Articles Posted in Employment Issues

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About twenty thousand employees of the California-based technology company Google walked off the job, from offices in Mountain View, New York City, Dublin, London, Singapore, Tokyo, Zurich, and other cities, on November 1, 2018. The multinational protest arose from a news report on the company’s handling of sexual harassment claims against a former executive. The walkout’s organizers presented a list of demands to the company’s management, including changes to sexual harassment reporting and investigation procedures. About a week later, the company announced that it was granting one of the demands by ending forced arbitration of sexual harassment claims. For employment attorneys in California, this event raises questions on both the employer’s and employees’ sides about the extent of legal protections for workers who walk off the job. While California employment law broadly favors employees, one federal statute provides the bedrock of protection for employees engaged in strikes and walkouts.

Congress enacted the National Labor Relations Act (NLRA) in 1935, in the midst of widespread disputes between employers and unions representing their employees. The statute protects the right of employees to organize for the purpose of collective bargaining, either by joining an existing labor union or forming one of their own. It also states that employees may “engage in other concerted activities” for “mutual aid or protection.” 29 U.S.C. § 157. Employers may not “interfere with, restrain, or coerce employees in the exercise of [these] rights,” but neither may unions “restrain or coerce employees.” Id. at §§ 158(a)(1), (b)(1). For employers, this means that they may not retaliate against an employee—such as through termination or demotion—for engaging in “concerted activities.”

The NLRA does not define the term “concerted activities,” leaving that job to the courts. Early cases before the U.S. Supreme Court resulted in some general exclusions. Actions that involve “force and violence in defiance of the law of the land” are not protected “concerted activities.” NLRB v. Fansteeel Corp., 306 U.S. 240, 258 (1939). Neither are actions that constitute a “repudiation by the employee of his [employment] agreement.” NLRB v. Sands Mfg. Co., 306 US 332, 344 (1939). The U.S. Supreme Court has defined “concerted activity” in a way that “embraces the activities of employees who have joined together in order to achieve common goals,” but which also includes individual action that is “intend[ed] to induce group activity.” NLRB v. City Disposal Systems, Inc., 465 US 822, 830-31 (1984).
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Businesses are subject to a variety of California employment laws affecting the employer/employee relationship. These include laws setting a minimum wage, establishing rules for overtime compensation and standards for workplace safety, and addressing employment discrimination and harassment. A lawsuit recently filed in a Northern California federal court alleges that a company violated state and federal laws that deal with employers’ obligations prior to mass layoffs of employees. Roberts, Jr. v. Telltale Games, Inc., No. 3:18-cv-05850, complaint (N.D. Cal., Sep. 24, 2018). The defendant, a video game developer in the Bay Area, recently announced that it had laid off most of its workforce in anticipation of closing its operations. The plaintiffs allege that the company failed to give advance notice as required by law.

The federal Worker Adjustment and Retraining Notification (WARN) Act of 1988 applies to employers with one hundred or more full-time employees. An employer must give notice in advance of a “plant closing” or a “mass layoff.” A “plant closing” occurs when an employer’s closure of a work site causes at least fifty employees to lose their jobs within a span of thirty days. 29 U.S.C. § 2101(a)(2). The Roberts case cited above involves an alleged “mass layoff.” The WARN Act defines this as a “reduction in force” within a thirty-day period that causes the loss of either (1) five hundred or more jobs, or (2) fifty or more jobs when that number accounts for at least one-third of the company’s total workforce. Id. at § 2101(a)(3).

California law applies more broadly than the federal WARN Act. The state statute applies to any employer with at least seventy-five employees, including part-time workers. Cal. Lab. Code § 1400(a). A “mass layoff” includes any incident that results in the loss of fifty or more jobs in thirty days. Id. at § 1400(d). Under both statutes, employers must give notice to affected employees or their representatives at least sixty days in advance of a mass layoff. 29 U.S.C. § 2102(a), Cal. Lab. Code § 1401.
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State and federal employment statutes prohibit discrimination by California businesses on the basis of multiple factors, including race, sex, religion, and others. The scope of these laws extends beyond overt, deliberate discrimination. An employment practice that adversely impacts one or more protected groups—known as “disparate impact”—may also constitute unlawful discrimination, even if the employer has no discriminatory intent. Questions of this nature should be directed to a dedicated California employment discrimination attorney to ensure you understand all options available to you.

A recent news story offers an example of how a disparate impact claim could have emerged. An internet-based retail company recently abandoned an artificial intelligence (AI) system that it had developed to screen job applicants, after it discovered that the system was apparently favoring male over female applicants in ways that were unrelated to job qualifications. The company has stated that it never used the system for real-world recruiting or hiring decisions.

Title VII of the federal Civil Rights Act of 1964 prohibits employment discrimination on the basis of race, color, religion, national origin, and sex. 42 U.S.C. § 2000e-2. Other federal statutes address discrimination based on age, disability, and genetic information. See 29 U.S.C. § 623(a); 42 U.S.C. § 12112; 29 U.S.C. §§ 1182(a)(1)(F), (b)(3). The California Fair Employment and Housing Act of 1959 also covers these factors, as well as others like sexual orientation and gender identity or gender expression. Cal. Gov. Code § 12940(a). It allows exceptions for “bona fide occupational qualifications.”

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Social media has provided near-countless ways for people to communicate with one another. The “marketplaces of ideas” that social media companies provide, however, require constant moderation in order to enforce rules against inappropriate and illegal content. Facebook, which is based in Northern California, has been the world’s largest social media service for over a decade, and now has more than two billion active monthly users. The company employs content moderators, through a staffing agency, to review posts by Facebook users and remove those that violate the service’s rules. A former content moderator has filed a putative class action alleging that the company has negligently failed to maintain a safe work environment for its content moderators, and that this has caused her to “suffer[] from significant psychological trauma and post-traumatic stress disorder.” Scola v. Facebook, Inc. et al, No. 18CIV05135, complaint at 2 (Cal. Super. Ct., San Mateo Cty., Sep. 21, 2018). The lawsuit also asserts several causes of action under the California Unfair Competition Law (CUCL). If you have a question about an issue you’re experiencing at work, contact a California business lawyer.

The Scola lawsuit is primarily based on the common-law theory of negligence. In order to prevail on a negligence claim in a court of law, a plaintiff must prove four elements by a preponderance of evidence: (1) the defendant owed a duty of care to the plaintiff or the general public; (2) the defendant breached this duty of care; (3) this breach was the proximate cause of the plaintiff’s injuries; and (4) the plaintiff has suffered a measurable loss because of these injuries.

The CUCL defines “unfair competition,” in part, as “any unlawful…business act or practice.” Cal. Bus. & Prof. Code § 17200. The plaintiff in Scola cites various provisions of the California Labor Code, and alleges that violations by the defendants constitute “unfair competition.” State law generally requires employers to “furnish employment and a place of employment that is safe and healthful for the employees therein.” Cal. Lab. Code § 6400(a). Employers must take various affirmative steps to safeguard the workplace and their employees, including the use of “an effective injury prevention program.” Id. at § 6401.7(a).
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State and federal wage laws require employers to pay a minimum wage and overtime to non-exempt employees. The U.S. Supreme Court has identified an exception when the alleged amount of unpaid wages is particularly small, known as the “de minimis doctrine.” It applies to wage claims under federal law, but not necessarily to state wage claims. The California Supreme Court recently ruled on a certified question from the Ninth Circuit Court of Appeals, asking whether the federal de minimis doctrine applies to California wage laws. The state high court ruled that it does not apply in Troester v. Starbucks Corp., No. S234969, slip op. (Cal., Jul. 26, 2018).

The federal Fair Labor Standards Act (FLSA) currently sets the national minimum wage at $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). It allows states to enact their own statutes with a higher, but not lower, minimum wage. Id. at § 218(a). California law sets a minimum wage of $10.50 per hour for employers with up to twenty-five employees, and $11 per hour for employers with at least twenty-six employees. Cal. Lab. Code §§ 1182.12(b)(1)(B), (2)(A). Both state and federal law establish an overtime wage rate of one-and-a-half times a non-exempt employee’s usual wage for work in excess of forty hours in a week. 29 U.S.C. § 207(a)(1), Cal. Lab. Code § 510.

The FLSA’s de minimis doctrine holds that employers are not liable for wage law violations when the amounts in question are sufficiently small, based on three factors:
1. When the amount of time in question “is so miniscule that it cannot, as an administrative matter, be recorded for payroll purposes”;
2. When “the size of the aggregate claim” is “insubstantial”; and
3. When “the claimants [did not] perform[] the work on a regular basis.”
Lindow v. United States, 738 F. 2d 1057, 1063 (9th Cir. 1984). See also Anderson v. Mt. Clemens Pottery Co., 328 US 680, 692 (1946); 29 C.F.R. § 785.47.
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California employment law prohibits discrimination against employees and job applicants on the basis of sex or gender. In the Northern California tech industry, gender discrimination has been a subject of numerous recent allegations and complaints. Last fall, a group of women employed by Google filed a class action alleging disparities in wages based on sex. Ellis, et al. v. Google, Inc., No. CGC-17-561299, complaint (Cal. Super. Ct., San Francisco Cty., Sep. 14, 2017). The company is also facing another discrimination lawsuit with a different, but related, angle. This lawsuit, filed in January 2018 by a male former employee, alleges discrimination on the basis of sex and political viewpoint. Damore, et al. v. Google, LLC, No. 18CV321529, complaint (Cal. Super. Ct., Santa Clara Cty., Jan. 8, 2018). California is one of the few states with an employment discrimination statute that addresses employees’ “political activities or affiliations.” Cal. Lab. Code § 1101 et seq. The plaintiff alleges that he experienced California employment discrimination as a male employee with politically conservative views.

The California Fair Employment and Housing Act (FEHA) generally prohibits discrimination on the basis of sex, gender, and other factors. Cal. Gov’t Code § 12940(a). The California Equal Pay Act (EPA) more specifically prohibits disparities in pay based on gender when the work, working conditions, and qualifications are “substantially similar.” Cal. Lab. Code § 1197.5(a). The statute makes exceptions when a pay disparity is based on certain “bona fide factor[s] other than sex,” including merit- or seniority-based systems and systems that base pay on “quantity or quality of production.” Id.

The statute dealing with employees’ political views prohibits employers from “[c]ontrolling or directing…the political activities or affiliations of employees,” id. at § 1101(b); and from using the “threat of discharge or loss of employment” to compel an employee to follow, or not follow, “any particular course or line of political action or political activity,” id. at § 1102. The California Supreme Court ruled that this statute allows private civil actions for alleged violations in Lockheed Aircraft Corp. v. Superior Court, 28 Cal.2d 481 (1946). The court later affirmed a claim of political viewpoint discrimination based on employees’ advocacy for “the struggle of the homosexual community for equal rights,” when claims of sexual orientation discrimination were not tenable under state law. Gay Law Students Assn. v. Pacific Tel. & Tel. Co., 24 Cal.3d 458, 488 (1979).

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California sexual harassment has gained unprecedented attention in recent months, starting in Hollywood and expanding to include nearly every type of employer in the country. Sexual harassment is considered a form of sex discrimination under both federal and state laws. It can take two main forms. Quid pro quo sexual harassment occurs when a supervisor or manager makes sexual conduct of some sort a condition of employment, such as when an employee will receive better shift assignments if they date the boss. A hostile work environment occurs when the sexually inappropriate conduct of one or more other people in the workplace interferes with the ability to do one’s job. Federal and state laws require proof that the allegedly offensive conduct was “pervasive or severe.” See Cal. Civ. Code § 51.9(a)(2). A California state senator held a hearing in January 2018 to consider whether this standard is too stringent, looking at New York City’s employment statute for possible revisions to state law that could affect many California employers.

The U.S. Supreme Court has defined the “severe or pervasive” standard for hostile work environment claims under federal law as requiring evidence of “an environment that a reasonable person would find hostile or abusive.” Harris v. Forklift Systems, Inc., 510 U.S. 17, 21 (1993). California courts apply the same standard for hostile work environment claims under the California Fair Employment and Housing Act (FEHA). See, e.g., Hughes v. Pair, 46 Cal.4th 1035, 1048 (2009). Determining whether the alleged offensive conduct was “severe or pervasive” has both a subjective and an objective component. It requires consideration of “a constellation of surrounding circumstances, expectations, and relationships,” rather than “a simple recitation of the words used or the physical acts performed.” Lyle v. Warner Bros. Television Prod., 42 Cal.Rptr.3d 2, 16 (2006).

A dissenting appellate court justice in the Hughes case cited above criticized the “severe or pervasive” standard, noting that the statute that uses that language, the Unruh Civil Rights Act (UCRA), “is not an employment discrimination statute,” and nothing indicates that the state legislature intended to mix this statute and the FEHA. Hughes v. Pair, 65 Cal. Rptr. 3d 619, 632 (Cal. App., 2d Dist. 2007) (Armstrong, Acting P.J., dissenting). The justice advocated for an “interpret[ation] based on the plain and ordinary meaning of the words” in the statute. Id. at 633. Other critics of the “severe or pervasive” standard point to the reportedly high percentage of sexual harassment complaints dismissed by the courts, arguing that the standard imposes too high a burden on complainants.

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Federal law protects the right of workers to organize for the purpose of collective bargaining with their employers, more commonly known as unionizing. The National Labor Relations Act (NLRA) outlines these rights and prohibits employers from interfering with employees engaging in protected activities. The National Labor Relations Board (NLRB) investigates alleged violations of workers’ rights and, in some cases, pursues legal claims on behalf of aggrieved workers. Throughout 2017, employees of Tesla, a Northern California technology company that designs, manufactures, and sells electric cars, have been involved in efforts to form a union. Multiple workers filed complaints with the NLRB. In August, the NLRB consolidated five of these California employment cases into a single complaint, which alleges various acts of coercion and restraint against employees involved in union organizing. Tesla, Inc. and Sanchez, et al., Nos. 32-CA-197020, 197058, 197091, 197197, 200530, cons. complaint (NLRB Reg. 32, Aug, 31, 2017).

The NLRA provides broad protections for employees’ “right to self-organization,” which includes “form[ing], join[ing], or assist[ing] labor organizations.” 29 U.S.C. § 157. It also protects employees’ “right to refrain from any or all of such activities” if they choose. Id. The statute prohibits “unfair labor practices,” including any “interfere[nce] with, restrain[t], or coerc[ion of] employees” in relation to their rights. Id. at § 158(a)(1). Unions are subject to similar prohibitions against coercing or restraining employees, such as in situations regarding their right not to participate in protected activities.

A recurring dispute with regard to unions involves the question of whether employees who do not wish to join a union may still be required to pay fees to unions that represent them. Some states allow employees to opt out of union membership through “right to work” laws. California is not a “right to work” state. Opponents of right to work laws note that collective bargaining agreements usually apply to all employees, regardless of whether they are dues-paying members of the union. Supporters tend to argue that employees should have the choice of whether to join and pay fees to a union.

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Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in 2010. The statute amended existing statutes like the Securities Exchange Act of 1934, and it referenced other major financial reform laws like the Sarbanes-Oxley Act of 2002. Dodd-Frank requires businesses to make a wide variety of disclosures about their financial activities, and it offers incentives to company insiders, or “whistleblowers,” to report violations. It penalizes employers that retaliate against whistleblowers. The Ninth Circuit Court of Appeals recently ruled in favor of a whistleblower in a retaliation claim that is relevant to future California employment cases. Somers v. Digital Realty Trust, Inc., 850 F.3d 1045 (9th Cir. 2017). The case depended on Dodd-Frank’s ambiguous use of the word “whistleblower.” The ruling conflicts with at least one other appellate court’s interpretation of the statute. As a result, the U.S. Supreme Court has agreed to hear the case in November 2017.

Dodd-Frank’s language regarding whistleblower retaliation is ambiguous. It prohibits employers from retaliating against whistleblowers who make reports to the Securities and Exchange Commission (SEC) as required by Dodd-Frank or other statutes, including but not limited to Sarbanes-Oxley. 15 U.S.C. § 78u-6(h)(1)(A). This would seem to include reports to other agencies besides the SEC, as well as internal reports to company management. The ambiguity is due to the word “whistleblower,” which is defined in an earlier subsection specifically as anyone “who provide[s] information relating to a violation of the securities laws to the [SEC].” Id. at § 78u-6(a)(6). The statute does not make it clear whether the anti-retaliation provision refers to the statute’s narrow definition of a whistleblower or uses a broader plain-language meaning.

The SEC’s regulation implementing the anti-retaliation provision, first promulgated in 2011, appears similarly ambiguous by repeating much of the language of the statute. 17 C.F.R. § 240.12F-2. The agency clarified, however, that it did not interpret “whistleblower” broadly to “include[] individuals who report to persons or governmental authorities other than the [SEC].” 76 Fed. Reg. 34299, 34304 (Jun. 13, 2011); see also 80 Fed. Reg. 47829 (Aug. 10, 2015). In court disputes over the ambiguity in the statute, how the court will rule depends on whether it follows the Chevron doctrine, which holds that courts should give deference to agency interpretations of statutes. See Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984).

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Any business that takes on employees also takes on responsibilities to those employees. In addition to standards regarding wages and hours of work, employers must make reasonable efforts to maintain a workplace that is free from unlawful discrimination and harassment. Throughout California, workplace harassment remains a serious problem. The technology industry of Silicon Valley and San Francisco has received attention for multiple recent accounts of sexual harassment and other forms of gender-based discrimination. A lawsuit filed earlier this year asserts several causes of action under California employment anti-discrimination statutes, including harassment and hostile work environment. Scott v. Upload, Inc., et al., No. CGC-17-558730, complaint (Cal. Super. Ct., San Francisco Cty., May 8, 2017).

Title VII of the federal Civil Rights Act of 1964 prohibits employment discrimination on the basis of “race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a). Many state laws and city ordinances go further. California’s Fair Employment and Housing Act (FEHA), for example, addresses discrimination based on sexual orientation, gender identity and expression, and more. Cal. Gov’t Code § 12940(a). Under both federal and state laws, sexual harassment is considered a type of unlawful sex discrimination. The FEHA expressly provides that both harassment and failure to prevent harassment violate its anti-discrimination provisions. Id. at § 12940(j).

The plaintiff in Scott states in her complaint that she began working for the defendant in May 2016. The defendant is a San Francisco-based business that “focuse[s] on the virtual and augmented reality industry.” Scott, complaint at 1. The plaintiff’s position was “Director of Digital and Social Media.” Id. at 3. She describes the “atmosphere and work environment” of the defendant as “marked by rampant sexual behavior and focus.” Id. at 4. Male employees and managers, including two individuals identified by the plaintiff as founders of the company, allegedly spoke openly about “sexual exploits” and made overtly sexual comments about women in the office, often right in front of them. Id. Work-related emails, the plaintiff claims, were similarly explicit.