New Labor Code Section Targets Choice-of-Law, Choice-of-Venue Provisions

On September 25, 2016, Governor Brown signed into law Senate Bill 1241, enacting new Labor Code section 925. Effective January 1, 2017, section 925 provides as follows:

(a) An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following: 

(1) Require the employee to adjudicate outside of California a claim arising in California. 

(2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

(b) Any provision of a contract that violates subdivision (a) is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute. 

(c) In addition to injunctive relief and any other remedies available, a court may award an employee who is enforcing his or her rights under this section reasonable attorney’s fees. 

(d) For purposes of this section, adjudication includes litigation and arbitration.  

(e) This section shall not apply to a contract with an employee who is in fact individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.  

(f) This section shall apply to a contract entered into, modified, or extended on or after January 1, 2017.

Legislative Counsel's Digest states: 

Existing law regulates the terms and conditions of labor contracts. Existing law prohibits an employer from requiring an employee or applicant for employment to agree, in writing, to any term or condition that is known by the employer to be illegal. Existing law creates the Division of Labor Standards Enforcement, which is under the direction of the Labor Commissioner, and generally commits to the commissioner the authority and responsibility for the enforcement of employment laws.  

This bill, for contracts entered into, modified, or extended on or after January 1, 2017, would prohibit an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would require the employee to adjudicate outside of California a claim arising in California or deprive the employee of the substantive protection of California law with respect to a controversy arising in California. The bill would make any provision of a contract that violates these prohibitions voidable, upon request of the employee, and would require a dispute over a voided provision to be adjudicated in California under California law. The bill would specify that injunctive relief is available and would authorize a court to award reasonable attorney’s fees. The bill would provide that adjudication includes litigation and arbitration for purposes of these provisions. The bill would except from these provisions a contract with an employee who was represented by legal counsel, as specified. 

Governor Vetoes Employment Arbitration Bill

I wrote recently in the Daily Journal ("Does the FAA cover your agreement?") about AB 465 (Legislative Counsel's Digest here), which would have enacted Labor Code section 925, providing, inter alia, as follows:

No person may require another person, as a condition of employment, to agree to the waiver of any legal right, penalty, forum, or procedure for any employment law violations; no person may threaten, retaliate, or discriminate against another person based on a refusal to agree to such waiver; any such waiver required as a condition of employment or continued employment is unconscionable, against public policy, and unenforceable; any waiver of a person’s employment rights must be knowing, voluntary, in writing, and expressly not made as a condition of employment.

Governor Brown vetoed AB 465 on October 11. His veto message is here.

Governor Signs Legislation Confirming Wage Order Meal Period Waivers for Employees in the Health Care Industry

Industrial Welfare Commission Wage Orders 4 and 5 have special provisions for meal periods that apply only to employees in the health care industry, as defined. Unlike employees in other industries, under Wage Orders 4 and 5, employees in the health care industry who work more than eight hours in a workday may waive one of their two meal periods, even if they work more than twelve hours in the workday.

In Gerard v. Orange Coast Memorial Medical Center (2/10/15) 234 Cal.App.4th 285 (discussed here), the Court of Appeal held that this provision contradicts Labor Code section 512 and is invalid. The California Supreme Court granted review of Gerard, and it is pending on the Court's docket.

In the mean time, Governor Brown on October 5 signed SB 327, which amends Labor Code 516 to provide:

Notwithstanding subdivision (a), or any other law, including Section 512, the health care employee meal period waiver provisions in Section 11(D) of Industrial Welfare Commission Wage Orders 4 and 5 were valid and enforceable on and after October 1, 2000, and continue to be valid and enforceable. This subdivision is declarative of, and clarifies, existing law.

This is urgency legislation that takes effect immediately.

The text of the bill is available here.

New Law: New Labor Code Section 2500 Protects Grocery Workers' Jobs on Change of Ownership

Just a quick word regarding AB 359, which provides protections to grocery workers upon a change of ownership of a grocery. With certain exceptions, upon the change of control of a grocery, the successor grocery employer must retain eligible grocery workers for a 90-day period, may not discharge those workers without cause during that period, and, upon the close of that period, must consider offering continued employment to those workers. Cal. Labor Code section 2500 et seq.


The text of AB 359 is here. 

Governor Brown Signs Urgency Legislation Amending Sick Leave Law

Last September, Governor Brown signed California’s new sick leave law, the Healthy Workplaces, Healthy Families Act, or HWHFA. (Quite a name. Rolls right off the tongue.) With limited exceptions, the HWHFA requires employers to provide employees with paid sick leave, which employees can use to care for themselves or their family members. Unfortunately, whether you support the idea of giving employees paid sick leave or not, the law was not very clear. With the law set to kick in on July 15, many employers were still guessing as to how to implement it.

On July 13, with two days to spare, Governor Brown signed legislation to clarify the law. Cal. Labor Code sections 245.5, 246, and 247.5. 

As just one example, the original law provided that employees could accrue sick leave at a rate of not less than one hour of leave for every 30 hours worked, or employers could provide a lump sum of three days or 24 hours at the start of each year. But what about employers whose existing sick leave or paid time off (PTO) policies accrued leave at a different rate? Under the amended law, employers may allow sick leave to accrue a basis other than one hour for each 30 hours worked, as long as (1) the sick leave accrues on a regular basis and (2) the employee will accrue at least 24 hours of sick leave by the 120th calendar day of employment. 

The law amending the statutes, AB 304, was designated as urgency legislation, to go into effect immediately. It is available here. 

Governor Brown Acts On Employment Law Bills

As you probably know, Governor Brown has acted on a very large number of bills over the last week, and many of them impact employment law. The following is a list, compiled by DFEH Director Phyllis Cheng.  I will review a few of these bills in detail over the next week or so.

Bills Signed

AB 1203 by Assemblymember Tony Mendoza (D-Artesia) –Public school employee organizations: unelected members: paid leaves of absence.

AB 1565 by Assemblymember Felipe Fuentes (D-Los Angeles) – Public contracts: school districts: bidding requirements.

AB 1598 by Assemblymember Joan Buchanan (D-San Ramon) – Public contracts: public works: installation.

AB 1675 by Assemblymember Susan Bonilla (D-Concord) – Farm labor contractors: licenses: civil penalty.

AB 1744 by Assemblymember Bonnie Lowenthal (D-Long Beach) – Employee compensation: itemized statements.

AB 1794 by Assemblymember Das Williams (D-Santa Barbara) – Unemployment insurance: use of employer reports: reporting and payroll: enforcement. 

AB 1844 by Assemblymember Nora Campos - prohibits employers from requiring that applicants give up their e-mail or social media account passwords.

AB 1855 by Assemblymember Norma Torres (D-Pomona) – Employment: contractors: sufficient funds. 

AB 1865 by Assemblymember Luis Alejo (D-Salinas) – Residential tenancies: eviction: notices.

AB 1908 by Assemblymember Luis Alejo (D-Salinas) – Classified employees: notice of layoff.

AB 1960 by Assemblymember Roger Dickinson (D-Sacramento) – State contracts: reports: lesbian, gay, bisexual, and transgender businesses. 

AB 1964 by Assemblymember Mariko Yamada (D-Davis)- Clarifies that the practice of wearing religious clothing or a religious hairstyle as a belief or observance is covered by protections under the Fair Employment and Housing Act.

AB 2103 by Assemblymember Tom Ammiano (D-San Francisco) – Employment: wages and hours: overtime. 

AB 2140 by Assemblymember Ricardo Lara (D-South Gate) – Public employees' retirement: State Bargaining Unit 5: contribution rates.

AB 2212 by Assemblymember Marty Block (D-San Diego) – Human trafficking: civil penalties.

AB 2298 by Assemblymember Jose Solorio (D-Santa Ana) – Insurance: public safety employees: accidents. 

AB 2396 by the Committee on Arts, Entertainment, Sports, Tourism – Employment of infants: entertainment industry.

AB 2343 by Assemblymember Norma Torres (D-Pomona) – Criminal history information.

AB 2508 by Assemblymember Susan Bonilla (D-Concord) – Public contracts: public health agencies.

AB 2580 by Assemblymember Warren Furutani (D-Long Beach) – Public contracts: job order contracting.

AB 2663 by the Committee on Public Employees, Retirement and Social Security – Teachers' Retirement Law.

AB 2674 by Assemblymember Sandré Swanson (D-Oakland) – Employment records: right to inspect.

AB 2675 by Assemblymember Sandré Swanson (D-Oakland) – Employment contract requirements.

AB 2677 by Assemblymember Sandré Swanson (D-Oakland) – Public works: wages: employer payment contributions.

SB 114 by Senator Leland Yee (D-San Francisco) – Teachers: retirement. 

SB 615 by Senator Ronald Calderon (D-Montebello) – Multiple employer welfare arrangements: benefits.

SB 691 by Senator Ted Lieu (D-Torrance) - Unemployment insurance: use of information.

SB 987 by Senator Gloria Negrete McLeod (D-Chino) – Public employees' retirement.

SB 1255 by Senator Roderick Wright (D- Los Angeles) – Employee compensation: itemized statements. 

SB 1291 by Senator Noreen Evans (D-Santa Rosa) – Unemployment benefits: training: teacher credentialing.

SB 1294 by Senator Tom Berryhill (R-Stanislaus) – Public employee health benefits: Mariposa County. 

SB 1370 by Senator Tom Berryhill (R-Stanislaus) – Prevailing wages: public works: director: code list

Bills Vetoed

AB 889 by Assemblymember Tom Ammiano (D-San Francisco) – Domestic work employees. A veto message can be found here.

AB 1450 by Assemblymember Michael Allen (D-Santa Rosa) – Employment: discrimination: status as unemployed. A veto message can be found here. 

AB 1852 by Assemblymember Nora Campos (D-San Jose) – Vital records: fees. A veto message can be found here.

AB 1968 by Assemblymember Bob Wieckowski (D-Fremont) – Peace officers. A veto message can be found here.  

AB 2132 by Assemblymember Ricardo Lara (D-South Gate) – Public postsecondary education: tenure policy. A veto message can be found here.

AB 2346 by Assemblymember Betsy Butler (D-Marina Del Rey) – Agricultural employee safety: heat-related illness. A veto message can be found here. 

AB 2389 by Assemblymember Bonnie Lowenthal (D-Long Beach) – Contractor disclosure requirements. A veto message can be found here.  

AB 2623 by Assemblymember Michael Allen (D-Santa Rosa) –State hospitals: peace officers. A veto message can be found here.

AB 2676 by Assemblymember Charles Calderon (D-Whittier) – Agricultural employee safety. A veto message can be found here. 

SB 204 by Senator Carol Liu (D-Pasadena) – Local alternative transportation improvement program. A veto message can be found here.

SB 259 by Senator Loni Hancock (D-Berkeley) – Higher education: employees. A veto message can be found here. 

SB 1233 by Senator Alex Padilla (D-Pacoima) – Ballot measure petitions: translations. A veto message can be found here.

SB 1318 by Senator Lois Wolk (D-Davis) – Health facilities: influenza vaccinations. A veto message can be found here.

SB 1434 by Senator Mark Leno (D-San Francisco) – Location information: warrants. A veto message can be found here.

SB 1476 by Senator Mark Leno (D-San Francisco) – Family law: parentage. A veto message can be found here.

Legislation Introduced to Keep California Employment Actions in California

Assembly Bill 267 (Swanson, D.), introduced on Monday, would create Labor Code section 924, invalidating any clause in an employment contract that requires an employee, as a condition of obtaining or continuing employment, to agree to a forum or choice of law other than California to resolve a dispute with his or her employer regarding employment issues that arise in California.

Section 924 would read as follows:

924. (a) An employer shall not require an employee or job applicant, as a condition of employment, to waive the application of California law to any dispute relating to employment, or the securing of employment, in California.
(b) An employer shall not require an employee or job applicant, as a condition of employment, to resolve outside of California any dispute regarding employment, or the securing of employment, in California.
(c) Any choice of law, choice of forum, or choice of venue provision in a job application, employment agreement, employment handbook, or other statement of an employer’s policies applicable to its employees, is unconscionable, violative of the public policy of this state, and void if the provision would have the effect of either
of the following:
(1) Requiring the employee or job applicant, as a condition of employment, to resolve outside of California claims that arose from employment, or the securing of employment, in California.
(2) Depriving the employee or job applicant of the protection of California law for claims arising from employment, or the securing of employment, in California.
(d) Nothing in this provision affects the right of an employee to voluntarily agree to a choice of law or forum selection provision that is not required as a condition of employment and that is the subject of independent consideration.

Governor Schwarzenegger vetoed similar legislation the last two years. Information on the bill is available here.

Governor Signs and Vetoes More Labor and Employment Bills

Governor Schwarzenegger has signed and vetoed the following labor and employment law bills.

Signed

SB 657 (Steinberg, D-Sacramento). Enacts the California Transparency in Supply Chains Act of 2010. Beginning January 1, 2012, requires certain retailers and manufacturers doing business in California to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains for tangible goods offered for sale.

SB 677 (Yee, D-San Francisco). Permits the seizure of real property used to facilitate human trafficking and forced labor.

SB 1304 (DeSaulnier, D-Concord). Requires private employers to permit certain employees to take paid leaves of absence for organ and bone marrow donation.

AB 569 (Emmerson, R-Hemet). Amends Labor Code Section 512 to exempt employees who are: in a construction occupation; commercial drivers; employees in the security services industry employed as security officers; and employees of electrical and gas corporations or local publicly owned electric utilities; if those employees are covered by a valid collective bargaining agreement containing specified terms, including meal period provisions.


Vetoed

SB 1230 by Senator Mark DeSaulnier (D-Concord) - Employment: posting requirements. Veto message:

This bill requires employers to post information related to slavery and human trafficking, including information related to nonprofit organizations that provide services in support of the elimination of slavery and human trafficking. I support efforts to eliminate human trafficking. However, this measure will burden legitimate businesses while having little to no impact on human slavery. After all, businesses likely to comply with his law are not likely to have employees that would benefit from such postings.

AB 2770 (Monning, D-Santa Cruz) - Employee wages and working hours: violators. Veto message:

This bill would 1) create a pilot program to investigate employment and payment
practices within the swimming pool and spa construction industry; and, 2) require the Employment Development Department, in consultation with the Franchise Tax Board, the Department of Justice, the Department of Insurance, the Labor and Workforce Development Agency, and industry representatives, to develop and implement a set of criteria that, if met by an employer, would trigger a recommendation for an audit or investigation by the appropriate state tax authorities.
My Administration has been committed to vigorously enforcing the laws of this state and maximizing resources to combat the underground economy. As shown in creation of the Economic and Employment Enforcement Coalition, I support implementing targeted systems of coordination. However, as I have repeatedly indicated, legislating that coordination and the adoption of protocols or standards for that is unnecessary. If existing laws impeded this coordination, it would be
appropriate to alter those. However, simply statutorily instructing the respective enforcement agencies to in essence work together does not assist them in a substantive and practical way.
Moreover, I also note that this bill fails to prescribe what it is intended to achieve. Rather than creating a trigger for a tax audit when labor laws are found to have been violated as the bill intends, this bill instructs tax authorities to recommend and
conduct audits or investigations to determine specifically whether labor laws, rather than tax laws, have been violated. Having tax authorities audit and investigate for potential labor law violations is inconsistent with their expertise, and instead is a function of the Division of Labor Standards Enforcement.

Governor Schwarzenegger Vetoes Wage and Hour Bills

On Friday, Governor Schwarzennegger vetoed a number of wage and hour bills:

AB 677 (Solorio, D-Santa Ana) - Public works: prevailing wages. Veto message:

Defining projects for renewable energy generating facilities serving school and community college districts as public works when the only public funds are those spent to purchase power produced is an unwarranted expansion of prevailing wage requirements into private works of improvement. Because the payment of prevailing wages results in higher costs, the bill may potentially reduce the number of renewable energy projects undertaken.

AB 1881 (Monning, D-Carmel) - Recovery of wages: liquidated damages. Veto message:

This bill would increase liquidated damages in civil actions for minimum wage violations to twice the wages unlawfully unpaid and interest thereon. Existing law allows for liquidated damages equal to wages owed, in addition to interest, other penalties, and attorneys’ fees. There is no information to show that the existing enforcement and protections of California’s minimum wage laws are insufficient.

AB 2187 (Arambula, I-Fresno) - Employment: payment of wages. Veto message:

AB 2187 would create a new criminal prohibition against a person or an employer who, having the ability to pay, willfully fails to pay all wages to an employee who has been discharged or who has quit within 90 days of the date of the wages becoming due. The bill contains an exemption for instances in which the employee’s entitlement to unpaid wages is disputed by the employer in a civil action or proceeding by the Labor Commissioner unless there is a final judgment in favor of the employee.

Waiting time penalties and defined timeframes for the payment of final wages currently exist in California law, as do mechanisms for enforcement of these obligations. Therefore, this bill is unnecessary.

AB 2773 (Swanson, D-Alameda) - Civil actions: costs. Would have reversed the California Supreme Court decision in Chavez v. City of Los Angeles. See our post on Chavez here. Veto message:

This measure would require an award of attorney’s fees in all fair employment and housing cases even when nominal damages are awarded and even if the case was improperly filed in a court of unlimited jurisdiction. While there may be instances when an award of attorneys fees may be proper, this measure removes all discretion from a judge and encourages frivolous lawsuits.

The Governor also vetoed a number of other employment bills:

AB 482 (Mendoza, D-Norwalk) - Employment: credit reports. Veto message.

AB 1765 (Solorio, D-Anaheim) - Public employment: furloughs. Veto message.

AB 2008 (Arambula, I-Fresno) - Public employment: furloughs. Veto message.

AB 2494 (Blumenfield, D-San Fernando Valley) - Personal services contracts. Veto Message.

More New Laws For 2009: Final Pay Requirements for Temporary Employees

Amanza Smith was working as a salesperson in a Beverly Hills boutique when a representative of L’Oreal approached her and asked if she would like to be a “hair model” at an upcoming show featuring L’Oreal products and a hair stylist. After she attended a modeling call, L'Oreal agreed to pay her $500 for one day’s work at the show. Ms. Smith worked at the show, where her hair was colored and styled, and she then walked a runway a few times. Ms. Smith stayed at the show until she was told she could leave. L'Oreal did not immediately pay her the $ 500 in wages it owed her, but waited over two months to do so.

Ms. Smith filed a class action law suit against L'Oreal, alleging that she worked for one day, that her employment was terminated at the end of the day, that L'Oreal violated its obligation to pay earned wages promptly upon separation, and that it should pay her and all similarly situated temporary employees "waiting time" penalties under Labor Code Section 203.

In Smith v. L'Oreal USA, Inc. (2006) 39 Cal. 4th 77, the California Supreme Court agreed. The Court held that the discharge element of Section 201 can be satisfied either when an employee is involuntarily terminated from an ongoing employment relationship or when an employee is released after completing the specific job assignment or time duration for which the employee was hired. An employee who works on a job assignment of short duration is not excluded from the protective scope of Sections 201 and 203.

Effective January 1, 2009, Labor Code Section 201.3 provides, with certain exceptions:

if an employee of a temporary services employer is assigned to work for a client, that employee's wages are due and payable no less frequently than weekly, regardless of when the assignment ends, and wages for work performed during any calendar week shall be due and payable not later than the regular payday of the following calendar week. A temporary services employer shall be deemed to have timely paid wages upon completion of an assignment if wages are paid in compliance with this subdivision.