In a huge win for California employers, the California Court of Appeals recently confirmed that courts have discretion to strike claims for penalties under the Private Attorneys General Act of 2004 (“PAGA”) if the claims will be unmanageable at trial. This decision will help employers defeat—or significantly pare down—the broad and unwieldy claims for PAGA penalties that have become popular with the plaintiffs’ bar.
On September 8, 2021, the House Education and Labor Committee issued proposed legislation in connection with the House’s new spending bill. Among other pro-union proposals issued in connection with the Protecting the Right to Organize (PRO) Act, the proposed legislation seeks to amend the National Labor Relations Act (NLRA) by banning class and collective action waivers.
The proposed legislation, which can be found here, says that no employer shall “enter into or attempt to enforce” any express or implied agreement not to “pursue, bring, join, litigate, or support any joint, class, or collective claim” arising from the employment relationship. This is unwelcome news to employers who rely on class and collective action waivers in their arbitration agreements.
Earlier this month, the Equal Employment Opportunity Commission (EEOC) held a webinar on artificial intelligence (AI) in the workplace. Commissioner Keith Sonderling explained that the EEOC is monitoring employers’ use of such technology in the workplace to ensure compliance with anti-discrimination laws. The agency recognizes the potential for AI to mitigate unlawful human bias, but is wary of rapid, undisciplined implementation that may perpetuate or accelerate such bias. Sonderling remarked that the EEOC may use Commissioner charges—agency-initiated investigations unconnected to an employee’s charge of discrimination—to ensure employers’ are not using AI in an unlawful manner, particularly under the rubric of disparate impact claims.
Employers operating in California often ask employees to agree to arbitrate employment-related disputes as a term and condition of employment. In its recent Chamber of Commerce v. Bonta decision, the Ninth Circuit took a significant step toward prohibiting such mandatory employment arbitration agreements. However, the combination of a 2-1 panel decision (authored by a visiting judge from the Tenth Circuit), a scathing dissenting opinion, and a holding that splits with decisions from the First and Fourth Circuits all but ensures more litigation. As a result, the case is far from over, so while employers eventually may have to consider changing their arbitration agreement practices, they very likely have some time to let the dust settle before doing so. Continue Reading The Ninth Circuit, Mandatory Arbitration Agreements, and “Clown Bop Bags”
On September 7, 2021, the Equal Employment Opportunity Commission (“EEOC”) filed a first-of-its-kind lawsuit against an employer that allegedly denied accommodation for telework in violation of the Americans with Disabilities Act (the “ADA”). Currently, the case is the only lawsuit the EEOC has filed concerning a request for an ADA accommodation related to COVID-19. The suit is a challenge to the typical posture of courts that frequently consider working from home to be an unreasonable accommodation.
The Office of Federal Contract Compliance Programs (“OFCCP”), an agency within the Department of Labor, has recently announced two significant changes that will impact covered contractors and subcontractors in the coming months. Continue Reading AAP Changes Ahead for Federal Contractors
Private employers with 100 or more employees will face sweeping new requirements related to COVID-19 vaccination and testing under a plan announced by President Joe Biden on September 9.
Last month, a judge out of the Alameda County Superior Court ruled California’s Proposition 22 unconstitutional, constituting a significant legal obstacle to this young statute.
Proposition 22 (formally the Protect App-Based Drivers and Services Act, Bus. & Prof. Code, §§ 7448, et seq.) was a ballot initiative passed by a majority of California voters in the November 2020 election, which primarily aimed to classify application-based transportation and delivery companies’ drivers as independent contractors rather than employees. Proposition 22 arose in response to Assembly Bill 5, 2019 legislation codifying the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court, which created a new “ABC” test for determining whether workers are properly classified as independent contractors. (More information on AB 5 can be found in this previous Hunton Employment & Labor Perspectives post.)
California already has prohibitions on including non-disclosure provisions in certain settlement agreements related to sexual harassment. Now California seeks to expand these prohibitions by enacting the Proposed California SB-331 (“Silenced No More Act”). The new Act aims to prohibit provisions within any agreement that prevent or restrict the disclosure of factual information of claims related to harassment, discrimination, and retaliation. The proposed bill recently passed senate and assembly, and if approved by governor, will become effective January 1, 2022.
On August 17, 2021, the Sixth Circuit Court of Appeals became the first federal appellate court to hold that where nonresident plaintiffs opt into a putative collective action under the FLSA, a court may not exercise specific personal jurisdiction over claims unrelated to the defendant’s conduct in the forum state. Canaday v. The Anthem Companies, Inc. (Case No. 20-5947) (6th Cir). The next day, the Eighth Circuit reached the same conclusion in a separate case. Vallone v. CJS Solutions Group, LLC, d/b/a HCI Group (Case No. 20-2874) (8th Cir).
We previously blogged about how district courts were divided on this question. Now, with two appellate court rulings, the weight of authority leans in favor of employers.
At issue in both cases was whether a federal court can exercise personal jurisdiction over the claims of FLSA opt-in plaintiffs who reside and worked for the defendant outside the state where the action is pending. Often, plaintiffs will file a proposed collective action in the state where he or she resides or worked for the defendant, which is many times not the defendant’s home state. In this scenario, the court has personal jurisdiction over the named plaintiff’s claims because the claims arise in the forum state. But does such jurisdiction extend to the claims of nonresident employees seeking to opt-in to the action?
Both circuits, analyzing similar fact patterns, answered “no.”
Critical to this rationale is the distinction between general and specific personal jurisdiction. If either claim were filed in the defendant-employer’s home state—either the state of incorporation or the principal place of business—district courts could exercise general personal jurisdiction over the defendant, enabling the court to hear any claim against the employer, even if such claims lack connection to the forum state. But such broad jurisdiction is absent where, as in Canaday and Vallone, the named plaintiff files suit in a state in which the defendant-employer is not at home. In such circumstances, the court can only assert specific personal jurisdiction over claims that arise as a result of the defendant’s in-state activities.
Although the nonresidents in Canaday and Vallone had claims based upon the defendant’s conduct in their respective states, such claims, the circuit courts concluded, lacked connection to the forum state. In so holding, both appellate courts cited the Supreme Court’s 2017 Bristol Myers Squibb Co. v. Superior Court of Ca. decision, wherein the Supreme Court explained that California state courts could not exercise specific personal jurisdiction over product liability claims of nonresidents where the claims did not relate to the defendant’s activity in California.
Notably, the Sixth Circuit rejected the plaintiff’s argument that personal jurisdiction should exist for nonresident plaintiffs in the same regard as it would in a Rule 23 action, which most courts agree only require that the named plaintiff establish personal jurisdiction. The Sixth Circuit disagreed with this comparison because Rule 23 class members are represented by the named plaintiff and have to affirmatively opt-out of a proposed class. In contrast, putative class members in an FLSA action have to affirmatively opt-in, and when they do so, they become “party plaintiffs” by operation of the statute.
The Canaday and Vallone opinions are a significant victory for employers defending putative nationwide FLSA collective actions, particularly in the Sixth and Eighth Circuits. If an employer is sued outside its home state, the Canaday and Vallone opinions should help a defendant-employer limit any proposed collective action to individuals who worked for the defendant in the forum state.