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On October 10, 2021, California Governor Gavin Newsom approved Senate Bill 331 which, effective January 1, 2022, significantly expands restrictions relating to non-disclosure and non-disparagement provisions in many settlement and separation agreements.

First, Senate Bill 331 expands the existing prohibitions on non-disclosure and non-disparagement provisions in settlement agreements. Existing law, under section 1001 of the California Code of Civil Procedure, already prohibits settlement agreements from having non-disclosure or non-disparagement provisions that prevent the disclosure of facts relating to a claim filed in a civil or administrative action regarding sex-based claims, including sex-based discrimination, sexual harassment, or related retaliation. Effective January 1, 2022, this amendment expands the prohibition on non-disclosure and non-disparagement provisions that prevent the disclosure of facts relating to a claim, outside of sex-based claims, to include discrimination, harassment, or retaliation claims based on any protected category under section 12940 of the Government Code, such as race, religion, national origin, and disability.
Continue Reading California expands restrictions on non-disclosure provisions

The worldwide COVID-19 pandemic has had, and will continue to have, a substantial impact on the U.S. workplace. We have prepared a series of FAQs compiled based on some of the more common questions that clients with California-based employees have posed to us over roughly the past six weeks.

These FAQs are general and high-level

California companies have been required to reconsider their use of independent contractors since the state’s Supreme Court outlined the new ABC test in Dynamex Operations West, Inc. v. Superior Court. Unlike the prior Borello test, which involved the balancing of numerous factors, the ABC test requires that a company establish all of the following: (A) the worker is free from the control and direction of the company; (B) the work is outside the company’s usual course of business; and (C) the worker is customarily engaged in an independent established business in the same line of work.

In the transportation industry, however, the ABC test may be preempted by the Federal Aviation Administration Authorization Act (the FAAAA). The FAAAA preempts all state laws that “relate[] to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” The United States Supreme Court has held that preemption may occur “even if a state law’s effect on rates, routes, or services is only indirect” and applies “at least where state laws have a significant impact related to Congress’ deregulatory and pre-emption-related objectives.”

Because the ABC test is new, there is no binding authority in California on the question of whether it is preempted by the FAAAA. Given this fact, Western States Trucking Association filed a lawsuit against the Acting Director of the California Department of Industrial Relations (Andre Schoorl) and the California Attorney General (Xavier Becerra) seeking a finding that the FAAAA preempts the ABC test.

Continue Reading 9th Circuit to consider whether the FAAAA preempts California’s ABC test for independent contractor truck drivers

California has long been known as a state that bans post-employment non-compete and customer non-solicitation agreements for its employees, absent very limited exceptions related to the sale of a business and trade secret protection. Employee non-solicitation provisions were believed to be the last post-employment restrictive covenant that California law still generally allowed, assuming they were properly drafted. Now, because of two recent California court decisions, even inclusion of limited employee non-solicitation provisions needs to be reconsidered.

The legal landscape until November 2018

Within its Business and Professions Code, California has a specific legislative ban on provisions that restrain anyone from engaging in their lawful profession. In 2008, the California Supreme Court in Edwards v. Arthur Andersen LLP specifically held that post-employment non-compete and customer non-solicitation provisions were disallowed under California law regardless of their scope or reasonableness. Because of the California Supreme Court’s silence as to employee non-solicitation provisions, the legal consensus has largely been that California decisions pre-Edwards, which allowed limited employee non-solicitation provisions, were likely still good law. In particular, the 1985 California Court of Appeals decision Loral Corp. v. Moyes allowed a one year post-employment employee non-solicitation provision. Therefore, these provisions have remained staples of California employment agreements.

Continue Reading Time to reconsider California employee non-solicitation provisions

On July 13, 2017, in a decision with serious repercussions on the scope of PAGA discovery, the California Supreme Court overruled the Court of Appeals in Williams v. Superior Court to allow state-wide discovery of Marshalls employees’ contact information, without the plaintiff first having to show any evidence to support his own individual claims or the existence of a company-wide policy.

Plaintiff was a Marshalls employee who brought an action under the California Labor Code Private Attorneys General Act (“PAGA”) for meal and rest break violations, timely wage payment, and wage statement violations. At the start of discovery, the plaintiff sought employee contact information pertaining to the approximately 16,500 non-exempt workers across all Marshalls locations in California.  Although the trial court and the Court of Appeals held that incremental discovery was more appropriate and denied the plaintiff’s request for any employee contact information outside of his own work location until after undergoing “six productive hours of deposition,” the California Supreme Court disagreed.

Instead, the Supreme Court, in a lengthy opinion, shut down each of the Court of Appeals’ objections to the plaintiff’s request for state-wide discovery.   First, the Supreme Court held that “[i]n pursuing such [representative] discovery, the strength or weakness of the plaintiff’s individual claim is immaterial.”  Second, the Supreme Court stated that state-wide discovery was proper absent any company-wide or uniform policy as “[a] uniform policy may be a convenient or desirable way to show commonality of interest in a case where class certification is sought, but it is not a condition for discovery, or even success, in a PAGA action…”
Continue Reading California Supreme Court Expands Scope of PAGA Discovery

On July 13, 2015, Governor Brown signed Assembly Bill 304 – an amendment to California’s recently effective (as of July 1, 2015), statewide sick-leave law, known as the California Healthy Workplaces, Healthy Families Act of 2014 (the Act). The Amendment is effective immediately. It adds significant new compliance options for employers, in addition to clarifying various ambiguities in the original Act. Below, we highlight the Amendment’s most important changes for employers.

Additional Accrual Options

The Amendment adds a third sick-leave accrual option for all employers: employers may accrue an employee’s sick-leave entitlement on a regular basis as long as it results in the employee earning at least 24 hours of sick leave by his or her 120th day of employment (or other 12-month accrual period).

  • Before the Amendment, employers were only permitted to accrue employee sick leave either (1) at an hourly rate (one hour for every 30 hours worked), or (2) granting a full 24 hours all at once at the start of the 12-month accrual period (i.e., frontloading)

Although the two pre-Amendment accrual options are still available to employers, the new, third option obviates employers’ need to tie sick-leave accrual to hours worked; sick leave can instead be tied to pay periods or other easy-to-measure benchmarks. The new accrual option will be particularly helpful for employers that wish to combine sick-leave policies with new Paid Time Off (PTO) policies, as most employers do not have PTO accrue on an hourly basis. For employers that had PTO policies in effect before January 1, 2015, the Amendment also allows for a fourth accrual option: such employers may continue existing PTO accrual methods as long as: (1) the accrual occurs on a regular basis; (2) the accrual results in each employee earning no less than one day (or eight hours) of sick leave or PTO within each three-month period of employment; and (3) employees are eligible to earn at least three days (or 24 hours) of sick leave or PTO within each nine-month period of employment. Note, however, that if an employer changes its accrual method under a pre-existing PTO policy (other than changes that merely increase the employee’s accrual amount or rate), it must then use one of the other accrual options going forward.

Continue Reading New Amendment to California Sick-Leave Law Takes Effect

The California Healthy Workplaces, Healthy Families Act of 2014 (“Healthy Families Act”) is fully effective July 1, 2015, including the significant potential for class-action liability for non-compliance. It is critical that employers ensure that their sick leave policy is current, given the ever-developing legal guidance. We have created a helpful list of common areas of confusion with this new law.

(1) General Background on the Healthy Families Act

The Healthy Families Act provides sick leave for absences from work for: (1) the diagnosis, care, or treatment (including preventive treatment) of an existing health condition of the employee or the employee’s family member, and (2) the employee being the victim of domestic violence, sexual assault, or stalking. Family member is expansively defined to include children, parents, foster parents, legal guardians, siblings, grandparents, grandchildren, spouses, and domestic partners.

The law requires employers to include information regarding accrual and use of sick leave with their employees’ wage statements. Further, employers must preserve these sick leave records for three years. Moreover, relevant posters and individual notices should have been posted and delivered as of January 1, 2015. New hires must also receive pertinent individual notices explaining their rights under the Healthy Families Act.

(2) Employees Must Provide “Reasonable” Notice.

The Healthy Families Act limits employers to requiring only “reasonable advance notification” of employee use of sick leave. Where unforeseeable, an employer may only require notice when “practicable.”

Continue Reading California Sick Leave To Go into Effect July 1 – Be Aware of These Common Traps

Jean F. Kuei and Michael R. Kleinmann have posted a new article on Forbes.com

The qui tam provisions of the False Claims Act (FCA) allow employees to bring whistleblower claims, on behalf of the government, against employers for alleged fraudulent acts harmful to the government.  A carrot encouraging whistleblowers to bring these suits is that