphia’s ordinance, but also other applicable statutes such as the federal Fair Credit Reporting Act and the Pennsylvania Criminal Records Act.

U.S. Supreme Court Continues To Reaffirm Concepcion, But Dodges Iskanian Again

On December 14, 2015, the U.S. Supreme Court reaffirmed its previous ruling that any state law that treats arbitration agreements less favorably than other types of agreements is preempted by the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq. Specifically, in a decision handed down in DIRECTV, Inc. v. Imburgia, No. 14-462, reaffirmed its decision in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), that the Federal FAA, which embodies the federal policy favoring arbitration, preempts all special state law rules that uniquely burden arbitration agreements. Although the Imburgia decision was a consumer class action, the Court’s approach indirectly confirms its continued support for the enforceability of employment arbitration agreements, including those with class action waivers. While Imburgia suggests that class action waivers are here to stay, the Court’s simultaneous decision to deny review to a case challenging the California Supreme Court’s ruling in Iskanian v. CLS Transportation Los Angeles LLC, 59 Cal.4th 348 (2014), suggests that the Court may exercise some restraint when it comes to state-specific workarounds, at least for the time being.

Imburgia

DIRECTV and its customers entered into service contracts that included binding arbitration agreements with class action waivers. The agreements specified, however, that the entire arbitration provision would be unenforceable if the “law of your state” made class arbitration waivers unenforceable. At the same time, the agreements declared that they were governed by the FAA.

Plaintiffs Amy Imburgia and Kathy Griener (“Plaintiffs”) sued DIRECTV in California state court seeking damages, but DIRECTV moved to compel arbitration. The state trial court denied DIRECTV’s request and it appealed. The California Court of Appeal decided that the enforceability of the arbitration provision turned on the meaning and import of the language the “law of your state” in the agreements. It reasoned that even though Concepcion held that the FAA preempted the California Supreme Court’s decision in Discover Bank v. Superior Court, 36 Cal.4th 148 (2005), which invalidated class arbitration waivers, the parties had expressly incorporated the law of the State of California – not federal law. Relying on two provisions of the California Consumers Legal Remedies Act (“CLRA”), which invalidated any waiver of the right to bring class actions, the Court of Appeal found that the more specific language concerning the “law of your state” controlled over the more general language indicating that the agreements were governed by the FAA, and held that the arbitration provision was, thus, unenforceable. The California Supreme Court denied discretionary review and DIRECTV appealed.

The U.S. Supreme Court reversed the Court of Appeals’ decision and reaffirmed Concepcion’s central holding that arbitration-specific state law defenses to enforcement are preempted by the FAA. The majority noted that the contract language was not ambiguous and presumably only meant to incorporate valid state law. Thus, because Discover Bank was no longer valid, that case’s holding was not incorporated. The majority also noted that the Court of Appeals’ approach was different than in any other context – i.e., it would not have incorporated invalid state law in deciding the enforceability of any other type of contract. The majority further explained that the Court of Appeals’ decision was rooted in the (erroneous) notion that an invalid state law remained in effect even after it had been authoritatively invalidated by the U.S. Supreme Court, as was the case here.

Wahid

In 2014, in Iskanian, the California Supreme Court held a state law that prohibits waiver of the right to bring non-class representative actions pursuant to California’s Private Attorneys General Act (“PAGA”), California Labor Code §§ 2698 et seq., was not preempted by the FAA. The U.S. Supreme Court denied review of Iskanian and, in January 2015, the Ninth Circuit Court of Appeals applied Iskanian’s holding in federal court.

Earlier this year, CarMax Auto Superstores California LLC (“CarMax”) petitioned for certiorari in CarMax Auto Superstores California LLC v. Wahid, effectively asking the U.S. Supreme Court to review Iskanian’s holding, arguing that it was at-odds with Concepcion and its progeny. However, despite its favorable ruling in Imburgia the same day, the U.S. Supreme Court denied CarMax’s petition for certiorari.

Takeaways

Although Imburgia’s holding reconfirms that employers can rely on arbitration agreements with class action waivers so long as the current Roberts court majority exists, the Court’s refusal to hear a challenge to Iskanian suggests that some level of interference with arbitration agreements will be permitted. California employers will have to wait until the Ninth Circuit or California Supreme Court again tee up the issue to determine how cases like Iskanian can be reconciled with Imburgia and Concepcion, if at all. Meanwhile, this uncertainty will permit California plaintiffs’ lawyers continued opportunities to engage in costly, large-scale representative actions.

Q&A: How to Ensure Compliance with California’s New Fair Pay Law

California’s Fair Pay Act, which takes effect Jan. 1, 2016, mandates that male and female employees doing “substantially similar” work be paid the same wages, unless employers can demonstrate that certain factors such as seniority, a merit system, education, training, experience or productivity can account for the gender disparities. As 2015 winds down, other companies either based in California or operating in the state may still be scrambling to ensure they’re prepared for the new law.

SHRM Online asked Los Angeles partner Mark Terman, as well as two other industry experts, to share their views about statistical analyses, labor law and compliance measures related to the Fair Pay Act.

Please click here to view the entire Q&A at SHRM Online.