Selected Developments
March 2019 Update
On May 10, 2018, the California Supreme Court issued an order approving new Rules of Professional Conduct for attorneys, which went into effect November 1, 2018. All references to the former Rules in the text have been updated.
Chapter 1: Hiring Guidelines and Pitfalls
As amended effective January 1, 2019, Lab C §432.7(m) permits an employer to ask an applicant about, or seek from any source, information regarding, a particular conviction of the applicant if, under federal or state law, any of the following apply:
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The employer is required by law to obtain information regarding the particular conviction of the applicant, regardless of whether that conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation.
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The applicant would be required to possess or use a firearm in the course of his or her employment.
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An individual with that particular conviction is prohibited by law from holding the position sought by the applicant, regardless of whether that conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation.
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The employer is prohibited by law from hiring an applicant who has that particular conviction, regardless of whether that conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation.
See §1.29.
In Connor v First Student, Inc. (2018) 5 C5th 1026, the California Supreme Court, in resolving a conflict in the courts of appeal over whether the ICRAA is unconstitutionally vague, and violates due process as applied to employer background checks because it overlaps, in part, with the CCRAA (see §1.35), the court concluded that some overlap between the two statutes did not render the ICRAA unconstitutionally vague when the statutes are otherwise unambiguous. Further, the background check that defendant conducted of its bus drivers was an investigative consumer report under the ICRAA because it reported on their character, general reputation, personal characteristics, or mode of living. The fact that the CCRAA also applied did not exempt the defendant from the requirement that it obtain a written authorization under the ICRAA before conducting or procuring a background investigation. See §1.36.
Chapter 2: Employment Contracts and Executive Compensation
For a case finding the discovery provision and others in an arbitration agreement to be unconscionable, see Baxter v Genworth N. Am. Corp., (2018) 16 CA5th 713. See §2.6.
In Saheli v White Mem’l Med. Ctr. (2018) 21 CA5th 308, the court concluded that the Federal Arbitration Act (FAA) preempts special requirements for arbitration agreements contained in the Ralph Civil Rights Act (CC §51.7) and the Bane Civil Rights Act (CC §52.1). See §2.6.
California appellate courts are split on whether claims for civil penalties under Lab C §558 are immune from FAA preemption. See Esparza v KS Indus., L.P. (2017) 13 CA5th 1228 (claim under Lab C §558 subject to arbitration); Lawson v ZB, N.A. (2018) 18 CA5th 705 (FAA preemption does not apply to Lab C §558 claims because that section provides no private right of action). Note: The California Supreme Court has granted review in Lawson v ZB, N.A. (review granted Mar. 21, 2018, S246711; superseded opinion at 18 CA5th 705). See §2.6.
In AMN Healthcare, Inc. v Aya Healthcare Servs., Inc. (2018) 28 CA5th 923, the court held that a nonsolicitation agreement signed by some travel nurse recruiters was an unenforceable restraint on competition under Bus & P C §16600 that prevented the recruiters from practicing their chosen profession. See §2.60.
In Epic Sys. Corp. v Lewis (2018) 584 US ___, 138 S Ct 1612, the Supreme Court rejected the NLRB’s position in Murphy Oil and D.R. Horton by ruling that employers can require employees to arbitrate disputes individually, and waive their right to pursue or participate in class or collective actions against their employer. The Court also noted that although “[t]he policy may be debatable,” Congress can pass new legislation to change the result. Following Epic Systems, the Ninth Circuit reversed class certification and the denial of a motion to compel individual arbitration in O’Connor v Uber Technols., Inc. (2018) 904 F3d 1087. See §2.85.
Chapter 3: Independent Contractors, Leased Workers, and Outsourcing
Businesses are generally not liable for injuries incurred by the employees of independent contractors. Alvarez v Seaside Transp. Servs. LLC (2017) 13 CA5th 635. See §3.4.
California cases continue to not give much weight to the parties’ intent or how they characterize their relationship when deciding whether a worker is an employee or independent contractor. See, e.g., Linton v DeSoto Cab Co. (2017) 15 CA5th 1208. See §3.9.
A new section has been added discussing the California Supreme Court’s landmark decision in Dynamex Operations W., Inc. v Superior Court (2018) 4 C5th 903, in which the court chose to essentially scrap the nearly 30-year old Borello test for determining whether a worker is an employee or an independent contractor for claims asserted under California’s Wage Orders. In replacing the decades-old Borello control test, which applied multiple factors to the determination of whether a worker qualifies as an independent contractor, the court adopted the simplified “ABC” test applied in various other jurisdictions around the country. See §3.9A.
For a recent case addressing independent contractor status for purposes of California workers’ compensation law, see Linton v DeSoto Cab Co. (2017) 15 CA5th 1208. See §3.17.
In the Ninth Circuit’s view, “Dynamex did not purport to replace the Borello standard in every instance where a worker must be classified as either an independent contractor or an employee for purposes of enforcing California’s labor protections.” See California Trucking Ass’n v Su (9th Cir 2018) 903 F3d 953, 959 n4; §3.18.
Title VII broadly defines “employee” to mean an individual employed by an employer. Frey v Hotel Coleman (7th Cir 2018) 903 F3d 671, 678. See §3.28.
In August 2015, a divided National Labor Relations Board overruled longstanding precedent and substantially relaxed the evidentiary requirements for finding a joint-employer relationship under the National Labor Relations Act (29 USC §§151–169). Browning-Ferris Indust. of Cal., Inc., d/b/a BFI Newby Island Recyclery (2015) 362 NLRB No. 186 (Browning-Ferris). Then, in December 2017, a different Board majority restored the prior, more stringent standard. In February 2018, the Board vacated that December 2017 decision, effectively changing the law back again to the relaxed standard of Browning-Ferris. See Hy-Brand Indus. Contractors, Ltd. (2018) 365 NLRB No. 156, 2018 NLRB Lexis 103. A petition for review challenging Browning-Ferris’ adoption of the relaxed standard as beyond the Board’s statutory authority is currently pending in the United States Court of Appeals for the District of Columbia Circuit. In addition, the Board has proposed a regulation establishing the standard for determining whether two employers, as defined in §2(2) of the NLRA, are a joint employer of a group of employees under the NLRA. See §3.44.
The form “Sample Agreement Between Principal and Independent Contractor” has been modified. See §3.68.
Chapter 4: Immigration Law Requirements for Employers
In 2017, USCIS introduced a revised version of Form I-9, marked “Rev. 07/17/2017 N.” Effective September 18, 2017, employers must use only this new version of the form. See §4.12.
Fines for hiring and paperwork violations have been updated. See §§4.23–4.24.
On June 6, 2017 the Secretary of Labor issued a press release calling for a revised Labor Condition Application so that the agency can better protect American workers, confront fraud, and increase transparency. Effective November 19, 2018, the revised ETA Form 9035/9035E becomes mandatory. See §4.39.
On November 30, 2018, the United States, Mexico, and Canada signed the trilateral agreement to replace NAFTA with the United States-Mexico-Canada Agreement (USMCA). Ratification by the legislatures of the three countries is necessary before the USMCA will take effect. Ratification is expected to occur in early 2019. Labor mobility provisions of the new pact are largely the same as those under NAFTA, with no changes to the list of current NAFTA designated professions or to the minimum education and alternative requirements for the designated professions. See §4.62.
Chapter 5: Wage and Hour Laws
Employees working on oil drilling platforms in the Santa Barbara Channel, which are subject to the Outer Continental Shelf Lands Act (43 USC §§1331–1356b), are subject to the FLSA and to California’s wage and hour laws. Newton v Parker Drilling Mgmt. Servs. (9th Cir 2018) 881 F3d 1078. See §5.1.
The California Supreme Court has explained that under the definition of “suffer or permit” to work, whether a worker may be considered an independent contractor to whom the Wage Order does not apply, the appropriate standard is the “ABC” test. Under this test, a worker is an independent contractor only if the hiring entity establishes that the worker
(A) Is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
(B) Performs work that is outside the usual course of the hiring entity’s business; and
(C) Is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.
Dynamex Operations West, Inc. v Superior Court (2018) 4 C5th 903, 958. For Wage Order claims, the ABC test replaces the “entirety of the circumstances” test, along with the usual common law “control of work” factors, that the court previously used to determine the existence of an employment relationship. S.G. Borello & Sons, Inc. v Department of Indus. Relations (1989) 48 C3d 341. See §5.13.
In Garcia v Border Transp. Group, LLC (2018) 28 CA5th 558, 570, the court applied the Borello test to uphold the dismissal of non-Wage Order claims, and applied Dynamex’s ABC test to reverse dismissal of Wage Order claims. See §5.13.
In 2017, California enacted AB 168, precluding employers from inquiring about prior salary history and requiring employers to provide on reasonable request by an applicant a pay scale for a position. However, employers have subsequently raised numerous questions, including who is considered “an applicant,” what is a “pay scale” and what constitutes a “reasonable request?” AB 2282 was enacted last year to clarify several of the provisions and terms used in AB 168. The text of §5.13A has been updated to reflect these clarifications.
In Mora v Webcor Constr., L.P. (2018) 20 CA5th 211, the court held that “gross wages earned” for purposes of Lab C §226(a)(1) (wage statements) do not include payments to a union vacation trust fund. See §5.14B.
In Alvarado v Dart Container Corp. of Cal. (2018) 4 C5th 542, the California Supreme Court held that when calculating overtime in pay periods in which an employee earns a flat sum bonus, employers must divide the total compensation earned in a pay period by only the non-overtime hours worked by an employee. See §5.37.
On March 23, 2018, in connection with amending the FLSA to prohibit employers from keeping tips for any reason, Congress nullified the 2011 amendments to 29 CFR §§531.52, 531.54, and 531.59 concerning 29 USC §203(m) until any future action is taken by the Wage-Hour Administrator. See §5.44.
Given the requirement that employees be paid for all hours worked, California does not recognize the federal de minimis doctrine, which permits an employee to work a few minutes each day without compensation. Troester v Starbucks Corp. (2018) 5 C5th 829. See §5.45.
The requirement that employees must be relieved of all duties during rest periods does not apply to an employee in a safety-sensitive position at a petroleum facility, to the extent that the employee is required to carry and monitor a communication device, such as a radio, pager, or other form of instant communication, and to respond to emergencies, or is required to remain on the employer’s premises to monitor the premises and respond to emergencies. Lab C §226.75(a). See §5.48.
For updated requirements regarding an employer’s obligation to provide a private location for women needing to express breast milk for their infant children, see §5.48.
An employer of temporary employees may comply with its obligation to provide meal periods by adopting a lawful meal period policy, training employees on the policy, instructing employees to immediately report if they are prevented from taking a meal period, and contractually requiring its clients that supervise the work of its employees to comply with all applicable laws. Serrano v Aerotek, Inc. (2018) 21 CA5th 773. See §5.48.
In Gerard v Orange Coast Mem. Med. Ctr. (Dec. 10, 2018, No. S241655) 2018 Cal Lexis 9500, the California Supreme Court rejected a challenge to the Industrial Welfare Commission’s authority to permit such waivers in the health care industry, upholding second period meal waivers for health care shifts of more than 12 hours. See §5.48.
If limitations on employees during meal breaks are too restrictive, meal breaks will be considered time worked and employees will be entitled to compensation for resulting overtime hours. In Rodriguez v Taco Bell Corp. (9th Cir 2018) 896 F3d 952, the Ninth Circuit held there was no violation of the meal break requirement when the employer required employees to remain on the work premises only when they elected to receive a discounted meal, because the intent was not to keep employees available for work duties, it was to prevent discounted meals from being given to nonemployees. See §5.48.
In Encino Motorcars, LLC v Navarro (2018) 584 US ___, 138 S Ct 1134, 1142, the Court rejected the principle that FLSA exemptions should be construed narrowly. Nothing in the FLSA requires the exemptions to be given “anything other than a fair (rather than a ‘narrow’) interpretation.” See §§5.62, 5.80.
Like the void Operations Manual, DLSE’s Enforcement Policies and Interpretations Manual is of questionable authority in court proceedings. See Troester v Starbucks Corp. (2018) 5 C5th 829, 841 (rejecting Labor Commissioner’s recognition of de minimis doctrine in DLSE manual).
The requirement in Lab C §98.2(b) to post an undertaking by the deadline for filing a notice of appeal is mandatory and jurisdictional. Palagin v Paniagua Constr., Inc. (2014) 222 CA4th 124, 132, 136. The only exception is established by CCP §995.240 for relief from undertaking requirements generally, and that application for relief must be made before expiration of the time provided for appeal under section §98.2. Burkes v Robertson (2018) 26 CA5th 334, 347. See §5.90.
In Epic Sys. Corp. v Lewis (2018) 584 US __, 138 S Ct 1612, the Court held that arbitration agreements between employers and employees that call for individualized proceedings are to be enforced. Neither the FAA’s savings clause—which recognizes only generally applicable contracts defenses, such as fraud, duress, or unconscionability—nor the NLRA’s protection of concerted activities by employees was a basis for striking down an agreement that requires bilateral arbitration. See §5.93A.
In Lawson v ZB, N.A. (review granted Mar. 21, 2018, S246711; superseded opinion at 18 CA5th 705), the California Supreme Court will decide whether a representative action under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab C §§2698–2699.6) seeking recovery of individualized lost wages as civil penalties under Lab C §558 falls within the preemptive scope of the FAA. See §5.93A.
Unnamed class members may not appeal a class judgment, settlement, or attorney fees award unless they intervene in the action. Hernandez v Restoration Hardware, Inc. (2018) 4 C5th 260 (by filing appeal without first intervening in action, appellant never became aggrieved party of record to the action, as CCP §902 requires). See §5.93B.
In Atempa v Pedrazzani (2018) 27 CA5th 809, the court held a corporate employer’s owner, president, secretary, and director liable for civil penalties, attorney fees, costs, and post-judgment interest as an “other person acting on behalf of the employer” that violated Lab C §§558(a) and 1197.1(a) by failing to pay the minimum wage and overtime. See §5.96.
An employee that is not aggrieved lacks standing to pursue a PAGA claim. Cabrera v Rx Servs. (ND Cal, Sep. 25, 2018, No. C 17-05803 WHA) 2018 US Dist Lexis 164625 (plaintiffs lost their standing to sue under PAGA when they waived their individual claims by choosing not to pursue individual arbitrations). See §5.97.
In Kim v Reins Int’l Cal., Inc. (review granted Mar. 28, 2018, S246911; superseded opinion at 18 CA5th 1052), the California Supreme Court will decide whether an employee bringing an action under PAGA loses standing to pursue representative claims as an “aggrieved employee” by dismissing his or her individual claims against the employer. See §5.97.
PAGA does not apply to an employee in the construction industry with respect to work performed under a valid collective bargaining agreement in effect any time before January 1, 2025, under certain specified conditions. See §5.100A.
See Lab C §2810.4 regarding the joint and several liability of businesses with 25 or more employees that use a port drayage motor carrier to perform port drayage services, after the Labor Commissioner posts a notice on its website that the port drayage motor carrier owes unpaid wages, unreimbursed expenses, damages, interest, and penalties to a port drayage driver. See §5.100E.
Chapter 6: Vacations, Family and Medical Leave, and Other Time Off
In Mora v Webcor Constr., L.P. (2018) 20 CA5th 211, 221, the court held that payments made by the employer to a union vacation trust fund established under a collective bargaining agreement and authorized by the Labor Management Relations Act of 1947 (29 USC §§141–187) were not “wages” for purposes of Lab C §226(a). See §6.6.
Under the Tax Cuts and Jobs Act (Pub L 115–97, 131 Stat 2054) eligible employers may claim a tax credit equal to 12.5 percent of the amount of wages paid to qualifying employees on family or medical leave, if the rate of payment is at least 50 percent of the employee’s regular wages. The credit is limited to wages paid for 12 weeks in any taxable year. This credit ends on December 31, 2019, and is effective for wages paid after December 31, 2017. IRC §45S. See §6.85A.
The form “Sample Policy for Personal Leave” has been modified. See §6.141.
Chapter 7: Tax Compliance
A new section discussing the New Employment Credit has been added. See §7.22A.
Chapter 8: Unemployment Compensation and State Disability Insurance
In Brown v Unemployment Ins. Appeals Bd. (2018) 20 CA5th 1107, the court held that an employee’s failure to wear the correct shirt to work was not willful misconduct. At issue on appeal was the correct prejudgment interest rate on unemployment benefits wrongfully withheld. The court of appeal determined it was the 10 percent contract rate, rather than the 7 percent generic interest rate on judgments, finding a former employee’s right to unemployment benefits is sufficiently tied to his or her employment contract to justify imposition of prejudgment interest at the contractual rate of 10 percent. See §8.114.
Beginning January 1, 2021, an employee may receive wage replacement benefits for time off due to qualifying exigencies (as defined) related to the service by the employee’s spouse, domestic partner, child, or parent in the United States armed services. Employees seeking such benefits from the Employment Development Department may be required to provide copies of the active duty orders or other military-issued documentation confirming the family member’s service. See §8.195.
Under existing law, an employer may require an employee to take up to 2 weeks of earned but unused vacation before, and as a condition of, the employee’s initial receipt of paid family leave benefits under Un Ins C §3303.1. Under existing law, if an employer requires an employee to take vacation leave, that portion of the vacation leave that does not exceed 1 week is to be applied to the waiting period for receiving the benefits. Assembly Bill 2587 deleted that application of vacation leave to the waiting period, consistent with the removal of the 7-day waiting period last year for those benefits on and after January 1, 2018. See §8.195.
Chapter 9: Notice-Posting, Training, and Recordkeeping Requirements
Civil Code §52.6 was amended in 2018 to require the Attorney General to update the human trafficking notice by January 1, 2019. Affected businesses must post the updated notice on or after January 1, 2019. See §9.53A.
Government Code §12950.1 was amended in 2018 by SB 1343 to broaden required sexual harassment prevention training. As amended, the statute requires that by January 1, 2020, employers with five or more employees (including temporary and seasonal employees) provide training to all employees, not just supervisory employees, within 6 months of their hire. However, the mandatory harassment training required for non-supervisory employees is for 1 hour, rather than the 2 hours for supervisory employees. At the same time, SB 1300 expanded the potential content of harassment training by adding new Govt C §12950.2, to allow the training to include “bystander intervention training.” See §9.61.
A new section has been added, discussing the requirement that hotels and motels provide training regarding human trafficking to each employee who is likely to interact with human trafficking victims. The employees at whom training and education efforts are directed include those who work in the reception area, perform housekeeping duties, help customers in moving their possessions, or drive customers. See §9.61C.
Chapter 10: Employee Handbooks
Effective January 1, 2019, the so-called “common interest” privilege applies to statements made “without malice” relating to a complaint of sexual harassment by an employee to an employer based on credible evidence. It also applies to subsequent communications by the employer to other “interested persons” during a sexual harassment investigation. In addition, CC §47(c) as amended by AB 2770 provides a safe harbor against defamation liability by allowing employers to provide information during reference checks involving employees who previously engaged in sexually harassing behavior. Although the section already provided immunity for nonmalicious responses as to whether the employee in question was eligible for rehire, as amended, it allows the employer or its agent to indicate whether the decision to not rehire is based on the employer’s determination that the former employee engaged in sexual harassment. See §§10.40, 13.75.
Chapter 11: Trade Secrets Protection and Unfair Competition
The federal Defend Trade Secrets Act (DTSA) (Pub L 114–153, 130 Stat 376) uses the same statutory definition, and applies the same analysis, as the existing California version of the Uniform Trade Secrets Act (UTSA) (CC §§3426–3426.11). See Alta Devices, Inc. v LG Electronics, Inc. (ND Cal, Oct. 17, 2018, No. 18-CV-00404-LHK) 2018 US Dist Lexis 185071; Rockwell Collins, Inc. v Wallace (CD Cal, Nov. 10, 2017, No. SACV 17-01369 AG JCGx) 2017 US Dist Lexis 190361. See §11.1A.
“Know-how,” which includes methods, procedures, and expertise that are not patentable may nevertheless qualify for trade secret protection. BladeRoom Group Ltd. v Facebook, Inc. (ND Cal, Jan. 23, 2018, No. 5:15-cv-01370-EJD) 2018 US Dist Lexis 10905. See §11.3.
The employer should carefully follow its internal security procedures without exception, if possible, to establish that it undertook reasonable security measures. Evidence that certain established security measures or policies were not followed may defeat a trade secrets claim. See Carr v AutoNation Inc. (ED Cal, Jan. 8, 2018, No. 2:17-cv-01539-JAM) 2018 US Dist Lexis 3305 (plaintiff failed to take reasonable steps to maintain secrecy of its business plan). See §11.6.
In BladeRoom Group Ltd. v Emerson Elec. Co. (ND Cal 2018) 331 F Supp 3d 977, the court held that expert testimony was unnecessary to prove ownership of trade secrets. See §11.7.
Improper acquisition alone of a trade secret, with no showing of subsequent use, still might legally support damages under the DTSA and UTSA. Waymo LLC v Uber Technols., Inc. (ND Cal, Jan. 18, 2018, No. C 17-00939 WHA) 2018 US Dist Lexis 8263. See §11.7A.
Trade secret protection may be lost or terminated by public disclosure. Wang v Golf Tailor, LLC (ND Cal, Nov. 3, 2017, No. 17-cv-00898-LB) 2017 US Dist Lexis 182838 (public disclosure through marketing and sale of product). See §11.12.
In Golden v California Emergency Physicians Med. Group (9th Cir 2018) 896 F3d 1018, the Ninth Circuit held that a settlement agreement containing a “no employment” provision prohibiting a doctor from subsequently being employed throughout California with certain provider networks, not just his former medical provider group, might violate Bus & P C §16600. See §§11.42, 11.52, 11.58.
In Swarmfly, Inc. v Cloudflare, Inc. (ND Cal, Sept. 28, 2018, No. C 17-06957 WHA) 2018 US Dist Lexis 168317, the court found the plaintiff to be acting in “bad faith,” and awarded attorney fees to the defendant when the plaintiff failed to dismiss the case after receiving proof from the defendant disproving trade secrets misappropriation. See §11.42A.
A recent federal decision applying CCP §2019.210, stated that to satisfy the trade secret disclosure statute, a trade secret disclosure needs to include
(1) a summary of the specific trade secret; (2) the background of the trade secret and a description of how each secret has derived independent, actual or potential economic value by virtue of not being generally known to the public; (3) a description of how each secret has been the subject of reasonable efforts to maintain its secrecy; and finally (4) each of the precise claimed trade secrets, numbered, with a list of the specific elements for each, as claims would appear at the end of a patent.
Openwave Messaging, Inc. v Open-Xchange, Inc. (ND Cal, Feb. 2, 2018, No. 16-cv-00253-WHO) 2018 US Dist Lexis 17776, *11. See §11.43A.
In determining whether confidential information should be disclosed to a third party’s chosen expert, courts will balance the receiving party’s interest in selecting the expert most beneficial to its case with the disclosing party’s interest in protecting its trade secrets from disclosure to competitors. See Codexis, Inc. v EnzymeWorks, Inc. (ND Cal, Dec. 4, 2017, No. 3:16-cv-00826-WHO) 2018 US Dist Lexis 199186. See §11.44.
In McGill v Citibank, N.A. (2017) 2 C5th 945, the California Supreme Court held that claims for injunctive relief under the Unfair Competition Law and California Legal Remedies Act were not subject to a predispute arbitration clause. See §11.55C.
In Barker v Insight Global, LLC (ND Cal, July 24, 2018, No. 16-cv-07186-BLF) 2018 US Dist Lexis 123896, the court held that a former employee lacked standing to seek declaratory and injunctive relief from a customer nonsolicitation clause which had already expired. See §11.59.
An employer-employee relationship, without more, is not a fiduciary relationship. Nor does a fiduciary relationship arise simply because an employee is permitted access to the employer’s confidential and proprietary information. Agfa Corp. v Richard (CD Cal, June 1, 2018, No. SACV 17-01976-DOC) 2018 US Dist Lexis 103460. See §11.68.
In In re General Capacitor (ND Cal 2018) 325 F Supp 3d 1029, 1040, the court held that the Computer Fraud and Abuse Act (18 USC §1030) did not apply to an employee who took data files and e-mails, and destroyed her employer’s computer records, while she was still employed. See §11.74.
Two recent Ninth Circuit decisions make clear that Pen C §502 still requires the plaintiff to plead and prove “non-permission to use” to establish liability under the statute. See Oracle USA, Inc. v Rimini St., Inc. (9th Cir 2018) 879 F3d 948, 962; Facebook, Inc. v Power Ventures, Inc. (9th Cir. 2016) 844 F3d 1058, 1069. As for now, it appears that courts will look at the “specific acts” that are alleged to constitute an offense under the California statute and whether there was “permission” to engage in those acts. San Miguel v HP Inc. (ND Cal 2018) 317 F Supp 3d 1075, 1987; New Box Solutions, LLC v Davis (CD Cal, Sept. 18, 2018, No. CV 18-5324-RSWL-KSx) 2018 US Dist Lexis 164510. See §11.74.
Chapter 12: Workplace Safety
In May 2016, OSHA published a final rule revising its Recording and Reporting Occupational Illness and Injuries Rule and requiring some employers to electronically submit certain injury and illness data. On November 1, 2018, the Office of Administrative law approved Cal/OSHA’s emergency action to conform with the OSHA requirements. Amendments require designated employers in California to electronically submit certain occupational injury and illness information to OSHA. The first submission was due December 31, 2018. See §12.1A.
In Solus Indus. Innovations, LLC v Superior Court (2018) 4 C5th 316, the California Supreme Court held that federal law does not preempt actions by California district attorneys against employers for recovery of civil penalties under the Unfair Competition Law (UCL) (Bus & P C §§17200–17210) based on violations of California workplace safety laws. See §12.4.
The Labor Code requires the Division of Occupational Safety and Health to issue a citation “with reasonable promptness.” No citation may be issued for violations after 6 months have elapsed since the violation occurred. Effective January 1, 2019, “occurrence” is defined to mean that the violative condition continues to exist, and the employer can be cited, until the violative condition is corrected, or the Division discovers the violation, or the employer’s duty to comply with the violated requirement ceases to exist. Lab C §6317. See §12.36.
Labor Code §6427(a) established the maximum penalty amounts for non-serious violations in 2017 at no more than $12,471. This includes general and regulatory violations of the safety orders, including posting, recording, and recordkeeping violations, but not failures to report a serious injury. However, Lab C §6427(b) has been added to comply with federal law and now requires that the amount of the maximum penalty be increased on January 1st of each year by the amount of the increase in the Consumer Price Index for All Urban Consumers (CPI-U) the previous October. Thus, the maximum amount of a non-serious violation in 2018 rose to $12,726. The CPU-I for October 2018 was 0.3 percent, meaning that the maximum value of a non-serious penalty in 2019 is expected to be $12,764. See §12.53.
In Alvarez v Seaside Transp. Servs. LLC (2017) 13 CA5th 636, the court reaffirmed the principle that liability for work-related injuries when one hires an independent contractor generally depends on the independent negligence of the hirer. See §12.124.
Chapter 13: Workplace Privacy
The form “Polygraph Consent Form” has been modified. See §13.18.
The form “Sample Computer/E-Mail Usage Policy” has been modified. See §13.33.
The form “Workplace Search Policy” has been modified. See §13.43.
The form “Sample Drug and Alcohol Policy” has been modified. See §13.66.
The form “Sample Consent to Drug and Alcohol Test” has been modified. See §13.69.
The form “Sample Outside Employment Policy” has been modified. See §13.86.
Chapter 15: Discrimination and Harassment
In Hively v Ivy Tech Community College (7th Cir 2017) 853 F3d 339, the Seventh Circuit became the first federal court of appeals to explicitly recognize sexual orientation discrimination as an illegal type of sex discrimination under Title VII. The circuits has subsequently split on this issue. See Zarda v Altitude Express, Inc. (2d Cir 2018) 883 F3d 100 (employee was entitled to bring Title VII claim for discrimination based on sexual orientation); EEOC v R.G. & G.R. Harris Funeral Homes, Inc. (6th Cir 2018) 884 F3d 560 (EEOC was entitled to bring Title VII claim on ground that employer discriminated against employee on basis of her transgender and transitioning status); but see Evans v Georgia Regional Hosp. (11th Cir 2017) 850 F3d 1248 (discrimination based on sexual orientation not actionable under Title VII). See §15.5C.
Current law provides that employers may be liable for the acts of nonemployees with respect to sexual harassment of employees, applicants, unpaid interns or volunteers. Govt C §12940(j). Senate Bill 1300, enacted in 2018 and effective January 1, 2019, amended that section to extend that liability to any form of harassment, not just sexual. See §§15.31, 15.33.
Responding to concerns that some harassers use the prospect of future work to initiate unwelcome sexual harassment, CC §51.9 was amended effective January 1, 2019, to impose liability for sexual harassment on individuals who hold themselves out as being able to help the plaintiff establish a business, service or professional relationship with the defendant or a third party. See §15.48.
In 2018, SB 820 was enacted to respond to concerns that nondisclosure provisions in sexual harassment settlement agreements conceal and perpetuate harassing behavior. Accordingly, CCP §1001 was added to prohibit settlement agreement provisions preventing the disclosure of “factual information related to a claim filed in a civil action or a complaint filed in an administrative action” regarding (1) sexual assault; (2) sexual harassment under the Unruh Act (CC §51); or (3) workplace sexual harassment, sex discrimination or retaliation against a person for reporting sex harassment or discrimination under FEHA. It further prohibits a court from entering any stipulation or order that restricts the disclosure of information in a manner that conflicts with this section. Any such provisions entered into on or after January 1, 2019 will be deemed void as against public policy. See §15.107A.
In civil actions brought under Govt C §12965(b), the court, in its discretion, may award to the prevailing party, including the DFEH, reasonable attorney’s fees and costs, including expert witness fees. However, as amended by SB 1300 effective January 1, 2019, a prevailing defendant may not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so. This limitation on the defendant’s costs recovery applies notwithstanding the provisions of CCP §998 (i.e., if the defendant offered a pre-judgment offer to compromise greater than the plaintiff’s trial recovery.) See §15.155.
The following new sections have been added to chap 15:
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“Tables: Common Acronyms and Abbreviations.” See §15.1A.
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“Persons Who Are Typically Not Employees” (i.e., for purposes of Title VII). See §15.3A.
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“Partners.” See §15.3B.
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“Board Members.” See §15.3C.
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“Independent Contractors.” See §15.3D.
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“Volunteers.” See §15.3E.
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“Special Issues Relating to Race and Color” (i.e., under Title VII). See §15.5A.
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“Special Issues Relating to Religion.” See §15.5B.
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“Special Issues Relating to Sex, Pregnancy, Sexual Orientation, and Gender Identity.” See §15.5C.
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“Special Issues Relating to National Origin.” See §15.5D.
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“Lilly Ledbetter Fair Pay Act of 2009.” See §15.20A.
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“First Amendment Issues.” See §15.30H.
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“Partners” (i.e., for purposes of coverage under FEHA). See §15.31B.
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“Issues Relating to National Origin.” See §15.40B.
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“Release of a Claim or Right Under FEHA.” See §15.40C.
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“Immigration Protection Under State Law.” See §15.47A.
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“Stray Remarks.” See §15.58A.
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“Use of Arrest and Conviction Records.” See §15.70A.
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“Legislative Declarations About Harassment Claims.” See §15.96A.
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“Form: Sample Investigation Documentation.” See §15.106A.
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“Form: Sample Training Documentation.” See §15.106B.
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“Confidentiality Limits for Sexual Harassment Settlement Agreements.” See §15.107A.
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“Claims Alleged.” See §15.161A.
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“Special Issues Relating to Federal Employees.” See §15.208A.
The form “Sample Policy Prohibiting Harassment” has been replaced. See §15.104.
Chapter 16: Whistleblower Issues
In Light v Dep’t of Parks & Recreation (2017) 14 CA5th 75, the court held that claims of intentional infliction of emotion distress due to alleged whistleblower retaliation under FEHA were an exception to the workers’ compensation exclusivity rule. See §16.4.
Chapter 16A: Workplace Investigations
Workplace investigations are subject to a reasonableness standard. A recent example of that principle is Jameson v Pacific Gas & Elec. Co. (2017) 16 CA5th 901 (employer acted reasonably and in good faith after appropriate investigation when it determined, on basis of report, it had good cause to terminate employee for retaliating against coworker for raising safety issue; thus, termination was not wrongful; employee was informed of investigation and directed early on to speak to investigator, who interviewed ten witnesses and provided credible reasons for her decision not to interview three others, and investigator produced 12-page report that detailed evidence she gathered and her analysis of it). See §16A.12.
Chapter 17: Discipline and Termination
Effective January 1, 2019, the language of CC §1542, commonly included in a release of claims, has been slightly changed. The text in three affected sections has been modified to include the new language. See §§17.106, 17.112, and 17.113.
Chapter 18: Reductions in Force and Plant Closings
Effective January 1, 2019, the language of CC §1542, commonly included in a release of claims, has been slightly changed. The form “Release” in §18.8 has been modified to include the new language.
Under the Worker Adjustment and Retraining Notification Act (WARN) (29 USC §§2101–2109), reduced-time notice of a plant closing or mass layoff is permissible if the cause is a business circumstance not reasonably foreseeable at the time notice otherwise would have been required. Such circumstances may include the termination of a major contract by a principal client, a strike at a major supplier, a dramatic economic downturn, a government ordered layoff, or a government order closing an employment site. In Varela v AE Liquidation, Inc. (In re AE Liquidation, Inc.) (3d Cir 2017) 866 F3d 515 the court excused the debtor-employer’s failure to give 60 days’ notice of a forced layoff when the sale of its assets as a going concern fell through and its Chapter 11 case was converted to one under Chapter 7. The trustee established that this business circumstance not reasonably foreseeable in advance. See §18.35.
Chapter 20: Mediation and Arbitration of Employment Disputes
Effective January 1, 2019, the language of CC §1542, commonly included in a release of claims, has been slightly changed. The form “Sample Mediated Settlement Agreement” in §20.20 has been modified to include the new language.
Chapter 21: Public Employment Issues
The free speech protections of the First Amendment prohibit public employees from being compelled to pay an “agency fee” or “fair share fee” to an exclusive representative instead of joining the union and paying member dues. Janus v AFSCME Council 31 (2018) 585 US ___, 138 S Ct 2448. The Janus decision does not appear to have invalidated negotiated maintenance of membership provisions (requiring union members to remain members during the term of the collective bargaining agreement) currently allowable under California law. In response to the Janus decision, the Public Employees Relations Board (PERB) stopped enforcing, as of June 27, 2018, provisions of the statutes under its jurisdiction that provide for agency fee or fair share fee arrangements. As of that same date, PERB ceased enforcing its regulations governing agency or fair share fees. See §21.14.
It is not bad faith to fail to reach agreement on mandatory subjects, as long as a good faith effort has been made and impasse procedures have been exhausted. City of Davis (2018) PERB Dec. No. 2582M, 43 PERC 51. See §21.24.
Factfinding is a nonbinding impasse resolution procedure. The factfinder is an independent neutral, and may be the third party on a tripartite panel including a management and a union representative. The factfinder, or panel majority, makes findings of fact on all matters on which the parties have reached impasse and recommends terms of settlement. The parties may accept the recommendations or may conduct further bargaining over the recommendations. City of Davis (2018) PERB Dec. No. 2582M, 43 PERC 51. See §21.28.
A new section has been added discussing “Impasse Resolution in Transit Districts.” See §21.29A.
