This Friday’s Five covers five employment law developments that occurred in August 2015 that will have an impact for employers in California.
1) NLRB ruling widens which companies may be considered “joint employers”
In a 3-2 decision, the NLRB ruled that Browning-Ferris Industries of California, Inc. was a joint employer with a staffing agency, Leadpoint Business Services, and therefore the employees of Leadpoint have bargaining rights with Browning-Ferris Industries.
The NLRB’s opinion stated that given the increase in employment placement agencies and temporary help services projected to be employing as many as 4 million employees by 2022, it “is reason enough to revisit the Board’s current joint-employer standard.”
The NLRB set forth this new standard:
Under this standard, the Board may find that two or more statutory employers are joint employers of the same statutory employees if they “share or codetermine those matters governing the essential terms and conditions of employment.” In determining whether a putative joint employer meets this standard, the initial inquiry is whether there is a common-law employment relationship with the employees in question. If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.
The NLRB also explained that the mere ability to control employees, even if never actually used in the workplace, would still be sufficient to establish a joint employment relationship:
We will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry.
This ruling will likely be appealed to the courts for review. However, the ruling could have an impact upon employers who don’t have union workers, as the NLRB decisions are often times relied upon by courts as persuasive authority.
2) Minimum wage increase stalls in state legislature
As written about previously, a bill, SB 3 proposed increasing California’s minimum wage to $11 per hour on January 1, 2016 and then again to $13 per hour by July 1, 2017. Then beginning on January 1, 2019, the minimum wage would have been indexed to inflation and would be adjusted upward every year afterwards. The bill was held in committee by the Assembly Committee on Appropriations this week, and will not likely make it out of the Committee this year.
3) California Supreme Court addresses arbitration agreements and what makes such agreements “unconscionable” and therefore unenforceable
In a consumer case, the California Supreme Court ruled in Sanchez v. Valencia Holding Company that an arbitration agreement that contained a class action waiver was not unconscionable, and therefore enforceable. The Court explained that the “unconscionability doctrine ensure that contracts, particularly contracts of adhesion, do not impose terms that have been described as …’so one-sided as to ‘shock the conscience’”. The Court noted that because unconscionability is a contract defense, the party asserting the defense bears the burden of proof. The Court ultimately held that plaintiff could not meet this burden in establishing that the arbitration agreement was unconscionable, and therefore could not proceed as a class action. Even though this case was in the consumer context, the ruling will apply to the enforcement of arbitration agreements with class action waivers in the employment context as well.
4) Bill precluding mandatory arbitration agreements passes legislature and sent to the Governor for his consideration
Speaking of arbitration agreements, AB 465 is a bill that prohibits employers from utilizing mandatory arbitration agreements was passed by the legislature this week. Now it is up to Governor as to whether the bill becomes law. The bill prohibits “any person from requiring 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.” The bill also shifts the burden of proof onto the employer enforcing the waiver to show that the waiver was “knowing and voluntary.” Violation of these provisions carry a penalty of $10,000 per violation plus attorney’s fees to the prevailing employee.
5) Studios fail to have antitrust class action dismissed, which alleges the studios engaged in a conspiracy to fix employee compensation and restrict mobility
Case sounds familiar, right? As the court noticed in its opinion the case is very similar to the High-Tech Employee Antitrust class actions alleging Adobe, Apple, Google, Intel, Intuit, Pixar, Lucasfils and eBay, alleging the companies had “no cold call” agreements to limit the requiring of high tech workers. This made Steve Jobs’ email response back to Eric Schmidt infamous, which only consisted of a smiley face when he was told that the recruiter who violated the no call rule was terminated.
In this case, the plaintiffs allege that Blue Sky Studios, DremWorks Animation SKG, ImageMovers Digital, Lucasfilm, Pixar, Sony, and Disney all had a scheme not to actively solicit each other employees and that the studios engaged in “collusive discussions in which they exchanged competitively sensitive compensation information and agreed upon compensation ranges,” that would keep the salaries artificially low in the industry. The court denied defendants’ motion to dismiss, permitting plaintiffs to litigate the case.