1 2015 ACC-SoCal In-House Counsel Conference #IHCC15 California Labor & Employment Law: Trends and Changes for 2015 January 21, 2015 Anaheim, California

12015 ACC-SoCal In-House Counsel Conference

#IHCC15

California Labor & Employment Law:Trends and Changes for 2015

January 21, 2015Anaheim, California

Sponsored by Sidley Austin LLP

Panelists: Andrew Dunbar, Max Fischer, Douglas Hart

#IHCC12

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#IHCC152015 ACC-SoCal In-House Counsel Conference

Andrew Dunbar– Sidley Austin LLP/Partner/[email protected]

Max Fischer– Sidley Austin LLP/Partner/[email protected]

Douglas Hart– Sidley Austin LLP/Partner/[email protected]

Panelists

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Trends and Changes for 2015

Arbitration, Class Action, and NLRB

Whistleblower Trends

Compensable Time Litigation

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Duran v. U.S. Bank– Clarified standards for use of statistics in wage/hour

class actions– Underscored significance of distinction between

damages and liability

California Supreme Court Class Action Development

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Iskanian v. CLS Transportation Los Angeles, LLC – In a long awaited decision, the CA Supreme Court permits

arbitration agreements containing class action waivers, but bars PAGA representative action waivers

– However, post-Iskanian, two federal district court opinions have rejected Iskanian and held that PAGA waivers are permissible and enforceable under the FAA (Fardig v. Hobby Lobby Stores (C.D. Cal.), Lucero v. Sears (C.D. Cal. 2014), Langston v. 20/20 Comm. (C.D. Cal. 2014)

– California appellate courts have continued to enforce Iskanian (Ybarra v. Apartment Inv. & Mgt. Co.) (unpubl.) (2d. Dist. 2014)

– This split underscores the importance of venue and removal

Arbitration Agreements & Class Action Waivers

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Murphy Oil USA, Inc. and Sheila M. Hobson– The NLRB reaffirmed its 2012 decisions in D.R. Horton Inc.

and Michael Cuda, holding that a class action waiver was unenforceable because it violated Section 7 of the National Labor Relations Act

– The majority of the Federal Courts of Appeal have rejected D.R. Horton, including the Second, Fifth, Eighth, and Ninth Circuits

Tiri v. Lucky Chances, Inc. – CA appellate court held that a trial court lacked the authority

to rule on an arbitration agreement’s enforceability because the arbitration agreement’s clause delegating this authority to the arbitrator was clear and irrevocable under state law

Arbitration Agreements & Class Action Waivers (cont.)

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Purple Communications, Inc.– NLRB determined that, with few exceptions, employees

have the right to use their employers’ email systems for union organizing and other concerted activity under Section 7 of the National Labor Relations Act

NLRB Decisions and Rules

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Triple Play Sports Bar and Grille– NLRB ruled that an employee “liking” a Facebook

status is engaging in protected concerted activity

NLRB Decisions and Rules (cont.)

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“Ambush Election Rule” – NLRB announced it will finalize a rule that will

drastically cut the amount of time an employer will have to react to a union petition before an election is held

– Effective on April 14, 2015– The Chamber of Commerce, along with other

organizations, recently filed suit seeking to invalidate the rule on constitutional and statutory grounds

NLRB Decisions and Rules (cont.)

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Assess any class action litigation and the use or objections to the use of statistical evidence per Duran

Consider arbitration agreements with class and collective action waivers

Review arbitration agreements carefully

Review email usage policies regarding compliance with the NLRA

Review social network policies to ensure compliance with the NLRA

Conduct a Union organizing assessment and take positive steps in light of new NLRB election rules

Significant Take-Away Points

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The Whistleblower Issue

Source: http://staffingtalk.com/wp-content/uploads/2011/11/whistleblower-cartoon.jpg

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Federal False Claims Act– Award up to 30% of recovery– Personal knowledge not required – State law parallels

Dodd-Frank– For violations of securities or commodities laws or

regulations (including FCPA)

Whistleblower award based on:– Significance of information – Level of assistance – Culpability in disclosed conduct

The Government’s Cultivation of Whistleblowers

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Information must be:– Derived from "independent knowledge" (and not

exclusively derived from publicly available sources)– Not already known to SEC– Voluntarily provided to the SEC (and not pursuant to a

pre-existing legal duty)

Whistleblower can receive 10-30% of monetary sanctions collected in SEC enforcement and related (e.g., DOJ) actions– Entitled to bounty if government recovery is $1M+

Contains anti-retaliation provision

Dodd-Frank Whistleblower Provisions

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3,620 whistleblower tips

Fourteen awards since August 2012

Awards range from $50k to $30M

2014 Statistics: SEC & Dodd-Frank

89%

11%

20%

Source of Complaints

Domestic (all 50 states, DC and Puerto Rico)

Outside the U.S. (49 different countries)

No Geographical Categorization/Anonymous

17%

16%

16%7%

4%

40%

Reported Issues

Corporate disclosures and financials

Offering fraud

Manipulation

Insider trading

FCPA

Other

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Implement uniform, user-friendly and anonymous process for handling complaints

Repeatedly and creatively communicate procedures

Solicit information from employees

Praise employees for taking action

Consider reporting back to whistleblower

Explore company incentives to report internally

Encouraging Internal Reporting

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Communication with HR

Respect the allegations

Treat whistleblower, et al. as potential government witness

Ensure steps are documented/proper warnings are given

Be mindful of 120-day SEC window

Address confidentiality/privilege issues early

Beware of internal pressures not to rock the boat

Respond to negative findings appropriately

Some Dos and Don’ts ofInvestigating a Whistleblower Complaint

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Reimbursements– Rethinking what is an expense

Compensable time litigation– Rethinking what is work

Trends in Compensable Time and Expense Litigation

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Cochran v. Schwan’s Home Service (2d. Dist. 2014)– Work-related phone calls from personal device reimbursable

Legal standard under Labor Code Section 2802– “necessary expenditures or losses incurred by the employee in

direct consequence of the discharge of his or her duties . . . .”

Legal standard under the IWC Wage Orders:– Must provide and maintain “tools or equipment . . . required by

the employer or are necessary to the performance of a job”– Except “hand tools and equipment customarily required by the

trade or craft” so long employee earns 2x minimum wage.

Minimum wage litigation arising from failure to reimburse

Reimbursement Litigation

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Emerging areas of reimbursement– Smart phones– Visa – Travel costs (related to compensable time litigation)– “Tools and equipment”– Remote workers

Home internet service Electricity Home computer/printer/supplies

Reimbursement Litigation (cont.)

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Conduct thorough analysis of all expenses incurred in course of employment and ensure: (i) truly voluntary and not widespread; or (ii) reimbursable

If mileage is reimbursed at less than the IRS rate, get experts

Carefully analyze work at home policies to ensure that all necessary expenses are reimbursed

If you use reimbursement caps, make sure you clearly convey what is “necessary” for the employee to use/spend

Ensure that reimbursement policies have an employee “appeal” process for amounts above or beyond specified rates or items

Reimbursement Take-Away Points

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Integrity Staffing Solutions, Inc. v. Busk, et al. – Unanimous U.S. Supreme Court holds security

screenings are non-compensable under the FLSA– BUT – does it affect obligations under California law?– Morillion v. Royal Packing (Cal. 2000) lowers bar for

hours worked in California to “under the control of the employer.”

Ruiz v. Affinity Logistics Corporation (9th Cir.) & Ayala v. Antelope Valley Newspapers (CA Supreme Court)– Independent contractors challenging non-employee

status can more easily achieve class certification

Trends in Compensable Time Litigation

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Next Wave: “Off-the-Clock” but “On-the-Network”– What is “employer knowledge”– What data is available, and what does it mean?

Areas of focus– Call centers (or any hourly employee who “logs on”)– Healthcare workers– Field employees– Any employee with a personal device used for work

Compensable Time (cont.)

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Analyze start-of-shift/end-of-shift procedures for non-exempt employees to ensure they are on-the-clock for all work-related activities (particularly for employees at or near minimum wage)

Audit electronic time-stamped records to ensure compliance with no off-the-clock policies

Ensure there is publicized mechanism for employees to claim working time in addition to normal time-keeping system

Audit use of independent contractors (widespread use) to ensure state standard is met

Compensable Time Take-Away Points

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11th Annual In-House Counsel ConferenceJanuary 21, 2015 (Anaheim, CA)

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www.acc.com/chapters/socal/

Documents

1 2015 ACC-SoCal In-House Counsel Conference #IHCC15 California Labor & Employment Law: Trends and Changes for 2015 January 21, 2015 Anaheim, California