March 2021 Update
Practitioners are strongly advised to check the latest federal rules and regulations for updates, as new developments are emerging under the Biden administration.
Chapter 1: Hiring Guidelines and Pitfalls
The U.S. Supreme Court granted certiorari (in part) in R.G. & G.R. Harris Funeral Homes, Inc. v EEOC (2019) ___ US ___, 139 S Ct 1599, to consider whether Title VII prohibits discrimination against transgender people or sex stereotyping under Price Waterhouse v Hopkins (1998) 490 US 228, 109 S Ct 1775. In Bostock v Clayton County, Ga. (2020) 590 US ___, 140 S Ct 1731, the Court affirmed R.G., stating that because discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender also violates Title VII. See §§1.10, 1.12.
In Babb v Wilkie (2020) 589 US ___, 140 S Ct 1168, the Court held that the plain meaning of 29 USC §633a(a) (“made free from any discrimination based on age”) demands that personnel actions be untainted by any consideration of age. To obtain relief, a plaintiff must show that age was a but-for cause of the challenged employment decision. But if age discrimination played a lesser part in the decision, other remedies may be appropriate. See §1.8.
Rizo v Yovino (9th Cir 2020) 950 F3d 1217 held that unlike Title VII, the Equal Pay Act does not require proof of discriminatory intent. See §§1.10, 5.13A, 5.42A.
An employer seeking criminal arrest records is required to provide the applicant with a list of the specific offenses under Pen C §290 for which disclosures are sought. Note that Health & S C §11590 was repealed by Stats 2019, ch 580, §1 (AB 1261), effective January 1, 2020. See §§1.29, 13.10A.
Chapter 3: Independent Contractors, Leased Workers, and Outsourcing
Proposition 22 (related to Uber, Lyft, DoorDash, and other gig-economy businesses) was passed by voters in November 2020. It allows app-based ride-hailing and delivery companies to continue treating their workers as independent contractors, effectively carving them out of AB 5. Now that California voters have carved out the law’s main target, other businesses and workers may push to escape AB 5’s reach. See §§3.9A–3.9B, 5.61B.
In 2018, the California Supreme Court issued its landmark decision in Dynamex Operations W., Inc. v Superior Court (2018) 4 C5th 903, articulating a new legal test (the “ABC test”) for determining whether someone is an independent contractor or an employee. Assembly Bill 5 codified the Dynamex ABC test, with certain exceptions, such as for doctors, lawyers, freelance writers, and certain construction industry workers, in Lab C §2750.3. In 2020, AB 2257 repealed Lab C §2750.3 and replaced it with Lab C §§2775–2784, which incorporated and renumbered the former Lab C §2750.3 language. In addition, the legislature added additional exceptions for certain recording artists, musicians, songwriters, managers of recording artists, record producers, musical engineers, and mixers. See §§3.9A–3.9B.
In Vazquez v Jan-Pro Franchising Int’l (Jan. 14, 2021, S258191) 2021 Cal Lexis 1, *11, the California Supreme Court decided that Dynamex applies retroactively, stating that “the well-established general principle affirming the retroactive application of judicial decisions interpreting legislative measures supports the retroactive application of Dynamex.” See §§3.9A–3.9B.
New case law. Ridgeway v Walmart Inc. (9th Cir 2020) 946 F3d 1066 (the panel rejected Wal-Mart’s claims that plaintiffs should not have been awarded damages for layovers, rest breaks, and inspections; under California law, time drivers spent on layovers was compensable if Wal-Mart exercised control over the drivers during those breaks). See §3.56.
Joint employers. There are now two joint employer scenarios per the Fair Labor Standards Act of 1938 (FLSA). See 2020 Department of Labor (DOL) guidance at 85 Fed Reg 2858 (2020); see also 29 CFR §791.2.
The first joint employer scenario, known as vertical joint employment, applies a four-part “economic realities” test for determining joint employment under the FLSA (the other person is the employee’s joint employer only if that person is acting directly or indirectly in the interest of the employer in relation to the employee). Those four factors are whether the other person
(1) Hires or fires the employee,
(2) Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree,
(3) Determines the employee’s rate and method of payment, and
(4) Maintains the employee’s employment records.
See 29 CFR §791.2(a).
In the second joint employer scenario, known as horizontal joint employment, one employer employs a worker for one set of hours in a workweek, and another employer employs the same worker for a separate set of hours in the same workweek. The jobs and the hours worked for each employer are separate, but if the employers are joint employers, both employers are jointly and severally liable for all of the hours the employee worked for them in the workweek. If the employers are sufficiently associated with respect to the employment of the employee, they are joint employers and must aggregate the hours worked for each for purposes of determining compliance with FLSA. The employers will generally be sufficiently associated if
There is an arrangement between the employers to share the employee’s services, as, for example, to interchange employees;
One employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or
Employers may be deemed to share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.
See DOL guidance at 85 Fed Reg 2858 (2020); 29 CFR §791.2(e).
However, in New York v Scalia (SD NY, Sept. 8, 2020, No 1:20-cv-1689-GHW) 2020 US Dist Lexis 163498, the court struck down the DOL’s revised rule applicable to vertical joint employment. Among other reasons, the court found that the revised rule ignored the FLSA’s broad definitions and unlawfully limited the factors the DOL may consider. However, the court upheld the rule applicable to horizontal joint employment, 29 CFR §791.2(e), in which the the DOL made only nonsubstantive revisions. Until this is resolved by the DOL or the courts, employers and employees may look to case law applying the prior regulations.
See also §§3.42, 5.4A.
Chapter 4: Immigration Law Requirements for Employers
Due to the extraordinary and unprecedented COVID-19 public health emergency, the production of certain Employment Authorization Documents (Form I-766, EAD) has been delayed. On August 19, 2020, the U.S. Citizenship and Immigration Services (USCIS) issued a notice indicating that employers could accept Form I-797, Notice of Action, as acceptable Form I-9, Employment Eligibility Verification. This temporary concession was initially granted until December 1, 2020, and was extended to February 1, 2021. This only applies to I-797, Notice of Action, with a Notice date on or after December 1, 2019, through and including August 20, 2020, informing an applicant of approval of an Application for Employment Authorization (Form I-765). The I-797 Approval Notice may be used as a Form I-9, Employment Eligibility Verification, List C #7 document that establishes employment authorization issued by the Department of Homeland Security under 8 CFR §274a.2(b)(1)(v)(C)(7), even though the Notice states it is not evidence of employment authorization. See https://www.uscis.gov/i-9-central/form-i-9-related-news/form-i-9-verification-during-ead-production-delays-due-to-covid-19. When completing the I-9, the employer should select “Employment Authorization Document Issued by DHS” as the document title and enter February 1, 2021, as the document expiration date. Additionally, new hires must present a valid List B document establishing identity. See §4.9.
As states began implementing stay-at-home orders due to COVID-19 and employees began to work from home, employers had to assess whether or not the home location was deemed a worksite triggering the posting and/or filing of a Labor Condition Application (LCA). The U.S. Department of Labor (DOL) Office of Foreign Labor Certification (OFLC) issued COVID-19 FAQs on March 20, 2020. See https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/DOL-OFLC_COVID-19_FAQs_Round%201_03.20.2020.pdf and https://www.dol.gov/agencies/whd/fact-sheets/62j-h1b-worksite. See §4.39.
On October 8, 2020, the DOL issued an Interim Final Rule restructuring the prevailing wage system, thereby significantly increasing wage requirements for beneficiaries of H-1B, E-3, H-1B1 petitions, and PERM applications. See Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States (85 Fed Reg 63872 (Oct. 8, 2020)). The regulation took effect on October 8, 2020, without any advance notice, and will impact Labor Condition Applications filed on or after October 8, 2020, and prevailing wage determinations issued on or after October 8, 2020. Employers are able to continue to use alternative wage sources instead of DOL prevailing wage data for LCAs and PERM applications. The Interim Final Rule has been challenged in court on procedural grounds, alleging that the agency violated the rulemaking process under the Administrative Procedure Act (APA). On December 1, 2020, ruling on summary judgment, the court found that the DOL did not have good cause to bypass notice and comment rulemaking procedures in violation of the APA. See U.S. Chamber of Commerce v U.S. Dep’t of Homeland Sec. (ND Cal, Dec. 1, 2020, No. 20-cv-7331-JSW) 2020 US Dist Lexis 224974. See also §4.38.
On October 8, 2020, Department of Homeland Security (DHS) issued an Interim Final Rule aimed at introducing stricter eligibility criteria for the H-1B specialty occupation classification, placing new restrictions on the placement of H-B workers at third party worksites, and reinstating strict evidentiary policies that had been rescinded earlier in 2020. The rule, which was to take effect on December 7, 2020, was challenged in court under procedural grounds for violating the rulemaking process under the APA. On December 1, 2020, a federal district court, ruling on summary judgment, set aside the DHS regulation, finding that the agency did not have good cause to bypass notice and comment rulemaking procedures. See U.S. Chamber of Commerce v U.S. Dep’t of Homeland Sec., supra. See also §4.40.
On October 21, 2020, the Department of State (DOS) published proposed regulations seeking to revise the B-1 visa classification, including eliminating the B-1 in lieu of H-1B and B-1 in lieu of H-3 subcategories. See https://www.federalregister.gov/documents/2020/10/21/2020-21975/visas-temporary-visitors-for-business-or-pleasure. See §4.61.
In response to the economic downturn in the spring of 2020 and under §§212(f) and 215(a) of the Immigration and Nationality Act (INA), then-President Trump issued two proclamations: Proclamation 10014 (on Apr. 22, 2020) suspending the entry of new immigrants and Proclamation 10052 (on June 22, 2020) restricting the entry of certain nonimmigrant visa categories to include the H-1B, H-2B, L-1, and certain J-1, as well as their dependents to the United States. Both proclamations provided exemptions and provide for discretionary waivers in limited circumstances. Both of these travel restrictions were due to sunset on December 31, 2020. See §4.63.
If an H-2A nonimmigrant who is physically present in the United States seeks to change employers during the COVID-19 National Emergency, the prospective new H-2A employer may file an H-2A petition on Form I-129, accompanied by a valid temporary agricultural labor certification, requesting an extension of the alien’s stay in the United States. To be approved, an H-2A petition must be received on or after December 18, 2020, but no later than June 16, 2021. If the new petition is approved, the extension of stay may be granted for the validity of the approved petition for a period not to exceed the validity period of the temporary agricultural labor certification. See 8 CFR §214.2(h)(22); 85 Fed Reg 82298 (Dec. 18, 2020). See also §4.63.
On February 24, 2020, DHS implemented an Inadmissibility on Public Charge Grounds final rule nationwide. The final rule requires applicants for Adjustment of Status (AOS) who are subject to the public charge ground of inadmissibility to report certain information related to public benefits on Form I-944, Declaration of Self-Sufficiency. This final rule has been challenged in court since late 2019. On December 3, 2020, the Ninth Circuit reinstated two lower court preliminary injunctions that had temporarily barred enforcement of the DHS public charge rule in several states and Washington, D.C. Washington v U.S. Dep’t of Homeland Sec. (9th Cir, Nov. 25, 2020, No. 19–35914) 2020 US App Lexis 37242. The Ninth Circuit ruling temporarily bars the public charge rule. However, the government may appeal and seek a stay or reversal. USCIS has further instructed that applications submitted without the public charge Form I-944 and documentation risk rejection by the agency. See §4.85.
Chapter 5: Wage and Hour Laws
With the increase in the state minimum wage on January 1, 2021, the equivalent of two times the minimum wage of $13 per hour for small employers (25 employees or less) equals $54,080 per year, and two times the minimum of $14 per hour for large employers (26 employees or more) equals $58,240 per year to qualify for the white collar exemptions. It is important to 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. See §§5.17, 5.56.
As of January 1, 2021, the minimum wage for employees of federal contractors and subcontractors is $10.95 per hour, which will be adjusted for inflation on each January 1. Tipped employees may be paid a cash wage of $7.65 per hour as of January 1, 2021. See 29 CFR §10.5. See also §§5.17, 5.19.
Private security officers subject to a valid collective bargaining agreement may be required to remain on the premises during rest periods and to remain on call, and carry and monitor a communication device during rest periods. If rest period is interrupted, the security officer shall be permitted to restart the rest period as soon as practicable. The security officer’s employer satisfies the rest period obligation if the security officer is then able to take an uninterrupted rest period. If on any workday a security officer is not permitted to take an uninterrupted rest period of at least 10 minutes for every 4 hours worked, or major fraction thereof, then the security officer shall be paid 1 additional hour of pay at the employee’s regular base hourly rate of compensation. See Lab C §226.7; Stats 2020, ch 343 (AB 1512). See also §§5.45, 5.48.
California’s wage statement requirements apply only to employees whose principal place of work is in California. Ward v United Airlines, Inc. (2020) 9 C5th 732, 760 (test satisfied if employee works majority of time in California or, for interstate transportation employees whose work is not primarily performed in any single state, if employee has their base of work operations in state). Likewise, California laws governing the timing of wage payments apply only to employees whose principal place of work is in California. Oman v Delta Air Lines, Inc. (2020) 9 C5th 762, 770 (rejecting claim for late payment of wages where employees only worked de minimis amount of time in California; ranging from 2.6 percent to high of 14 percent). See §§5.13, 5.14B.
In Ridgeway v Walmart Inc. (9th Cir 2020) 946 F3d 1066, the Ninth Circuit held that an employer violated California law by not compensating truck drivers for pre-trip and post-trip inspections. The employer’s compensation system was activity-based, and was silent on compensation for the inspections. The court explained that an employer may not satisfy the payment requirements by “borrowing” from other compensation sources, such as an hourly rate or mileage payment. 946 F3d at 1084. See also §§5.47–5.48, 5.51.
In Frlekin v Apple Inc. (2020) 8 C5th 1038, the supreme court held that time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees is compensable as “hours worked” within the meaning of Wage Order No. 7–2001 (8 Cal Code Regs §11070); but see Griffin v Sachs Elec. Co. (9th Cir, Nov. 20, 2020) 2020 US App Lexis 38840, *2 (all the employees had to do was flash their badges to guard at security gate, which is significantly less invasive than the exit searches at issue in Frlekin, so that time was not compensable). See §§5.45, 5.47.
In Naranjo v Spectrum Sec. Servs., Inc. (review granted Nov. 14, 2019, S258966; superseded opinion at 40 CA5th 444), the California Supreme Court will decide the following issues: (1) Does a violation of Lab C §226.7, which requires payment of premium wages for meal and rest period violations, give rise to claims under Lab C §§203 and 226 when the employer does not include the premium wages in the employee’s wage statements but does include the wages earned for meal breaks? (2) What is the applicable prejudgment interest rate for unpaid premium wages owed under Lab C §226.7? See §§5.14B, 5.16.
In Ferra v Loews Hollywood Hotel (review granted Jan. 22, 2020, S259172; superseded opinion at 40 CA5th 1239), the California Supreme Court will decide whether the legislature intended the term “regular rate of compensation” in Lab C §226.7, which requires employers to pay a wage premium if they fail to provide a legally compliant meal period or rest break, to have the same meaning and require the same calculations as the term “regular rate of pay” under Lab C §510(a), which requires employers to pay a wage premium for each overtime hour. See §5.48.
Chapter 6: Vacations, Family and Medical Leave, and Other Time Off
Senate Bill 1159 (emergency legislation) defines “injury” for an employee to include illness or death resulting from the 2019 novel coronavirus disease (COVID-19) under specified circumstances, until January 1, 2023, and creates a disputable presumption that the injury arose out of and in the course of the employment and is compensable, for specified dates of injury. The bill limits the applicability of the presumption under certain circumstances. The bill requires an employee to exhaust their paid sick leave benefits and meet specified certification requirements before receiving any temporary disability benefits or, for police officers, firefighters, and other specified employees, a leave of absence. The bill also makes a claim relating to a COVID-19 illness presumptively compensable after 30 days or 45 days, rather than 90 days. Until January 1, 2023, the bill allows for a presumption of injury for all employees whose fellow employees at their place of employment experience specified levels of positive testing, and whose employer has five or more employees. See Lab C §§77.8, 3212.86–3212.88). See also §§6.11, 6.14, 6.39, 13.34, 19.9.
Assembly Bill 2992 expanded the right to take time off work under Lab C §230. The new law permits employees to take time off if they are victims “of a crime that caused physical injury or that caused mental injury and a threat of physical injury” or for anyone “whose immediate family member is deceased as the direct result of a crime.” Employers must update any relevant crime victim leave policies to comply with the new requirements. See Lab C §230(j); Stats 2020, ch 224 (AB 2992). See also §§6.14, 6.137–6.138.
Senate Bill 1383 expands the California Family Rights Act (CFRA) to make it an unlawful employment practice for any employer with five or more employees to refuse to grant a request by an employee to take up to 12 workweeks of unpaid protected leave during any 12-month period to bond with a new child of the employee or to care for themselves or a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner, as specified. The bill requires an employer who employs both parents of a child to grant leave to each employee. The bill also makes it an unlawful employment practice for any employer to refuse to grant a request by an employee to take up to 12 workweeks of unpaid protected leave during any 12-month period due to a qualifying exigency related to the covered active duty or call to covered active duty of an employee’s spouse, domestic partner, child, or parent in the Armed Forces of the United States. The bill defines employee for these purposes as an individual who has at least 1250 hours of service with the employer during the previous 12-month period, unless otherwise provided. See Govt C §12945.2; Stats 2020, ch 86 (SB 1383). See also §§6.23, 6.30A–6.38, 6.60.
Government Code §12945.21 requires the DFEH to create a small employer family leave mediation pilot program for employers with between 5 and 19 employees. The pilot program authorizes a small employer or the employee to request all parties to participate in mediation through the DFEH’s dispute resolution division within 30 days of receipt of a right-to-sue notice. It prohibits an employee from pursuing civil action until the mediation is complete if an employer or employee requests mediation, and tolls the statute of limitations for the employee, including for additional related claims, from receipt of a request to participate in the program until the mediation is complete. This section will be repealed on January 1, 2024. See Stats 2020, ch 45 (AB 1867). See also §6.30C.
Public Law 116–127, 134 Statutes 178 is the Families First Coronavirus Response Act 2020 (FFCRA). On March 18, 2020, then-President Trump signed into law the FFCRA, which creates two new emergency paid leave requirements in response to the COVID-19 global pandemic. Division E of the FFCRA, the Emergency Paid Sick Leave Act (EPSLA), entitles certain employees of covered employers to take up to 2 weeks of paid sick leave if the employee is unable to work for specific qualifying reasons related to COVID-19; Div C of FFCRA permits certain employees of covered employers to take up to 12 weeks of expanded family and medical leave, 10 of which are paid, if the employee is unable to work due to a need to care for their son or daughter whose school, place of care, or childcare provider is closed or unavailable due to COVID-19–related reasons. See §6.31.
Public Law 116–136, 134 Statutes 281 is the Coronavirus Aid, Relief, and Economic Security Act 2020 (CARES Act). The Paycheck Protection Program (CARES Act §§1101–1114) provides an incentive for employers to keep workers on their payrolls. The FFCRA authorizes the Secretary of Health and Human Services to issue EPSLA and Emergency Family and Medical Leave Expansion Act (EFMLEA) regulations under two exceptions to the usual requirements of the Administrative Procedure Act (APA) (5 USC §§551–596). One of those exceptions permits issuing a rule without prior public notice or the opportunity for the public to comment if there is good cause to believe that doing so is “impractical, unnecessary, or contrary to the public interest”; the other permits a rule to become effective immediately, rather than after a 30-day delay, if there is good cause to do so. FFCRA §3102(b) (as amended by §3611(7) of the CARES Act), §5111 (referring to 5 USC §553(b)(3), (d)(3)). Relying on those exceptions, DOL promulgated a temporary rule to carry out the EPLSA and EFMLEA, which was made public on April 1, 2020. 85 Fed Reg 19326 (2020); see also 85 Fed Reg 20156–02 (Apr. 10, 2020, correction and correcting amendment to Apr. 1 rule). See §6.31.
On April 14, 2020, the State of New York filed suit in the U.S. District Court for the Southern District of New York challenging certain parts of the temporary rule under the APA. New York v U.S. Dep’t of Labor (SD NY, Aug. 3, 2020, No. 20-CV-3020 (JPO)) 2020 WL 4462260. On August 3, 2020, the New York district court ruled that four parts of the temporary rule are invalid: (1) the requirement under 29 CFR §826.20 that paid sick leave and expanded family and medical leave are available only if an employee has work from which to take leave; (2) the requirement under 29 CFR §826.50 that an employee may take FFCRA leave intermittently only with employer approval; (3) the definition of an employee who is a “health care provider,” set forth in 29 CFR §826.30(c)(1), whom an employer may exclude from being eligible for FFCRA leave; and (4) the statement in 29 CFR §826.100 that employees who take FFCRA leave must provide their employers with certain documentation before taking leave. See §6.31.
The DOL reaffirmed that an employee may take paid sick leave or expanded family and medical leave only to the extent that any qualifying reason is a but-for cause of the employee’s inability to work. Because the DOL agreed with district court that there was no basis, statutory or otherwise, to apply the work-availability requirement only to some of the qualifying reasons for FFCRA leave, and in keeping with the DOL’s original intent, the DOL amended 29 CFR §826.20(a)(3), (a)(4) to state explicitly, as §826.20(a)(2), (a)(6), and (a)(9) does, that an employee is not eligible for paid leave unless the employer would otherwise have work for the employee to perform. The DOL similarly added 29 CFR §826.20(a)(10) to make clear such requirement was likewise needed when an employee requests paid leave for a substantially similar condition as specified by the Secretary of Health and Human Services. See §6.31.
Chapter 7: Tax Compliance
Every limited liability company doing business in this state as described in Rev & T C §17941(a) that organizes or registers with the Secretary of the State under Rev & T C §17941(b) on or after January 1, 2021, and before January 1, 2024, shall not be subject to the tax imposed under this section for its first taxable year. See Rev & T C §17941(g)(1); Stats 2020, ch 8 (AB 85). This shall become operative only for a taxable year in which any budget measure appropriates one dollar ($1) or more to the Franchise Tax Board for the costs associated with administration of this subdivision. Rev & T C §17941(g)(2). See §7.85.
Small business hiring credit. Taxpayers may use the credit to offset income taxes or even sales and use taxes (which take a special irrevocable election by the taxpayer). For each employee the business hires, the taxpayer receives $1000 in credit. The credit is maxed out at $100,000. To claim the credit, the taxpayer must obtain a tentative credit reservation from the California Department of Tax and Fee Administration (CDTFA). The taxpayer must elect sales and use tax or the credit will default to income taxes. To qualify for the credit, taxpayer-employers must have 100 or fewer employees as of December 31, 2019 (this includes part-time employees); must have suffered a 50 percent or more decrease in gross receipts from April to June of 2020 as compared to the same time period in 2019; and must have applied for the tentative credit reservation (described above) by January 15, 2021 (applications accepted starting Dec. 1, 2020). See Rev & T C §§6902.7, 6902.8, 17053.72, 23627; Stats 2020, ch 41 (SB 1447). See §7.22C.
Chapter 8: Unemployment Compensation and State Disability Insurance
The Coronavirus Aid, Relief, and Economic Security Act 2020 (CARES Act) expanded unemployment benefits under CARES Act §§2101–2116 and provided help to workers whose positions have been affected by COVID-19. Programs provide relief with respect to (1) employed individuals whose employers continue to pay them, (2) employed individuals who must take leave from work, and (3) unemployed individuals who no longer had work or had as much work. See Pub L 116–136, 134 Stat 281. See §8.78.
Chapter 9: Notice-Posting, Training, and Recordkeeping Requirements
Assembly Bill 685 requires a public or private employer that receives a notice of potential exposure to COVID-19 to provide specified notifications to its employees within 1 business day of the notice of potential exposure. Employers must provide prescribed notice to all employees, and the employers of subcontracted employees, who were on the premises at the same worksite as a qualifying individual within the infectious period that they may have been exposed to COVID-19. The bill requires an employer, if the employer or representative of the employer is notified of the number of cases that meet the definition of a COVID-19 outbreak, within 48 hours, to report prescribed information to the local public health agency in the jurisdiction of the worksite. The bill also requires an employer that has an outbreak to continue to give notice to the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the worksite. The bill exempts a health facility, as defined, from this reporting requirement. AB 685 (effective Jan. 1, 2021); see Lab C §6409.6. See also §§9.18, 9.24, 12.1A, 12.30.
Senate Bill 973. On or before March 31, 2021, and on or before March 31 of each year thereafter, every private employer with 100 or more employees and who is required to file an annual Employer Information Report (EEO-1) under federal law must submit a pay data report for the prior year to the Department of Fair Employment and Housing (DFEH). DFEH shall make the reports available to DLSE on request. The report must include the number of employees by race, ethnicity, and sex in various job categories as well as their annual earnings with each of the pay bands used by the U.S. Bureau of Labor Statistics. Govt C §12999(a); Stats 2020, ch 363 (SB 973). See §9.70; see also §5.42A.
Chapter 11: Trade Secrets Protection and Unfair Competition
Courts continued to recognize that there are few, if any, differences in judicial application of the federal Defend Trade Secrets Act (DTSA) (Pub L 114–153, 130 Stat 376) and the California Uniform Trade Secrets Act (UTSA) (CC §§3426–3426.11). See, e.g., Oh My Green v Cuffe (CD Cal, June 9, 2020, No. CV 20-2509 PA (PVCx)) 2020 US Dist Lexis 131827, *8 (“Given the substantial similarities in claims of misappropriation under the DTSA and CUTSA, courts often assess them together”). See §11.1A.
The Ninth Circuit in InteliClear, LLC v ETC Global Holdings, Inc. (9th Cir 2020) 978 F3d 653, 658, further clarified which types of pleadings would be insufficient to state a trade secrets claim (for example, plaintiffs may not rely on “catchall” phrases or categories of trade secrets they intend to pursue at trial). Further, the court in Inteliclear applied within the federal context the rule of CCP §2019.210, requiring a plaintiff suing for trade secret misappropriation under the DTSA to identify with “sufficient particularity” at the outset of the case. Additionally, Inteliclear held that confidentiality provisions constituted reasonable steps to maintain privacy. See §§11.1A, 11.6, 11.19, 11.43A.
Federal practice generally requires heightened or more detailed pleading than California state court practice. This is true even when pleading a trade secrets claim under both the federal DTSA and California UTSA. Additional cases beyond Inteliclear provided examples of types of pleadings that would be insufficient to state a claim. See TGG Mgmt. Co. v Petraglia (SD Cal, May 28, 2020, No. 19-cv-2007-BAS-KSC) 2020 US Dist Lexis 93215; Calsoft Labs, Inc. v Panchumarthi (ND Cal, Jan. 31, 2020, No. 19-cv-04398-NC) 2020 US Dist Lexis 17214, *20; but see Zoom Imaging Solutions, Inc. v Roe (ED Cal, Jan. 30, 2020, No. 2:19-cv-01544 WBS KJN) 2020 US Dist Lexis 15933 (amended complaint sufficiently alleged existence of trade secrets); Cisco Sys., Inc. v Chung (ND Cal 2020) 462 F Supp 3d 1024. See §§11.1A, 11.4, 11.68.
Thus, for federal cases, consider filing a Fed R Civ P 12(b)(6) motion to dismiss based on inadequacy of the allegations, or failure to plead with “sufficient particularity” the trade secrets misappropriated. See, e.g., Ahern Rentals, Inc. v Equipmentshare.com, Inc. (ED Cal, June 29, 2020, No. 2:19-cv-01788-MCE-KJN) 2020 US Dist Lexis 113340, *11(formulaic and conclusory allegations insufficient); Acrisure of Cal., LLC v SoCal Commercial Ins. Servs., Inc. (CD Cal, Mar. 27, 2019, No. CV 18-10187-CJC (ADSx)) 2019 US Dist Lexis 170027, *8 (vague and conclusory allegations of generic types of customer information failed to state claim); Power Integrations, Inc. v De Lara (SD Cal, Mar. 26, 2020, No. 20-CV-410-MMA (MSB)) 2020 US Dist Lexis 52724. See §11.1A.
In Javo Beverage Co. v California Extraction Ventures, Inc. (SD Cal, Dec. 2, 2019, No. 19-CV-1859-CAB-WVG) 2019 US Dist Lexis 207483, the 3-year statute of limitations for the UTSA/DTSA is triggered when plaintiff knows or has reason to know a third party has knowingly acquired, used, or disclosed its trade secrets. See §11.2.
In Albert’s Organics, Inc. v Holzman (ND Cal 2020) 445 F Supp 3d 463, the court continued to hold that specific customer information was sufficient to allege a trade secret and gave further examples of the types of information that may qualify for trade secret protection. See §11.3.
As set forth in CC §3426.1(d)(1), and as the Ninth Circuit affirmed: A trade secret is information that derives value “from not being generally known to the public or to other persons who can obtain economic value from its closure or use.” Prostar Wireless Group, LLC v Domino’s Pizza, Inc. (ND Cal 2018) 360 F Supp 3d 994, 1013, aff’d (9th Cir 2020) 815 Fed Appx 117, 119. See §11.4.
Conversely, court decisions to date have found that the following specific types of information generally do not constitute a protectable trade secret. In Hooked Media Group, Inc. v Apple Inc. (2020) 55 CA5th 323, for example, the court found that employees’ general knowledge did not constitute a protectable trade secret. More specifically, the court in Hooked held that the former employee’s mere possession of trade secrets that were lawfully obtained from the former employer was not in itself actionable when the employee merely changed jobs. Mere “speculation” that former employees must have taken trade secrets based solely on their decision to change employers will not suffice. Hooked also held that hiring an at-will employee normally does not, in itself, constitute misappropriation of trade secrets by a competitor. It is only if an employee subsequently uses or discloses trade secrets learned during prior employment to the detriment of the former employer that a cause of action for trade secret misappropriation arises. See §§11.4, 11.7A, 11.9.
Cisco Sys., Inc. v Chung, supra, also held that independent economic value can be shown by “circumstantial evidence of the resources invested in producing the information, the precautions taken to protect its secrecy, and the willingness of others to pay for its access.” See §11.4.
Liability can attach to the new employer either under a theory of vicarious liability (respondeat superior) or “direct” liability, where the employer has either authorized the tortious act or subsequently ratified an originally unauthorized tort. Cisco Sys., Inc. v Chung, supra. See also WeRide Corp. v Huang (ND Cal 2019) 379 F Supp 3d 834 (citing and applying PMC, Inc. v Kadisha (2000) 78 CA4th 1368); but see Genentech, Inc. v JHL Biotech, Inc. (ND Cal, Mar. 5, 2019, No. C 18-06582 WHA) 2019 US Dist Lexis 35177 (holding that under DTSA and UTSA there can be no independent claim for conspiracy). See §11.7.
In some circumstances, employers have a duty to make sufficient inquiry when hiring to determine whether the new employee might be placed in a position to disclose the former employer’s trade secrets. WeRide Corp. v Huang (ND Cal, Nov. 5, 2019, No. 5:18-cv-07233-EJD) 2019 US Dist Lexis 192212. See §11.9.
California courts have refused to adopt the “inevitable disclosure” doctrine because the state has a strong public policy favoring mobility of its workforce and because it would conflict with the prohibition against covenants not to compete under Bus & P C §16600. See Hooked Media Group, Inc. v Apple Inc., supra; Cypress Semiconductor Corp. v Maxim Integrated Prods., Inc. (2015) 236 CA4th 243. As stated in Hooked Media Group, Inc., 55 CA5th at 413: “Allowing an action for trade secret misappropriation against a former employee for using his or her own knowledge to benefit a new employer is impermissible because it would be equivalent to retroactively imposing on the employee [an unlawful] covenant not to compete.” See §11.10.
With respect to governmental disclosures, counsel for the discloser should check whether the statute requiring disclosure specifically provides a mechanism to maintain the confidentiality of the information disclosed. If not, counsel should attempt to negotiate an appropriate confidentiality agreement with the governmental agency. For a case that discusses the potential pitfalls and waiver of trade secrecy protection, see Amgen Inc. v Health Care Servs. (2020) 47 CA5th 716. See §11.16.
In Carr v AutoNation, Inc. (9th Cir 2020) 798 Fed Appx 129, 130, the Ninth Circuit held that a business plan sent to a third party was not protected as trade secret where distributor did not undertake reasonable efforts to ensure secrecy through an NDA or other means putting recipient on notice. See §11.28.
The “Form: Employee Termination Certificate” has been updated to include additional technologies on which proprietary information may have been stored. See §11.38A.
Providing a new employer with a copy of an already filed complaint against the former employee should be protected either on state or on federal privilege grounds. Hill Phoenix, Inc. v Classic Refrigeration SoCal, Inc. (CD Cal, Mar. 15, 2020, No. 8:19-cv-00695-DOC-JDE) 2020 US Dist Lexis 44539, *25.
Tilkey v Allstate Ins. Co. (2020) 56 CA5th 521 provides a caution that employers must be careful in postemployment letters to a new employer or customers not to defame the former employee. See §11.40.
In a decision involving an issue of first impression, a California court held that even one-way recordings (i.e., where the party recording the conversation only tapes its side of the communication but not the other person’s side) are subject to the the California Invasion of Privacy Act. Gruber v Yelp Inc. (2020) 55 CA5th 591. That same decision also addressed whether telephone and recording systems that employ Voice over Internet Protocol (VoIP) technology were covered by the Act, and found that the issue was not yet settled under the law. See §11.41B.
Another limitation on employers is set forth in the federal Electronic Communications Privacy Act (ECPA) (18 USC §§2510–2522), which prohibits intentionally intercepting and using captured electronic communications. See 18 USC §2510. Thus, for an e-mail to be unlawfully “intercepted” under the ECPA, it must be acquired during transmission, not while it is in “electronic storage.” Konop v Hawaiian Airlines, Inc. (9th Cir 2002) 302 F3d 868, 878 n6; see also In re Facebook, Inc. Internet Tracking Litig. (9th Cir 2020) 956 F3d 589, 608 n9 (citing Konop). See §11.41C.
The “Form: Company Policy for Use of Company Computers, Internet, E-Mail, and Personal or Cloud-Based Electronic Storage Devices” has been updated to include updated technologies. See §11.41I.
In Ajaxo, Inc. v E*Trade Fin. Corp. (2020) 48 CA5th 129, 164, the court analyzed the sufficiency of evidence in the record to reject an award of reasonable royalty. Enertrode, Inc. v General Capacitor Co. Ltd. (ND Cal, Apr. 17, 2019, No. 16-cv-02458-HSG) 2019 US Dist Lexis 65830 provides further discussion of royalties and exemplary damages. See §11.42.
Attorney fees and costs incurred to litigate (and arbitrate) trade secret claims may be recoverable by the plaintiff or the defendant, depending on the circumstances, and if willfulness or bad faith is demonstrated under the UTSA, or if an attorney fee provision in a contract is implicated (CC §§1717, 3426.4), fees may be awarded. Attorney fees may be awarded
To a prevailing party if the trade secret misappropriation claims were based, in part, on alleged breach of confidentiality provisions in an employment contract that contained an attorney fee clause. Sandler Partners, LLC v Masergy Communications, Inc. (CD Cal, Apr. 28, 2020, No. CV 19-6841-JFW(MAAx)) 2020 US Dist Lexis 102486.
To the trade secret owner if willful and malicious misappropriation is shown to exist. BladeRoom Group Ltd. v Emerson Elec. Co. (ND Cal, Mar. 11, 2019, No. 5:15-cv-01370-EJD) 2019 US Dist Lexis 38829; Swarmify, Inc. v Cloudflare, Inc. (ND Cal, Mar. 3, 2018, No. C 17-06597 WHA) 2018 US Dist Lexis 34727, *12 (preliminary injunction denied based on plaintiff’s “overbroad,” “shape-shifting,” and “conclusory” allegations and descriptions of its trade secrets).
To the defendant if the plaintiff made a claim of misappropriation in “bad faith.” But see Green v Monrovia Nursery Co. (CD Cal, Jan. 23, 2020, No. 2:18-CV-05257-RGK-GJS) 2020 US Dist Lexis 34873, *6 (plaintiff’s loss on summary judgment did not result in finding of “bad faith”); M. A. Mobile LTD v Indian Inst. of Technol. (ND Cal, Dec. 4, 2019, No. 3:08-cv-02658-WHO) 2019 US Dist Lexis 209226, *6 (same).
In addition, prejudgment interest may be awarded to a prevailing plaintiff to make it whole. BladeRoom Group Ltd. v Emerson Elec. Co., supra. See also Aerotek, Inc. v Johnson Staffing Group Co. (2020) 54 CA5th 670, 677 (holding attorney fees awarded under CC §3426.4 (excluding fees client has already paid), absent agreement with defendant/client, belong to attorneys who represented client). See §11.42A.
Ex parte temporary restraining orders (TROs) (i.e., sought without first providing notice to the other side) are rarely considered, let alone granted, by courts. See, e.g.,CBRE, Inc. v Bowyer (CD Cal, Oct. 28, 2019, No. 2:19-cv-09108-RGK-E) 2019 US Dist Lexis 227317, *7. In Lamont v Krane (ND Cal, May 7, 2019, No. 5:18-cv-04327-EJD) 2019 US Dist Lexis 77249, a preliminary injunction was denied where the plaintiff failed to identify alleged trade secrets with “reasonable particularity” or establish “irreparable harm.” In Zeetogroup, LLC v Fiorentino (SD Cal, Feb. 24, 2020, No. 19-CV-458JLS (NLS)) 2020 US Dist Lexis 31169, *7, a lack of supporting evidence of use of the trade secret by one of the individual defendants precluded injunctive relief against her. See §11.42B.
Where there is evidence that a departing employee has taken trade secrets near or at the time of departure, the employer should consider seeking a TRO or preliminary injunction to preserve (or prevent the former employee from destroying) hard copy documents or electronic files, which may contain potentially discoverable evidence on the issue of trade secret misappropriation. See ExamWorks v Baldini (ED Cal, May 8, 2020, No. 2:20-CV-00920-KJM-DB) 2020 US Dist Lexis 81746 (TRO granted); First Found. Inc. v Giddings (CD Cal, Mar. 7, 2020, No. CV 20-00359-DOC-KES) 2020 US Dist Lexis 40327 (preliminary injunction granted); Comet Technols. United States of Am., Inc. v Beurman (ND Cal, Mar. 15, 2018, No. 18-CV-01441-LHK) 2018 US Dist Lexis 224356. See §11.42B.
Generally, economic injury alone does not support a finding of irreparable harm. However, a showing of imminent or continued use of a trade secret or disclosure to a competitor will almost always show irreparable harm. Likewise, the threatened loss of prospective customers or goodwill can also support a finding of the possibility of irreparable harm. See First Found. Inc. v Giddings, supra; TGG Mgmt. Co. v Petraglia (SD Cal, Jan. 14, 2020, No. 19-CV-2007-BAS-KSC) 2020 US Dist Lexis 6376. A delay in seeking preliminary injunctive relief will imply a lack of urgency and irreparable harm. Javo Beverage Co. v California Extraction Ventures, Inc. (SD Cal, Feb. 24, 2020, No. 19-CV-1859-CAB-WVG) 2020 US Dist Lexis 31167 (denying preliminary injunction in trade secrets case). See §11.42B.
Expedited discovery is not the norm, however. Therefore, the moving party must make a showing of “good cause” to obtain it early in the case, such as when seeking a preliminary injunction. Federal courts weigh the reasonableness of the request by considering a nonexhaustive set of factors. See, e.g., Medimpact Healthcare Sys., Inc. v IQVIA Holdings, Inc. (SD Cal, Nov. 25, 2019, No. 19:-cv-1865-GPC-LL) 2019 US Dist Lexis 205468; TGG Mgmt. Co. v Petraglia (SD Cal, Nov. 25, 2019, No. 19-cv-2007-BAS-KSC) 2019 US Dist Lexis 205528. It is often much easier to obtain expedited discovery if a TRO is granted before the preliminary inunction hearing is set to take place. See ExamWorks v Baldini (ED Cal, May 8, 2020, No. 2:20-CV-00920-KJM-DB) 2020 US Dist Lexis 81746. See §11.42B.
An injunction narrowly designed to stop or protect against trade secret misappropriation is appropriate, and is not an unlawful restraint on competition or violative of Bus & P C §16600. International Petroleum Prods. & Additives Co. v Black Gold (ND Cal 2019) 418 F Supp 3d 481, 491. See §11.42B.
The posting of a bond is normally required in order for a preliminary injunction to become effective. See, e.g., Cutera, Inc. v Lutronic Aesthetics, Inc. (2020) 444 F Supp 3d 1198, 1211 (minimal bond of $5000 imposed despite request by plaintiff for $3 million bond). See §11.42B.
Several California decisions have addressed the exercise of personal jurisdiction, both general and specific, over out-of-state or foreign defendants who are sued for misappropriation of trade secrets and unfair competition. See, e.g., Cleanfish, LLC v Sims (ND Cal, Mar. 17, 2020, No. 19-cv-03663-HSG) 2020 US Dist Lexis 46191; MedImpact Healthcare Sys., Inc. v IQVIA Holdings Inc. (SD Cal, Mar. 24, 2020, No. 19-cv-1865-GP (LL)) 2020 US Dist Lexis 50955. See §11.42D.
With respect to personal jurisdiction, in Krypt, Inc. v Ropaar (ND Cal, Jan. 2, 2020, No. 19-cv-03226-BLF) 2020 US Dist Lexis 118207, an allegation that an out-of-state codefendant “conspired” with an in-state codefendant to misappropriate trade secrets was insufficient to establish personal jurisdiction; and in Hungerstation LLC v Fast Choice LLC (ND Cal, Jan. 13, 2020, No. 19-cv-05861-HSG) 2020 US Dist Lexis 5442, there was found to be no personal jurisdiction in a trade secret case where the defendant’s only contact was storing data on servers located in California. In Terra Tech Corp. v Vandevrede (CD Cal, Feb. 27, 2019, No. SACV-18-602-JVS (JDEx)) 2019 US Dist Lexis 74636, there was no personal jurisdiction over out-of-state, individual, New Jersey–based defendants for tort claims despite the existence of a California contractual permissive forum selection clause. See §11.42D.
Section 11.44A includes further discussion regarding the “compelling reasons” standard. See, e.g., CBRE, Inc. v Bowyer (CD Cal, Oct. 28, 2019, No. 2:19-cv-09108-RGK-E) 2019 US Dist Lexis 227317, *5. It is not enough to assert that documents are highly confidential; this standard is invoked “even if the dispositive motion, or its attachments, were previously filed under seal or protective order.”
In Cutera, Inc. v Lutronic Aesthetics, Inc. (ED Cal 2020) 444 F Supp 3d 1198, 1204, an evidence preservation order was issued in conjuction with the issuance of a TRO. See §11.46.
WeRide reiterated parties’ duties and obligation to preserve electronically stored information (ESI) through established electronic information retention and storage policies. WeRide Corp. v Huang (ND Cal, Apr. 24, 2020, No. 5:18-cv-07233-EJD) 2020 US Dist Lexis 72738 (striking defendants’ answers, entering defaults, imposing terminating sanctions, plus awarding attorney fees to plaintiff, for intentional destruction and deletion of material e-mails and source code). See §11.46A.
In authorizing a forensic examination, the courts will rely on a host of factors: (1) the record evidence suggesting the likely loss of potentially significant corporate documents (mainly e-mails), (2) the record evidence that defendants failed to make an adequate search for documents, (3) evidence of certain anomalies in the documents produced (including e-mails that may have been altered, and contradictory or absent metadata), and (4) incomplete production of documents even in the last few months. See Beef Prods. v Hesse (D SC, Dec. 12, 2019, No. 4:17-CV-04130-KES) 2019 US Dist Lexis 215845, *26 (citing Klipsch Group, Inc. v Big Box Store Ltd. (SD NY, Mar. 4, 2014, No. 12 Civ 6283 (VSB) (MHD)) 2014 US Dist Lexis 31509. Absent a showing of misconduct, courts are also reluctant to allow the deposition of a party’s employees or IT persons to confirm that an adequate search for and retrieval of ESI has occurred, or that a party has behaved improperly—so-called discovery about discovery. See, e.g., Freed v Home Depot U.S.A., Inc. (SD Cal, Feb. 13, 2019, No. 18-cv-359-BAS (LL)) 2019 US Dist Lexis 6584. See §11.46A.
Courts will shift the cost of forensic experts and ESI discovery to the defendant where evidence is presented that there has been unlawful misappropriation or spoliation of evidence. See ExamWorks v Baldini (ED Cal, May 8, 2020, No. 2:20-CV-00920-KJM-DB) 2020 US Dist Lexis 81746, *4. Conversely, e-discovery costs may be awarded to a defendant at the end of the litigation as the prevailing party in a trade secrets case. See Hooked Media Group, Inc. v Apple Inc. (2020) 55 CA5th 323, 417 (court awarded defendant $92,000 in e-discovery expenses for use of outside vendor to assist in data conversion). See §11.46B.
Conversion Logic, Inc. v Measured, Inc. (CD Cal, Dec. 13, 2019, No. 2;19-cv-05546-OWD (FFMx)) 2019 US Dist Lexis 215195, *15, reiterated that attempts by an employer to contractually require an employee to assign ideas or inventions developed after termination of employment will be struck down as a form of noncompete agreement in violation of Bus & P C §16600. See §11.49.
California has been one of the leading states to look unfavorably on contractual restraints on competition, especially in the context of employment agreements seeking to restrict an employee’s ability to compete post-employment. This position is rooted in public policy and codified in Bus & P C §16600, and courts have broadly held (with certain limited statutory exceptions) that §16600 applies to every contract that imposes “a restraint of a substantial character,” regardless of whether the contract includes an express noncompete clause. Golden v California Emergency Physicians Med. Group (9th Cir 2015) 782 F3d 1083, 1091; SPS Technols., LLC v Briles Aerospace, Inc. (CD Cal, Oct. 30, 2019, No. CV 18-9536-MWF (ASx)) 2019 US Dist Lexis 219610, *39. See §11.51.
Midwest Motor Supply Co. v Superior Court (2020) 56 CA5th 702, 713, affirmed that an amendment to an employment contract after January 1, 2017, rendered a forum selection clause voidable by employee. See §§11.51, 11.55, 11.55B.
In a surprising decision, the “rule of reasonableness” was applied to enforce covenants not to compete in commercial and business contracts outside of the employment context despite the plain language of §16600. See Ixchel Pharma, LLC v Biogen, Inc. (2020) 9 C5th 1130, 1148. For those who have spent years studying, practicing, and advising clients in this area of law, the California Supreme Court decision in Ixchel is confusing in that it seems to ignore the plain and unambiguous language of §16600 and years of case law (including prior California Supreme Court decisions) construing §16600 and rejecting the “rule of reason” in any type of business relationship or contract, and not just employment and sale of business interest contexts. A closer reading of Ixchel, however, shows that it is limited to certain situations, discussed further in §11.52.
Techno Lite, Inc. v Emcod, LLC (2020) 44 CA5th 462, 473, continued to hold that employers and franchisors also can prohibit competitive activities of their employees and franchisees during the term of their relationships, usually by contract (through “in-term” restrictive covenants) or by virtue of the employee’s separate duty of loyalty. See §11.52.
Healy v Qognify (CD Cal, Jan. 10, 2020, No. 2:18-cv-06318-ODW (MRW)) 2020 US Dist Lexis 5580, *7, continued to caution that preemptive claims for declaratory relief may be rendered moot or not ripe either because the employer has not sued for breach of the covenant not to compete or because the time period for the restrictive covenant has expired before trial. See §11.52.
In Power Integrations, Inc. v De Lara (SD Cal, Mar. 26, 2020, No. 20:cv-410-MMA (MSB)) 2020 US Dist Lexis 52724, *13, the court applied “governmental interest analysis” to determine that California had materially greater interest in having its noncompete law applied in disregarding Philippine choice of law provisions in defendants’ employment agreements; see also Healy v Qognify (CD Cal, Mar. 15, 2019, No. 2:18-cv-06318-ODW (MRW)) 2019 US Dist Lexis 44111, *7 (New Jersey choice of law clause unenforceable where employee lived and worked remotely from California, which also had materially greater interest than chosen state law in having its noncompete law applied). Davis v MacuHealth Distrib., Inc. (ED Cal, May 29, 2020, No. 2:19-cv-01947 WBS KJN) 2020 US Dist Lexis 94578 continued to illustrate that a divergence of rulings often leads to procedural gamesmanship, forum shopping, and races between former employees and their former employers to the courthouse in their respective state and federal courts. See §11.55A.
Employment contracts entered into or subsequently amended with California-based employees after 2016 that contain out-of-state forum selection clauses are voidable. See Lab C §925; Midwest Motor Supply Co. v Superior Court, supra (amendment to employment contract after January 1, 2017, renders forum selection clause voidable by employee). See §11.55B.
In Brown v TGS Mgmt. Co. (2020) 57 CA5th 303, the court reversed an arbitration award, finding the arbitrator exceeded his powers by issuing an award that violated an unwaivable statutory right or contravened an explicit legislative expression of public policy, such as that contained in Bus & P C §16600. In Mejia v DACM Inc. (2020) 54 CA5th 691, an arbitration clause was rendered unenforceable under McGill where it barred plaintiff from seeking public injunctive relief. See §11.55C.
Hamilton v Juul Labs, Inc. (ND Cal, Sept. 11, 2020, No. 20-cv-03710-EMC) 2020 US Dist Lexis 166718, *22, held that employee nonsolicitation clauses may be permissible under §16600 and Loral if they do not negatively affect an individual’s chosen profession. But see AMN Healthcare, Inc. v Aya Healthcare Servs., Inc. (2018) 28 CA5th 923 (holding employee nonsolicit agreement unenforceable under §16600; doubting continued viability of Loral after Edwards decision); WeRide Corp. v Huang (ND Cal 2019) 379 F Supp 3d 834, 851 (same). See §11.57.
Although the California Supreme Court struck down the enforceability of customer nonsolicitation clauses as violating §16600, the court has not, for the time being, expressly extended its holding to employee nonsolicitation provisions. See Edwards v Arthur Andersen LLP (2008) 44 C4th 937, 946 n4; see also Hamilton v Juul Labs, Inc., supra (employee nonsolicitation clauses may be permissible under §16600 and Loral if they do not negatively affect an individual’s chosen profession); Power Integrations, Inc. v De Lara (SD Cal, Mar. 26, 2020, No. 20:cv-410-MMA (MSB)) 2020 US Dist Lexis 52724; Conversion Logic, Inc. v Measured, Inc. (CD Cal, Dec. 13, 2019, No. 2;19-cv-05546-OWD (FFMx)) 2019 US Dist Lexis 215195. Again, Ixchel Pharma, LLC v Biogen, Inc., 9 C5th at 1148, affirmed Edwards’ per se rule against post-employment nonsolictation provisions entered in the context of employment-related agreements, but also applied the “rule of reasonableness” to potentially uphold a covenant not to compete in nonemployment business or other commercial contract relationships. See §11.57.
Despite the general unenforceability of customer nonsolicitation clauses, parties in litigation may nonetheless agree, as part of a negotiated settlement, to have the court enter a stipulated injunction prohibiting one side from soliciting the other’s customers. And, based on the recent California Supreme Court decision in Ixchel Pharma, LLC v Biogen, Inc., 9 C5th at 1148, such litigation settlements also may be separately enforceable, at least between business competitors (but maybe not the former employee) if “reasonable” in scope and duration. See §11.58.
One recent California case has warned against confidentiality provisions or agreements that broadly define the scope of “confidential information” as encompassing information about an entire industry or profession, or beyond what the employee is exposed to while employed. Such overbroad definitions, on the face, can be ready to prevent an employee from lawfully competing and therefore violate the noncompete provision of Bus & P C §16600 and render the confidentiality provision or agreement void and unenforceable. Brown v TGS Mgmt. Co. (2020) 57 CA5th 303. See §11.59.
Recent California decisions have found that the UTSA may preempt related tort and statutory claims typically asserted in the field of unfair competition. See Acrisure of Cal., LLC v SoCal Commercial Ins. Servs., Inc. (CD Cal, Mar. 27, 2019, No. CV 18-10187-CJC (ADSx)) 2019 US Dist Lexis 170027 (tortious interference and unfair competition claims preempted). The test employed is whether the non-UTSA claims are “based on the same nucleus of facts,” as the trade secret misappropriation claim. See, e.g., Snapkeys, Ltd. v Google LLC (ND Cal 2020) 442 F Supp 3d 1196; JEB Group, Inc. v San Jose III (CD Cal, Mar. 31, 2020, No. CV 19-04230-CJC (AGRx)) 2020 US Dist Lexis 96186. Put another way, “[c]laims are not preempted … when based upon a broader spectrum of misconduct than trade secret misappropriation.” Javo Beverage Co. v California Extraction Ventures, Inc. (SD Cal, Dec. 2, 2019, No. 19-CV-1859-CAB-WVG) 2019 US Dist Lexis 207483, *14. See §11.61A.
The federal courts that have considered the issue are split. Compare, e.g.: Erhart v Bofi Holding, Inc. (SD Cal, Mar. 31, 2020, No. 15-cv-02287-BAS-NLS) 2020 US Dist Lexis 57137, *101 (court granted partial summary judgment, based on UTSA preemption, on claims for fraud, negligence, conversion and breach of duty of loyalty); Navigation Holdings, LLC v Molavi (ND Cal 2020) 445 F Supp 3d 69, 75 (preemption of tortious interference and part of fiduciary duty claims); Calsoft Labs, Inc. v Panchumarthi (ND Cal, Jan. 31, 2020, No. 19-cv-04398-NC) 2020 US Dist Lexis 17214, *4 (finding UTSA preemption of claims for breach of fiduciary duty, conversion, intentional interference with contract and prospective economic relationships); Albert’s Organics, Inc. v Holzman (ND Cal 2020) 445 F Supp 3d 463 (finding preemption of tortious interference and statutory unfair competition claims, but not breach of duty of loyalty claim); CleanFuture, Inc. Motive Energy, Inc. (CD Cal, Apr. 15, 2019, No. SACV 19-00084 AG (KESx)) 2019 US Dist Lexis 132841, *7 (preemption of various tortious interference, unfair competition, and unjust enrichment claims where based on unauthorized disclosure and use of trade secrets) with the following: Zoom Imaging Solutions, Inc. v Roe (ED Cal, Nov. 8, 2019, No. 2:19-cv-01554–WBS-KJN) 2019 US Dist Lexis 195374 (no preemption of tortious interference and breach of fidcuiary duty claims, but preemption of UCL claim); ChromaDex, Inc. v Elysium Health, Inc. (CD Cal 2019) 369 F Supp 3d 983, 989 (no preemption of breach of fiduciary duty claim based on theory other than trade secret misappropriation); Javo Beverage Co. v California Extraction Ventures, Inc. (SD Cal, Dec. 2, 2019, No. 19-CV-1859-CAB-WVG) 2019 US Dist Lexis 207483 (no preemption of tortious interference claim where wrongful conduct pled was distinct from alleged misappropriation of trade secrets claim); Heieck v Federal Signal Corp. (CD Cal, Nov. 4, 2019, No. SACV 18-02118 AG (KESx)) 2019 US Dist Lexis 219591 (preemption of breach of fiduciary duty and loyalty, UCL and conversion claims, but not claims for tortious and negligent interference with economic advantage or violation of Pen C §502 (computer fraud)). See §11.61A.
Five Star Gourmet Foods, Inc. v Fresh Express, Inc. (ND Cal, Jan. 31, 2020, No. 19-cv-05611-PJH) 2020 US Dist Lexis 16368 considered and rejected plaintiff’s argument that it would be “premature” to address UTSA preemption at the motion to dismiss stage. See §11.61A.
SPS Technols., LLC v Briles Aerospace, Inc. (CD Cal, Oct. 30, 2019, No. CV 18-9536-MWF (ASx)) US Dist Lexis 219610, *18, adopted the minority view that a competitor need not plead and prove reliance to state a UCL claim. Under the “fraudulent” prong of the UCL, a plainitff must meet the heightened pleading standards under state and federal law and plead with the requisite “specificity”; that is, by alleging “the who, what, when, where and how.” Power Integrations, Inc. v De Lara (SD Cal, Mar. 26, 2020, No. 20:cv-410-MMA (MSB)) 2020 US Dist Lexis 52724. See §11.62.
Under Caliber Paving Co. v Rexford Indus. Realty & Mgmt., Inc. (2020) 54 CA5th 175, 183, a noncontracting party with economic interest in the contract is not immune from a tort claim of intentional interference with the contract. Additional cases confirmed that plaintiff must plead with greater specificity the facts surrounding the type and nature of the contracts with which defendant’s conduct allegedly interfered. Zoom Imaging Solutions, Inc. v Roe (ED Cal, Jan. 30, 2020, No. 2:19-cv-01544 WBS KJN) 2020 US Dist Lexis 15933, *6 (amended pleading that alleged “at least 74 Zoom customers ha[d] cancelled their agreements with [plaintiff]” sufficiently stated claim); Calsoft Labs, Inc. v Panchumarthi (ND Cal, Nov. 7, 2019, No. 19-cv-04398-NC) 2019 US Dist Lexis 194939, *11. See §§11.66–11.67.
Until recently, there was some uncertainty in the law when the underlying contract at issue was terminable on notice by either party or “at will.” The issue was recently resolved by the California Supreme Court in Ixchel Pharma, LLC v Biogen Inc., 9 C5th at 1141, which held that to state a claim for “tortious interference” with “at-will contracts” requires proof of an independent wrongful act, not just the interference itself. One preceding line of cases indicated there was no tort claim for interference with the contract, only for tortious interference with prospective business or economic relations. Conversely, the other prior cases, now disapproved, had found that it was actionable to induce a party to a contract to terminate the contract according to its own terms or even if the contract is “at-will.” These two lines of cases were reconciled in Ixchel, which now requires pleading and proof of an independent wrong, in addition to mere interference itself, regardless of whether the at-will nature of the contract is for employment or other commercial or business purposes. See §11.66.
The tort of tortious interference with prospective business relations does not protect hypothetical relationships not developed at the time of the allegedly tortious acts. A plaintiff may not “vaguely claim a defendant disrupted a potential economic relationship with ‘prospective customers’ or ‘the general public.’” Spice Jazz LLC v Youngevity Int’l, Inc. (SD Cal, Mar. 11, 2020, No. 19-cv-583-BAS-WVG) 2020 US Dist Lexis 42364, *8; AlterG, Inc. v Boost Treadmills LLC (ND Cal 2019) 388 F Supp 3d 1133, 1151; Calsoft Labs, Inc. v Panchumarthi (ND Cal, Nov. 7, 2019, No. 19-cv-04398-NC) 2019 US Dist Lexis 194939. See §11.67.
High-level corporate officers and directors who participate in the management of the company owe fiduciary duties to their corporation. Hooked Media Group, Inc. v Apple Inc., 55 CA5th at 414. A fiduciary, such as a corporate officer or director, as opposed to a mere lower-level employee, arguably has a heightened duty to the corporation. That duty not only includes “affirmatively to protect the interests of the corporation … but also to refrain from doing anything that would work injury to the corporation, or to deprive it or profit or advantage which his skill and ability might properly bring to it.” Bancroft-Whitney Co. v Glen (1966) 64 C2d 327, 345; ChromaDex, Inc. v Elysium Health, Inc. (CD Cal 2019) 369 F Supp 3d 983, 989. Moreover, the duty of officers and directors to protect privileged and confidential information is a duty that extends beyond termination, and continues even after their resignation and even after they leave the company. AlterG, Inc. v Boost Treadmills LLC, 388 F Supp 3d at 1148; Calsoft Labs, Inc. v Panchumarthi, supra. Further, Albert’s Organics, Inc. v Holzman (ND Cal 2020) 445 F Supp 3d 463, 480, set forth elements to establish aiding and abetting breach of fiduciary duty. Even lower-level employees may have similar duties of loyalty to the employer under principles of agency law. See Techno Lite, Inc. v Emcod, LLC (2020) 44 CA5th 462, 472. See also Erhart v Bofi Holding, Inc. (SD Cal, Mar. 31, 2020, No. 15-cv-02353-BAS-NLS) 2020 US Dist Lexis 57137 (explaining subsidiary obligations under the duty of loyalty). See §11.68.
Again, a claim for breach of fiduciary duty may or may not be preempted by the UTSA, depending on the allegations and facts. Five Star Gourmet Foods, Inc. v Fresh Express, Inc. (ND Cal, Jan. 31, 2020, No. 19-cv-05611-PJH) 2020 US Dist Lexis 16368, *40 (“For example, a claim alleging a violation of a duty of loyalty is not displaced by CUTSA where the duty of loyalty would be violated by undertaking competitive acts, regardless of whether any proprietary information was implicated. … However, ‘where the allegation is that [a defendant] breached his duty of loyalty by disclosing trade secrets, the claim for breach of fiduciary duty is based on the same operative facts and is therefore preempted by CUTSA.’”); Albert’s Organics, Inc. v Holzman 445 F Supp 3d at 475 (alleged breach of fiduciary duty was broader than disclosing trade secrets or confidential information and included a duty not to compete against one’s current employer; i.e., a duty of loyalty). See §11.68.
In CleanFuture, Inc. v Motive Energy, Inc. (CD Cal, Apr. 15, 2019, No. SACV 19-00084 AG (KESx)) 2019 US Dist Lexis 132841, *16, the court granted a motion to dismiss where plaintiff failed to “allege the speaker, recipient, timing and location of each allegedly libelous statement.” See §11.72.
As a general rule, certain intangible property interests can be converted, but exactly what type of “intangible” property in the trade secret/unfair competition realm is still unclear. Erhart v Bofi Holding, Inc. (SD Cal, Mar. 31, 2020, No. 15-cv-02287-BAS-NLS) 2020 US Dist Lexis 57137. See §11.73.
The Computer Fraud and Abuse Act (CFAA) is subject to a 2-year statute of limitations. 18 USC §1030(g); Stage 32, LLC V Tuccio (CD Cal, Oct. 29, 2019, No. 2:18-cv-098000-ODW (JEMx)) 2019 US Dist Lexis 187582,*7. The Comprehensive Computer Data Access & Fraud Act (CCDAFA) has a 3-year statute of limitations. See Pen C §502(e)(5); Brodsky v Apple Inc. (ND Cal 2020) 445 F Supp 3d 110, 134. See §11.74.
The definition of the term “inventions” has been modified in the “Form: Definitions.” See §11.78.
Chapter 12: Workplace Safety
Amended regulations. The Occupational Safety and Health Appeals Board (OSHAB) announced a new regulation package effective October 1, 2020. The amended regulations include a new process for docketing and perfecting appeals, issuance of subpoenas by attorneys, new advice on discovery, and changes to the expedited appeals process. See 8 Cal Code Regs §§359.1, 361.3, 372.2 for amendments. See §§12.1A, 12.62A, 12.66.
Title 8 California Code of Regulations §3203 has been amended to require procedures to allow employee access to the Injury and Illness Prevention Program (IIPP). The written program, but not the records of the steps taken to implement and maintain the program, must be provided on request of an employee or designated employee representative. See §§12.1A, 12.85, 12.90.
Cal/OSHA and COVID-19. These updates include actions taken in response to occupational hazards associated with COVID-19 and are intended to identify changes, either temporary or permanent, to the administration of the California Occupational Safety and Health Act of 1973 (Cal/OSHA). This is a rapidly changing area. All issues noted herein should be reviewed for continued accuracy, updates, and amendments. See §12.1A.
Assembly Bill 685 requires a public or private employer that receives a notice of potential exposure to COVID-19 to provide specified notifications to its employees within 1 business day of the notice of potential exposure. Employers must provide prescribed notice to all employees, and the employers of subcontracted employees, who were on the premises at the same worksite as a qualifying individual within the infectious period that they may have been exposed to COVID-19. The bill requires an employer, if the employer or representative of the employer is notified of the number of cases that meet the definition of a COVID-19 outbreak, within 48 hours, to report prescribed information to the local public health agency in the jurisdiction of the worksite. The bill also requires an employer that has an outbreak to continue to give notice to the local health department of any subsequent laboratory-confirmed cases of COVID-19 at the worksite. The bill exempts a health facility, as defined, from this reporting requirement. See Lab C §6409.6; AB 685 (effective Jan. 1, 2021). See §§12.1A, 12.30.
Executive Orders. Governor Gavin Newsom has issued various executive orders that may impact enforcement of Cal/OSHA regulations, including Executive Orders No. N–63–20 (May 7, 2020) and No. N–71–20 (June 30, 2020), temporarily extending the time to issue a citation and to file a complaint claim or appeal, and authorizing the use of electronic means to conduct hearings, provided certain criteria are met. In response, OSHAB has begun noticing and conducting video hearings. Prehearing procedures, including prehearing identification of witnesses and submission of exhibits, have been amended accordingly. See §12.1A.
Emergency regulations. On November 19, 2020, the Occupational Safety and Health Standards Board (Standards Board) approved emergency regulations to address COVID-19 prevention. The emergency regulations, including 8 Cal Code Regs §§3205, 3205.1, 3205.2, 3205.3 and 3205.4, were approved by the Office of Administrative Law and became effective November 30, 2020. See https://www.dir.ca.gov/OSHSB/COVID-19-Prevention-Emergency.html. The emergency regulations apply to employees and places of employment, with limited exception. They require employers to establish, implement, and maintain an effective COVID-19 prevention program, provide detailed requirements for responding to COVID-19 outbreaks in the workplace, and address COVID-19 prevention in employer-provided housing and transportation. The regulations are comprehensive and create many new obligations for employers. They should be reviewed carefully for implementation as is appropriate. The Standards Board has directed the Division of Occupational Safety and Health (the Division or DOSH) to work with the Board to convene an advisory committee to review and recommend amendments to the emergency regulations and, after the COVID-19 pandemic subsides, to convene an advisory committee to consider the necessity for a permanent regulation. Without a permanent regulation or renewal, the current version will expire October 2, 2021. See §12.1A.
Cal/OSHA guidance. Cal/OSHA has published various documents to be used as guidance on requirements to protect workplaces from COVID-19. These are not regulations but may be seen as a map toward compliance with existing regulations that require, among other things, workplace inspections, identification and correction of hazards, and employee communication and training. The Cal/OSHA website notes that the guidance documents are subject to change as new information is received and the situation evolves. See https://www.dir.ca.gov/dosh/coronavirus/Guidance-by-Industry.html. See §12.1A.
The definition of a serious injury and illness was changed by amendment of Lab C §6302(h) effective January 1, 2020. The definition was subsequently updated by Cal/OSHA on February 10, 2020. 8 Cal Code Regs §330(h). See §12.30.
The total statutory minimum and maximum penalties have been updated for 8 Cal Code Regs §336. See §12.56.
If an appeal initiated by phone, in writing, or by online form is incomplete or does not include contact information as required by 8 Cal Code Regs §§355.1 and 359.1, the additional information must be submitted to OSHAB within 20 days of the written or electronic acknowledgment by the Board. Failure to do so constitutes grounds for dismissal. 8 Cal Code Regs §359.1(b). See §12.62A.
Effective October 1, 2020, OSHAB updated the requirements for perfecting an appeal. An employer is no longer required to submit a copy of the citations with its appeal. Instead, once an appeal is properly filed by an employer, OSHAB will serve each party with a notice of docketed appeal. Cal/OSHA must then provide a copy of all appealed citations to the Appeals Board within 15 working days after service of the notice of docketed appeal. The Division’s failure to timely comply with this requirement will not prejudice an employer’s appeal. 8 Cal Code Regs §359.1(e), (f). See §12.62A.
Effective October 1, 2020, OSHAB updated its discovery rules, requiring licensed members of the California State Bar, who are acting as an attorney of record for a party, to issue their own subpoenas and subpoenas duces tecum. 8 Cal Code Regs §372.2(c). See §12.66.
Every employer must establish, implement, and maintain an effective Injury and Illness Prevention Program (IIPP). Lab C §6401.7. The additions reflect the most up-to-date requirements. See §§12.85, 12.91, 12.114.
Chapter 13: Workplace Privacy
A new “Statutory” privacy issues section has been added to address the California Privacy Rights Act (CPRA), passed as a ballot proposition in November 2020. The CPRA amended and expanded the California Consumer Privacy Act of 2018 (CCPA) (CC §§1798.100–1798.199), which was enacted in 2018 and amended in 2019. Portions of the CCPA took effect in January 2020. However, provisions of the CCPA that apply to the employer-employee relationship had not taken effect when the CPRA passed, and implementation of those provisions is now scheduled for 2023. The CPRA establishes a new administrative agency, the California Privacy Protection Agency, to implement and enforce the CCPA. This agency will promulgate regulations in addition to regulations that were adopted before passage of the CPRA. Because the CPRA was enacted through a ballot measure, any material change will require another ballot measure. See §13.3A.
Statutory references have been updated in §13.10.
Labor Code §432.7(f) permits health facilities to ask applicants for positions with regular access to patients about convictions that require registration under the Sex Offender Registration Act (Pen C §290). However, the statute imposes limits on health facilities regarding inquiries about juvenile-related offenses. Specifically, Lab C §432.7(f)(2)(A) prohibits inquiries from health facilities about juvenile-related arrests, detentions, and so forth, unless the information relates to a juvenile court conviction of a misdemeanor or felony for specified crimes within 5 years of the employment application. An employer seeking such disclosures will be required to provide the applicant with a list of specific offenses under Pen C §290 for which disclosures are sought. Health providers are precluded from inquiring into an applicant’s juvenile offense history that has been sealed by the juvenile court. Lab C §432.7(f)(2)(B). See §13.10A.
The discussion regarding “interception” under federal law has been expanded. See §13.21.
The definition of “intercept” was expanded to include GET requests as discussed in Davis v Facebook, Inc. (In re Facebook Inc. Internet Tracking Litig.) (2020) 956 F3d 589. A GET request includes information identifying the computer user and the searched topic. Facebook was compiling its users’ browser histories by duplicating and collecting the users’ GET requests. See §13.30.
Health risks associated with COVID-19 have allowed employers to conduct daily health screens, including taking employees’ temperatures and requiring employees to certify that they do not have any symptoms typical of the disease, before entering the workplace. Information gathered during such screens must be treated confidentially, as with any medical information. Employers should discontinue screening practices once a vaccine is widely available and the pandemic is adequately controlled. See Lab C §§3212.86–3212.88, added by Stats 2020, ch 85 (SB 1159). See §13.44.
Civil Code §47(c) 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. The former employer or its agent may state that the former employee is not eligible for rehire based on the former employer’s determination that the former employee engaged in sexual harassment. The privilege applies only when the statement is made without malice. See §13.75.
With respect to required notice of unauthorized access, “personal information” is defined. Notably, per CC §1798.82(h)(1)(A)–(B), “personal information” does not include information publicly available from federal, state, or local government records. See §13.82.
Language to explicitly permit “natural hairstyles, including afros, braids, twists, and locks” has been added to the “Form: Sample Dress and Grooming Policy.” See §13.85.
Chapter 15: Discrimination and Harassment
The U.S. Supreme Court granted certiorari (in part) in R.G. & G.R. Harris Funeral Homes, Inc. v EEOC (2019) ___ US ___, 139 S Ct 1599, to consider whether Title VII prohibits discrimination against transgender people or sex stereotyping under Price Waterhouse v Hopkins (1998) 490 US 228, 109 S Ct 1775. In Bostock v Clayton County, Ga. (2020) 590 US ___, 140 S Ct 1731, the Court affirmed R.G., stating that because discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender also violates Title VII. See §§1.10, 1.12, 15.55–15.56, 15.60.
In Babb v Wilkie (2020) 589 US ___, 140 S Ct 1168, the Court held that the plain meaning of 29 USC §633a(a) (“made free from any discrimination based on age”) demands that personnel actions be untainted by any consideration of age. This does not mean that a plaintiff may obtain all forms of relief that are generally available for a violation of §633a(a), including hiring, reinstatement, backpay, and compensatory damages, without showing that a personnel action would have been different if age had not been taken into account. To obtain such relief, a plaintiff must show that age was a but-for cause of the challenged employment decision. But if age discrimination played a lesser part in the decision, other remedies may be appropriate. See §§1.8, 15.55–15.56, 15.60–15.61, 18.48–18.51, 18.54.
Rizo v Yovino (9th Cir 2020) 950 F3d 1217 held that unlike Title VII, the Equal Pay Act does not require proof of discriminatory intent. See §§15.20, 15.55–15.56, 15.60, 18.48–18.51, 18.54.
In Our Lady of Guadalupe Sch. v Morrissey-Berru (2020) 591 US ___, 140 S Ct 2049, 2053, the Court held that the First Amendment foreclosed the adjudication of employment discrimination claims by private school teachers who performed vital religious duties educating their students in the Catholic faith. “When the ‘ministerial exception’ reached this Court in Hosanna-Tabor, the Court looked to precedent and the ‘background’ against ‘the First Amendment was adopted,’ and unanimously recognized that the Religion Clauses foreclose certain employment-discrimination claims brought against religious organizations” (quoting Hosanna-Tabor Evangelical Lutheran Church & Sch. v EEOC (2011) 565 US 171, 183, 132 S Ct 694). See §15.30H.
In Frappied v Affinity Gaming Black Hawk LLC (10th Cir 2020) 966 F3d 1038, the Tenth Circuit upheld sex-plus-age disparate impact claims under Title VII (alleged by female workers over 40 years of age) against casino operator Affinity Gaming and reversed the district court’s order of dismissal. A prima facie case ordinarily requires proof of four elements under the McDonnell Douglas framework. While many courts have interpreted the fourth element as requiring evidence of replacement by a younger comparator, the court held that “in light of Bostock, we conclude that a sex-plus plaintiff does not need to show discrimination against a subclass of men or women. Instead, if a female plaintiff shows that she would not have been terminated if she had been a man—in other words, if she would not have been terminated but for her sex—this showing is sufficient to establish liability under Title VII.” See §§15.55–15.56, 15.60, 18.48–18.51, 18.54.
See also Comcast Corp. v National Ass’n of African American-Owned Media (2020) 589 US ___, 140 S Ct 1009 (whether or not McDonnell Douglas has some useful role to play in 42 USC §1981 cases, it does not mention motivating factor test, let alone endorse its use only at pleadings stage); Astre v McQuaid (9th Cir 2020) 804 Fed Appx 665 (evidentiary strictures of McDonnell Douglas do not determine the sufficiency of 42 USC §1981 claim). See §§15.55–15.56, 15.60, 18.51.
Senate Bill 1383 expands the California Family Rights Act (CFRA) to make it an unlawful employment practice for any employer with five or more employees to refuse to grant a request by an employee to take up to 12 workweeks of unpaid protected leave during any 12-month period to bond with a new child of the employee or to care for themselves or a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner. It requires an employer who employs both parents of a child to grant leave to each employee. The bill defines employee for these purposes as an individual who has at least 1250 hours of service with the employer during the previous 12-month period, unless otherwise provided. Stats 2020, ch 86 (SB 1383). See §15.76.
Government Code §12950.1 (sexual harassment training) was amended in 2018 by SB 1343 to broaden required sexual harassment prevention training. It was amended again in 2019 by SB 778, to extend the deadline for compliance and to clarify certain issues. As amended, the statute requires that by January 1, 2021, employers with five or more employees must provide the training to all employees, not just supervisory employees, once every 2 years. However, the mandatory harassment training required for nonsupervisory employees is for 1 hour, rather than the 2 hours for supervisory employees. See §§9.61, 15.103.
Chapter 16: Whistleblower Issues and Chapter 17: Discipline and Termination
The California Labor Code expressly prohibits employers from retaliating against employees for refusing to participate in activities “that would result in a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation” under Lab C §1102.5(c). The court is now authorized to award reasonable attorney fees to a plaintiff who brings a successful action for a violation of these provisions. Lab C §1102.5(j). See Stats 2020, ch 344 (AB 1947). See also §§16.13, 17.12.
Assembly Bill 749 prohibits and invalidates any provisions in settlement agreements entered into on or after January 1, 2020, that prevent workers from obtaining future employment with the settling employer or its affiliated companies under certain circumstances. Assembly Bill 2143, passed in 2020, provides an exception to this ban, if the employer documented in good faith, prior to a claim, that a person engaged in sexual harassment, sexual assault, or criminal conduct. See Stats 2020, ch 73 (AB 2143). See §17.111.
Chapter 18: Reductions in Force and Plant Closings
The Coronavirus Aid, Relief, and Economic Security Act 2020 (CARES Act) introduced the Paycheck Protection Program, CARES Act §§1101–1114, which provides an incentive for employers to keep workers on their payrolls. See Pub L 116–136, 134 Stat 281. See also §18.1.
Chapter 19: Insurance Coverage for Employment Claims
Senate Bill 1159 (emergency legislation) defines “injury” for an employee to include illness or death resulting from the 2019 novel coronavirus disease (COVID-19) under specified circumstances, until January 1, 2023. The bill creates a disputable presumption, as specified, that the injury arose out of and in the course of the employment and is compensable, for specified dates of injury. It limits the applicability of the presumption under certain circumstances, and it requires an employee to exhaust their paid sick leave benefits and meet specified certification requirements before receiving any temporary disability benefits or, for police officers, firefighters, and other specified employees, a leave of absence. The bill also makes a claim relating to a COVID-19 illness presumptively compensable after 30 days or 45 days, rather than 90 days. Until January 1, 2023, SB 1159 allows for a presumption of injury for all employees whose fellow employees at their place of employment experience specified levels of positive testing, and whose employer has five or more employees. See Lab C §§77.8, 3212.86–3212.88. See §19.9.
Chapter 20: Mediation and Arbitration of Employment Disputes
In Rittmann v Amazon.com, Inc. (9th Cir 2020) 971 F3d 904, the Ninth Circuit held that the district court properly concluded that delivery providers fall within the scope of the FAA’s transportation worker exemption under 9 USC §1 because they deliver goods shipped from across the United States. See §20.28.
See also California Trucking Ass’n v Becerra (9th Cir, Mar. 30, 2020, Nos. 20–55106, 20–55107) 2020 US App Lexis 10066 (truckers not independent contractors under Dynamex ABC test (AB 5); state law not preempted by FAAAA); Gonzales v San Gabriel Transit, Inc. (review granted Jan. 15, 2020, S259027; superseded opinion at 40 CA5th 1131) (court of appeal held that Dynamex’s “ABC test” applies retroactively to certification of class of employees allegedly misclassified as independent contractors); but see Waithaka v Amazon.com Inc. (1st Cir 2020) 966 F3d 10 (criticized by Rittmann, 971 F3d at 920 n11, “We recognize that the First Circuit’s decision in Waithaka reached a different result in interpreting identical contract terms. However, it is not clear that the court applied the Washington state law principles of contract interpretation that we identify here.”). See §20.28.