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Employment Law E-Buzz

Easy-to-digest updates on emerging employer legal issues

Did You Know…An $80,000 Facebook Post Costs $80,000

Posted in Court Decisions, Social Media

When does a confidentiality provision in a settlement agreement mean what it says? What if you tell your children about your confidential settlement and they post about it on Facebook? Well, here is what just might happen:

Patrick Snay’s daughter cost him $80,000 when she posted about his lawsuit settlement on Facebook. On February 26, the Third District Court of Appeals ruled that Snay’s $80,000 discrimination settlement with his former employer Gulliver Preparatory School was null and void because his daughter breached the terms of the non-disclosure clause when she broadcast the settlement on social media.

In 2010, Snay, now 69, sued Gulliver for age discrimination and retaliation when the school decided not to renew Snay’s employment contract. Gulliver settled the case in November of 2011 and agreed to pay Snay $80,000. Central to the settlement agreement was a detailed confidentiality provision, which provided that the existence and terms of the agreement between Snay and the school were to be kept strictly confidential, and that if Snay or his wife should breach the confidentiality provision, the $80,000 settlement proceeds would be void.

Despite the terms of the confidentiality provision, Snay immediately told his daughter that the case had settled. She, in turn, took to social media to announce the news to her 1,200 Facebook friends, many of whom are current and former Gulliver students:

“Mama and Papa Snay won the case against Gulliver,” she wrote. “Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”

The news made its way back to Gulliver’s attorneys. Four days after the deal was signed, Gulliver notified Snay that the school would not be paying any of the settlement money. Snay initially won an order to enforce the agreement, but the Court of Appeals tossed out the $80,000 settlement last week. “Snay violated the agreement by doing exactly what he had promised not to do,” Judge Linda Ann Wells wrote. “His daughter then did precisely what the confidentiality agreement was designed to prevent.” Read the full opinion here.

This case is a reminder that Facebook – and other forms of social networking sites – are making an increasingly significant mark on the world of litigation. Any information posted by a user, and even information posted by a third-party about a user and his whereabouts, can be used as evidence in a court action.

Did You Know…The Continuing Saga of Arbitration Agreements & Unconscionability

Posted in Court Decisions

In light of the United States Supreme Court decision in AT&T Mobility LLC v. Concepcion, the California Supreme Court recently reversed its own prior decision where it had held that an arbitration agreement that requires an employee to waive the right to a hearing [Berman hearing] before the state labor commissioner is contrary to public policy and unenforceable. Thus, in Sonic-Calabasas A, Inc. v. Moreno, the California Supreme Court held that the Federal Arbitration Act preempts (trumps) California state law categorically prohibiting the waiver of a Division of Labor Standards Enforcement Berman hearing in a mandatory pre-dispute arbitration agreement. However, a majority of the Court held that arbitration agreements can be invalidated where the employee can show that such agreements are found to be unconscionable whenever it is “unreasonably favorable to the more powerful party” so long as the basis for finding the unconscionability does not interfere with “fundamental attributes of arbitration.”

The Court has thus remanded the case to the trial court to determine whether the arbitration agreement in this case was otherwise so unconscionable as to be unenforceable. So stay tuned…

In light of this decision, employers who do not have arbitration agreements should consider whether they should implement them and those with arbitration agreements should revisit them to ensure that they do not contain provisions that could be construed as “unconscionable” and “unenforceable” because they “unfairly advantage” the employer.

Did You Know…Lady Gaga Settles Wage and Hour Claim

Posted in Wage and Hour
As we reported to you earlier in the year during our annual employment seminars, Lady Gaga was sued by her former personal assistant who alleged Lady Gaga violated federal law by failing to pay her overtime for being “on-call” 24/7.  Her personal assistant claimed overtime ”for every hour of every day” beyond 40 hours a week during her 13 months of employment.  As you will recall, at her deposition Lady Gaga testified that her employees work no more than eight hours daily, though the time is spaced out throughout the day.  Per Lady G - ”You don’t get a schedule that is like punch in and you can play f—ing Tetris at your desk for four hours and then you punch out at the end of the day….This is —when I need you, you’re available.”
 
It should come as no surprise that Lady Gaga settled the lawsuit for an undisclosed confidential amount.   

Did You Know…California Raises Minimum Wage

Posted in Legislation, Wage and Hour

On September 25, 2013, Governor Brown signed AB 10 into law, raising California’s minimum wage from $8 per hour today to $10 per hour by 2016.    

The bill will raise the minimum wage in two separate one-dollar increments: from $8 to $9 per hour effective July 1, 2014, and then from $9 to $10 per hour effective January 1, 2016.

California is the first state to implement a $10 per hour minimum wage, which is considerably higher than the current federal minimum wage of $7.25 per hour.  While most employers in California are subject to both the federal and state minimum wage laws, the employer must follow the stricter standard; that is, the one most beneficial to the employee.  Accordingly, all employers in California who are subject to both laws must pay the higher California minimum wage rate unless their employees are exempt. 
 
The higher minimum wage will impact more than just the increase to hourly earners in California.  For example, the following areas will be affected by the minimum wage hike:

  • Salary Basis Test for “White Collar” Exemptions: Exempt California employees are required to receive a monthly salary of at least twice the California minimum wage for full-time employment.  Under AB 10, the minimum salary amounts will go up from $33,280 per year today to $37,440 per year by July, 2014, and to $41,600 by January, 2016.
  • Commissioned Salesperson Exemption: To qualify for the commissioned salesperson exemption, employees must earn more than 1.5 times the California minimum wage.  Thus, the minimum earning rate will go up from $12 per hour today to $13.50 per hour on July 1, 2014, and $15.00 per hour by January, 2016.
  • Overtime, Vacation, Sick Leave, Paid Time Off, Meal and Rest Period Premiums: These must be adjusted in light of the increased minimum wage.
  • Employees Who Furnish Tools or Equipment: An employee who is paid at least twice the minimum wage may be required to provide and maintain hand tools and equipment customarily required by his or her trade.  This rate will go up from $16 per hour today to $18 per hour on July 1, 2014, and $20 per hour by January, 2016.
  • Split-Shift Pay: Employers who operate 2 or more shifts in a workday with an unpaid break of more than an hour between them must comply with “split-shift” pay regulations — an extra hour of pay at California’s minimum wage, unless the employee earns more than an hour of extra pay at minimum wage on that workday. 
  • Voluntary Meal or Lodging Agreement: Meals or lodging may not be credited against the minimum wage without a voluntary written agreement between the employer and the employee.  Any such voluntary written agreement will need to be adjusted to reflect the minimum wage increase.
  • Posting Requirement: Employers will be required to post the new wage in an area frequented by employees where it may be easily read during the work day.

Note that certain California cities may impose an even higher minimum wage and/or adjust their minimum wage more frequently.  For example, San Francisco’s current minimum wage rate is $10.55 per hour.  San Jose’s current minimum wage rate is $10.00 per hour, and will increase to $10.15 per hour on January 1, 2013.

Also note that while the California minimum wage provisions apply to public employers (see, e.g., Wage Order Nos. 1-13, 16; Sheppard v. N. Orange County Reg’l Occupational Program), the impact may vary from that outlined above.

Employers should review their compensation policies for all employees—hourly, salaried and exempt—to ensure timely compliance with the new changes in California’s minimum wage.  

See our earlier eBuzz for more information on AB 10.

Did You Know… A New San Francisco Ordinance Imposes a Duty on Employers to Consider and Respond to Employee Requests for Flexible Work Arrangements

Posted in Disability Discrimination, Leave Laws, Wage and Hour

On October 1, 2013, the San Francisco Board of Supervisors approved the Family Friendly Workplace Ordinance, giving employees the right to request flexible work schedules to assist with caregiver responsibilities.  Under the ordinance, San Francisco employers will be required to formally consider and respond to such requests.  San Francisco Mayor Ed Lee has stated that he intends to sign the ordinance into law.  

The San Francisco Board of Supervisors hopes that the Ordinance will alleviate the high attrition rates of families leaving San Francisco.  The Board notes that, according to the 2010 census, children make up only 13.5 percent of the San Francisco population, making San Francisco the city with the lowest population of children of any major city in the United States.  Despite aims of making San Francisco’s workplaces more family-friendly, the Ordinance likely also will increase the already high costs of doing business for employers in San Francisco. The Ordinance will apply to employers who regularly employ 20 or more employees, including part-time employees, within the City of San Francisco.  The Ordinance grants employees who have six or more months of service and work at least eight hours per week a right to request a flexible work schedule to assist with caregiver responsibilities for:

  1. a child;
  2. a parent age 65 or older; or
  3. a spouse, domestic partner, parent, child, sibling, grandparent, or grandchild with a serious health condition. 

Under the Ordinance, eligible employees may request any type of flexible work arrangement, such as an alternative work schedule, part-time employment, telecommuting, job sharing, or a predictable schedule.  Employees have a right to make such requests twice a year, but may make additional requests following the birth or adoption of a child or an increase in caregiver responsibilities for a family member with a serious health condition.  The request must be made in writing, specifically identifying the accommodation requested and how that accommodation assists the employee’s caregiver responsibilities.  

Employers will be required to respond to flexible work schedule requests verbally and in writing.  Within 21 days of receiving a written request, the employer must meet with the employee to discuss the request.  Thereafter, the employer must respond to the request within 21 days, either granting or denying the request.  If the employer denies the request, the response to the request must identify a bona fide business reason for the denial and notify the employee of his or her right to request a reconsideration within 30 days.
 
While the Ordinance does not provide a private right of action, it makes it unlawful for San Francisco employers to interfere with or retaliate based upon an employee’s request for a flexible work arrangement.  The Ordinance grants the San Francisco Office of Labor Standards Enforcement (“OLSE”) authority to investigate alleged violations and take administrative and legal action to enforce the Ordinance and remedy certain violations.  In addition to injunctive relief, OLSE can impose administrative penalties of $50 per employee per day that the violation continues.  If signed into law as expected, the Ordinance will take effect on January 1, 2014.  As such, San Francisco employers should be aware of new requirements under the Ordinance.

Did You Know…Public Employees’ Facebook “Like” is the Internet Equivalent of a Political Yard Sign

Posted in Court Decisions, Privacy, Social Media

The courts are taking steps to protect communications made via social media; e.g., Ehling v. Monmouth-Ocean Hospital Service Corp., No. 2:11-cv-03305 (D.N.J. Aug 20, 2013) (holding that private Facebook posts are protected under the Stored Communications Act).

Likewise, the Fourth Circuit Court of Appeals recently ruled that “liking”  something on Facebook is a form of speech protected by the First Amendment. In Bland et al. v. Roberts, sheriff’s department employees in Virginia lost their jobs after a political campaign in which they expressed support on Facebook for the political rival of the winning candidate.

In deciding that this activity on Facebook is considered protected “speech” under the First Amendment, the Court of Appeals wrote: “On the most basic level, clicking on the ‘like’ button literally causes to be published the statement that the User ‘likes’ something, which is itself a substantive statement.” “’Liking’ the campaign page of the incumbent Sheriff’s political opponent, the Court of Appeals said, was the “Internet equivalent of displaying a political sign in one’s front yard, which the Supreme Court has held is substantive speech.”

The Court of Appeals had to balance the rights of public employees to speak as private citizens against the interest of government (public employers) in ensuring its efficient operation. Thus, it is critical that public agency employers in California analyze whether the conduct in which employees are engaging is protected speech before taking any disciplinary action.

Did You Know…Ninth Circuit Holds No Aggregation of PAGA Penalties to Establish Federal Diversity Jurisdiction

Posted in Class Actions, Court Decisions, Litigation, Wage and Hour

In Urbino v. Orkin Servs. of California Inc., a divided Ninth Circuit held that civil penalties recoverable by individual employees under California’s Private Attorneys General Act of 2004 (“PAGA”) cannot be aggregated to meet the $75,000 amount in controversy requirement for diversity jurisdiction.

A wage-and-hour representative PAGA action brought originally in California state court, Urbino was removed by defendants to federal court on the theory that individual claims, when aggregated, meet the minimum requirements of diversity jurisdiction.  After removal, defendants moved to compel arbitration on the basis that Urbino had executed an Arbitration Agreement agreeing to arbitrate all claims against the company, including PAGA and representative action claims.

The District Court maintained its federal jurisdiction, and denied defendants’ motion to compel arbitration, distinguishing representative PAGA action waivers from class action waivers enforced by the U.S. Supreme Court in AT&T Mobility LLC v. Concepcion.  

Defendants appealed the District Court’s denial of their motion to compel arbitration, and Urbino cross-appealed the District Court’s refusal to remand the case to state court.

On appeal, the  Ninth Circuit determined that it lacked subject matter jurisdiction over the PAGA dispute, and remanded the action to state court for resolution – leaving undecided the issue of whether an arbitration agreement’s waiver of a PAGA representative action claim is enforceable.  The latter issue is pending before the California Supreme Court in Iskanian v. CLS Transportation of Los Angeles

Although it is anticipated that defendants will challenge the Ninth Circuit decision in Urbino, until and unless Urbino is overturned, employers will not be able aggregate claims in the removal of a PAGA action based on diversity.  However, the Ninth Circuit did not address whether a PAGA  action could be removed under the Federal Class Action Fairness Act  (“CAFA”).  Recently a California district court held that a defendant could remove a PAGA action under CAFA by aggregating the civil penalties.  The Ninth Circuit vacated the submission of that case pending the U.S. Supreme Court’s decision in Mississippi ex rel. Hood v. AU Optronics Corp.

The Ninth Circuit’s interpretation of PAGA could also have effects outside the removal context; e.g., whether PAGA claims can be made on an individual vs. representative basis.  

Stay tuned!

Did You Know…U.S. Supreme Court Narrowly Defines “Supervisor” For Purposes of Title VII Employer Liability

Posted in Court Decisions, Harassment

In Vance v. Ball State University, No.11-556, the U.S. Supreme Court ruled in favor of Ball State, making it harder for employees to sue employers for harassment under Title VII.    

The Court adopted a narrow definition of “supervisor” for purposes of vicarious liability under Title VII, holding that an employee is a “supervisor” only if he or she is empowered by the employer to take tangible employment actions against the subordinate employee (i.e., actions that have a “significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits”).  This is important because if the harassing employee is not a “supervisor”  but a “co-worker,” the employer is liable only if it was negligent in controlling working conditions; i.e., if the employer knew or reasonably should have known about the harassment but failed to take remedial action.  

In 1998, the Supreme Court held that an employer may be vicariously and strictly liable for a supervisor’s unlawful harassment.  Faragher v. City of Boca Raton, 524 U.S. 775 (1998); Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998).  However, the Court left open the question of who qualifies as a “supervisor.”

In Vance v. Ball State University, Maetta Vance, a catering specialist at Ball State University, accused a co-worker, Shaundra Davis, of racial harassment and retaliation.  Vance sued the school under Title VII of the Civil Rights Act of 1964, saying the University was liable for the harassment she experienced since Davis was her supervisor.  The District Court ruled that Ball State University could not be held vicariously liable for Davis’ alleged racial harassment because Davis could not “hire, fire, demote, promote, transfer, or discipline” Vance, and, as a result, was not Vance’s supervisor.  The Seventh Circuit affirmed, and Vance appealed to the Supreme Court.

Writing for the majority, conservative Justice Samuel Alito affirmed the judgment of the Seventh Circuit, holding for the University to be liable, Davis must have had the authority to “hire, fire, demote, promote, transfer, or discipline” Vance.

The Court specifically rejected Vance’s argument that a supervisor was anyone with day-to-day oversight of an employee’s activities. 

The Court also rejected the “nebulous” definition of a supervisor advocated by the U.S. Equal Employment Opportunity Commission — one who “wield[s] authority ‘of sufficient magnitude so as to assist the harasser explicitly or implicitly in carrying out the harassment’” — calling the EEOC definition a “study in ambiguity.”

However, to put this into perspective for California employers, this decision will have little – if any – impact in California given that most employees sue under California’s more favorable Fair Employment and Housing Act (FEHA) and not Title VII.  A harassment claim under FEHA applies the definition of supervisor in California Government Code section 12926(s): “Supervisor” means any individual having the authority, in the interest of the employer, to hire, transfer, suspend, layoff, recall, promote, discharge, assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend that action . . . .”  Thus, the California defintion of supervisor is more expansive than under Title VII.

Did You Know…U.S. Supreme Court Strengthens Class Action Waivers in AmEx Ruling

Posted in Class Actions, Court Decisions

In another employer-friendly decision, the U.S. Supreme Court reinforced its support for class action waivers, ruling in American Express Co. v. Italian Colors Restaurant that an explicit class action waiver in an arbitration agreement cannot be invalidated simply because the plaintiff’s cost of individually arbitrating a claim exceeds the potential recovery.

Justice Scalia, writing for the five-judge majority, distinguished the right to pursue a claim from the expense involved in proving a claim: “[T]he fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue the remedy.”

The American Express decision clarified that the Court’s earlier decision in AT&T Mobility LLC v. Concepcion was not limited to the Federal Arbitration Act’s preemption of state law, as had been interpreted by some lower courts.  Rather, courts must “rigorously enforce” arbitration agreements according to their terms, even for claims alleging violation of a federal statute, unless the FAA’s mandate has been overridden by a contrary congressional command.

Although American Express was decided in the context of an antitrust case, it will assist employers in wage-and-hour litigation, where class waivers frequently have been challenged, and cost of individual arbitration is a common argument invoked by plaintiffs.

American Express is also significant to California employers seeking to enforce waivers of representative Private Attorney General Act (“PAGA”) claims, as the decision makes clear that the right to pursue a claim as a class (or presumably as a group) can be bargained away so long as the ability to pursue the underlying cause of action remains.

Did You Know… The Supreme Court’s DOMA Ruling Opening Federal Benefits to Same-Sex Couples Requires Employers to Update Employee Benefits Policies

Posted in Court Decisions

The Supreme Court’s ruling that the Defense of Marriage Act’s definition of marriage as a legal union only between one man and one woman is unconstitutional requires employers to treat same-sex couples who are legally married the same as married opposite-sex couples under federal law. In prohibiting federal law from distinguishing between same-sex couples and opposite-sex couples, the ruling immediately extended a wealth of employee benefits to same-sex couples — perks which were already given to opposite-sex couples. This benefits extension, will require employers to update their employee benefits policies and plans to reflect the change. Exactly how much an employer will have to change their plans depends on the range of benefits already offered to same-sex couples. Among other changes, Employers should be aware of the following important employee benefits that are now available to same sex couples:

  • Joint and survivor annuities, retirement and pension plans
  • Tax-free health care plans
  • Tax-favored benefits such as flexible spending accounts
  • Leave under the Family Medical Leave Act to care for a same-sex spouse suffering from a serious health condition, for military caregiver leave, or for qualifying exigency when a same-sex spouse is called to active military duty in a foreign country
  • Continuance of health insurance benefits under COBRA