But Are They Right for Your Workforce?
The US Supreme Court issued a highly anticipated decision on May 21, 2018 in Epic Systems Corp. v. Lewis, holding that class action waivers in arbitration agreements are fully enforceable, notwithstanding the right to engage in concerted activity under the National Labor Relations Act.
Although employers now have a tool to effectively eliminate most employment class actions through the use of arbitration agreements, several other important nuances remain to be considered before rolling out an arbitration program.
Click here to learn more about the decision and what it means for your business.
Welcome news for employers: companies can require their workers go through arbitration to pursue any legal claims against their employers, rather than go to court or join together in class lawsuits or grievances, the US Supreme Court held today in a 5-4 vote.
Writing for the majority in three consolidated cases (Epic Systems Corp. v. Lewis, NLRB v. Murphy Oil USA, Inc., and Ernst & Young LLP v. Morris), Justice Neil Gorsuch said the Federal Arbitration Act sets a strong policy favoring the enforcement of arbitration agreements, and employees of the three companies failed to show they had any right to disregard the arbitration agreements they signed.
The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written. While Congress is of course always free to amend this judgment, we see nothing suggesting it did so in the NLRA — much less that it manifested a clear intention to displace the Arbitration Act. Because we can easily read Congress’s statutes to work in harmony, that is where our duty lies.
The ruling means that companies can enforce their class action waiver agreements and their employees will have to pursue their claims in individual arbitration proceedings. Please stay tuned for more to come from us on the actions employers should take now in response to this important decision.
“The Dynamex Case: A New Threat to Franchising?” alerts franchisors to the California Supreme Court’s recent opinion in Dynamex Operations West Inc. v. The Superior Court of Los Angeles County.
Although not a franchise case, the decision cites two cases that used the ABC test to determine that franchisees were employees of a franchisor, not independent contractors. Assuming the Dynamex test is applied to franchising, it could have far-reaching consequences for our franchise clients with operations in California.
On April 30, the California Supreme Court issued an opinion radically changing the legal landscape for any company engaging independent contractors in California. Dynamex Operations West Inc. v. The Superior Court of Los Angeles County changes the legal test for determining whether workers should be classified as employees or as independent contractors under California’s wage orders. The Court scrapped the multifactor, flexible test (known as “Borello”) that has been used in California for decades. It adopted the “ABC” test, a standard that has its roots in determination of unemployment tax status in other states and presumes workers are employees instead of independent contractors.
This extraordinary decision will have far-reaching consequences for California companies reliant on independent contractors and likely spur a landslide of litigation for years to come. As such, we are recommending that companies engaging independent contractors in California, in any industry, work with counsel to revisit classification decisions and undertake a cost/benefit analysis of reclassifying workers in the near term.
For more, please read our alert HERE.
As we previously posted, on January 5, 2018, the Department of Labor did away with its previous six-factor test and announced a new “primary beneficiary” test to determine whether interns and students working for “for-profit” employers are entitled to minimum wages and overtime pay under the Fair Labor Standards Act. See our previous post HERE, as well as the DOL’s Fact Sheet #71 HERE. While employers are required to pay employees for their work, in some circumstances, interns may not actually be employees under the FLSA, and therefore, can be unpaid.
Whether your company is already planning to bring on unpaid interns, or to the extent your company would like to explore the possibility of a new unpaid internship program, you will want to consider the DOL’s new primary beneficiary test so as to guard against potential costly claims for pay and/or overtime.
Please reach out to your Baker McKenzie lawyer for more details.
In the wake of the #metoo movement, several lawmakers proposed legislation to ban confidentiality provisions in workplace sexual harassment settlements.
Critics of confidentiality agreements say that they enable serial abusers and silence victims. But, some advocates question whether a ban could actually harm individuals. For instance, some victims may actually prefer confidentiality and the prospect of publicity may discourage them from coming forward. Further, the promise of confidentiality may lead to larger (and earlier) monetary settlements for victims.
The use of mandatory employment arbitration agreements has long been the subject of debate, but the controversy has intensified since the inception of the #MeToo movement. Some legislators believe that mandatory arbitration of sexual harassment claims silences harassment victims and perpetuates harassment.
- Employers must review their workplace health and safety policies to ensure that anti-harassment polices are up to date and that training is in place, particularly around sexual harassment.
- Review termination clauses in employment agreements to ensure compliance with ESA and clarity of language and intent.
- Implement the minimum wage and equal pay obligations that are now in force.
- Be proactive in managing the use of cannabis in the workplace, particularly where accommodation requests come into play.
- Prepare for expanding supply chain + ESG transparency and global corporate human rights obligations. If operating globally, ensure you have a policy and due diligence program in place to mitigate adverse human rights impacts and lower risk of exposure to human rights lawsuits and reputational damage.