May 5, 2014 • An Advertising Supplement to the Los Angeles Business Journal EMPLOYMENT & LABOR LAW ROUNDTABLE This special advertising supplement did not involve the reporting or editing staff of the Los Angeles Business Journal. A S the legal landscape continues to evolve in terms of labor and employment, the Los Angeles Business Journal once again turned to some of the leading employment attorneys and experts in the region to get their assessments regarding the current state of labor legisla- tion, the new rules of hiring and firing, and the various trends that they have been observing, and in some cases, driving. Below is a series of questions the Business Journal posed to these experts and the unique responses they provided – offering a glimpse into the state of business employment law in 2014 – from the perspectives of those in the trenches of our region today. Sue M. Bendavid Chair, Employment Practice Group Lewitt Hackman Veronica M. Gray Partner & Chair of the Employment Practice Group Nossaman LLP Nicky Jatana Shareholder Jackson Lewis P.C. Richard S. Rosenberg Founding Partner Ballard Rosenberg Golper & Savitt, LLP Jennifer B. Zargarof Partner Sidley Austin LLP ➼
Transcript
May 5, 2014 • An Advertising Supplement to the Los Angeles Business Journal
EMPLOYMENT& LABOR LAWROUNDTABLE
This special advertising supplement did not involve the reporting or editing staff of the Los Angeles Business Journal.
A S the legal landscape continues to evolve in terms of labor andemployment, the Los Angeles Business Journal once again turned tosome of the leading employment attorneys and experts in the regionto get their assessments regarding the current state of labor legisla-
tion, the new rules of hiring and firing, and the various trends that they havebeen observing, and in some cases, driving. Below is a series of questions theBusiness Journal posed to these experts and the unique responses they provided– offering a glimpse into the state of business employment law in 2014 – fromthe perspectives of those in the trenches of our region today.
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◆ In your view, in what ways has thelabor and employment law landscapechanged over the past ten years in ourstate? Have these changes benefitted orhindered California businesses?
ROSENBERG: For employers, the changes of thepast decade have surely hindered business. Thelegislature and courts have been adding signifi-cant new employer obligations, both operationaland financial, at a time when a great many busi-nesses are struggling to stay afloat. Perhaps ofmost concern is the exponential growth in thenumber of class action and class-like representa-tive actions filed under the California PrivateAttorneys General Act. According to recent statis-tics for 2013, these cases were filed at a rate ofnearly 60 new cases a week. Companies havespent literally billions in settlements and, it looksas though this trend is going to continue.
GRAY: The growing complexity of legal compli-ance for employers and the substantial increasein employee rights has made it extremely chal-lenging for employers from a legal and businessperspective to do business in California. Also,each year, more and more employment-relatedlegislation is referred to as a “job killer bill.” Thetrend has been for employees to prevail with ahost of new case law and statutory rights, whichplace added restrictions on every aspect of theemployer-employee relationship.
BENDAVID: In the past decade, we’ve seen a dra-matic increase in wage and hour disputes – bothcivil lawsuits filed in court and claims filed at theLabor Commissioner’s office. More recently, thereseems to be an increased focus on classificationissues, such as independent contractors,exempt/nonexempt and interns disputing themethods in which they are paid (or not paid inthat case). We’re also seeing more challenges foremployers with regard to disabled employees andclaims for disability discrimination arising out of aclaimed failure to accommodate. We’ve seen moreleeway with respect to meal and rest breaks whichhave benefited businesses and employees by giv-ing some limited flexibility and provided strengthto affirmative defenses for penalty claims.
◆ What trends to you anticipate in theworld of labor law over the next fiveyears?
GRAY: My crystal ball suggests that there will bemore enforcement efforts by agencies such as theEEOC, DOL, NLRB and OSHA. We can expectthat the EEOC will focus on systematic harass-ment/discrimination and human trafficking; theDOL will continue to focus on the misclassifica-tion of employees as independent contractors oras overtime exempt; the NLRB will focus onenforcing employee rights under Sections 7 & 8of the NLRA; and OSHA will focus on workplacesafety issues. We can also expect continuedefforts regarding immigration and health carereform. We will also likely see continued expan-
sion of employee rights regarding leave laws,increase of minimum wage at the federal, state,and local levels, fewer restrictive covenants suchas non-competes and non-solicitations of cus-tomers and employees, efforts to expand “banthe box” to the private sector and limit criminalbackground and credit checks, continued expan-sion of LGBT rights. We can expect greater flexi-bility in work hours and benefits as well. Lastly,technology will continue to transform the work-place. This will continue to create a host of issuesincluding (but not limited to) wage and hour, pri-vacy, social media, data security, confidentiality,telecommuting, and safety issues.
ROSENBERG: One of the hottest issues to beresolved in the next five years is the extent towhich employers can use mandatory workplacedispute arbitration policies to fend off classaction litigation and collective action litigationunder the California Private Attorney GeneralAct. We also anticipate some reshaping of thewage and hour laws to take into considerationthe proliferation of non-traditional workengagements such as employees working athome or from remote locations using technolo-gy. Most people these days would admit tobeing “tied” to their smart phones, often check-ing for messages during non-work hours. Shouldsuch activity be compensable? These are just thefew of the types of questions that are likely tobe addressed in the next five years.
◆ What are your clients most worriedabout in terms of emerging legislation?
BENDAVID: Complying with labor laws is becom-ing increasingly difficult for employers. Withnew penalties (both criminal and civil) there ismore pressure than ever on business owners toensure they’re paying properly and have therecords to prove it. Clients are also worried aboutbeing falsely accused of discriminating againstemployees based on the expanding list of pro-tected categories in the Fair Employment andHousing Act (FEHA), or retaliating againstemployees in violation of Family and MedicalLeave Act (FMLA), California Family Rights Act(CFRA), whistleblower, and other laws.Employers are devoting more resources onemployee relations, hiring effective HR personneland engaging labor counsel just to keep up.
ROSENBERG: Our clients are most concernedabout any legislation that would add direct costor administrative burden over and above whatexists today. The list of the protected classes foranti-discrimination legislation has grown overthe years and adding to that list creates potentialliability and risk of lawsuits that have to bedefended, regardless of their merit. With all ofthe discussion about income and equality, itseems that balance will continue to be tipped infavor of creating more employee protective legis-lation in the future.
GRAY: The continuation of “job killer” bills and the
complexity of the new laws that make complianceunnecessary convoluted, complex and expensive isworrisome to employers in California.
◆ How serious a legal issue is social mediain the workplace?
ZARGAROF: It ranks somewhere between serious toextremely serious, depending on the employer,but all employers should be paying attention tothese issues. The focus on social media in theworkplace is 100% well deserved and, if anything,more attention is warranted. There are few areaswhere so many laws and workplace policies inter-sect – employee privacy; employer confidentialityand trade secrets; advertising, publicity and FairTrade Commission issues; harassment and dis-crimination; collective action rights and NationalLabor Relations Board; and so on. Employers haveindustry-specific concerns (patient privacy/HIPAAin healthcare, customer confidentiality issues inretail, securities regulation in financial services, toname just a few) but all employers have compet-ing interests and legal rights/obligations to bal-ance. In light of the frequent legislative, adminis-trative and judicial action in this area, employersshould be looking at their social media and allrelated policies on an annual basis.
JATANA: Social media has raised and will continueto raise ongoing issues for employers andemployees alike. Social media has expanded theworkplace beyond the traditional four walls andcompany-sponsored functions with respect toemployment issues. It also will continue to be anessential component of litigation even if the coreissue of the litigation is not the use or misuse ofsocial media itself. Often times individualsinvolved in litigation will have engaged in someuse of social media which provides evidencerelated to claims or damages involved in employ-ment litigation.
BENDAVID: Social media and new technology raisemany concerns. An employee’s public remarkscould seriously damage business and negativelyimpact your reputation. Additionally, employersare frustrated by how social media in the work-place affects productivity. It also impacts liability.We’ve defended harassment and discriminationcases where public postings are used both to sup-port and defend claims. Going further, employersshould be concerned with whether employees areusing smart phones and devices when operatingdangerous equipment or driving company vehi-cles. It’s best to have a social media policy inplace, and all employees should be aware of thatpolicy. In preparing policy, consider a variety oflegal issues, including employees’ rights to engagein lawful conduct away from the workplace, andemployees’ rights to discuss the terms and condi-tions of their employment with co-workers,among others.
◆ How are technologies such as “find mydevice” applications, Google Glass and
‘Social media has raised and will continue to raise ongoing issues foremployers and employees alike. Social media has expanded the workplacebeyond the traditional four walls and company-sponsored functions withrespect to employment issues. It also will continue to be an essentialcomponent of litigation even if the core issue of the litigation is not theuse or misuse of social media itself.’NICKY JATANA
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Blackphones going to impact the use ofdevices in the workplace? What issuesmust employers be aware of with employ-ees using these and other devices?
ROSENBERG: With the advent of such new tech-nology, the legal issue is the right to privacy andwhether these technologies impermissibly invadethat right. Years ago, California voters amendedthe state Constitution to add a specific right ofprivacy to protect all citizens. Since then, courtshave been struggling to provide guidance as towhen privacy rights are impermissibly implicated.We saw that some years ago in the cases involv-ing workplace drug testing. We recommend thatemployers advise employees about the technolo-gy because a number of court cases have heldthat with such advance warning, employees can-not claim a privacy violation. It is also advisablefrom a morale perspective. Otherwise, the compa-ny is apt to develop a “big brother” mentality,which is sure to be a drag on employee morale.
BENDAVID: The right of an employer to control itsworkplace and protect its interests, and the rightof an individual to privacy will always be at issuewith new technology. Google Glass in particularraises questions about the wearer’s ability to sur-reptitiously activate a camera. What happens ifsomeone records an employee using foul lan-guage, or engaging in other activity that may beharmful to the company or other employees?Possibly worse, what if the wearer capturesimages of confidential employee files or theingredients of a secret recipe? How do you pro-tect against identity theft or trade secret misap-propriation? These are all issues that must betaken into consideration when preparing policiesand implementing company procedures.
JATANA: Emerging technologies will continue tochallenge employers. The news has been buzzingwith applications and devices that can be used asbeneficial tools for a business. However, alongwith the benefits, employers must grapple withprivacy related issues, data security, data reten-tion and management issues these new devicesand technologies bring to the workplace. Forexample, if an employee uses his or her ownBlackphone for business as well as personal use,an employer may not be able to access company-related data or information when needed forbusiness or litigation because of its encryptioncapabilities. Similarly, employers considering theuse of “find my device” applications (with somebells and whistles) when employees fail to returncompany devices after their employment ends,may overstep when the application automaticallytakes a photograph of the person in possession ofthe device. Employers should carefully review theintended business purpose and use along withprivacy, data security, and management issuesthese devices and other technologies present.
◆ Although there are no state laws specifi-cally prohibiting workplace bullying, it’san issue that has received some media
attention. Is this something that employ-ers need to keep an eye on or is it muchado about nothing?
ZARGAROF: In a sense, it is a bit overblown whilesimultaneously worthy of attention. Mostemployers already treat “bullying” behavior asserious under their harassment, code of conduct,workplace violence and other behavior rules. So,it is not truly new. However, there are new leg-islative proposals each cycle that suggest addi-tional legislation is coming in this area.Employers who respond pro-actively to employ-ee issues are ahead of the curve. Therefore, allemployers should make sure they have robustinternal complaint procedures and follow upwith employees who raise issues of mistreatmentthat could qualify as bullying.
BENDAVID: Bullying is a serious issue and can leadto a variety of claims, including workers compen-sation and unlawful harassment (hostile workenvironment). Not only does bullying impactproductivity, it also leads to lawsuits. When work-ers are verbally abusing; threatening, humiliatingor intimidating; and interfering with anotheremployee’s duties, you have a serious issue thatneeds to be resolved promptly. Previously, ifsomeone gave an employee the silent treatment,or engaged in other nonverbal bullying tacticslike hostile staring, sometimes the problem wasignored, and sometimes it lead to a visit with anHR rep. Now it leads to a trip to court.
JATANA: Employers absolutely should keep an eyeon workplace bullying. Not only can workplacebullying be extremely disruptive to the work envi-ronment, more often than not, it has a negativeimpact on productivity, retention, recruitment,work quality and workplace stress related claims,to name a few. Additionally, depending on thetype of conduct at issue, it has the potential to alsoescalate to unlawful harassment or discrimination.
GRAY: Although there is no current federal or statelaw expressly prohibiting workplace bullying,many states have introduced legislation thatwould make workplace bullying illegal. Bullyingcan be equal to or worse than unlawful harass-ment and discrimination; it can also lead toemployer liability under claims of harassment,discrimination and retaliation. There is no brightline test when bullying becomes harassment ordiscrimination. Thus, employers should considerimplementing anti-bully policies and identify“bullying” as prohibited conduct, which couldlead to immediate termination. On the otherhand, an employer also needs to keep in mindthat the “bully” may suffer from psychologicalproblems and has rights under state and/or federaldisabilities laws.
◆ What can businesses do to remainup-to-date with ever-evolving employmentlaw trends?
JATANA: We recommend employers partner withtheir employment counsel each step of the waymuch like they do with their human resources
professionals. Keeping abreast of employment lawdevelopments that impact an employer’s industryand business is key to compliance.
ZARGAROF: If resources were not an issue, in-houselawyers and human resources professionals wouldhave all the time they needed to attend seminars,read articles, scour the blogs and stay on top ofevery development. Of course, resources are amajor issue for most companies and the ideal isnot often realistic. I have always found that a goodhandbook review once a year helps surface anydevelopments that may have otherwise beenmissed. Most significant changes affect at least onepolicy and the overall discussion should be broad-er than just what is in black and white. This canbe done inexpensively and is a great complementto attending at least one update seminar a year.
GRAY: Although there is no true replacement forhiring employees or outside consultants who arequalified and experienced in the field of humanresources and engaging outside counsel whenappropriate, there are many organizations thatprovide current information on employmentlaws. For example, the California Chamber ofCommerce recently released two (2) free mobileapps that can help employers stay informedabout changes to California employment law:Alert Mobile App which provides timely coverageof proposed California employment laws and reg-ulations and updates on major court decisions,ballot measures, and legislative vote records; andHRWatchdog Mobile App which highlightschanges to federal and California employmentlaw, as well as HR trends and other news.
BENDAVID: It may seem impossible to keep upwith California employment law, but there aresome relatively easy ways to do so. First, manyattorneys offer complimentary seminars at theirown firms, bar associations, Chambers ofCommerce, employers groups, or via webinar.Second, you can follow California employerattorneys on LinkedIn, Twitter, Facebook, etc.They’ll often post updates on the latest court rul-ings, and changes in labor law. Third, subscribeto blog feeds regarding employment law, look foritems in the business section of newspapers, oron human resources websites. Last, make sureyou have a good HR team, and/or a goodemployment attorney. These are the peoplewhose job it is to keep up.
◆ What is one of the most importantthings employers should do to prevent alawsuit from occurring?
ZARGAROF: Focus on good separations. Even thewage and hour cases about meal periods, paystubs, regular rate calculation and the like almostalways start with an employee who felt mistreatedon his or way out the door. Terminations are anormal part of business but employers can do alot to soften the blow and avoid the lawsuit. Well-communicated and user-friendly procedures forraising concerns are key. Many issues get resolvedthrough these procedures and leave the employeefeeling positive and valued. Likewise, showing
‘Most employers already treat “bullying” behavior as serious under theirharassment, code of conduct, workplace violence and other behavior rules.So, it is not truly new. However, there are new legislative proposals eachcycle that suggest additional legislation is coming in this area. Employerswho respond pro-actively to employee issues are ahead of the curve.’JENNIFER B. ZARGAROF
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sensitivity and respect with the logistics (likeallowing the separated employee some say withhow and when to retrieve his/her personal itemsinstead of an embarrassing escort out the buildingin front of the now former colleagues) can also goa long way. If all else fails, consider buying peacewith a separation agreement and release whenyou know there is a potential problem.
JATANA: One of the most important things anemployer can do is to embrace issues internallybefore an employee feels the need to seek outsidelegal assistance. An employer that faces few employ-ment claims usually has a good human resourcesdepartment and its management is trained and readyon how best to address day-to-day employmentissues. Of course, this alone will not prevent a currentor former employee from filing a lawsuit. Generally,however, if these practices are in place and there isgood documentation of actions taken and issues thathave been addressed, employers will position them-selves to appropriately defend against litigation.
BENDAVID: Employers cannot “prevent” all lawsuits.They are an unfortunate reality in California andare often without merit. But an employer can cer-tainly reduce the likelihood of being sued and tohelp defend if they are. Document everything.Before firing an employee, make sure you havelegitimate (lawful) reasons for doing so, and thatthe reasons are on record. A good termination isone that does not come as a surprise to theemployee. Make sure your company policies areclearly written and understood, whether you’reoutlining how commissions are to be paid, who isentitled to certain leaves of absences, or what thedress code is. If an employee makes a complaint,make sure to fully investigate the matter and recordthe findings. Properly worded emails, signed lettersand interoffice memos are absolute musts.
ROSENBERG: Management training is key. Theemployment laws are complex and often counterintuitive. Additionally, California law holds abusiness responsible for the acts of its peoplemanagers, regardless of their intention. This iscalled “strict liability.” If risk management is theobjective, then training is the key. All personswith people management responsibility shouldbe exposed to a wide array of employment lawtraining so that these individuals do not inadver-tently say or do things that violate the employ-ment laws. Many a case has been made by simplemistakes by people managers who are not educat-ed in how their behavior was at odds with thelaw. Since employment litigation can be veryexpensive, often costing several hundred thou-sand dollars, we recommend that employmenttermination decisions be reviewed with counsel.
◆ What are some legal issues that compa-nies overlook during the hiring process?
BENDAVID: Don’t let inexperienced personnel
handle the hiring process. Your managers shouldknow what questions can and can’t be asked,how to investigate credentials without invadingprivacy, and the procedures necessary for crimi-nal background checks, drug testing, etc. Havethe manager focus on the “KSAs” – the “knowl-edge, skills and abilities” of the applicant. Onceyou have chosen a candidate, send her or him awell-written offer letter that confirms the termsof employment, including “at-will” (if hired at-will), job title, duties, pay and benefits. We oftenuse offer letters to defend post-terminationclaims. They help establish what was promised,what was expected, and how the employee failedto meet expectations.
JATANA: While many employers conduct back-ground checks of applicants, it is easy to run afoulof the technical requirements of the Fair CreditReporting Act as well as California’s and otherstates’ requirements when doing so. Aside fromspecific notice and consent requirements, the typeof information and the length of time duringwhich information can be requested and thenactually considered during the hiring process canvary from state to state and also under federal lawas well as position to position. The informationthat one employer may obtain and consider for aparticular position may not be the same foranother employer or another position.
ZARGAROF: There are a number of easily over-looked issues and they are almost all found in thedocuments. As the saying goes, the devil is in thedetails, and I am seeing increased litigation over asingle question or statement on a form. After thelawsuit comes, the company realizes no one hasread the standard documents for complianceissues in years. It is critical to have a periodicreview of hiring-process forms such as the appli-cation itself, background check disclosures,notices regarding drug testing or medical exami-nations and related paperwork. The legal land-scape as to criminal records and backgroundchecks has changed most significantly with notonly private suits but also investigations andenforcement actions by the Equal EmploymentOpportunity Commission (EEOC) and others. Anhour or so of attorney time could spot an issuethat is otherwise inviting a class action filing.
◆ What are some legal issues that compa-nies often overlook during a layoff or ter-mination process?
BENDAVID: When laying off employees, it’simportant to have a documented plan in place.Establish criteria for letting workers go: will lay-offs be dependent on experience, job perform-ance, disciplinary history, or for other reasons?Before proceeding, ensure documentation sup-ports your decision for each individual. Avoidlaying off an employee merely because of a man-ager’s personal dislike for that person, if possible.Larger companies may need to comply withCalifornia and federal WARN Acts – providing at
least 60 days’ written notice to affected workersand certain governmental entities. Apply thesame rules to terminating an employee: your cri-teria should already be established via a companyhandbook, and you should be able to demon-strate your reasons for firing someone with docu-mented facts.
ZARGAROF: I most often see a “miss” in the con-text of employees who are terminated at the endof a leave of absence. Managers and humanresources professionals are often on top of thevarious leave laws and related company policiesbut fail to consider whether additional leave iswarranted as a reasonable accommodation underthe disability laws. Missing that last step of theseparation analysis can be a sure way to face afailure to accommodate claim.
ROSENBERG: If you are laying off more than 50employees or closing a facility where more than50 employees will be affected, then you mustcomply with applicable federal and state WARNregulations for providing 60 days advance notice(or pay in lieu thereof) to the affected employees.There are also notifications that must go out tothe state employment agencies as well. If you arecontemplating obtaining a separation agreement(with a release) then certain language must beincluded for older workers (including statisticalinformation regarding the impact of the layoffwhere it is a group termination) or the releaseagreement will be invalid as to any claims of agediscrimination under the Federal AgeDiscrimination and Employment Act. It is alsovery strongly recommended that you review thisstatistical impact that the contemplated layoff willhave on the company’s workforce EEO statistics.
JATANA: It is not uncommon for employers whoare new to California or who predominantlyhave operations outside of California to uninten-tionally violate the California Labor Coderequirement to provide an employee his or herfinal paycheck upon termination or within 72hours of a voluntary termination. Notably,California considers accrued but unused vacationor paid time off (PTO) to be wages and thus, arealso due upon termination. Failure to complywith these requirements could subject theemployer to what is called waiting time penaltieswhich is a day’s pay for each day the employerdid not timely pay the employee (upon termina-tion or within 72 hours, as appropriate), up to amaximum of 30 days of pay.
◆ What kind of activity can we anticipatefrom the NLRB now that there is a fullquorum?
GRAY: The National Labor Relations Board hasmade it clear (even without a full quorum) thatpolicies that interfere with an employee’s right toengage in concerted activity or could have achilling effect on the exercise of those rights -whether or not the employees are represented by
‘All persons with people management responsibility should be exposed to awide array of employment law training so that these individuals do notinadvertently say or do things that violate the employment laws. Many acase has been made by simple mistakes by people managers who are noteducated in how their behavior was at odds with the law.’RICHARD S. ROSENBERG
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a union - will be found to violate the NLRA. Inaddition to scrutinizing social media policies, thishas resulted in the Board reviewing employerhandbooks, policies, procedures, and varioustypes of agreements to determine if they violateSections 7 & 8 of the Act. For example, it wasrecently held that an employer’s confidentialityrule prohibiting the discussion of “financialinformation, including costs” and “personnelinformation” could be reasonably construed toinclude preclusions against employee wage dis-cussions outside of the company. Likewise, civili-ty, anti-harassment and abuse, and non-dispar-agement policies are targeted if they requirerespectful, courteous, or civil behavior. Anothercritical area is arbitration agreements. The Boardis taking the position that employees cannotwaive their rights to deal with matters on a class,collective or group basis, such as through a classaction in court. Most courts disagree with theBoard and a recent Fifth Circuit decision againstthe Board may trigger a request for review by theU.S. Supreme Court.
ROSENBERG: According to recent statistics fromthe US Department of Labor, fewer than 5% ofthe private sector employees in the US are unionrepresented. That will change in all likelihood ifnew regulations promulgated by the ObamaNLRB get passed. These rules will make it easierfor union to organize and harder for employersto challenge those efforts. In addition, the NLRBis reviewing a number of its prior rulings seekingto expand union and employee rights.
◆ Is the NLRB really a threat/challengefor non-union California employers?
JATANA: Yes. The NLRB should not be taken light-ly or simply ignored because an employer doesnot have a unionized workforce. Aside from tra-ditional union organizing issues, employersshould be mindful of issues related to socialmedia and class action waivers in arbitrationagreements. Both of these latter issues can greatlyimpact non-unionized employers to the extentthey may chill an employee’s right to engage in
protected concerted activity as set forth inSection 7 of the National Labor Relations Act.
ROSENBERG: The National Labor Relations Boardwas created to administer the National LaborRelations Act in 1935. Most people understandthat law to govern union-management relations.Few understand that the scope of the law goes farbeyond that. Under the Obama administration,the NLRB has attempted to become increasinglyrelevant to the non-union workforce by makingsweeping rulings having nothing whatsoever todo with the traditional union-management rela-tions. The NLRB has issued rulings outlawing var-ious employer policies and practices such asthose dealing with social media, mandatory arbi-tration of workplace disputes and the right ofemployees to openly criticize their employer andmanagement team through public media sources.In addition, the NLRB is considering rule changesthat will make it far easier for unions to organize.
GRAY: The NLRB is using a very broad brush with-out taking into account the practical impact itsdecisions and approach is having in the employ-ment arena. However, it is doubtful that theNLRB will be changing its approach in the nearfuture. Employers with overly broad or ambigu-ous policies and agreements risk the scrutiny ofthe NLRB (as well California and federal laws).Employers should conduct a self-audit and decidewhich policies and agreements should be revisedand clarified.
◆ With all of the wage and hour and classaction cases being reviewed by theCalifornia Supreme Court, where is thistype of litigation heading? What shouldemployers focus on in terms of best prac-tices to defend against these claims?
ZARGAROF: Predictions of the death (or at least thetrickling away) of wage and hour class actions arisealmost every year yet the cases keep coming. Myview is that the end is still not in sight. For everyquestion answered by an appellate court, there aredozens of lawyers (in California in particular) whocome up with ten new questions and theories thatkeep these cases going. Employers should of course
be in the best position to win by using wage/houraudits and compliance monitoring to have thebest policies and practices in place. When they doget hit with a lawsuit, there is no substitute forout-thinking and out-working the other side.Know when to fight (nothing scares off a plaintiff’slawyer like a ruling already against them from aprior case) and know when to settle and fix theissue to avoid getting hit again.
GRAY: The California Supreme Court will addressthe issue of class actions when it renders its opin-ion in Iskanian v. CLS Transportation. Oral argu-ment was in early April 2014 and a decisionshould be issued later this year. The Court willaddress whether another case [Gentry v. SuperiorCourt] which discussed the unconscionability ofmandatory, pre-dispute arbitration agreementswith class action waivers, survived the UnitedStates Supreme Court’s decision in AT&T Mobilityv.Concepcion. Iskanian will also decide whetherConcepcion trumps the California statutory rightto bring representative claims under the LaborCode Private Attorneys General Act of 2004. Thedefense of wage and hour actions can be compli-cated and strategically sensitive. As a practicalmatter, the best defense is for employers to audittheir wage and hour policies and procedures toensure they are in compliance. This may be easiersaid than done but it is something every employ-er should put on its bucket list.
ROSENBERG: I don’t really think class action wageand hour cases are going away any time soon. Infact, claims under the California PrivateAttorneys General Act (which do not requirestrict adherence to class action rules) are growing.Employers need to be proactive in reviewingcompany policies and practices, such as wage andhour practices that could be subject to a classaction or collective action type claim. The timeto do so is now before a claim is filed. However,employers have to be very strategic about how toimplement changes.
◆ Are class actions/representative actionsalive and well in California?
ROSENBERG: Yes. Even if California courts
‘The NLRB is using a verybroad brush without takinginto account the practicalimpact its decisions andapproach is having in theemployment arena. However,it is doubtful that the NLRBwill be changing its approachin the near future. Employerswith overly broad or ambigu-ous policies and agreementsrisk the scrutiny of the NLRB(as well California and federallaws). Employers shouldconduct a self-audit anddecide which policies andagreements should be revisedand clarified.’VERONICA M. GRAY
‘Trial courts are more readilygranting class certificationswhen there is either a lack ofpolicy or when there is adefective policy that is in vio-lation with the law, regardlessof the difficulty in establishingindividual damages foremployees. Many plaintiffs’attorneys are using company-wide policies and practices toargue for class certification ofan entire group of affectedemployees. It’s best foremployers to retain an attor-ney to periodically review andrevise workplace policy. SUE M. BENDAVID
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approve the right of an employerto ban class allegation in a work-place arbitration agreement it isunlikely that representative claimsunder the Private Attorney GeneralAct will suffer the same faith anytime soon.
BENDAVID: In my experience, mealand rest break class actions as wellas other class action litigation suitshave been on the rise for the lastdecade. Trial courts are more readi-ly granting class certificationswhen there is either a lack of poli-cy or when there is a defective pol-icy that is in violation with thelaw, regardless of the difficulty inestablishing individual damages foremployees. Many plaintiffs’ attor-neys are using company-wide poli-cies and practices to argue for classcertification of an entire group ofaffected employees. It’s best foremployers to retain an attorney toperiodically review and reviseworkplace policy.
GRAY: Although many thought thatthe California Supreme Court’sdecision in Brinker (the infamousmeal and rest break saga) would bethe death knell for class action cer-tification in California, that hasnot been the case based on recentCalifornia Court of Appeal deci-sions. Indeed, class action wageand hour complaints have prolifer-ated and many are getting certi-fied. However, others are beingdenied. Moreover, class actionwaivers in arbitration agreementsalso need to be taken into consid-eration. Thus, to some extent thetide has turned. Concepcion was asea change for the CaliforniaSupreme Court, which has beenhostile to arbitration agreementsthat limit a plaintiff’s ability to pur-sue a class action. Thus, arbitrationagreements containing class actionwaivers have been upheld requir-ing plaintiff employees to proceedas a single plaintiff in arbitrationinstead of in court via a classaction. However, earlier this year,the California Supreme Courtreminded us that arbitration claus-es may be invalidated if they areunconscionable. Iskanian will fur-ther address the viability of arbitra-tion agreements waiving class andrepresentative actions and how theU.S. Supreme Court precedentaffects California’s legal landscape.
◆ Do California employersneed to be concerned aboutthe EEOC and DOL enforce-ment initiatives?
BENDAVID: Employers are seeingmore pressure at both the federaland state level. The Department ofLabor increased investigations sig-nificantly over the past few years,even putting employers with nohistory of labor violations underthe microscope. The DOL’s con-ducting both unannounced anddirected investigations, and asking
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Congress for a marked increase in budget andstaff to do so, while cutting resources in employercompliance assistance departments. The EqualEmployment Opportunity Commission approveda new Strategic Enforcement Plan last year, whichactually set quotas for enforcement and litigationactivity. California’s governing agencies are alsocracking down with criminal penalties, liens onproperty, and making it more difficult to recoverattorney fees and court costs when an employerprevails in litigation.
ROSENBERG: Under the Obama administrationthe EEOC and the DOL are becoming increas-ingly aggressive. These agencies have wide rang-ing investigatory powers and the power to sub-poena records. DOL can also seize goods andstop production where manufacturing is notconducted in compliance with the labor lawsthe agency enforces. Employers are wise to payclose attention to these agencies pronounce-ments because they show the enforcement pri-ority of the agency.
◆ Are discrimination/harassment claims a“thing of the past?”
JATANA: No. We continue to see harassment anddiscrimination cases regularly. The state and fed-eral agencies (California Department of FairEmployment and Housing and the EqualEmployment Opportunity Commission) tasked
with the administration of these claims also con-tinue to report steady claims of discriminationand harassment. In our practice, we have seen anincrease in disability and age-related discrimina-tion and harassment claims and we also continueto see race, gender and sexual harassment as wellas the other protected categories.
BENDAVID: Discrimination and harassment claimsseemed to have taken a back seat to wage andhour litigation over the past several years, but itis not likely to last long. We’re seeing more andmore litigation in California regarding discrimi-nation against workers with religious groomingor dress, and other claims. Now that bullying isforefront in the media, we’re expecting to seemore of that be presented as evidence.
ROSENBERG: The civil filing sheets demonstratethat discrimination and harassment claims areever present and more and more of these casesare being filed each year. Employers need to stayproactive and take the necessary steps to ensurethat both the management team and employeesalike understand the employee’s rights and thecompany’s obligations under the federal and stateanti-discrimination/harassment laws.
ZARGAROF: These claims are not a thing of thepast for anyone with employees. Wage/hour classactions stole the headlines from individualclaims of harassment but the cases never wentaway. To the contrary, I see more wage/hourcases (individual and proposed class) where theplaintiff alleges harassment/discrimination
claims as well. Likewise, an increasing number ofplaintiff-side firms are investing in class and pat-tern/practice claims on behalf of large groups ofemployees. A more recent development is thechanging relationship between the accuser andthe accused—more cases involve claims by men,claims by and against people of the same gender(regardless of the sexual orientations) and byemployees at all levels of seniority in the organi-zation. Having the right policies and proceduresin place for preventing and correcting possibleissues of harassment or discrimination remainscritical for all employers.
◆ How about trade secret/confidentialinformation protection in the employmentarena – is that a thing of the past?
ZARGAROF: Clearly no. Since the old image of anemployee leaving with a box full of documentshas given way to thumb drives, clouds and otherelectronically stored information, the logistics forprotecting information has changed. The interestin doing so, however, has not. Many of the legalprinciples have remained the same; only thepractical implications have changed. Well-draftedagreements and a strategy for enforcing them stillallow employers to protect their trade secrets andconfidential information, even in Californiawhere employees are almost always free to defectto a competitor.
GRAY: This question raises several issues. First,employee mobility and the evolution of the digi-
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tal and mobile world have increased exponential-ly the risk of employee trade secret/confidentialinformation theft. Employees can steal/misappro-priate company trade secrets simply by using asmart phone, their own mobile/personal devises,web-based personal email accounts, USB drives,or by uploading the data to a community or pub-lic cloud. Due to the lack of adequate security, allof this can be done without the employer beingalerted. Given an employer’s responsibility to bepro-active in protecting company trade secrets,some things an employer can/should do include:(1) implementing specific policies governing theuse of personally owned devices, third-partyapplications, and private cloud computing sys-tems; (2) having the right IT team to identify andimplement the appropriate safeguards/software topermit the use of mobile devices while at thesame time providing security measures to protectthe data; (3) limiting access on an “as needed”basis; (4) investing in remote data-wiping tech-nology to avoid inadvertent loss of data; (5)installing software applications to monitor/detectunauthorized computer traffic; (6) limiting theinstallation of third-party applications or devices;(7) implementing a “bring your own device towork” policy; (8) and developing a comprehen-sive on-boarding, off-boarding and exit interviewto ensure all company data is returned. Second,due to technology, trade secrets can easily losetheir protective status by employers not takingsufficient safeguards or due to the proliferation ofthe exchange of information on LinkedIn,Facebook, or other publicly available databases.Data that was once considered confidential inad-
vertently becomes part of the public domain.Thus, confidential information may easily beaccessible by going to Google. Additionally, fail-ing to require customers to sign software licens-ing agreements or confidentiality agreements andallowing the transfer of software freely from onecomputer to another one, or failing to changedefault passwords in the software can destroytrade secret status. Third, the climate inCalifornia creates substantial risk for employerswho seek to utilize non-compete clauses as partof an employment agreement. Unless a covenantnot to compete is covered by one of three statu-tory exceptions to protect good will in the sale ordissolution of a business, it is invalid. If a courtconcludes that such a clause is invalid, theemployee may have a tort claim against theemployer. Thus, the issue is whether the com-monly used post-termination restraints on solici-tation of customers and employees are enforce-able as “trade secret exceptions” or invalidrestraints on trade. Currently, state and federalcourts in California are currently divided onwhether the trade secret exception still exists.Thus, this is an area in which employers need toproceed with caution when drafting employmentand confidentiality agreements and identifyingand protecting their trade secrets.
ROSENBERG: Trade secret/confidential informa-tion protection is not at all a thing of the past.While California law vigorously protects the rightof a former employee to compete with his or herformer employer, the law also protects the rightof a business owner to ensure that its trade secret
and proprietary confidential information is notmisused by existing or former employees. To thatend, employers of all kinds with protectable intel-lectual property and other trade secret informa-tion should take aggressive action to take the stepnecessary to protect its valuable trade secret andproprietary information.
◆ How does a law firm specializing inlabor and employment differentiate itselffrom the competition?
ZARGAROF: By using the lawyers’ experience to beefficient but to throw away the cookie-cuttersand see why every case is different. We have hadto rescue cases after certification and other badrulings under another firm’s care. The diagnosis isalways the same – failure to develop a truly case-specific (and employer-specific) strategy from theoutset. As for advice and transactional work, thekey is to look at the whole business context andprovide sound practical guidance along with thelegal advice.
GRAY: In addition to having the expertise inlabor/employment law, law firms/attorneys musthave an individual commitment to positioningthemselves as strategic partners with the client,demonstrate an understanding of their businessand appreciate the importance of working withclients to identify, understand and implement theirgoals. A law firm and its attorneys need to strive toconsistently exceed their clients’ expectations.
