Perez v. U-Haul: Employers cannot compel arbitration of standing issue in PAGA cases
Some companies continue to try to force employees to arbitrate their individual PAGA claims before bringing their representative PAGA claims in court. Two appellate decisions make it crystal clear that California courts have rejected these efforts, and that workers are not required to litigate PAGA claims in multiple forums.
By way of background, in Iskanian v. CLS Transportation, the California Supreme Court held that employers could not compel plaintiffs to arbitrate their representative PAGA claims. In the wake of that case, some defendants began to argue that where workers had signed an arbitration agreement, they should be required to arbitrate their individual claims before proceeding with their representative claims in court. (more…)
Morris v. Ernst & Young -The Ninth Circuit Follows D.R. Horton
In an important decision for workers seeking to join together to enforce their employment rights, the Ninth Circuit Court of Appeals ruled in Morris v. Ernst & Young 
(https://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/22/13-16599.pdf) that employers can not impose concerted action waivers in mandatory arbitration agreements. The Ninth Circuit held that employers violate Sections 7 and 8 of the National Labor Relations Act (“NLRA”) by requiring employees to waive their right to participate in “concerted activities” such as class and collective actions. With Morris, the Ninth Circuit joins the Seventh Circuit (Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016)), which was the first federal Circuit Court to adopt the National Labor Relations Board (“NLRB”) position in D.R. Horton, Inc., 357 NLRB No. 184 (2012).
In Morris, employees filed a class and collective action alleging that their employer had misclassified certain employees as exempt from overtime in violation of the Fair Labor Standards Act (“FLSA”) and California labor laws. These employees were required to sign agreements that had a “concerted action wavier” that required them (1) to pursue legal claims against Ernst & Young exclusively through arbitration, and (2) to arbitrate as individuals in “separate proceedings.”
The Court explained that:
This case turns on a well-established principal: employees have the right to pursue work-related legal claims together. 29 U.S.C. § 157; Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978). Concerted activity – the right of employees to act together – is the essential substantive right established by the NLRA. 29 U.S.C. § 157. Ernst & Young interfered with that right by requiring its employees to resolve all of their legal claims in “separate proceedings.” Accordingly the concerted action waiver violates the NLRA and cannot be enforced.
Although the Federal Arbitration Act (“FAA”) creates a “federal policy favoring arbitration,” it also has a “savings clause” that allows courts to refuse to enforce arbitration agreements that interfere with or defeat rights provided by other federal laws – federal rights such as the right to engage in concerted activity under the NLRA. The problem with Ernst & Young’s arbitration agreement was not that it prevented employees from proceeding with their claims in court, but that it forced workers to waive their right to pursue claims collectively under the NLRA or other federal laws, such as the FLSA. As Chief Judge Thomas explained:
The same infirmity would exist if the contract required disputes to be resolved through casting lots, coin toss, duel, trial by ordeal or any other dispute resolution mechanism, if the contract limited resolution to that mechanism and required separate individual proceedings.
Other circuit courts have taken a quite different position and have enforced employers’ concerted action waivers under the FAA. See Cellular Sales of Missouri, LLC v. N.L.R.B., 824 F.3d 772, 776 (8th Cir. June 2, 2016); Murphy Oil USA, Inc. v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015); Owen v. Bristol Care, Inc., 702 F.3d 1050, 1053-54 (8th Cir. 2013); D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 361 (5th Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290, 297 n.8 (2d Cir. 2013).
The U.S. Supreme Court is likely to take up this important issue now that there is a split of opinion between the Circuit Courts.
Can I Get Fired for Taking Time Off to Take Care of a Sick Family Member?
Many people are aware that employers cannot discriminate against an employee with a disability under the California Fair Employment and Housing Act (FEHA) or the Americans with 
Disabilities Act (ADA). But, what if you have a child, spouse or parent with a disability and need to take time off from work to care for him or her? What if you need to be home in the evenings to nurse a disabled loved one back to health? Can your employer retaliate against you for requesting an accommodation or discriminate against your because you are associated with someone with a disability? (more…)
California Wage Statements and Exempt Employees
California Labor Code section 226 requires that an employer provide its employees with wage statements, sometimes known as pay stubs, when it pays their wages. Section 226(a) provides a list of the specific information that must be included in wage statements. Employers that ignore these requirements face liability both under section 226(e), and, through PAGA, under section 226.3.
One of the requirements of section 226(a) is that the employer state the total number of hours that an employee worked. This requirement is important for most employees, because it is the most effective way to figure out whether you are paid for all hours worked. But what about employees who are not paid by the hour, like salaried employees or employees who are paid on a commission basis? (more…)
Some Real Data Regarding the Gig Economy-and What It Tells Us About the Future of the U.S. Economy
It feels like the “gig economy” (also referred to euphemistically as the “sharing economy”) has taken over. Uber, Grubhub, TaskRabbit, wherever you look, it seems like employees are being replaced by independent contractors or temporary workers who are being exploited by internet-based companies. This perception is stoked by predictions in the tech industry, such as Intuit’s recent claim that by 2020, 43 percent of workers will be employed in the on-demand labor market. (Of course, Intuit markets its products to “on-demand employers,” so such predictions should be taken with a grain of salt.)
A tectonic shift of this nature would upend the way that we think about work and wages. Among other things, independent contractors are not subject to many wage and hour requirements, such as overtime and the minimum wage. And temp workers often struggle to piece together a livable income from multiple sources of employment. (more…)
Does it Matter if my Client is a Medicare-Enrolled Beneficiary?
Do you have a client who is sixty-five or older? Do you have a disabled client? If so, you should determine whether the client is a Medicare-enrolled beneficiary.
Medicare beneficiaries who have claims against a tortfeasor with liability insurance or no fault insurance must initially contact the Centers for Medicare and Medicaid Services (CMS) and its Coordinator of Benefits Contractor (COBC) to report a case. (more…)
PAGA and Intervention: Replacing a Plaintiff Who Wants Out
One of the seminal cases in the world of California’s Private Attorneys General Act, or PAGA, is Iskanian v. CLS Transportation. Iskanian wound its way up to the California Supreme Court, which ultimately held that arbitration agreements that attempt to limit a plaintiff’s right to bring PAGA actions are unenforceable.
Now Iskanian is back in the news. After years of struggle, the plaintiff, Mr. Iskanian, decided that he did not want to proceed with the case. (It is unclear why he reached that decision.) In an interesting twist, he then filed a motion, representing himself, to dismiss his individual claims (which were being arbitrated) as well as his PAGA claims. His attorneys then sought to replace him with Mr. Frost, another individual from the group of limousine drivers that Mr. Iskanian belonged to. (more…)
New PAGA Rules Take Effect July 1, 2016
Governor Jerry Brown’s budget for 2016-17 contains several significant amendments to the procedural requirements of the Private Attorneys General Act, or PAGA. These amendments apply to PAGA cases filed on or after July 1, 2016. They are limited to cases alleging violations of the California Labor Code provisions listed in Labor Code section 2699.5.
The amendments fall into four large categories: (1) the cost and procedure for filing a PAGA action; (2) the timing of PAGA actions; (3) what information and documents must be provided to the Labor and Workforce Development Agency, or LWDA; and (4) the procedure that an employer must follow to cure PAGA violations. Each amendment goes into effect on July 1, 2016, and does not affect PAGA notices filed before that date.
First, PAGA notices will require a filing fee of $75, and must be submitted both online and by certified mail.
Second, the LWDA, will have longer to review PAGA notices in order to decide whether to investigate the allegations. If the LWDA does not intend to investigate, it shall notify the employer and the employee within 60 days of the postmark date of the PAGA notice. If the LWDA does not provide any such notice, plaintiffs must wait until 65 days after the postmark date of the notice to file suit. (The current rule is 33 days.)
If the LWDA intends to investigate a PAGA complaint, it has 65 days from the postmark date of the notice to inform a plaintiff and his or her employer that it intends to do so. The LWDA then has 120 days to conduct that investigation. The 120 day period can be extended by an additional 60 days.
Third, a plaintiff will need to serve the LWDA with a copy of his or her PAGA complaint. And, if the plaintiff settles his or her PAGA claims, the plaintiff must notify the LWDA of that settlement by providing a copy of the proposed settlement. That must occur when the plaintiff notifies the court of the settlement in order to seek approval under Labor Code 2699(l). (That section requires a court to review and approve any proposed PAGA penalties.) The plaintiff must also provide a copy of any order that denies or approves any PAGA settlement to the LWDA.
Finally, any employer that seeks to cure any PAGA violations must submit its notice electronically.
These amendments follow on the heels of AB 1506, which, as of October 2015, permit employers to cure certain defects on the wage statements that they issue to their employees. In particular, employers are given 33 days to cure defects regarding the dates of the period for which the employees are paid. They can also cure defects regarding the name and address of the employer. However, the burden on an employer seeking to cure these defects is significant: it must provide fully compliant wage statements to each aggrieved employee for each pay period during the three years prior to the date of the notice to the LWDA.
Significantly, the new amendments do not contain additional funding for the LWDA to increase its involvement in PAGA actions. As a result, at least for the immediate future the responsibility for enforcing PAGA claims will continue to rest with plaintiff side employment attorneys.
Commonality, Damages, and Representative Evidence: The Ninth Circuit Properly Cabins Dukes and Comcast, and Underscores Tyson Foods
Over the past decade or so, higher court rulings regarding class actions have tended to dramatically favor either corporations or workers. Corporations have arguably scored the most significant victories. However, with the recent exit of Justice Antonin Scalia from the United States Supreme Court, there are some indications that this tide has begun to turn. At the same time, it is clear that a Republican victory in November 2016 would return a conservative majority to the Court, and devastate any positive momentum in terms of workers’ rights.
Vaquero v. Ashley Furniture Industries, Inc., No. 13-56606 (June 8, 2016), a recent decision of the Ninth Circuit, is a good example of the type of decision that we can hope to see more of in the future. Vaquero does three important things. First, it properly limits the scope of Wal-Mart v. Dukes, 564 U.S. 338 (2011) with respect to the issue of commonality. Second, it limits the impact of Comcast v. Behrend, 133 S. Ct. 1426 (2013) in wage and hour class actions. Finally, it underscores the critical holding in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016) that plaintiffs may continue to rely upon representative evidence to prove both liability and damages. As such, Vaquero provides powerful ammunition for workers and their advocates in class actions. (more…)
Arbitration Agreements that Prohibit Class and Collective Actions Violate the National Labor Relations Act
A major storm-the biggest in decades- has been brewing for years in the American workplace. At its center is whether employers can require workers to waive their right to bring class, collection, and representative actions. The implications are enormous: As union membership has declined, workers have relied more on litigation to stop companies from breaking the law. If employers succeed in stripping workers of the right to do so, the results will be grim indeed.
Until recently, the field of combat had consisted of, on the workers’ side, the National Labor Relations Board, which held in D.R. Horton that such agreements violate Section 7 of the National Labor Relations Act (NLRA). On the employers’ side is a series Circuit Court decisions, D.R. Horton v. NLRB (5th Cir. 2013); Owen v. Bristol Care, Inc. (8th Cir. 2013); Sutherland v. Ernst & Young LLP (2d Cir. 2013); and Richards v. Ernst & Young, LLP (9th Cir. 2013). Each of those cases, to some degree, rejected the NLRB’s decision in D.R. Horton.
That field shifted dramatically on May 26, 2016. In Lewis v. Epic Systems Corporation, the Court of Appeals for the Seventh Circuit held that an arbitration agreement that prohibited class and collective actions violates Section 7 of the NLRA and was therefore not enforceable. [In a post dated February 2, 2016, I discussed a similar ruling by the Hon. Dolly M. Gee, a courageous federal judge.] As the first Circuit Court to reach this holding, Lewis changed the legal landscape significantly in a manner that benefits workers. (more…)