Miscellaneous Employment Law Developments

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The following was written collectively by our Labor & Employment Department.

A. California WARN Act

1. Layoffs Of Any Length Require Compliance with Cal-WARN

In The Internat. Brotherhood of Boilermakers etc. v. NASSCO etc., 17 Cal. App. 5th 1105 (Nov. 30, 2017), the employer notified 90 employees, without prior notice, to not return to work for at least 3 weeks due to a lull in shipyard production work. NASSCO later extended the layoff period by several weeks for some of the employees. The WARN Act’s notice requirement provides that a covered employer “may not order a mass layoff, relocation or termination at a covered establishment unless, 60 days before the order takes effect, the employer gives written notice of the order to … the employees of the covered establishment…”

The employer argued that such short “furloughs” were not a mass “layoff” covered by Cal-WARN. The Court disagreed because the law defined “mass layoff” as “a separation from a position for lack of funds or lack of work.” (§ 1400, subd. (c)) (emphasis added). The Court reasoned that, based on the plain meaning of that statutory language, a “separation” can be either temporary or permanent and there was no temporal requirement. The Court also noted that the Cal-WARN act was meant to give greater protection to employees than the Federal WARN act, which requires notice only when a layoff will last more than six months.

Liability for violations of the Cal-WARN act can include compensatory damages, attorney fees, and statutory penalties.

B. Fair Labor Standards Act

1. Outside Counsel Personally Liable for Retaliation under FLSA.

In Arias v. Raimondo, 860 F.3d 1185 (9th Cir. 2017), the Ninth Circuit held that an employer’s attorney could be held liable for retaliation under the Fair Labor Standards Act (“FLSA”) for reporting an undocumented plaintiff in a wage and hour claim to the Immigration and Custom Enforcement agency (“ICE”). The attorney for the defendant dairy farm contacted ICE to inform them that the plaintiff was undocumented and to encourage them to take him into custody at a scheduled deposition and remove him from the United States. Subsequently, plaintiff filed a claim against the attorney personally, alleging that in his capacity as the dairy farm’s agent, the attorney retaliated against plaintiff in violation of the anti-retaliation provision of the FLSA. Defendant argued that he was not plaintiff’s employer. The Ninth Circuit held that the FLSA anti-retaliation provision includes a broader definition of “employer” than the FLSA’s provisions regarding wages, and applies to “any person acting directly or indirectly in the interest of an employer in relation to an employee.”

C. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

1. Supreme Court to Decide Whether Internal Complaints Grant “Whistleblower” Status

In Somers v. Digital Realty Trust, Inc., 850 F.3d 1045 (9th Cir. 2017), petition for cert granted, 137 S.Ct. 2300, plaintiff Paul Somers made several reports to senior management regarding possible securities law violations by his employer. The company fired him before Somers reported any violation to the SEC. Joining the Second Circuit, and disagreeing with the Fifth Circuit, the Ninth Circuit adopted the broader interpretation of “whistleblower” and held that Section 21F of the Dodd-Frank Act “unambiguously and expressly protects from retaliation all those who report to the SEC and who report internally.” The Supreme Court will review this decision to resolve the Circuit Split.

D. Fair Credit Reporting Act

1. A Waiver Must Be Printed on a Document Separate From an Applicant’s Credit Report Disclosure

In Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017), the defendant provided plaintiff job applicant Syed a document labeled “Pre-employment Disclosure Release.” The Disclosure Release informed Syed that his credit history and other information could be collected and used as a basis for the employment decision, authorized M-I to procure Syed’s consumer report, and stipulated that, by signing the document, Syed was waiving his rights to sue M-I and its agents for violations of the FCRA. The FCRA states that an employer cannot obtain an applicant’s credit report unless “a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes…” (emphasis added).

Syed sued and sought punitive and statutory damages for M-I’s “willful” violation of the FCRA. The Ninth Circuit held that, “[i]n light of the clear statutory language that the disclosure document must consist ‘solely’ of the disclosure, a prospective employer’s violation of the FCRA is ‘willful’ when the employer includes terms in addition to the disclosure, such as the liability waiver here, before procuring a consumer report or causing one to be procured.” Thus, a prospective employer should not include a waiver of liability on the same document where the employer provides the required disclosure to a prospective employee.

E. Fair Pay and Safe Workplaces Executive Order

1. Congress Repeals Obama’s Fair Pay and Safe Workplaces Executive Order

In March 2017, Congress repealed the Fair Pay and Safe Workplaces Executive Order, which was introduced by the Obama administration in 2014. Regulations implementing the Executive Order were finalized in 2016; however, a court enjoined its implementation prior to it going into effect. In part, the Executive Order would have required contractors and prospective contractors to list any recent violations of labor laws (including, e.g., the FLSA, the NLRA, Title VII, and the ADEA) in their contract bids, with “serious, repeated, willful or pervasive” labor law violations to be taken into account by contracting officers when determining whether to award or extend contracts. In addition, it would have required contracts over $1 million to include a provision stating that the contractors agreed that “the decision to arbitrate claims arising under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise.”

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