California Considers Ban On Forced Arbitration By Employers

Late last year, a bipartisan coalition in the United States Senate sponsored legislation to ban the use of mandatory arbitration agreements to settle sexual harassment and sex discrimination claims (H.R. 4734/S. 2203). While that bill—titled the “Ending Forced Arbitration of Sexual Harassment Act of 2017”—remains pending, a similar bill is also now pending before the California legislature (A.B. 3080). If enacted, A.B. 3080 would prohibit employers from requiring mandatory arbitration agreements as a condition of employment, continued employment, or the receipt of any employment-related benefit, such as a bonus.

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Relearning the ABCs: California Supreme Court Adopts New Independent Contractor Test

Last week, in Dynamex Operations West, Inc. v. Superior Court, 2018 WL 1999120 (Apr. 30, 2018) (Dynamex), the California Supreme Court upended the prevailing understanding of the independent contractor-employee distinction under California law. In a ruling that is certain to have wide-ranging repercussions for companies that rely on independent contractors, the Court declined to apply the multi-factor common law test derived from its 1989 decision in S.G. Borello & Sons, Inc. v. Dep’t of Indus. Rel’ns, 48 Cal. 3d 341 (1989) (Borello) to the question of whether a worker is an “employee” subject to the minimum wage and overtime protections of the California Industrial Welfare Commission’s (“IWC”) wage orders. Instead, the Court adopted a simple, three-part test that likely will expand the wage orders’ reach.

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Federal Court Dramatically Reduces Attorney-Fee Award to Plaintiffs in FLSA Collective Action Against Chipotle

The United States District Court for the District of Minnesota has dramatically cut an attorney-fee request in a wage-and-hour collective action against Chipotle Mexican Grill Inc. from $3.2 million to $600,000, finding the original amount “excessive” in light of the relatively small $62,000 recovery and straightforward nature of the case. Harris et al. v. Chipotle Mexican Grill Inc., No. 13-CV-1719 (SRN/SER), 2018 WL 617972 (D. Minn. Jan. 29, 2018).

The 81 percent fee reduction marks the end of an almost five-year saga, which began in 2013 as a nationwide putative collective action by employees Marcus Harris and Julius Caldwell. Through the action, Harris and other named plaintiffs, who were employed as hourly workers at Chipotle’s Crystal, Minnesota, restaurant sought unpaid straight time and overtime wages based on allegations that Chipotle forced its non-exempt employees to perform off-the-clock work, pursuant to the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219, and the Minnesota Fair Labor Standards Act, Minn. Stat. §§ 177.21-177.35.

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California Supreme Court Ruling on Right to Statewide Discovery in PAGA Actions Is Not as Bad for Employers as It Looks

In a blow to the defense bar—and, in particular, retail employers—the California Supreme Court, in Williams v. Superior Court (Marshalls of CA, LLC), S227228 (July 13, 2017), held that there is nothing unique about claims filed under the California Labor Code Private Attorneys General Act of 2004 (PAGA) that would justify restricting the scope of discovery under California law.  The Supreme Court reversed a decision of the California Court of Appeal that would have precluded PAGA plaintiffs from obtaining the contact information of other potentially aggrieved employees beyond the discrete location at which they work(ed) without first making a threshold evidentiary showing that (a) they were aggrieved employees and (b) they had knowledge of systemic statewide Labor Code violations.  Rather, to justify disclosure of the contact information of all employees in California, the Supreme Court found that it is sufficient for a named plaintiff to allege that the at-issue violations occurred, that plaintiff himself or herself was aggrieved, and that the defendant employer had a systemic, statewide policy that caused injury to other employees across California.
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Federal Court Permanently Enjoins DOL’s Persuader Rule

A federal district court in Texas has issued a permanent injunction blocking implementation of the U.S. Department of Labor’s (“DOL”) controversial “Persuader Rule,” which was promulgated under the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA”).[1]

The LMRDA imposes public reporting obligations on employers and consultants who enter into agreements to persuade or influence employees’ exercise of their collective bargaining rights.  For more than 50 years, the DOL interpreted the LMRDA’s “Advice Exemption” as exempting from the statute’s onerous reporting requirements indirect “persuader activities” by labor relations consultants, including attorneys. The DOL’s Persuader Rule, however, which took effect on April 25, 2016, removed indirect persuader activities from its definition of exempt advice, thus subjecting confidential attorney-client communications and agreements to the LMRDA’s public reporting requirements.

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