NLRB Suspends Implementation of New Election Rule

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On the heels of yesterday's federal court decision invalidating the NLRB's new election rule that had taken effect April 30, the NLRB announced today that it is suspending implementation of the rule as a result of the court decision.  The NLRB stated that it is reviewing the court decision and considering how it will respond.  The NLRB's announcement is available here.  Stay tuned for further developments. 

Federal Court Invalidates NLRB’s New Election Rule

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The United States District Court for the District of Columbia issued a ruling yesterday invalidating the NLRB's new election rule.   The court held that the rule was not properly adopted because the NLRB lacked a quorum when it voted to adopt the rule.  Only two NLRB members voted on the rule.  A third had voiced opposition to the rule and made clear that his position was to oppose the rule's adoption.  However, he did not actually participate in the vote.  According to the court, this resulted in the lack of a quorum and rendered the rule's adoption ineffective.  As a result of the court's holding, for now the new election rule is invalid and representative elections will proceed under the old rules.  It is of course possible that the NLRB will simply hold a new vote on the election rule, and employers will be back in the same position shortly only to await legal rulings on substantive challenges to the election rule.  We'll keep you posted on further developments here.

Social Media and the NLRA: Important Information for Employers

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On Thursday, May 24 at 10:00 a.m. PDT, CDF Partner Mark Spring will be presenting a complimentary webinar on Social Media and the NLRA.  The NLRB has taken an aggressive position in protecting employees who post negative and derogatory comments on social media about their employers and/or supervisors.  They are issuing complaints against union and non-union companies. Do you know if your social media policy complies with the NLRB's broad view of "protected concerted activity" on the internet?  This webinar will help you understand when it is okay for employers to discipline employees for inappropriate social media activity and when such activity is protected by the National Labor Relations Act.  We will also provide information and guidance on how employers should consider drafting and/or modifying their written social media policies so that they are in the best position if the NLRB challenges their policy or a decision made pursuant to the policy.  Finally, time permitting, we will also discuss some bonus practical advice for California employers who have employees using smart phones and other similar portable devices as part of their job function.  We hope you will join us for this informative webinar.  To register, click here. 

California Court Holds Armendariz Still Applies After Concepcion

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This week a California court held that the United States Supreme Court's recent decision in AT&T Mobility v. Concepcion does not overrule California unconscionability standards for assessing employment arbitration agreements, including the standards generally prescribed by the California Supreme Court in Armendariz v. Foundation Health.  Armendariz is the leading case setting forth basic standards for assessing whether an employment arbitration agreement is unconscionable in California.  The case makes clear that in order to be enforceable, an agreement must include a mutual agreement to arbitrate, must provide for adequate discovery, must not impose costs on the employee that the employee would not normally bear in court, must provide for selection of a neutral arbitrator, and similar other fairness requirements.  In addition to Armendariz, the California Supreme Court issued a decision in a case called Gentry, providing grounds for assessing whether a class action waiver in an employment arbitration agreement is unconscionable and unenforceable.  Recently, the continued validity of these cases was called into question when the US Supreme Court issued its decision in Concepcion, overruling a California Supreme Court case known as Discover Bank, which is a case similar to Gentry but sets forth unconscionabilty standards for class action waivers in consumer (not employment) arbitration agreements.  The US Supreme Court held that the FAA preempts state laws that place unique restrictions on the enforceability of arbitration agreements.  Although Concepcion did not specifically address Armendariz or Gentry, their continued validity is called into question by the reasoning of Concepcion.  This week, one California court specifically held that Concepcion does not overrule Armendariz and that the Armendariz standards still apply to employment arbitration agreements in California.  The court relied on Armendariz to find the agreement at issue unconscionable and unenforceable, primarily because it was presented on a take it or leave it basis, required the employees (actually contractors) to arbitrate all claims but reserved a judicial forum for certain employer claims, shortened the statute of limitations for filing claims, and contained a unilateral fee-shifting provision requiring the workers to pay the employer's costs in certain circumstances.  The case is Samaniego v. Empire Today, and the full decision is here.  Stay tuned for further developments in this evolving area of law. 

California DLSE Creates Information Portal for New and Small Businesses

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The California Division of Labor Standards Enforcement recently opened a separate page on its website designed to help new and small California businesses.  The web portal appears designed to help small business owners, new business owners, and businesses based out-of-state understand many of the requirements in the California Labor Code and related regulations in an easy to understand way.  Access to the portal is available by clicking here.

CA Comes to Texas: Post-Brinker Advice-How to Minimize Risk in Management of Meal & Rest Breaks for CA Employees

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The California Supreme Court issued its long-awaited decision in Brinker v. Superior Court (Hohnbaum) on April 12, 2012.  This decision finally answered the much litigated question of what it means to "provide" a meal break under California law.  The Court's decision also addressed issues surrounding when a second meal break is required, and clarified the rest break requirements of California law.  Finally, the Supreme Court made it clear that despite some favorable changes, class action litigation on meal and rest break issues remains viable.  What Brinker failed to address is exactly what changes employers with California employees need to make to their meal and rest break practices in order to minimize legal exposure.  However, on May 16, 2012, Texas-based employers with California operations can get this information directly from CDF attorneys coming to Dallas to help explain the new meal and rest break landscape in California.  During this complimentary seminar hosted by CDF Partners Brent Giddens, Mark Spring and Robin Largent, we will discuss the Brinker decision, how it impacts meal and rest break policies and practices going forward and what employers should do in its wake.  The seminar is on May 16 from 3:30-5:00 p.m. (followed by cocktails and hors d'ouevres from 5:00-6:00) at Le Meridien (Galleria) in Dallas.  We hope you can join us for this informative seminar.  For additional details and to register, please click here.

California Supreme Court Limits Recovery of Attorneys’ Fees on Meal and Rest Claims

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Yesterday the California Supreme Court issued its opinion in Kirby v. Immoos Fire Protection, Inc., addressing whether a prevailing party in a rest break case is entitled to recover attorneys' fees incurred in litigating the case.  In this case, the defendant employer was the prevailing party on a claim by plaintiffs for alleged missed rest breaks in violation of Labor Code section 226.7.  The employer, as the prevailing party, sought to recover its attorneys' fees under Labor Code section 218.5, which on its face allows for an award of attorneys' fees to "the prevailing party" in "any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions."  The trial court awarded attorneys' fees to the employer on multiple claims, but the court of appeal reversed claims covered by Labor Code section 1194 (minimum wage and overtime claims) and 2810 because each of these provisions specifically allow for only one-way fee shifting in favor of a prevailing plaintiff.  The court of appeal upheld the award of attorneys' fees to the employer on the rest break claim, holding that the claim sought additional "wages" and was, therefore, covered by Labor Code section 218.5 and its mutual fee shifting provision.  The plaintiffs sought review by the California Supreme Court, arguing that the rest break claim was governed by section 1194's unilateral fee shifting provision because it was really in the nature of an action for payment of less than the minimum wages required by law.  Plaintiffs also argued that because they had a separate claim for unpaid overtime covered by section 1194, that section should apply to the whole action, including the rest break claim.

The Supreme Court rejected the plaintiffs' argument that section 1194 applies to a rest break claim, reasoning that section 1194 expressly states that it only applies to claims for unpaid minimum wage or overtime compensation.  As such, the Court held that section 1194 does not provide a mechanism for a prevailing party to recover attorneys' fees on a rest break claim.  Turning to section 218.5, the Court similarly held that this fee shifting statute does not apply to rest break claims.  Using somewhat strained reasoning, the Court held that a claim for missed rest breaks is not a claim for "nonpayment of wages" within the meaning of 218.5 (even though the Supreme Court recently held that the premium pay owed for missed breaks is a "wage" and not a "penalty").  Nor is a claim for missed rest breaks a claim for nonpayment of fringe benefits or health and welfare contributions.  Instead, according to the Court, a claim for missed breaks is a claim for denial of a mandated break and, as such, is not covered by the express language of section 218.5 and 218.5 does not provide a mechanism for a prevailing party to recover attorneys' fees on a claim for missed breaks.

The Supreme Court's decision was bad news for the employer in the Kirby case, who had its attorneys' fee award reversed.  However, the result appears to be a good one for California employers in the larger sense because the decision precludes prevailing plaintiffs from using section 218.5 (or 1194) to recover attorneys' fees in connection with meal and rest break claims.  This should operate to drive down the incentive for the plaintiffs' bar in connection with such suits.  They may try to utilize PAGA or California Code of Civil Procedure section 1021.5's private attorney general theory as means to recover fees on these claims, but these avenues are not without hurdles and in many cases, will not work.

NLRB Takes Aim at Class Waiver in 24 Hour Fitness’ Arbitration Policy

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The NLRB filed a complaint today against 24 Hour Fitness, alleging the company's arbitration policy violates the NLRA.  According to the NLRB, the action was prompted by a complaint lodged with the NLRB by a 24 Hour Fitness employee in California.  24 Hour Fitness' arbitration policy, like those of many companies, contains a class action waiver provision that effectively requires employment disputes to be resolved individually.  As employers may recall, the NLRB recently issued a decision in a case called D.R. Horton, holding that class waiver provisions violate employees' section 7 rights to engage in concerted activity.  D.R. Horton has been appealed and it was not clear how active the NLRB was going to be in enforcing its position declaring class waiver provisions unlawful.  Well, the NLRB's complaint against 24 Hour Fitness may be a sign of  more to come.  Stay tuned.  For the NLRB's press release on the 24 Hour Fitness matter, click here.

Acting NLRB General Counsel Provides Guidelines for Expedited Union Elections

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Legislative and legal efforts challenging the NLRB's expedited election procedures have thus far failed, and today is the effective date for these new procedures.  The new NLRB expedited election procedures will likely make it easier for unions to win elections in many cases.  All NLRB union elections will now be conducted under the new expedited procedures.  Last week, NLRB General Counsel, Lafe Solomon, publicized a memorandum explaining how NLRB Regional Offices will implement these new procedures.  In addition, Solomon's office also published a list of Frequently Asked Questions about the new procedures.  For more details on the new NLRB union election procedures that became effective today, please click here. 

Employer Cannot Be Compelled to Arbitrate Class Claims Absent Express Agreement to Do So

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Today a California court held that where an employment arbitration agreement is silent on the issue of whether class claims may be arbitrated, the employer may not be ordered to arbitrate such claims.  In Kinecta v. Sup. Ct., the employer and employee had an agreement that any disputes between them arising out of the employment relationship would be resolved by binding arbitration.  Notwithstanding the agreement, the plaintiff employee filed a wage and hour class action against Kinecta in California state court.  Kinecta moved to compel arbitration of the plaintiff's individual claims and to dismiss the class allegations from the complaint.  The trial court granted the motion to compel arbitration, but denied the motion to dismiss the class allegations, thereby effectively requiring Kinecta to arbitrate class claims.  Kinecta appealed and the court of appeal agreed with Kinecta that it should not have been ordered to arbitrate class claims.  The court of appeal relied on the United States Supreme Court 's decision in Stolt-Nielsen v. Animalfeeds Intl., 130 S.Ct. 1758 (2010), in which the Supreme Court held that a party cannot be compelled to arbitrate class claims unless the party has expressly agreed to do so.   The arbitration agreement between Kinecta and its employee was silent on the issue of classwide arbitration.  Because there was no express agreement to arbitrate class claims, the court held that they could not be compelled to arbitration based on Stolt-Nielsen.   As a result, the court of appeal issued an order directing the trial court to dismiss the class allegations. 

In its decision, the court of appeal considered whether the agreement's practical prohibition on an individual pursuing claims as a class action in any forum was enforceable under the California Supreme Court's decision in Gentry.   The court noted that "there is some question" whether Gentry is still good law or whether it is preempted by the United States Supreme Court's decision in AT&T v. Concepcion.  However, the court held that it need not decide that issue because even if Gentry is still good law, the plaintiff had failed to make an evidentiary showing that the waiver of class claims would be unenforceable under the standards set forth in Gentry.  The Kinecta decision is here.