August 16, 2013
Posted by Cal Labor Law in New Laws & Legislation
There are a number of bills being considered by the California Legislature this session that are of interest to California employers. With the Democratic supermajority in both legislative houses, as well as a Democratic Governor, it is quite likely that more employee-friendly bills will be passed and signed into law than in recent years. The following are some of the notable pending bills:
SB 404 (FEHA/familial status): This bill would expand the list of protected categories for employment discrimination purposes under FEHA, to include “familial status.” “Familial status” is defined to include individuals who provide medical or supervisory care to a family member (child, parent, spouse, domestic partner, or parent-in-law). If signed into law, this will expand the scope of lawsuits and potential liability against employers for alleged discrimination against applicants or employees based on their familial status.
AB 556 (FEHA/military and veteran status): This bill would add “military and veteran status” to the list of protected categories for employment discrimination purposes under FEHA.
SB 400 (domestic violence/stalking): This bill would expand employment protections provided to victims of domestic abuse (Labor Code section 230) by adding a provision that prohibits employers from discriminating against applicants or employees based on their known status as victims of domestic violence, sexual assault or stalking, and would also require employers to provide time off to employees who need to attend court proceedings dealing with stalking (the law already provides for time off for proceedings relating to domestic violence and assault). Most notably, the law would require employers to provide “reasonable accommodation” to victims of domestic violence, sexual assault and/or stalking in the form of implementing safety measures for the employee while at work.
SB 655 (FEHA/mixed motive cases): This bill is intended to codify the California Supreme Court’s recent decision in Harris v. Santa Monica, specifically to codify the burden-shifting framework and remedies available in cases where there are mixed motives for an adverse employment action in a FEHA discrimination case. Under this bill, a plaintiff in a discrimination case will prevail if he/she proves that his/her protected status/activity was a “substantial motivating factor” for the employer’s decision to take adverse employment action against the plaintiff. However, the employer can try to limit its liability by pleading and proving that it would have made the same adverse employment decision even without consideration of the protected characteristic/activity. If the employer proves this, the employer will not be liable for economic damages (back pay/front pay). However, the employer will still be liable for non-economic damages (emotional distress damages), attorneys’ fees, expert witness fees, a penalty of $15,000, and possibly injunctive relief.
AB 263/SB 666 (wage complaints and immigration practices): These bills would amend Labor Code 98.6 to make clear that written or oral complaints regarding wages the employee believes are owed him/her are protected activities for purposes of the prohibition on retaliation against an employee for engaging in protected conduct. These bills would also make clear that an employee may, but is not required to, exhaust administrative remedies before filing a lawsuit. These bills would also add sections 1019 et seq. to the Labor Code, delineating certain unfair and unlawful immigration-related practices. “Unfair immigration practices” include requesting more or different documents of an applicant than are allowed under federal I-9 rules; refusing to honor documents that appear genuine on their face; using the federal E-verify program to check authorization status of a person at a time or in a manner not required or authorized under the program procedures; and threatening to file or filing a false police report. The new law would also prohibit retaliation against applicants/employees who complain about the employer’s non-compliance with these provisions and/or inform others of their rights in this regard, or who even seek information from the employer about its compliance. The new law would provide a rebuttable presumption that adverse action taken against an employee within 90 days of such protected activity is retaliatory.
AB 442 (liquidated damages for wage violations): This bill would expand the remedies available to employees who file claims with the Labor Commissioner for payment of a wage lower than minimum wage. The bill would permit the Labor Commissioner to award liquidated damages (employees can already recover liquidated damages in a civil lawsuit), in addition to unpaid wages, penalties, and interest.
AB 729 (privilege for communications with union agent): This bill would create an evidentiary privilege (similar to the attorney-client privilege) to protect from disclosure confidential communications between a union agent and a represented employee or former employee.
AB 218 (limits state/local agency inquiries into applicant criminal history): This bill would add section 432.9 to the Labor Code and would generally prevent state and local agency employers from asking applicants to disclose criminal history information, via application or otherwise, until after it is first determined that the applicant meets the minimum qualifications for the position.
AB 241 (domestic workers/wages): This bill, which was introduced but unsuccessful last year, is back. This bill would add certain wage protections for domestic workers, such as babysitters and house cleaners. With certain exceptions, the bill would require payment of daily and weekly overtime and compliance with other wage order requirements, for most household workers. With respect to babysitters, the law would exempt babysitters under age 18 and would also exempt "casual" babysitters who work no more than 6 hours per week in any given month (these employees are still entitled to minimum wage for all hours worked, however). The law also sets forth specific requirements for live-in household employees.
AB 10 (minimum wage increases): This bill provides for state minimum wage increases as follows: $8.25/hour on January 1, 2014; $8.75/hour on January 1, 2015; $9.25/hour on January 1, 2016; $9.50/hour on January 1, 2017; and $10.00/hour on January 1, 2018.
AB 25 (social media/public employers): Last year, a new law was passed prohibiting private employers from requiring applicants or employees to disclose usernames/passwords for social media and/or requiring employees to access or divulge social media. This bill would extend these provisions to public employers.
SB 770 (paid family leave expansion): This bill would expand California's paid family leave partial wage replacement program (administered through EDD) to provide wage replacement benefits to an employee who takes time off to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law, effective July 1, 2014. (Current law already provides such benefits to employees who take time off to care for a spouse, child, parent, or domestic partner.)
In addition to the foregoing bills being considered by the California Legislature, the Legislature already passed and the Governor already signed into law SB 292, which "clarifies" that a plaintiff claiming sexual harassment under FEHA need not prove that the harassment was motivated by sexual desire in order to prove "sexual" harassment. This is not really a change in the law, but the bill was aimed at curtailing the effect of a recent California Court of Appeal decision, Kelley v. Conco, 196 Cal.App.4th 191 (2011), which had some language suggesting that in a same-sex harassment case, evidence that the alleged harasser was heterosexual and not motivated by sexual intent or desire could defeat a harassment claim.
The full text of each of these bills, along with information on the bills' sponsors, is available here. Wondering why this list does not include all of the employer-friendly bills pending before the Legislature? (Of course there aren't any--they were all defeated early on in the session.)
The California Legislature has until September 13 to pass bills this session, and the Governor thereafter has until October 13 to sign or veto such bills.
Today the Ninth Circuit issued its decision in Urbino v. Orkin Services of California, Inc., addressing how to properly analyze whether the amount in controversy element is satisfied for purposes of diversity jurisdiction in a PAGA action. As most California employers know, PAGA is a California statute that allows an employee to recover penalties (purportedly on behalf of the state) against an employer for various violations of the California Labor Code. Worse, the employee who is the named plaintiff can seek to recover penalties on behalf of all aggrieved employees. Most claims are filed in state court, but employers retain the option to remove the action to federal court if the requirements for diversity jurisdiction are met. One of those requirements is that the amount in controversy must exceed $75,000. In determining whether the amount in controversy meets this jurisdictional threshold, the question becomes whether courts should look only at the amount of the named plaintiff's claim, or whether courts should look at the aggregate amount of the claim as to all "represented" employees. California district courts have disagreed over the answer to this question. Today, the Ninth Circuit resolved the question, holding that only the claim of the named plaintiff (and not the aggregate claims of all aggrieved employees sought to be represented) may be considered in determining whether the amount in controversy requirement is satisfied. The result of this decision will be that far fewer PAGA claims will be capable of removal to federal court based on diversity jurisdiction. The full opinion of the court is here.
Employers should be aware that, according to a recent lawsuit filed by an employer, the EEOC has engaged in a shocking new tactic as part of its “investigatory” power. Specifically, under the guise of its “investigation” into a claim of alleged unlawful conduct on the part of the employer, the EEOC, without any advance notice, directly emailed over 1100 of the employer’s employees (at their employer’s email address) in an attempt to develop class members for a potential class action against the employer.
In response to the EEOC’s conduct, Case New Holland Inc. and CNH America LLC sued the EEOC on August 1, 2013 seeking injunctive relief and attorneys’ fees, claiming that the mass email interfered with its business operations, constituted contact with represented parties in violation of the Rules of Professional Conduct, and denied CNH the right to be present during communications with its employees. The lawsuit further alleges that (1) no rule or regulation authorized the mass email, (2) the investigation was biased and violated statutory and constitutional rights, (3) the missive constituted a violation of the EEOC compliance manual, (4) violated the Fourth Amendment of the Constitution of the United States, and (5) violated the Fifth Amendment of the Constitution of the United States.
Employers should be concerned that even long after an investigation appears to have concluded, the EEOC could undertake such a tactic. The Complaint alleges that the EEOC investigation of CNH commenced in 2011 and that over the course of the investigation, CNH cooperated by providing, among other things, approximately 5,707 pages of documents and over 600,000 electronic records to the EEOC. The vast information was provided to the EEOC in January 2012 and, without any warning, about 18 months later on the morning of June 5, 2013, the EEOC made its direct contact with hundreds of CNH’s employees.
If you are being investigated by the EEOC this could happen to you. So once you learn of a potential investigation, engage counsel and press regularly for the termination of the investigation and conclusions reached by investigator.
In 2003, the Second District Court of Appeal for California, in American Airlines, Inc. v. Superior Court, 114 Cal.App.4th 881 (2003), refused to recognize a privilege for communications between a union representative and bargaining unit employee under the California Labor Code, the Railway Labor Act, common law privacy or any other provision. In 2005, Illinois became the first state to enact a statute creating a privilege for such communications. Last year, the Alaska Supreme Court in Peterson v. State, 280 P.2d 559 (Alaska 2012), created a new Alaskan common law privilege for certain communications between an employee and his/her union representative.
The California Legislature is now attempting to overturn American Airlines, and follow Illinois by creating a statutory privilege for such communications through Assembly Bill 729. AB 729 amends the California Evidence Code to create a privilege for confidential communications between an employee or former employee and his/her union agent that is similar to the attorney-client privilege. AB 729 passed the full Assembly in May by almost a 2/3 majority. Last week, the Senate Judiciary Committee voted in support of the bill 4-2. AB 729 now moves to the Senate Appropriations Committee for consideration before being considered by the entire state Senate. Unionized employers should play close attention to this piece of legislation. We will continue to keep you advised on how this develops.
The recent U.S. Supreme Court Case regarding the Defense of Marriage Act (Windsor v. Schlain, No. 12-307 (U.S. 2013)) has numerous immigration consequences for certain same-sex spouses that are married. The June 26, 2013 decision opens the door for many immigration benefits for certain qualifying spouses.
If the marriage takes place in a state that recognizes a same-sex marriage, then U.S. Citizenship & Immigration Services (US CIS) will allow the U.S. Citizen or permanent resident partner to sponsor their foreign national spouse for permanent residency in the U.S. Currently, there are 14 states where the marriage will be recognized as valid for immigration purposes, including California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, Washington DC.
And the U.S. Citizen spouse could even sponsor the foreign national partner on a fiancé visa if they are overseas and plan to marry within 90 days of entry to the U.S.
In addition, it will allow non-immigrants who are applying for a temporary visa (such as H-1B, L-1, TN, etc.) to have their spouses join them on a derivative visa if their same-sex marriage is recognized as valid in the overseas country where the marriage took place. Currently, there are 15 countries that recognize same sex-marriages including Argentina, Belgium, Brazil, Canada, Denmark, France, Iceland, Netherlands, New Zealand, Norway, Portugal, South Africa, Spain, Sweden, and Uruguay.
US CIS has indicated that the place of marriage (celebration) will dictate eligibility as opposed to the current place of residency. For example, if a couple marries in California and then moves to Wyoming, then they will still be able to petition for permanent residency since the location of the ‘place of celebration” of the marriage controls.
Spouses may also marry overseas in a country that recognizes same-sex marriages and US CIS will recognize that marriage for visa purposes.
US CIS is expected to provide more guidance on this in the months to come. See here.
For more information, please contact Greg Berk, Chair of the CDF Immigration Practice Group.
Yesterday the United States Supreme Court issued two decisions important for employers litigating harassment and retaliation claims under Title VII. In the first case, Vance v. Ball State University, the Court decided an important issue relating to an employer's liability for harassment of an employee by a "supervisor." More specifically, the Court decided a dispute concerning what it means to be a "supervisor"--i.e. does the employee need to have authority to hire and fire and make similar decisions or is it enough if the employee directs the daily work of others(the latter approach being the approach endorsed by the EEOC)? This issue is significant because employer liability for harassment under Title VII varies depending on whether the alleged harasser is a supervisory employee or a co-worker. If the harasser is a supervisor, the employer generally is vicariously liable for the harassment. If the harasser is not a supervisor but a co-worker of the victim, then the employer generally only is liable if it knew or should have known of the harassment and failed to take prompt and effective remedial action. Prior to yesterday's decision, courts disagreed over the meaning of the term "supervisor" and thus parties to harassment suits under Title VII generally had to litigate whether the alleged harasser qualified as a supervisor (with Plaintiffs' attorneys of course arguing broadly for supervisor status, and employers urging a narrow view of supervisor status).
In yesterday's 5-4 decision, the Supreme Court provided the needed clarification and guidance on this issue, defining the term "supervisor" narrowly in a way that benefits employers. The Court held that to be considered a supervisor, the employee must be empowered by the employer to take "tangible employment actions against the victim." This means that the employee must have the power to effect "a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits." The Court rejected as "nebulous" the EEOC's (and many circuit court's) definition of a supervisor to include anyone with the ability to significantly direct another's daily work.
The Supreme Court's decision is a favorable one for employers because it narrows the circumstances under which employers can be held vicariously liable for harassment, and should reduce litigation costs that previously had to be expended litigating whether the alleged harasser was a supervisor or not. The full decision in Vance is available here.
In another employer-friendly Title VII decision issued yesterday, University of Texas Southwestern Medical Center v. Nassar, the Court (also in a 5-4 decision) decided a split among the circuits concerning the standard for proving retaliation claims under Title VII (meaning claims that an employee was retaliated against for complaining about discriminatory practices in violation of Title VII). Prior to yesterday's decision, some courts had held that an employee need only prove that a retaliatory motive was "a motivating factor" behind the adverse employment action. Other courts held that an employee, in order to prevail, has a higher burden of proving that a retaliatory motive was the "but for" cause of the adverse employment action. The Supreme Court has now spoken and held that the standard for proving a retaliation claim under Title VII is "but for" causation. This decision similarly is favorable for employers litigating Title VII retaliation claims because it makes it more difficult for the plaintiff to prove and prevail on the claim. The full decision in Nassar is available here.
It has been a good week for employers on the United States Supreme Court front.
Today the United States Supreme Court issued its opinion in American Express Co. v. Italian Colors Restaurant, holding that courts may not invalidate a contractual waiver of class arbitration simply because the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery he or she might receive. This case is not an employment case, but a case involving a merchant with a credit card contract with American Express. The merchant brought a class action against American Express, alleging violation of antitrust laws resulting in merchants being charged excessively high rates. The contract between American Express and its merchants contained an arbitration agreement whereby the merchants had to agree that any disputes would be resolved by binding arbitration and that there would be no right to have claims decided on a class basis in arbitration. Pursuant to this contractual agreement, American Express sought to compel individual arbitration of the merchant’s claim. The trial court granted the motion to compel arbitration but the court of appeal reversed, holding that the prohibitive costs the merchant would face in arbitration to prove an antitrust violation precluded effective vindication of statutory rights and rendered the class waiver unenforceable. Specifically, the individual merchant only stood to recover between $12,000-$38,000 in damages, but it would cost at least several hundred thousand dollars, and possibly more than one million dollars, to prove the violation through expert analysis. The court of appeal concluded that requiring an individual to bear such cost in arbitration while precluding class wide relief, effectively eviscerated the right to pursue the action in the first place. The United States Supreme Court granted certiorari and reversed.
In today’s decision (a 5-3 decision authored by Justice Scalia), the Supreme Court held that the Federal Arbitration Act (FAA) requires that arbitration agreements be enforced according to their contractual terms, even for claims alleging a violation of a federal statute, unless the FAA's mandate has been overridden by a contrary congressional command. The Court made clear that neither the antitrust laws nor Rule 23 of the Federal Rules of Civil Procedure contains any congressional command that individuals be permitted to pursue antitrust violations on a class basis. The court further rejected application of an "effective vindication" exception used by some courts to invalidate class waivers in arbitration agreements. Under that exception, which the Court emphasized originated from dicta in an earlier Supreme Court decision, courts sometimes invalidate arbitration agreements that operate to prospectively waive a party's rights to pursue a statutory remedy. The Court held that there was no reason to apply any such exception in this case because the arbitration agreement did not result in a waiver of the merchant's right to pursue an antitrust claim. The merchant could still pursue the claim in arbitration, even though not on a class basis. "[T]he fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy." The court further reasoned that if courts could invalidate arbitration agreements based on a principle of cost versus benefit analysis of individual versus class wide claims, this would require courts, in ruling on a motion to compel arbitration, to undertake an analysis of the legal requirements for success on the merits on a claim, the evidence necessary to meet those requirements, the cost of developing that evidence, and the damages that would be recovered in the event of success. "Such a preliminary litigating hurdle would undoubtedly destroy the prospect of speedy resolution that arbitration in general and bilateral arbitration in particular was meant to secure." The Court thus held that the arbitration agreement, including its class waiver, was enforceable as written under the FAA.
Today's Supreme Court decision is yet another example of the Court's strong position on enforcing arbitration agreements, including class waivers, according to their terms and the parties' intentions. While this is not an employment action, the analysis and reasoning in the decision carries over to cases interpreting the enforceability of arbitration agreements and class waivers in the employment context and may well impact the California Supreme Court's upcoming analysis in important employment cases pending before it on the issue of enforceability of employment arbitration agreements in California, including on the issue of class waivers. As readers of this blog know, the California Supreme Court is expected to decide this year whether the United States Supreme Court's recent decision in AT&T Mobility v. Concepcion (and the FAA) preempt California laws relating to the enforceability of arbitration agreements and class waivers in such agreements in employment cases, particularly in wage and hour class actions and PAGA representative actions.
Employers probably recall that last year the EEOC published guidance on the use of criminal background checks in the hiring process. This led many to forecast that the EEOC would be stepping up its enforcement efforts in this area. Well, earlier this month the EEOC filed lawsuits against two different companies, BMW Manufacturing and Dollar General, alleging that their criminal background check policies discriminated against black applicants in violation of Title VII. According to the lawsuit against BMW, BMW had a policy that barred employment to applicants with certain criminal convictions regardless of how old the conviction was, the nature or gravity of the offense, or the nature of the employment position sought. The EEOC charged that BMW's policy had a disparate impact on blacks and constituted unlawful employment discrimination.
In the case against Dollar General, the EEOC similarly alleges that Dollar General's criminal conviction policy disparately impacts black applicants. That lawsuit arose out of two administrative charges filed with the EEOC by rejected applicants. In one case, the applicant had a six-year old drug conviction. Dollar General's policy was to consider this type of conviction a bar to employment if the conviction was less than 10 years old. As such, the applicant was not hired. In the other case, the applicant's background check revealed a felony conviction but the applicant insisted that the report was wrong. Although she informed Dollar General of the mistake, she still was not hired. The EEOC is now challenging Dollar General's criminal convictions policy as a whole. In both cases, the EEOC seeks back pay as well as injunctive relief. The EEOC's press release regarding these two lawsuits is available here.
The EEOC's increased attention and enforcement efforts in this area serve as a reminder to employers of the need to review their criminal background check policies (as well as similar questions on employment applications) to try to ensure the policies pass muster under the EEOC's guidance. Our prior post on that guidance is available here. California employers must also be mindful that California has some additional restrictions on the scope of criminal background checks used for employment purposes (e.g. California Labor Code section 432.8, which prohibits employers from considering certain marijuana-related convictions in making employment decisions). Thus, California employers need to ensure that their policies and procedures comply with both federal EEOC guidance and California law.
As we reported last month, the D.C. Circuit Court of Appeals recently issued a decision invalidating the NLRB’s rule requiring employers to post an Employee Rights poster to apprise employees of their rights under the NLRA. This past Friday, another court weighed in and similarly concluded that the posting rule is unenforceable. In Chamber of Commerce v. NLRB, the Fourth Circuit Court of Appeals held that the NLRB exceeded its authority in adopting the posting rule. The court reasoned that the NLRB’s role is a reactive one, intended to address unfair labor practice charges, and that the NLRB exceeded this role when it acted in a proactive manner adopting a workplace posting rule. While the outcome of the Fourth Circuit decision is the same as the D.C. Circuit’s earlier decision, the reasoning behind the two decisions is somewhat different. The D.C. Circuit punted the issue of whether the NLRB had authority to issue the posting rule, instead ruling that the posting rule was invalid because it violated employers’ free speech rights. The Fourth Circuit more strongly held that the NLRB plainly lacks authority to issue such a proactive posting rule. It is unclear whether the NLRB will appeal to the United States Supreme Court or accept the adverse rulings of these two courts and abandon efforts to maintain the posting rule. The most recent Fourth Circuit decision is here.
Last week the United States Supreme Court issued its decision in Oxford Health Plans LLC v. Sutter, refusing to vacate an arbitrator’s finding that a doctor’s arbitration agreement with a health plan permitted class-wide arbitration. Sutter, a pediatrician, had entered into a fee for service contract with Oxford Health, whereby Oxford Health agreed to pay Sutter certain rates for services he provided patients. Sutter initiated a lawsuit on behalf of himself and other doctors also under contract with Oxford Health, alleging that Oxford Health failed to pay the doctors in accordance with the contract terms. Oxford Health moved to compel arbitration, relying on the following arbitration provision in the contract with Sutter:
“No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the rules of the American Arbitration Association before one arbitrator.”
The agreement did not expressly authorize nor expressly prohibit claims from proceeding in arbitration on a class-wide or collective basis. However, the parties agreed that the arbitrator should decide whether the agreement permitted class-wide arbitration or whether Sutter would be limited to pursuing only his individual claim in arbitration. The arbitrator thereafter concluded that the agreement permitted class-wide arbitration. The arbitrator reasoned that the agreement’s use of the term “civil action” was not limited to only certain types of civil actions, that a class action is a common type of civil action, and that by agreeing that all “civil actions” (without limitation) would be resolved by way of arbitration, the parties must have intended to include class claims in its scope.
Oxford Health petitioned to vacate the arbitrator’s decision, but its efforts were unsuccessful. While the arbitration process continued, the United States Supreme Court issued its decision in Stolt-Nielsen v. Animal Feeds International, 559 U.S. 662 (2010), holding that a party cannot be compelled to arbitrate claims on a class basis unless there is a contractual basis for concluding that the party agreed to do so. In Stolt-Nielsen, the parties (very unusually) stipulated that they had no agreement concerning the use of class-wide arbitration. Notwithstanding this fact, a panel of arbitrators ordered class-wide arbitration. In those circumstances, the Supreme Court held that the arbitration panel exceeded its authority because it did not conclude class-wide arbitration was appropriate based on interpretation of the parties’ contract. It could not have done so, given that the parties stipulated their contract did not cover the issue of class arbitration. Instead, the panel ordered class arbitration as a matter of public policy. According to the Supreme Court, this was not a proper exercise of the arbitrator’s power and as, such, the order was overturned.
Relying on Stolt-Nielsen, Oxford Health renewed its efforts to undo the arbitrator’s decision that the claims against it could proceed on a class basis in arbitration. This time the challenge made its way to the Supreme Court, which issued its decision last week, disagreeing with Oxford Health’s position and limiting the scope of Stolt-Nielsen. In its unanimous opinion, the Supreme Court held that this case was different than Stolt-Nielsen because in Stolt-Nielsen the parties had stipulated that they had no agreement concerning the use of class arbitration. Here, by contrast, the parties simply disagreed about whether or not the subject was covered by the arbitration provision in their contract. More significantly, the parties specifically agreed that the arbitrator should decide, as a matter of pure contract interpretation, whether the agreement permitted class arbitration. By giving the arbitrator this power, the parties largely forfeited any meaningful judicial review of the arbitrator’s decision. The Supreme Court explained that judicial review of an arbitrator’s rulings is extremely limited under the Federal Arbitration Act and a decision will only be vacated if clearly in excess of the arbitrator’s authority. A decision that is simply a “wrong interpretation” is not in excess of authority. The arbitrator was authorized to interpret the contract and did so. The fact that he may have gotten the result wrong is not a proper ground for reversal.
The Supreme Court hinted that had Oxford Health not stipulated that the arbitrator should decide the issue of class arbitration, Oxford Health could have argued that the issue was an issue of arbitrability in the first instance and one that a court, not an arbitrator, must decide. If a court had issued the decision, judicial review would have been broader and the outcome quite possibly different.
The Oxford Health case is a good reminder that employers must carefully review the language of their arbitration agreements to ensure that the subject of class/collective arbitration is expressly addressed and prohibited. Employers should also consider and address in their agreements the issue of whether an arbitrator or a court will decide issues of arbitrability pertaining to the agreement. Limited judicial review is great when the decision is in your favor, but cuts the other way too—as the Oxford Health case demonstrates. The Oxford Health case is available here.
In a related development in California, yet another California has weighed in on the issue of whether a class waiver provision in an arbitration agreement precludes an employee from pursuing a representative claim under PAGA. California state and federal courts have disagreed on this issue, with some concluding that class and representative claims, including those brought under PAGA, may be barred by an arbitration agreement, and others concluding that an arbitration agreement cannot preclude an employee from pursuing a representative action under PAGA. Earlier this month, the Sixth District Court of Appeal handed down a decision in the Plaintiffs’ camp, holding that a plaintiff may pursue a representative claim under PAGA, notwithstanding an otherwise valid arbitration agreement precluding class/collective claims. The decision is Brown v. Superior Court (Morgan Tire & Auto) and the decision is here. Employers should note that the California Supreme Court is expected to resolve the issue of whether representative PAGA claims are excluded from the scope of an otherwise valid class waiver provision in an arbitration agreement sometime in the next year in Iskanian v. CLS Transportation (which reached the opposite conclusion with respect to the impact of a class waiver provision on a PAGA claim). In the meantime, employers can expect continued assertion of PAGA claims by Plaintiffs’ lawyers in an effort to circumvent applicable arbitration agreements with class waivers.
We will continue to post developments as they arise in this important area.