Hunton Employment & Labor Perspectives

The U.S. Supreme Court voted to hear an appeal of the Ninth Circuit’s decision in Varela v. Lamps Plus, Inc.  The Court is expected to decide whether workers can pursue their claims through class-wide arbitration when the underlying arbitration agreement is silent on the issue.  The case could have wide-reaching consequences for employers who use arbitration agreements.

New Jersey’s Paid Sick Leave Act will go into effect on October 29, 2018, making it the tenth state plus Washington DC and dozens of localities to mandate paid sick leave.

New Jersey’s Act requires employers of all sizes to provide employees with up to 40 hours of paid leave per 12-month period.  Key aspects of the new law include:

The saga continues with regards to the status of a December 2017 NLRB decision that loosened restrictions on employer workplace rules.  As we reported, on December 14, 2017, the NLRB overruled the “reasonably construe” standard for evaluating the validity of employer work rules and replaced it with an evaluation that balances 1) the nature and extent of a rule’s impact on NLRA rights and 2) an employer’s legitimate justifications for the rule.  The new standard is widely-perceived as a victory for employers and indicated the newly-composed NLRB’s intent to revise the law in situations where the previous administration had stretched key legal principles too far, turning the “reasonably construe” standard into a “possibly construe” standard.

There may be some changes coming to how California enforces its antidiscrimination law, the Fair Employment and Housing Act (“FEHA”).  In February 2017, a bill (Senate Bill 491) was introduced in the California Senate proposing to allow local government entities to enforce antidiscrimination statutes.

After nearly a decade of attempts, the Democratic Party is once again attacking non-compete agreements at the national level.  For several years, federal legislation has been proposed to limit the use of non-compete agreements in low-wage fields where Democrats say they have no valid use.  For example, in June 2015, former U.S. Senator Al Franken (D-Minn) and U.S. Senator Chris Murphy (D-Conn) proposed legislation that would ban the use of non-competes for low-wage earners (identified as individuals making less than $15 an hour, $31,200 per year or the minimum wage in the employee’s municipality) and require employers to notify all prospective employees that they may be asked to sign a non-compete agreement upon hiring.

Recently, the NLRB created significant uncertainty as to the joint employer test under the NLRA when it vacated a December 2017 decision that resurrected the standard that existed prior to 2015.  Such a standard determines the existence of a joint employer relationship by assessing whether one entity has “actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control)” and the control is “’direct and immediate’ (rather than indirect)” and exercised in a manner that is not “limited and routine.”

On April 23, 2018, the U.S. District Court for the Northern District of Illinois in Ratliff v. Celadon Trucking Servs., 1:17-cv-07163, dismissed a putative class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”).  Ratliff is significant in the body of background check precedent because it is a part of an emerging trend of § 1681b(b)(3) claims (as opposed to the more commonly challenged § 1681b(b)(2)Disclosure claims) challenged and dismissed for lack of Article III standing.

In the opinion, Judge Manish S. Shah found plaintiff Ratliff could not show that he suffered an injury-in-fact after defendant Celadon allegedly did not properly provide him with an FCRA mandated notice before declining his employment due to the results of his criminal background check.

When a franchisor provides a California franchisee with detailed instructions about how to operate the franchise business, but allows the franchisee to manage its own workforce, can the franchisor be held liable for the franchisee’s wage and hour violations?  The California Court of Appeals found the answer to be no under the facts in Curry v. Equilon Enterprises, LLC, 2018 WL 1959472 (Cal. Ct. App. Apr. 26, 2018).  There, the Court of Appeals concluded Equilon Enterprises, LLC, doing business as Shell Oil Products US (“Shell”), was not liable for the alleged wage and hour violations of the company that operated its Shell-branded gas stations throughout California.

The California Supreme Court has adopted a new three-part test to determine whether a worker is an independent contractor or an employee under California’s wage orders, which regulate wages, hours, and working conditions.  The highly anticipated ruling could have wide ranging effects for businesses operating in California and beyond, as companies try to navigate the new gig economy.

On April 16, newly confirmed member John Ring was sworn in as the fifth member and Chairman of the National Labor Relations Board, establishing a Republican-controlled Board.   While all has been relatively quiet with regard to rulings from the Board,  we will likely see a rise in activity now that the NLRB (with a  newly-minted majority) is poised to roll back some of the Obama-era rulings.