Selected Developments
March 2023 Update
Practitioners are strongly advised to check the latest federal rules and regulations for updates, as new developments are continually emerging under the Biden Administration. Note also that on October 17, 2022, Governor Gavin Newsom announced the State of Emergency in response to COVID-19, and associated Executive Orders N-39-20 and N-75-20, will end on February 28, 2023.
Agency Name Change to “Civil Rights Department”
Effective July 1, 2022, the Department of Fair Employment and Housing (DFEH) became the California Civil Rights Department (CRD). This renaming is incorporated throughout the title, including updated website content, posters, and brochures. Limited references to the DFEH may remain where appropriate (e.g., in historical discussion or case summaries and parentheticals).
Notable Legislation
A new protected category (SB 523). Senate Bill 523, the Contraceptive Equity Act of 2022, amended the Fair Employment and Housing Act (FEHA) (Govt C §§12900–12999) to include “reproductive health decisionmaking” as a protected category. See, e.g., Govt C §§12940(a), 12926(y). These amendments are scheduled to take effect on January 1, 2023. See Stats 2022, ch 630 (SB 523). See, e.g., §§1.17, 1.26, 3.4, 15.33, 16.1A, 18.10, 18.47.
Protections for off-the-job cannabis use (AB 2188). Starting January 1, 2024, California employers are prohibited from discriminating against employees who use cannabis off the job and away from the workplace. Assembly Bill 2188 amends Govt C §12954. Under the new law, employers may still prohibit employees from being impaired while at work. Govt C §12954(b). The law prohibits certain type of drug tests, but does not prohibit employers from using “scientifically valid preemployment drug screening conducted through methods that do not screen for nonpsychoactive cannabis metabolites.” Govt C §12954(a). The new law will not apply to the building and construction trades, and it does not change any other rights or obligations specified under federal law or regulations. Govt C §12954(c)(e). See Govt C §12954; Stats 2022, ch 392 (AB 2188). See, e.g., §§1.65, 10.35, 16.1A, 17.119.
“Designated person” as chosen family (AB 1041). Assembly Bill 1041 amended two California leave laws. First, the California Family Rights Act (CFRA) (Govt C §12945.2) now includes the term “designated person” among the class of persons whom an employee may take leave to care for. Second, California’s paid sick leave law, the Healthy Workplaces, Healthy Families Act of 2014 (Lab C §§245–249) now similarly includes “designated person” within its definition of “family member”—for whose care, treatment, and so forth, the employee may use paid sick days. See Stats 2022, ch 748 (AB 1041). See, e.g., §§6.42A, 9.40, 10.28, 15.46.
Statutory bereavement leave (AB 1949). Assembly Bill 1949 adds Govt C §12945.7, which prohibits discrimination, discharge, demotion, and suspension of employees who exercise the right to bereavement leave. This new requirement is inapplicable to union employees with existing bereavement leave provisions in their collective bargaining agreements. See, e.g., §§6.142, 17.119.
Enhanced pay scale reporting requirements for employers (SB 1162). Pursuant to SB 1162 (Stats 2022, ch 559), employers must provide certain pay scale information to employees who request it, as well as in any job posting by an employer with 15 or more employees, among other requirements. See Lab C §432.3. See, e.g., §§1.30A, 5.13A, 9.70.
Chapter 1: Hiring Guidelines and Pitfalls
In their hiring and employment decisions, employers may not discriminate against certain protected classes, which now include “reproductive health decisionmaking.” See “Notable Legislation,” above. See §§1.2, 1.4, 1.17, 1.22, 1.26.
Senate Bill 1162, codified at Lab C §432.3, imposes upon employers certain pay scale reporting requirements for employees who request such information. Employers with 15 or more employees must also include such information in any job posting. See §1.30A; see also §5.13A.
With respect to drug testing, AB 2188 amends Govt C §12954 and, among other things, prohibits certain type of drug tests, but does not prohibit employers from using “scientifically valid preemployment drug screening conducted through methods that do not screen for nonpsychoactive cannabis metabolites.” Govt C §12954(a). See “Notable Legislation,” above. See §1.65.
Chapter 2: Employment Contracts and Executive Compensation
The Ninth Circuit recently granted a panel rehearing (Aug. 22, 2022) in Chamber of Commerce v Bonta (9th Cir 2021) 13 F4th 766 and withdrew its opinion. Chamber of Commerce v Bonta (9th Cir 2022) 45 F4th 1113. See §§2.6, 2.85; see also §§11.42E, 11.55C.
Discussion of the arbitrability of discrimination claims now includes De Leon v Pinnacle Prop. Mgmt. Servs., LLC (2021) 72 CA5th 476 (employee’s arbitration agreement shortening statute of limitations for all claims to 1 year and providing for limited discovery was substantively unconscionable). See §2.6.
Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (Pub L 117–90, 136 Stat 26), individuals bringing sexual assault and sexual harassment claims who entered into a predispute arbitration agreement or predispute class or collective action waivers now have the option to reject those agreements and waivers. Courts, not arbitrators, have the power to determine whether the Act applies and whether an agreement requiring arbitration is enforceable. See §§2.6, 2.85.
Iskanian v CLS Transp. Los Angeles, LLC (2014) 59 C4th 348 was overturned in Viking River Cruises, Inc. v Moriana (2022) 596 US ___, 142 S Ct 1906, insofar as it precluded division of an action under the Labor Code Private Attorneys General Act (PAGA) into individual and nonindividual claims through an agreement to arbitrate. For further discussion, see §2.85; see also §20.31A.
Arbitration agreements have been invalidated when an employer waives the right to arbitrate by engaging in litigation conduct inconsistent with its right to compel arbitration. But in Quach v California Commerce Club, Inc. (2022) 78 CA5th 470, the employer was not found to waive its right to arbitration. See §2.85; see also §20.33.
Arbitration agreements also may not include a city as a party. People v Maplebear, Inc. (2022) 81 CA5th 923. See §2.85.
Chapter 3: Independent Contractors, Leased Workers, and Outsourcing
A recent Ninth Circuit misclassification case, Bowerman v Field Asset Servs., Inc. (9th Cir 2022) 39 F4th 652, 666–67, held that the existence of an employment relationship is a question of fact, and a court can only decide the existence of an employment relationship if evidence supports only one reasonable conclusion. See §§3.9–3.9A.
Chapter 4: Immigration Law Requirements for Employers
Under 8 CFR §274a.13(d), foreign nationals in certain employment eligibility categories who timely file an EAD renewal application may receive automatic extension for up to 180 days after the expiration date of the Employment Authorization Document (Form I-766), or upon issuance of notification of a decision denying the renewal request. See §4.9.
On May 4, 2022, the Department of Homeland Security (DHS) published a temporary final rule in the Federal Register (87 Fed Reg 26614 (May 4, 2022)) to temporarily increase the employment authorization or extension for applicants within certain employment eligible categories who have a pending Form I-765, requesting a renewal of their employment authorization. For further information, see §4.9.
In 2020, USCIS introduced a revised version of Form I-9, marked “Rev. 10/21/2019 N.” In October 2022, DHS announced that employers should continue using this Form I-9 even after its expiration date of October 31, 2022, until further notice. See §4.12.
The civil fine amounts (minimum and maximum) to be paid for hiring violations have been updated. See §4.23.
The civil penalty amounts (minimum and maximum) for engaging in discrimination in violation of the Immigration Reform and Control Act of 1986 (IRCA) have been updated. See §4.30.
Now that many employers are implementing hybrid work-from-home policies, they should assess whether the home work site should be included in the Labor Condition Application (LCA). See §4.39.
On March 20, 2020, USCIS announced that, due to the ongoing COVID-19 National Emergency, they would accept all benefit forms and documents with reproduced original signatures, including the Form I-129, for submissions dated March 21, 2020, and beyond. On July 25, 2022, USCIS announced that it will continue to accept copies of original signatures on all forms and documents as a permanent policy. See §4.40.
As of July 16, 2021, USCIS updated its policy manual and removed reference to the 90-day rule with respect to change-of-status and the presumption of fraud. See §4.44.
The discussion of TN Canadian and Mexican professionals has been updated in the context of the United States Mexico Canada Agreement (USMCA) (previously the North American Free Trade Agreement (NAFTA)) and includes further discussion of confirming documentation to be provided to certain applicants. See §4.62; see also §4.17.
Chapter 5: Wage and Hour Laws
A new section, §5.89K, has been added to the chapter to introduce the Fast Food Accountability and Standards Recovery Act, or FAST Recovery Act, which establishes a Fast Food Council within the Department of Industrial Relations to establish minimum standards on working conditions for the fast food industry. Lab C §§1470–1473. The new law has been subject to court challenge. Similarly, detailed discussion has been added to address the new pay scale reporting requirements for employers, which apply to requests made by employees as well as to employer job postings (see Lab C §432.3; see §§5.13A, 5.42A)).
Employer restrictions on choice of law and choice of forum do not apply to a contract with an employee who is individually represented by legal counsel in negotiating its terms. Lab C §925(e). Nor do they apply to a forum selection clause of a corporate charter. Grove v Juul Labs, Inc. (2022) 77 CA5th 1081. See §5.13C.
Current employee nondisclosure, nondisparagement restrictions. An employer may not, in exchange for providing a raise or bonus, or as a condition of employment or continued employment, require an employee to sign either (a) a “release of a claim or right” (as defined) under the Fair Employment and Housing Act (FEHA), or (b) a nondisparagement agreement or other document to the extent it has the purpose or effect of denying the employee the right to disclose information about unlawful acts in the workplace. Govt C §12964.5. For further discussion, see §5.13C.
Settlement agreement restrictions. A settlement agreement that prevents or restricts the disclosure of factual information related to a claim filed in a civil action or a complaint filed in an administrative action, regarding various acts of sexual assault, harassment, discrimination, or retaliation, is prohibited. CCP §1001(a)–(d). However, a settlement agreement may preclude the disclosure of the amount paid to settle a claim. CCP §1001(e). See §5.13C.
The discussion of itemized wage statements now includes Naranjo v Spectrum Sec. Servs., Inc. (2022) 13 C5th 93, 121 (failure to report premium pay for missed breaks supports monetary liability under Lab C §226 for failure to supply “accurate itemized statement” reflecting employee’s “gross wages earned, net wages earned, and credited hours worked”), and Gunther v Alaska Airlines, Inc. (2021) 72 CA5th 334, 352 (reversing $25 million heightened penalties award when employer provided wage statements, although missing several items, and employee dismissed recordkeeping claim). See §5.14B; see also §5.16.
Regarding sick pay statements, investigations, and hearings, and civil actions, in Sevior-Iloff v LaPaille (review granted Oct. 26, 2022, S275848; superseded opinion at 80 CA5th 427), the California Supreme Court will decide the following issues: (1) Must an employer demonstrate that it affirmatively took steps to ascertain whether its pay practices comply with the Labor Code and Wage Orders to establish a good faith defense to liquidated damages under Lab C §1194.2? (2) May a wage claimant prosecute a paid sick leave claim under Lab C §248.5 in a de novo wage claim trial conducted pursuant to Lab C §98.2? Note, this case has been severed as to plaintiffs/appellants and has been retitled Iloff v LaPaille. See §§5.14C, 5.90, 5.92.
The California minimum wage will increase to $15.50 per hour on January 1, 2023, regardless of employer size. Lab C §1182.12(c)(3)(B). On January 1, 2024, and each January 1 thereafter, the minimum wage will be increased by the lesser of the increase in the Consumer Price Index or 3.5 percent, rounded to the nearest $0.10. Lab C §1182.12; see also Wage Order No. MW–2023 (8 Cal Code Regs §11000). The University of California, Berkeley, maintains a list of City and County minimum wages in California. See §5.17; see also §§5.15A, 5.56.
The minimum wage section also addresses special considerations for fast food industry workers (see Lab C §§1471(d)(2), 1473), sheepherders and goat herders (see Lab C §§2695.1–2695.4; Wage Order No. 14–2001, §4(E) (8 Cal Code Regs §11140(4)(E))), and minors and “learners” (see, e.g., Wage Order Nos. 1–2001—16–2001, §2; 8 Cal Code Regs §§11010–11160; 2002 Division of Labor Standards Enforcement Policies and Interpretations Manual §44.1.3 (rev 2010)). See §5.17.
The federal minimum wage is $7.25 per hour. 29 USC §206(a)(1). As of January 1, 2023, the minimum wage for employees of federal contractors and subcontractors is $12.15 per hour, which will be adjusted for inflation on each subsequent January 1. 29 CFR §10.5. However, for work performed on federal contracts entered into on or after January 30, 2022, or that are renewed or extended (pursuant to an option or otherwise) on or after January 30, 2022, the minimum wage as of January 1, 2023, is $16.20 per hour, which will be adjusted for inflation on each subsequent January 1. 29 CFR §§10.5(c), 23.50. For further discussion of federal wage requirements, see §5.18.
With the increase in the state minimum wage on January 1, 2023, the equivalent of two times the minimum wage of $15.50 per hour equals $64,480 per year to qualify for the white collar exemptions. Note that the salary basis test is set according to the California state minimum wage, not the applicable minimum wage that may apply in the various local cities and counties in California. Discussions and examples have been updated accordingly. See §5.56; see also §§5.15A, 5.17.
Meal and lodging credits have been updated to reflect 2023 amounts. See §5.21.
The discussion of preparatory and concluding activities at work includes a case discussion of Cadena v Customer Connexx LLC (9th Cir 2022) 51 F4th 831. See §5.47.
Under California law, meal and rest period requirements also apply to employees of the state, political subdivisions of the state, counties, municipalities, and the Regents of the University of California who provide direct patient care or support direct patient care in a general acute care hospital, clinic, or public health setting. Lab C §512.1. See §5.48.
Minimum salary requirements for exemption and specific professions have also been updated (see §§5.56, 5.59–5.60), as well as for salary requirements relating to tools and equipment (see §5.89A).
Two new cases address employer seating requirements: Meda v AutoZone, Inc. (2022) 81 CA5th 366 and LaFace v Ralphs Grocery Co. (2022) 75 CA5th 388. See §5.89G.
With respect to complaints of discrimination and retaliation, in Lawson v PPG Architectural Finishes, Inc. (2022) 12 C5th 703, the California Supreme Court held that the test set forth in Lab C §1102.6 is the correct evidentiary standard for retaliation claims brought pursuant to Lab C §1102.5, rather than the test set forth in McDonnell Douglas Corp. v Green (1973) 411 US 792, 93 S Ct 1817. In People ex rel Garcia-Brower v Kolla’s Inc. (review granted Sept. 1, 2021, S269456; superseded unpublished opinion at 2021 Cal App Unpub Lexis 3044, 2021 WL 1851487), the California Supreme Court will decide the following issue: Does Lab C §1102.5(b), which protects an employee from retaliation for disclosing unlawful activity, apply when the information is already known to that person or agency? See §5.90B.
The discussion of class actions and arbitration includes discussions of several new and noteworthy cases, including Viking River Cruises, Inc. v Moriana, supra; Southwest Airlines Co. v Saxon (2022) ___ US ___, 142 S Ct 1783; Morgan v Sundance (2022) ___ US ___, 142 S Ct 1708; and Garcia v Expert Staffing W. (2021) 73 CA5th 408. See §5.93A; see also §5.97.
The section on PAGA includes summaries and discussion of Viking River Cruises, Inc. v Moriana, supra; Howitson v Evans Hotels, LLC (2022) 81 CA5th 475; Shaw v Superior Court (2022) 78 CA5th 245; Estrada v Royalty Carpet Mills, Inc. (review granted June 22, 2022, S274340; superseded opinion at 76 CA5th 685); LaFace v Ralphs Grocery Co., supra; Turrieta v Lyft (SEIFU) (review granted Jan. 7, 2022, S271721; superseded opinion at 69 CA5th 955). See §5.97.
As of September 1, 2023, the portion of disposable earnings to be withheld will be reduced as detailed in §5.117.
Chapter 6: Vacations, Family and Medical Leave, and Other Time Off
Section §6.42A has been added to address California’s new “designated person” standards and its expansion of the CFRA. See “Notable Legislation,” above. In addition to the CFRA, California’s paid sick leave law also incorporates this new “designated person” standard. See Lab C §245.5(c). See §6.42A; see also §§6.11C, 6.30A, 6.33, 6.69A, 6.144.
COVID-19 supplemental paid sick leave updates are summarized in §6.11.
Earlier emergency legislation, SB 1159, had defined “injury” for an employee to include illness or death resulting from COVID-19 under specified circumstances, until January 1, 2023. The bill created a disputable presumption that the injury arose out of and in the course of the employment and is compensable, for specified dates of injury. Assembly Bill 1751 slightly amended and extended these provisions until January 1, 2024. See Stats 2022, ch 758 (AB 1751). See Lab C §§77.8, 3212.86–3212.88. See §§6.11, 6.14, 6.39; see also §19.9.
The table of legal holidays has been updated to address Lunar New Year (for California), Genocide Remembrance Day (for California), and Juneteenth (for California). See §6.16.
The “Form: Sample Policy for FMLA/CFRA Leave” now includes a “designated person” for purposes of CFRA leave. See §6.139. The “Form: Sample Policy for Bereavement Leave” has been revised to account for California’s new statutory bereavement leave. See §6.142.
Pursuant to AB 1949, employers of five or more employees must provide up to 5 days of unpaid bereavement leave upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law, to employees who have been employed for at least 30 days prior to the start of the leave. See “Notable Legislation,” above. See §6.142.
Chapter 7: Tax Compliance
In considering the roles of attorneys and accountants in employer tax compliance, in the Ninth Circuit, the attorney-client privilege will apply to dual-purpose communications with an attorney only if their primary purpose is to seek legal advice. In re Grand Jury (9th Cir 2022) 23 F4th 1088, 1092. On October 3, 2022, the U.S. Supreme Court granted certiorari to determine whether the Ninth Circuit applied the correct standard for dual-purpose communications of this kind; oral arguments were held on January 9, 2023. See §7.3.
An employer also is required to withhold Medicare and Social Security taxes under FICA from wages paid to an employee. The FICA tax consists of a Medicare portion (1.45 percent of wages, split evenly between employees and employers) and an old age, survivors, and disability insurance (OASDI, or Social Security) portion (12.4 percent, split evenly between employees and employers). The OASDI portion is imposed on an annual compensation base of $147,000 for 2022. See https://www.ssa.gov/oact/cola/cbb.html. There are no limitations on the amount subject to the Medicare portion of the tax. IRC §§3103, 3111, 3121(a). See §7.17.
Chapter 8: Unemployment Compensation and State Disability Insurance
The court of appeal in Johar v Unemployment Ins. Appeals Bd. (2022) 83 CA5th 259, 279, held that a unemployment compensation claimant had good cause for voluntarily leaving work when she did so to care for a seriously ill family member and that she preserved the employment relationship by communicating her need for leave to her supervisor, who stated her full support. See §§8.99–8.100, 8.112.
Senate Bill 191 expands the permissible ways in which the Employment Development Department may serve a notice of eligibility for benefits to include not just personal service and by mail, but also electronic service and “in any other manner the department elects.” See §8.138.
Senate Bill 951 amends Un Ins C §2655 to modify the formulas for calculating a claimant’s weekly benefit amount for specified disability periods. See §8.179.
Chapter 9: Notice-Posting, Training, and Recordkeeping Requirements
In addition to required postings, §9.2 now lists required pamphlets for employees.
Several websites containing required posters have been updated or are now included in this chapter. These include the following: the Fair Labor Standards Act (FLSA) wage notice (see §9.3); the Davis-Bacon poster (see §9.4); the required poster for the Walsh-Healy Public Contracts Act (see §9.5); the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) English/Spanish poster (see §9.7); the EDD Publication DE 2511 and posting (see §9.42); the notice addressing California state disability benefits rights and unemployment insurance (see §9.43); a poster that satisfies the requirements under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) (see §9.44); a notice addressing time off to vote (see Elec C §§14000–14001) (see §9.50); the California whistleblower “hotline” and whistleblower protections (see §9.53); human trafficking information (see §9.53A); and others.
Wage Orders must be posted in a conspicuous location frequented by employees during the hours of the workday. Lab C §1183. See §9.12.
Covered employees in the public or private sectors who work for employers with 26 or more employees are entitled to up to 80 hours of 2022 COVID-19 related paid sick leave from January 1, 2022, through December 31, 2022, immediately upon an oral or written request to their employer, with up to 40 of those hours available only when an employee or family member tests positive for COVID-19. Lab C §248.6. See §9.14.
In 2022, Governor Newsom signed AB 2693, which amends and extends COVID-19 workplace notice requirements until January 1, 2024, and gives employers another option for complying with these notification requirements. See AB 2693; see also Lab C §6409.6(h). See §§9.18, 9.24.
Under Title VII of the Civil Rights Act of 1964 (42 USC §§2000e—2000e–17), every employer, employment agency, and labor organization must post a notice that is prepared or approved by the U.S. Equal Employment Opportunity Commission (EEOC) setting forth excerpts from Title VII and information about filing complaints. 42 USC §2000e–10(a); 29 CFR §1601.30(a). Failures to post under this section are punishable by a fine of not more than $100 for each separate offense. 42 USC §2000e–10(b); 29 CFR §1601.30(b). The EEOC has developed a new poster entitled “Know Your Rights: Workplace Discrimination Is Illegal” (rev Oct. 20, 2022) that satisfies this posting requirement. See §§9.32–9.34.
Effective January 1, 2018, all employers with 5 or more employees are required to display a poster about the workplace rights of transgender individuals. The poster, DFEH-A04P-ENG, is available at https://calcivilrights.ca.gov/publications/ and https://calcivilrights.ca.gov/posters/. See §9.35.
Federal contractor posters, including the required “Pay Transparency Nondiscrimination Provision” poster, are available at https://www.dol.gov/agencies/ofccp/posters. See §9.36.
An employer that willfully violates the posting requirement under the FMLA may be assessed a civil penalty by the Wage and Hour Division of up to $189 for each offense. 29 CFR §825.300(a). See §9.39.
The section addressing the CFRA (Govt C §§12945.2, 19702.3) takes note of the new required posting and website (see Family Care & Medical Leave & Pregnancy Disability Leave (CRD-100–21ENG) (Sept. 2022 revision), which may be obtained at https://calcivilrights.ca.gov/publications/ and https://calcivilrights.ca.gov/posters/, as well as the new “designated person” standard pursuant to AB 1041. See “Notable Legislation,” above. See §9.40.
The section addressing pregnancy leave references the CRD’s model notice, “Family Care & Medical Leave & Pregnancy Disability Leave” (CRD-100–21ENG) (Sept. 2022 revision) and the notice “Your Rights and Obligations as a Pregnant Employee” (CRD-E09P-ENG). Both are available at https://calcivilrights.ca.gov/publications/ and https://calcivilrights.ca.gov/posters/. See §9.41.
The discussion of employee wage records includes a brief summary of SB 1162, introducing additional pay transparency requirements for employers. See “Notable Legislation,” above. See §9.70.
Chapter 10: Employee Handbooks
The protected categories enumerated in §10.19 have been clarified and expanded (including the recently added “reproductive health decisionmaking”). See “Notable Legislation,” above. See §10.19; see also §10.28.
In Mendoza v Trans Valley Transp. (2022) 75 CA5th 748, an arbitration agreement contained in an employee handbook with an acknowledgment of receipt of the handbook was held unenforceable. See §10.21.
A new law effective January 1, 2023, makes it unlawful for employers to take or threaten adverse action against an employee for refusing to report to or leave a workplace due to a reasonable belief that the workplace is unsafe due to a “emergency condition.” Lab C §1139. See §10.31.
Starting January 1, 2024, California employers are prohibited from discriminating against employees who use cannabis off the job and away from the workplace. Assembly Bill 2188 amends Govt C §12954. See “Notable Legislation,” above. See §10.35.
Chapter 11: Trade Secrets Protection and Unfair Competition
With respect to defining “trade secret misappropriation,” Philips N. Am. LLC v Advanced Imaging Servs. (ED Cal, Oct. 29, 2021, No. 2:21-cv-00876-JAM-AC) 2021 US Dist Lexis 211026 also supports the proposition that the Defend Trade Secrets Act (DTSA) uses the same statutory definition, and applies the same analysis, as the existing California version of the Uniform Trade Secrets Act. See 18 USC §1839(3), (5). See §11.1A; see also §§11.43, 11.46A (citing Philips N. Am. LLC on other points). With respect to ex parte seizure proceedings, the DTSA provides that an ex parte application for a TRO seizure order is appropriate “only in extraordinary circumstances” when “necessary to prevent the propagation or dissemination of the trade secret.” 18 USC §1836(b)(2)(A)(i). See §11.1A.
Under California law, misappropriation cannot occur if someone “discloses his trade secret to others who are under no obligation to protect the confidentiality of the information.” BladeRoom Group, Ltd. v Emerson Electric Co. (9th Cir 2021) 20 F4th 1231, 1246. The duty not to disclose can arise under the UTSA or DTSA, or by contract through the use of nondisclosure or confidentiality agreements. See §11.2.
The discussion of whether information can constitute a trade secret includes a new case, Masimo Corp. v True Wearables, Inc. (CD Cal, Oct. 15, 2021, No. SACV 18–2001 JVS (JDEx)) 2021 US Dist Lexis 246928, 2021 WL 6104823, *14. See §11.4.
With respect to whether certain customer information is accorded trade secret status, Marsh & McLennan Agency, LLC v Teros Advisors, LLC (ND Cal, Aug. 11, 2021, No. 20-cv-02679-HSG) 2021 US Dist Lexis 202649, 2021 WL 4846245, *6–7, held that a spreadsheet containing information on 46 of employer’s current clients might qualify for trade secret protection. See §11.5. See also §§11.42C, 11.43, 11.52.
An exception to the use of customer contact information is the “professional” or “new job” announcement exception. Blue Mountain Enters., LLC v Owen (2022) 74 CA5th 537, 554–55, discussed whether an “announcement” constituted an unlawful “solicitation.” See §11.5A. Blue Mountain is also discussed in the context of covenants not to compete. See §§11.53, 11.57, 11.58.
The party claiming a trade secret must establish that it undertook efforts that were “reasonable under the circumstances” to maintain the secrecy of the information misappropriated. CC §3426.1(d)(2). Employers should carefully follow internal security procedures without exception. Evidence that certain established security measures or policies were not followed may defeat this second prong of the trade secret test. See Teradata Corp. v SAP SE (ND Cal 2021) 570 F Supp 3d 810, 826–28. See §11.6.
The discussion of eavesdropping, recording telephone conversations, video surveillance, the use of GPS tracking devices, and the California Invasion of Privacy Act (Pen C §§630–638.55) has been expanded to include a more thorough discussion of Pen C §§632.7 and 637.2 and new case law, including Collins v Enver Solar Inc. (CD Cal, May 26, 2021, No. SACV 19–00146-JLS-KES) 2021 US Dist Lexis 115616, *6–7, 2021 WL 4551174, *3; Mendell v American Med. Response, Inc. (SD Cal, Mar. 23, 2021, No. 19-cv-01227-BAS-KSC) 2021 US Dist Lexis 54854, *15, 2021 WL 1102423; and Ronquillo-Griffin v TELUS Communications, Inc. (SD Cal, June 27, 2017, No. 17-CV-129 JM (BLM)) 2017 US Dist Lexis 99577, *4, 2017 WL 2779329, *2. The California Supreme Court has recently held that §632.7 applies to the parties of the call as well as to nonparties. Smith v LoanMe, Inc. (2021) 11 C5th 183, 191–203. See §11.41B.
With respect to remedies available to plaintiffs whose trade secrets have been misappropriated, Citcon United States v RiverPay Inc. (9th Cir, Jan. 31, 2022, No. 20–16929) 2022 US App Lexis 2717, 2022 WL 287563, *2–3, has been added to the discussion of injunctive relief and attorney fees. See §§11.42–11.42A. Sitrus Technol. Corp. v Le (CD Cal, Apr. 27, 2022, No. SACV 22–00184-CJC (JDEx)) 2022 US Dist Lexis 91689, 2022 WL 2255019, *2–4, has been added to the discussion of TROs and preliminary injunctions. See §11.42B.
As noted in the context of the use and enforceability of employment-related arbitration contracts in trade secret litigation, the Ninth Circuit recently granted a panel rehearing (Aug. 22, 2022) in Chamber of Commerce v Bonta (9th Cir 2021) 13 F4th 766 and withdrew its opinion. Chamber of Commerce v Bonta (9th Cir 2022) 45 F4th 1113. The case is likely to eventually be appealed to the U.S. Supreme Court. See §§11.42E, 11.55C; see also §§2.6, 2.85.
The discussion of protective orders has been expanded, including the addition of Clevland v Ludwig Inst. for Cancer Research Ltd. (SD Cal, Feb. 8, 2022, No. 19-cv-02141-JM-JLB) 2022 US Dist Lexis 23301, *17, 2022 WL 395962, *6. See §11.44. Further, §11.46A expands the discussion of electronic discovery.
New case law has been added to the discussions of covenants not to compete and employee solicitation and no-poach agreements, including DePuy Synthes Sales, Inc. v Howmedica Ostenonics Corp. (9th Cir 2022) 28 F4th 956, 963–67, and Ho v Marathon Patent Group, Inc. (CD Cal, Feb. 11, 2022, No. EDCV 21–339 PSG (SPx)) 2022 US Dist Lexis 93170, 2022 WL 1600048, *18–19. However, on January 5, 2023, the FTC proposed a new rule that would prohibit employers from imposing noncompete agreements on their workers, including both employees and independent contractors. See https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition. See §§11.52, 11.57.
The ability of California-based employers to insert choice of law provisions in their contracts has been greatly circumscribed with the enactment of Lab C §925, which now allows California-based employees to void such out-of-state choice of law clauses. Tovar GC Servs. Ltd. P’ship (SD Cal, Dec. 17, 2021, No. 3:21-CV-1597-CAB-BGS) 2021 US Dist Lexis 241811, 2021 WL 5989944, *5. A new case has been added to the discussion of how the divergence of rulings often leads to procedural gamesmanship and has led employees to relocate to California (as a “safe haven”) when they changed jobs to avoid being subject to noncompete covenants entered into with former employers when they lived in another state. See Westrock Servs., LLC v Roberts (ND Ga, May 4, 2022, No. 1:22-CV-01501-SCJ) 2022 US Dist Lexis 96235, 2022 WL 1715964. See §11.55A. Employment contracts entered into or subsequently amended or extended with California-based employees after 2016 that contain out-of-state forum selection clauses are voidable. See Depuy Synthes, Inc. v Howmedica Osteonics Corp., supra. Further, Dexcom, Inc. v Medtronic, Inc. (SD Cal, Dec. 14, 2021, No. 21-CV-1677-CAB-LL) 2021 US Dist Lexis 239049, 2021 WL 5908930, has been added to the discussions of the application of California law, and the “closely related” doctrine. See §11.55B; see also §11.55C.
Mendoza v TransValley Transp., supra, demonstrates the ways in which employees may challenge arbitration agreements, e.g., on grounds that no binding agreement to arbitrate was entered into because there was no “mutual assent” between the parties, often by attacking the when, where, and how the agreement to arbitrate supposedly was entered into; where the arbitration provisions are located in certain employment forms or contracts; and whether the employee was made aware that they were agreeing to arbitration. See §11.55C.
BladeRoom Group Ltd. v Emerson Electric Co. (9th Cir 2021) 20 F4th 1231, 1238–42, has been added to the discussion of confidentiality agreements and covenants not to disclose, among cases indicating that a nondisclosure or confidentiality clause that has a fixed or set term (e.g., for 1 or 2 years) permits the former employee to disclose proprietary and confidential information after the expiration of the contractual term, regardless of whether the information would still qualify as a legally protectable trade secret. See §11.59.
New case law has been added to the discussions of UTSA preemption (XpandOrtho, Inc. v Zimmer Biomet Holdings, Inc. (SD Cal, Mar. 15, 2022, No. 3:21-cv-00105-BEN-KSC) 2022 US Dist Lexis 46698, 2022 WL 801743, *17–18) and statutory unfair competition (Bus & P C §§17200–17210) (Wagner Aeronautical, Inc. v Dotzenroth (SD Cal, Sept. 16, 2022, No. 21-cv-0994-L-AGS) 2022 US Dist Lexis 168150, 2022 WL 4295261, *3–5; Genfit S. A. v Cymabay Therapeutics Inc. (ND Cal, Jan. 21, 2022, No. 21-cv-00395-MMC) 2022 US Dist Lexis 11460, 2022 WL 195650; Meta Platforms, Inc. v Brandtotal Ltd. (ND Cal, June 6, 2022, No. 20-cv-07182-JCS) 2022 US Dist Lexis 100679, 2022 WL 1990225; Fraser v Mint Mobile, LLC (ND Cal, July 1, 2022, No. C 22–00138 WHA) 2022 US Dist Lexis 116929, *6–7, 2022 WL 2391000, *2). See §§11.61–11.62.
New case law has been added to an expanded discussion of tortious interference, including hiQ Labs, Inc. v Linkedin Corp. (9th Cir 2022) 31 F4th 1180 and George v eBay, Inc. (2021) 71 CA5th 620. Like parties to a prospective economic relationship, parties to at-will contracts have no legal assurance of future economic relations. Thus, an at-will contract may be terminated, by its terms, at the prerogative of a single party; the other party has no legal claim to a continuation of the relationship. See Pech v Doniger (2022) 75 CA5th 443. See §11.66; see also §§11.67–11.68.
The recent Ninth Circuit case hiQ Labs, Inc. v Linkedin Corp., supra, as well as recent district court cases (see, e.g., Salinas v The Cornwell Quality Tools Co. (CD Cal, June 10, 2022, No. 5:19-cv-02275-FLA (SPx)) 2022 US Dist Lexis 140827, 2022 WL 3130875; Saffron Rewards, Inc. v Rossie (ND Cal, July 25, 2022, No. 22-cv-02695-DMR) 2022 US Dist Lexis 131613, 2022 WL 2918907; Fraser v Mint Mobile, LLC (ND Cal, July 1, 2022, No. C 22–00138 WHA) 2022 US Dist Lexis 116929, 2022 WL 2391000; Fish v Tesla Corp. (CD Cal, May 12, 2022, No. SACV 21–060 PSG (JDEx)) 2022 US Dist Lexis 87065, 2022 WL 1552137; Meta Platforms, Inc. v Brandtotal Ltd. (ND Cal, June 6, 2022, No. 20-cv-07182-JCS) 2022 US Dist Lexis 100679, 2022 WL 1990225; and Cottle v Plaid, Inc. (ND Cal 2021) 536 F Supp 3d 461) expand the discussion of civil remedies for theft, destruction, or misuse of computer data. See §11.74.
Mere knowledge alone, even specific knowledge, is not enough to state a claim for aiding and abetting. California law requires that for liability to attach, “a defendant have made a conscious decision to participate in tortious activity.” See George v eBay, Inc. (2021) 71 CA5th 620, 641–42 (citing cases therein). See §11.74A.
Chapter 12: Workplace Safety
The “New and Noteworthy” section of this chapter details new legislation addressing updated language requirements for safety and citations and orders (see AB 2068; see Lab C §§6318, 6431); new employee rights when there is an “emergency condition” (as defined) (see SB 1044; see Lab C §1193); changes to COVID-19 notification requirements (AB 2693; see Lab C §6409.6); new requirements for Cal/OSHA with respect to heat illness and wildfire smoke standards (see AB 2243; see Lab C §6721); and new certification requirements relating to live events (see AB 1775; see Lab C §§9250–9254). See §12.1A; see also §§12.30, 12.51.
On November 19, 2020, the Occupational Safety & Health Standards Board (Standards Board) approved emergency regulations to address COVID-19 prevention. The Emergency Temporary Standards (ETS) were approved by the Office of Administrative Law, became effective November 30, 2020, and were re-adopted, with amendment, most recently on April 21, 2022. Additional information regarding the status of the ETS is available at https://www.dir.ca.gov/OSHSB/COVID-19-Prevention-Emergency.html. The ETS are set to expire on January 1, 2023, unless otherwise extended or re-adopted. See §12.1A.
The discussion of applying to the OSHSB for a permanent variance from an occupational safety and health standard has been updated to note an application must be in writing and submitted under penalty of perjury and must be accompanied by one copy of all photographs, blueprints, and other illustrative material necessary to document or clarify statements in the application. See 8 Cal Code Regs §411(a)–(b). See §12.16.
Penalties for violations have been updated in §12.56.
Assembly Bill 2870 expands the categories of persons who can file a petition requesting that the court issue an ex parte Gun Violence Restraining Order (GVRO). See Pen C §§18150(a), 18170(a)–(e), 18190(a). See §12.120A.
Chapter 13: Workplace Privacy
The “Form: Sample Computer/Email Usage Policy” has been updated to include “reproductive health decisionmaking” as a protected category. See §13.33.
Under the California Confidentiality of Medical Information Act (CMIA) (CC §§56–56.37), the definition of “medical information” has been updated to include “mental health application information.” See CC §56.05(i)–(k). See Stats 2022, ch 690 (AB 2089). See §13.50.
Chapter 15: Discrimination and Harassment
“Reproductive health decisionmaking” is now a protected category under the FEHA. See Stats 2022, ch 630 (SB 523). See, e.g., §§15.30D, 15.33, 15.36, 15.40, 15.76.
Assembly Bill 1041 amended the CFRA to include the term “designated person” among the class of persons whom an employee may take leave to care for. See “Notable Legislation,” above. See §15.46.
On January 27, 2022, the California Supreme Court issued its opinion in Lawson v PPG Architectural Finishes, Inc., supra. Prior to Lawson, there was a split whether courts should use the McDonnell Douglas framework in reviewing whistleblower retaliation claims under Lab C §1102.5, or if courts should employ the statutory framework contained in §1102.6. “Unsurprisingly, [the court] conclude[d] courts should apply the framework prescribed by statute in Labor Code section 1102.6.” 12 C5th at 707. Following Lawson, the court in Vatalaro v County of Sacramento (2022) 79 CA5th 367 reviewed a lower court’s decision granting the County of Sacramento’s motion for summary judgment on a §1102.5 retaliation claim filed by a former employee. The court looked at the evidence presented by the county, holding that “the County’s undisputed evidence would require a reasonable factfinder to find it ‘highly probable’ that the [adverse action] would have occurred for legitimate, independent reasons even if Vatalaro had not [engaged in a protected activity].” 79 CA5th at 386. On this ground, the court affirmed the order granting the county’s motion for summary judgment. See §15.82.
Chapter 16: Whistleblower Issues
“New and Noteworthy Legislation” includes SB 523, the Contraceptive Equity Act of 2022, which amended the FEHA to include “reproductive health decisionmaking” as a protected category, and AB 2188, prohibiting discriminating against employees who use cannabis off the job and away from the workplace, subject to certain exceptions. See Govt C §12954. See “Notable Legislation,” above. See §16.1A.
Effective January 1, 2021, the California Legislature amended CC §47(b) by adding an exception to the privilege for statements made in judicial or official proceedings, providing that false reports or reports made with reckless disregard for the truth or falsity of the report are not privileged. See AB 1775 (Stats 2020, ch 327). See also King v City of Sacramento (ED Cal, Jan. 3, 2022, No. 2:20-cv-01326-KJM-DB) 2022 US Dist Lexis 1631. An exception to the protection afforded whistleblowers is provided by the qualified privilege of CC §47(b). See §16.5A.
Plaintiffs need not show that the employer’s nonretaliatory reason was pretextual under the McDonnell Douglas burden-shifting framework. Alternatively, even if the employer had a genuine, nonretaliatory reason for its adverse action, the plaintiff will still carry its burden if it is shown that the employer also had at least one retaliatory reason that was a contributing factor to the adverse employment action. See Lawson v PPG Architectural Finishes, Inc., supra. See §16.10.
Chapter 17: Discipline and Termination
The discussion of the required pamphlet and notice of termination (Pamphlet DE 2320; see also https://www.edd.ca.gov/) now notes that employers of 20 or more employees must provide a notice to certain terminating employees regarding California’s Health Insurance Premium Payment (HIPP) Program related to Medi-Cal benefits (DHCS 9601). See §17.94A.
Language has been added to the “Form: Short Form Severance Agreement” to note that nothing in the Agreement prevents the employee from discussing or disclosing information about unlawful acts in the workplace. See §17.113.
The “Chart: California Statutes Limiting Termination and Discipline” has been updated to include California’s new bereavement leave rights (see Govt C §12945.7) and protections for off-the-job cannabis use (see Govt C §12954). See “Notable Legislation,” above. See §17.119.
Chapter 18: Reductions in Force and Plant Closings
Discussion of the basic requirements for standard waiver and the requirements for waiver by employees over the age of 40 now includes more recent case law and robust case summaries. See §§18.4–18.5. The “Form: Release” has been updated to reflect California’s restrictions on nondisclosure agreements (§18.8); and the discussion of tax issues in releasing ADEA and Title VII claims has been updated to reflect current federal tax law (§18.10).
The new protected category of “reproductive health decisionmaking” has been added to the list of prohibited criteria in selecting employees for adverse employment actions (§18.17) and the categories of employees protected against discrimination (§18.47). See “Notable Legislation,” above. The categories of gender, gender identity, gender expression, and sexual orientation now include reference to Bostock v Clayton County, Ga. (2020) 590 US ___, 140 S Ct 1731 (clarifying that Title VII prohibits discrimination based on transgender status). See §18.47.
Discussions of the Worker Adjustment and Retraining Notification Act (WARN) further clarify which employees are to be counted toward the statute’s numerical threshold under the federal WARN; and California WARN discussions address new legislation, effective January 1, 2023, specifying that California WARN applies to call centers. See §18.22; see also §§18.26–18.27. The new legislation requires call center employers to include atop their WARN notices: “This notice is for the relocation of a call center” (Lab C §1410(a)). See §18.31.
The Employment Development Department publishes semiannually a list of call center employers that provided notice under Lab C §1410(a), and call center employers on that list, or those that should have appeared on the list, are ineligible for state grants, state-guaranteed loans, and tax credits for a period of 5 years, subject to limited exceptions (Lab C §§1410(b); 1411(a)–(b)). See §18.42.
The discussion of COBRA notes that the American Rescue Plan Act of 2021 (ARPA) was in effect from April 1, 2021, through September 30, 2021. The federal law included a temporary COBRA subsidy, requiring that employers cover 100 percent of an eligible employee’s cost of continuing coverage under COBRA. See §18.45.
The discussion of nondischargeable claims in employer bankruptcies notes that an individual may be personally liable for certain violations of the California Labor Code, even if the corporate employer has filed for bankruptcy. See Lab C § 558.1. See §18.83.
Chapter 19: Insurance Coverage for Employment Claims
Earlier emergency legislation, SB 1159, had defined “injury” for an employee to include illness or death resulting from COVID-19 under specified circumstances, until January 1, 2023. Assembly Bill 1751 slightly amended and extended these provisions until January 1, 2024. See AB 1751 (Stats 2022, ch 758). See Lab C §§77.8, 3212.86–3212.88. See §19.9; see also §§6.11, 6.13, 6.49.
With respect to an “occurrence” of sexual harassment, Guillon v AMCO Ins. Co. (ND Cal, Jan. 26, 2021, No. 20-cv-07926-CRB) 2021 US Dist Lexis 14625 was affirmed in Guillon v AMCO Ins. Co. (9th Cir, Dec. 22, 2021, No. 21–15297) 2021 US App Lexis 37929. See §§19.4–19.5, 19.7A.
The “Form: Employment Practices Liability Coverage Section (Chubb Form 14–02–3797)” has been deleted as outdated. See §19.14.
Chapter 20: Mediation and Arbitration of Employment Disputes
The discussion of the binding nature of arbitration agreements has been updated to include discussion of the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (Pub L 117–90, 136 Stat 26 (2022)). The discussion adds new case law, Mendoza v Trans Valley Transp., supra (finding employee handbook insufficient to create binding arbitration agreement expressly or by implication). See §20.26.
With respect to class action waivers, in Viking River Cruises, Inc. v Moriana, supra, the U.S. Supreme Court overruled Iskanian in part, holding that the Federal Arbitration Act (FAA) preempts the state court decision insofar that it precludes a division of PAGA actions into individual and nonindividual claims through an agreement to arbitrate. For further discussion, see §20.31A; see also §2.85.
With respect to waiver of arbitration rights, Quach v California Commerce Club, Inc., supra, held that prejudice was not established when a party resisting arbitration incurred no costs in litigation they would not have otherwise expended had the case gone to arbitration earlier. Further, in Morgan v Sundance, Inc., supra, the U.S. Supreme Court invalidated a long-considered and oft-cited rule that a litigant waives its right to compel arbitration only when its conduct has prejudiced the other party. For further discussion, see §20.33. See also §2.85.
Chapter 21: Public Employment Issues
Unions also have a right to meet with new employees at or near the time of their initial employment orientation. Govt C §3556. Senate Bill 191 (Stats 2022, ch 67) amended this code section to provide additional rights to exclusive representatives and employees. If the state or a local public health agency has issued an order limiting the size of gatherings, the union will have the right to schedule multiple meetings to ensure that all new employees have the opportunity to attend. These provisions are set to expire on June 30, 2025. See §21.12.
Appendix: Workplace Audit Checklist
The Appendix includes a few additional checklist items to consider when conducting a workplace audit.
