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New Year, New Laws for California Employers – Employer Access to Social Media

California employers received more attention in 2012 with 554 bills introduced in the legislature mentioning “employer,” compared to 346 in 2011. Fortunately, most bills do not become law. However, those that do bring with them new challenges for California employers. As 2013 draws near we begin our series, “New Year, New Laws for California Employers. Prepared by Mark Terman, partner in the Los Angeles office, this series will take a look at some of the significant new regulations affecting private employers doing business in California.

Employer Access to Social Media

Social media is everywhere. Facebook, for example, claims 1 billion users with more than 140 billion friend connections among them. For some employers, this may be too attractive a source of information about employees and job applicants. Balancing employee expectations of privacy against employer business protection needs, AB 1844 prohibits employers from requiring or requesting an employee or applicant to disclose a username or password for the purpose of accessing personal social media or to access personal social media in the presence of the employer or to divulge any personal social media.

It also prohibits employers from discharging, disciplining (or threatening to do so) or retaliating against an employee or applicant for refusing a demand or request by the employer that violates this law.

Excepted from this new law are employer requests to divulge personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, provided that the social media is used solely for purposes of that investigation or a related proceeding.

Nothing in this law limits an employer from requiring or requesting an employee to disclose a username, password or other method for the purpose of accessing an employer-issued electronic device.

At the same time, the National Labor Relations Board and its counsel continue to opine on when an employer’s policies

or actions regarding employee use of social media interfere with the protection of concerted activity of employees to, for example, discuss wages and working conditions, whether it involves union activity.

The NLRB general counsel’s third and most recent report, which may surprise nonunion employers, is at www.calcpa.org/ NLRBsocialmediapolicies.

New Year, New Laws in California

As long as the sun rises each day, regulation of California employers will increases each year. And employers received more attention this year with 554 bills introduced in the California Legislature mentioning “employer,” compared to 346 last year. Fortunately, most bills do not become law. Mark Terman, partner in the Los Angeles office, has compiled an overview of significant new regulation affecting private employers which appears in the December issue of CAL CPA magazine. To read the list in its entirety click here.

David Raizman Quoted in Daily Journal

Los Angeles partner David Raizman was quoted in the Daily Journal in an article titled, “Increasing Disability Discrimination Claims Bring up Fraught Workplace Issues.”

The article discusses the rise of disability discrimination and failure to accommodate disability complaints in California, a state that has long had strong provisions against workplace disability discrimination.

Lawyers on both sides of the fence attribute the increased filings to a growing awareness of workplace disability rights among employees and an increased willingness among judges to put such claims before a jury.

California legislators have long employed a broad definition of disability, for example, to include conditions that merely “limit” various life activities, as opposed to “substantially limit” such activities. Then in 2008, the U.S. Congress adopted many of California’s broad interpretations into federal law.

David, a partner in the Labor & Employment Practice Group, said, “California really led the way here” and, as a result, workers in the state are more likely to see a “less traditional” disability like obesity as something to be accommodated by employers.

David said he tells his clients that if the plaintiff has a medical diagnosis of any kind, a court will most likely consider him or her disabled. He also said that plaintiffs’ lawyers have learned that the claims are likely to go before a jury because they’re “very hard to dispose of at the summary judgment stage.”

He noted that an employer’s claims of undue hardship in accommodating a disabled worker are “frankly, generally squishy concepts that are more subject to factual dispute than others.”

David added that as California’s workers age, claims of workplace disability discrimination will only continue to increase.

“Given the broad definition of disability, the population is getting more disabled,” he said.

California Joins Other States in Implementing Laws Governing Employer Access to Employee’s and Applicant’s Social Media Accounts

California is poised to be on the front lines of implementing laws governing when and if employers can require applicants or employees to divulge their social media passwords and grant employer access as part of the hiring process or in the course of the employment relationship. Last week, the California Senate voted 28-5 in favor of Assembly Bill 1844, which would prohibit employers from forcing employees and prospective workers to turn over usernames and passwords for their social media accounts and also would ban employers from discharging, disciplining or threatening to retaliate against employees or job applicants who did not comply with such requests. Of note, the Senate’s proposed amendments clarify that employers may request personal social media information when related to an investigation involving alleged workplace misconduct or violations of the law. The Senate also amended the bill to specify that the State’s labor commissioner is not required to investigate or determine any violations of the bill. The proposed bill next moves to the Assembly for a vote.

This proposed California bill comes on the heels of multiple memoranda issued by the National Labor Relations Board analyzing various implications of social media in the workplace and specifically opining on what employers can and cannot review and regulate in the context of employee (and applicant) rights. There currently are hundreds of cases pending before the National Labor Relations Board concerning social media issues — and the Board has made it abundantly clear that its jurisdiction to protect employee rights is not limited to organized (“unionized”) workplaces.

Maryland passed the first state law prohibiting employers from requiring disclosure of social media information which goes into effect October 1, 2012. Illinois also passed a similar law on August 1, 2012 (see our prior coverage here) which takes effect on January 1, 2013. Massachusetts, New Jersey and New York are also currently considering similar legislation.

Is Relief on the Horizon for California Employers Attempting to Enforce Arbitration Agreements as Class Waivers?

In California, a hotbed of wage and hour class and collective action filings, a recent appellate court opinion provides some long-awaited good news for employers attempting to enforce arbitration agreements as class waivers. In Reyes v. Liberman Broadcasting, Inc., plaintiff Jesus Reyes worked for Liberman Broadcasting, Inc. from April to September 2009. Pre-hire, Reyes executed an arbitration agreement. In May 2010, he filed a class action alleging wage and hour violations on behalf of a putative class of security officers. When it initially answered the Complaint, Liberman failed to raise the issue of arbitration. In July 2011, Liberman filed a motion to compel Reyes to arbitrate his wage and hour claims as an individual (versus holding a role as a class representative). The court denied the motion, finding that Liberman had waived its rights via the delay. This led Liberman to appeal, resulting in a decision further interpreting the U.S. Supreme Court’s April 2011 decision in AT&T Mobility v. Concepcion, which held that the Federal Arbitration Act preempts state laws that invalidate class action arbitration waivers. To date, courts have to date [delete] been split on whether Concepcion overruled the California case of Gentry v. Superior Court, which required class arbitration under certain circumstances. However, last Friday, the appellate court, in Reyes, reversed the lower court’s denial of Liberman’s motion to compel arbitration. In so ruling, the Second District Court of Appeal held, “an arbitration agreement silent on the issue of class arbitration may have the same effect as an express class waiver.” (The Second District Court of Appeal declined to decide whether the Gentry case remains good law following the Concepcion ruling, holding instead that Reyes failed to show that the Gentry factors made the arbitration agreement unenforceable.)

The Court of Appeal also held that although Liberman did not mention the arbitration agreement in its answer and had previously engaged in discovery in the case, the company did not waive its right to compel arbitration. In so holding, the appellate court found that Liberman reasonably concluded it could not enforce the arbitration agreement before the Concepcion decision, given the fact that several California decisions pre-Concepcion appeared to require class arbitration in similar contexts. The Court of Appeal opined, the “risk [of compelled class arbitration] diminished substantially when Concepcion changed the legal landscape, and Liberman promptly informed Reyes of its intent to arbitrate one month after the [Concepcion] decision and filed its motion to compel a month later.” Accordingly, the opinion stated, “Liberman did not act inconsistently with a right to arbitrate by not moving to compel until after Concepcion.”

The body of law on enforcing arbitration agreements as class waivers is still developing post-Concepcion, but perhaps Reyes v. Liberman Broadcasting, Inc. indicates that there is some relief on the horizon.

California Rejects Enforcement of Restrictive Covenant in Employment Agreement

A California Court of Appeal recently rejected a covenant not to compete included in an employment agreement, although it was related to a transaction for the sale of goodwill of a business – one of the well-recognized exceptions to the general rule in California that limits restrictive covenants.

In Fillpoint, LLC v. Maas, No. G045057 (Cal. Ct. App. Aug. 24, 2012), Michael Maas, a shareholder in Crave Entertainment Group, Inc., sold his shares in the company when it was acquired by Handleman Company. That transaction was executed through a stock purchase agreement which contained a three year covenant not to compete. A month later, Maas entered into an employment agreement, which contained a one year covenant not to compete that became effective as of the date of the termination of his employment with Crave. Three years after the sales transaction, Maas resigned from Crave and began working for a competing company. Handleman’s successor, Fillpoint, LLC, sued Maas for breaching his employment agreement (as well as his new employer for interference with contract).

Fillmore argued that the restrictive covenant in Maas’ employment agreement was enforceable because it fell within the sale of goodwill exception contained in California Business and Professional Code section 16600. The Court of Appeal rejected that argument and found that, although the stock purchase agreement and employment agreement constitute a single transaction and each agreement referenced the other, only the purchase agreement was focused on protecting the acquired goodwill. In contrast, the Court of Appeal stated that the covenant contained in the employment agreement impermissibly targeted an employee’s fundamental right to pursue his or her profession and was therefore unenforceable.

This recent decision reaffirms the limited scope of the exceptions to the general rule in California that covenants not to compete are unenforceable. Therefore, employers must be mindful when drafting such covenants to ensure that they fall squarely within one or more of the recognized exceptions.