Fenwick Employment Brief for November 2013

Fenwick Employment Brief November 15, 2013 Michael A. Sands 650.335.7279 Allen M. Kato 415.875.2464 flurry of new california employment § Required time off (and other reasonable statutes continues accommodations) that must be afforded to victims The California Legislature passed and Governor now applicable to an expanded list of crimes Brown approved the following new statutes impacting The current law prohibits discrimination or retaliation California employment law that shortly take effect in against an employee who is a victim of a felony crime 2014. and who takes time off to attend judicial proceedings related to that crime. AB 288 expands the list of Employment Discrimination – FEHA amendment covered crimes including victims of a crime involving prohibits discrimination on account of military or driving under the influence and crimes involving veteran status violence (not limited to crimes charged as a felony). In The California Fair Employment and Housing Act addition, the protection to attend judicial proceedings (“FEHA”) prohibits discrimination against employees has been expanded to cover delinquency proceedings, on account of race, religion, gender and other sentencing, post-conviction release hearings, and the protected categories. AB 566 amended FEHA to add like. “military and veteran status” as additional protected categories. Existing federal and state laws protect § Time off for volunteer fire and law enforcement employees in military service and veterans from training expanded to cover emergency rescue discrimination; now, FEHA protection and remedies training will be available to such employees. Employers Presently, employers who employ 50 or more are, however, permitted to inquire about military or employees must allow an employee who is a volunteer veteran status for the purpose of awarding a veteran’s firefighter to take a leave of absence of up to 14 days preference where such preferences are allowed by law. for firefighting training. AB 11 expands this leave of absence right to reserve peace officers and emergency Leaves of Absences rescue personnel to attend law enforcement and § Time off and reasonable accommodations must emergency rescue training. be afforded to victims of stalking (in addition to existing protections for victims of domestic violence and sexual assault) california courts continue to rule in favor of arbitration Existing law protects employees who are victims of domestic violence or sexual assault from California Supreme Court reverses rule that first discrimination or retaliation for taking time off to required administrative hearing by state Labor appear in court or to obtain legal relief to ensure Commissioner before permitting arbitration of wage their health, safety or welfare. SB 400 extends and hour claims such protections to victims of stalking. In addition, In 2011, the California Supreme Court in Sonic- employers must provide reasonable accommodations Calibasas A, Inc. v. Moreno refused to enforce an to victims of stalking that would increase the safety arbitration agreement where an employee had of the victim while at work, such as implementing filed a wage and hour claim with the state Labor additional safety measures (for example, a transfer, Commissioner, and required the employer to first reassignment, modified schedule, changed work participate in the administrative hearing with the telephone and work station, and the like). Labor Commissioner before allowing arbitration of the claim. If the employer was dissatisfied with the results of the administrative hearing (referred to as a “Berman www.fenwick.com hearing”), then the employer would be permitted class of college students sued the college over alleged to appeal the determination to an arbitrator who misrepresentations about the quality and cost of would issue a final determination. The court held that the education and career prospects of graduates. the public policy in favor of administrative Berman They sought, among other remedies, injunctive relief hearings was not preempted by the federal Arbitration to prevent further violations of California’s unfair Act (“FAA”). competition and false advertising laws. On appeal, the U.S. Supreme Court ordered the In Broughton v. Cigna Health Plans and a second California Supreme Court to reconsider its decision. case Cruz v. PacifiCare Health Systems, the California On remand, the California Supreme Court reversed Supreme Court had previously held that arbitration course, and ruled that a court may not force the agreements could not prohibit court claims, on behalf employer to first participate in the administrative of the general public, to obtain injunctive relief against action and permitted the arbitrator to decide the deceptive practices. The Ninth Circuit adopted this matter in the first instance. The court concluded that reasoning in Davis v. O’Melveny & Myers, allowing such a court-imposed delay of arbitration was contrary employees to pursue court action for injunctive relief to, and preempted by the FAA. under the unfair competition laws. However, the California Supreme Court also remanded Reversing its ruling in Davis, and rejecting the the matter to the lower court to consider whether the Broughton-Cruz rule, the court held that the arbitration agreement at issue was unconscionable Broughton-Cruz rule was preempted by the federal and unenforceable, i.e., whether the arbitration Arbitration Act (“FAA”), and that claims for public agreement at issue imposed costs and risks on the injunctive relief for alleged violations of the California wage claimant that would make the resolution of unfair competition laws must also be resolved the wage dispute inaccessible and unaffordable. In through arbitration. Since the arbitration agreement making the determination of unconscionability, the between the college and its students covered “all issue for the court is not whether the arbitration claims … arising from my enrollment,” and did not agreement was a “bad deal” for the employee, exclude claims for injunctive relief, the court directed but rather whether the agreement was so arbitration of the entire action including the students’ “unreasonably one-sided” as to render the provision claims for public injunctive relief. legally unenforceable, for instance, an arbitration In Iskanian v. CLS Transportation Los Angeles, LLC, agreement that effectively deprives wage claimants pending before the California Supreme Court, the of an accessible and affordable dispute-resolution court is scheduled to decide whether the Private mechanism. Attorney General Act (“PAGA”) claims and claims for Carefully crafted employment arbitration provisions violation of the unfair competition laws are exempt that require the employer to bear the costs unique from arbitration under the Broughton-Cruz rule. The to the arbitral forum and call for a speedy and fair Ferguson court’s conclusion that the FAA preempts hearing by a neutral arbitrator should satisfy this legal the Broughton-Cruz rule, while not binding on the standard and avoid an unconscionability challenge. California court, may nonetheless be persuasive to convince the California court to also abandon the Federal Appeals Court in California strikes down rule Broughton-Cruz rule. If so, then the California court in that prohibited arbitration of injunctive-relief claims Iskanian may decide to compel arbitration of PAGA and that affect the public interest unfair competition claims that are commonly alleged In a non-employment case, the federal Ninth Circuit in employment wage and hour cases. Court of Appeals (which covers California) in Ferguson v. Corinthian Colleges, Inc. re-considered the so- called “Broughton-Cruz” rule that claims for injunctive relief under California’s unfair competition law were exempt from arbitration because the claims sought “public injunctive relief.” Ferguson on behalf of a 2 fenwick employment brief fenwick & west news bites contracts with Angelica’s customers that included early cancellation rights that were not customary in Company not required to reinstate temporary the industry. As a result, when Park started his new employee after FMLA leave of absence where temp competing businesses, these customers were able to agency did not request that employee be reinstated cancel their contracts with Angelica and immediately In Cuellar v. Keppel Amfels LLC, the Fifth Circuit Court transfer their business to Park. There were admittedly of Appeals addressed the relatively novel issue of no trade secrets at issue, and Park convinced the whether a company has an obligation to reinstate a lower court to dismiss the breach of contract and temporary employee returning from FMLA-covered other claims on the ground that the claims were leave. Jessica Cuellar was assigned by a staffing displaced by the Uniform Trade Secrets Act (“UTSA”) agency Perma-Temp (the “primary employer”) to work such that a violation of trade secrets was an essential at Keppel (the “secondary employer”) in Texas. Cuellar element for a UTSA claim. Reversing, the court held went on a maternity leave, and Perma-Temp assigned that the common-law claims were not displaced by another temporary employee to work at Keppel. the statutory claim for violation of the UTSA, and that After having her baby, Cuellar sought reinstatement Park’s alleged misconduct during his employment was at Keppel. Perma-Temp did not request Keppel to independent of and not predicated on any violation of reinstate Cuellar and Keppel continued to use the Angelica’s trade secrets.

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