Employment Flash - December 2019

Skadden, Arps, Slate, Meagher & Flom LLP

This edition of Employment Flash looks at recent NLRB activity, including its issuance of a decision suggesting two members would be willing to reconsider a precedent regarding surveillance of employees’ union activity. We also discuss other U.S. federal and state labor and employment-related developments, including the January 1 increase of the salary threshold for overtime exemption, the First Circuit’s ruling that Sun Capital Advisors is not liable for certain pension debts, a district court’s order that the EEOC continue collecting EEO-1 Component 2 pay data and the federal Workforce Mobility Act of 2019. In addition, we outline the new EU Whistleblower Protection Directive.

NLRB Spotlight

  • NLRB Issues Decision Suggesting Reconsideration of Position on Monitoring Union Activity
  • NLRB Signals Picketers Should Be Careful To Direct Picketing at Correct Party
  • NLRB Will Send ‘Unilateral Change’ Claims to Arbitration and Defer to the Arbitrator

Additional Developments

  • Salary Threshold for Overtime Exemption Increases on January 1, 2020
  • First Circuit Rules Sun Capital Advisors Not Liable for Pension Debts
  • Judge Orders EEOC To Continue Collecting EEO-1 Component 2 Pay Data While OFCCP Reports It Will Not Use Component 2 Pay Data in Enforcement
  • Senators Introduce Bipartisan Bill to Ban Noncompetes
  • President Rescinds Executive Order Granting Job Rights to Employees of Federal Contractors
  • New H-1B Process
  • Second Circuit Says Offers of Judgment in FLSA Claims Are Exempt From Judicial Review
  • Second Circuit Rules Title VII Plaintiffs Need Not Prove Equal Work to Succeed on Pay Claim
  • New York City Expands Human Rights Law Protections to Independent Contractors
  • New York City Employers Must Have ‘Encouraged, Condoned or Approved’ Sexual Harassment To Be Strictly Liable
  • New 2020 Laws for California Employers
  • California Appeals Court Rules Dynamex Applies Retroactively
  • Ballot Initiative Launched to Repeal AB5
  • California Governor Vetoes Worker Retaliation Protections

International Spotlight

  • The New EU Whistleblower Protection Directive

NLRB Spotlight

NLRB Issues Decision Suggesting Reconsideration of Position on Monitoring Union Activity

On October 29, 2019, the National Labor Relations Board (NLRB) issued a ruling suggesting at least two NLRB members – Chairman John Ring and member Marvin Kaplan – “would welcome the opportunity to revisit” the board’s long-standing precedent that surveillance of employees’ union activity may be unlawful even when the employees are not aware of such surveillance. The ruling was issued in National Captioning Institute, Inc. and National Association of Broadcast Employees & Technicians — Communications Workers of America, AFL-CIO, 368 NLRB No. 105 (October 29, 2019). The surveillance precedent was promulgated in the Ninth Circuit’s 1941 decision in NLRB v. Grower-Shipper Vegetable Association of Central California, 122 F.2d 368 (9th Cir. 1941), and has not been revisited since. Specifically, the court in Grower-Shipper, relying on the dictionary definitions of “interfere,” “restrain” and “coerce,” held that “a person can be interfered with, restrained or coerced without knowing it.” Accordingly, the court upheld the NLRB’s ruling that hiring agents to surveil union activities violated the National Labor Relations Act (NLRA) even though neither the union nor any of its members knew of the surveillance. National Captioning did not provide the NLRB with the opportunity to revisit the rule because at least one employee was aware of the employer’s surveillance of a private Facebook group in which employees held union discussions. Nonetheless, National Captioning provided the opportunity for the two NLRB members to signal their interest in reconsidering the 1941 rule and highlight, in a footnote, “the lack of meaningful analysis” about how an employer can unlawfully interfere with, restrain or coerce employees when no employees are aware of the surveillance.

NLRB Signals Picketers Should Be Careful To Direct Picketing at Correct Party

On November 1, 2019, the NLRB submitted its answering brief to the Ninth Circuit in Service Employees International Union Local 87 v. National Labor Relations Board, No. 19-70334, arguing that the court should uphold the NLRB’s ruling that an employer did not violate the NLRA by discharging a group of janitors who engaged in unlawful “secondary” picketing. The dispute arose from the janitors’ fall 2014 picketing outside the office building where they provided cleaning services on behalf of their employer, Ortiz Janitorial Services, which had been subcontracted to provide the services to the office building by Preferred Business Services pursuant to an agreement with the building’s property manager, Harvest Properties. Following the protests, Preferred canceled the contract with Harvest and Ortiz Janitorial lost its subcontract. The owner of Ortiz Janitorial discharged the janitors as a result. According to the NLRB, because, among other reasons, the janitors failed to clearly disclose that their dispute was with their primary employer and targeted neutral Harvest Properties and multiple neutral tenants of the office building, the janitors were engaged in “secondary” picketing, which is not afforded the same protection as “primary” picketing under the NLRA. Accordingly, in its brief, the NLRB urged the Ninth Circuit to find that the janitors’ discharges were lawful.

NLRB Will Send ‘Unilateral Change’ Claims to Arbitration and Defer to the Arbitrator

As previously reported in the September 2019 Employment Flash, in MV Transportation, Inc., 368 NLRB No. 66 (September 10, 2019), the NLRB adopted the “contract coverage” standard for determining whether unionized employers violated federal labor law by making unilateral changes. Under the “contract coverage” standard, the NLRB examines the plain language in a collective bargaining agreement to see whether it allows the employer to make the unilateral change at issue. Following its decision in MV Transportation, Inc., the NLRB received a number of questions from regional offices regarding procedure and application of the new standard. On November 1, 2019, the NLRB’s Division of Operations-Management published a memorandum clarifying to regional directors that they should defer “unilateral change” claims to arbitrators in situations where the union has filed a grievance or, even if the union has not filed a grievance, provided that both sides do not object to arbitration, where the collective bargaining agreement calls for arbitration.

Additional Developments

Salary Threshold for Overtime Exemption Increases on January 1, 2020

As reported in the September 2019 issue of Employment Flash, effective January 1, 2020, the minimum salary threshold for the executive, administrative and professional “white collar” exemptions under the Fair Labor Standards Act (FLSA) will increase from $455 per week (or $23,660 annually for a full-time worker) to $684 per week (or $35,568 annually for a full-time worker). However, there are special minimum salary levels for exempt employees in U.S. territories ($455 per week for employees in Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam and the U.S. Virgin Islands, and $380 per week for employees in American Samoa) and for exempt employees in the motion picture industry (a “base rate” of $1,043 per week). Further, the minimum annual earnings threshold for the FLSA’s highly compensated employee exemption will increase from $100,000 to $107,432. Employers may use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard minimum salary threshold or the special minimum salary levels that apply to certain U.S. territories. Such payments may include, for example, nondiscretionary incentive bonuses tied to productivity and profitability. No changes were made to the duties, tests or other FLSA exemptions (e.g., the outside sales exemption).

State and local governments may impose higher salary thresholds. In connection, the minimum earnings threshold for overtime exemptions under certain state and local laws will increase on January 1, 2020, as well. For example, the minimum annual salary threshold for the white collar exemptions will increase from $45,760 to $49,920 for California employers with 25 or fewer employees and the threshold for California employers with 26 or more employees will increase from $49,920 to $54,080. In New York, depending on the worker’s location and size of the employer, the 2019 minimum annual salary threshold range is $43,264 to $58,500, which will increase to a range of $46,020 to $58,500 on January 1, 2020. Nondiscretionary bonuses and incentive payments may not be applied to satisfy the minimum salary thresholds under these state laws.

First Circuit Rules Sun Capital Advisors Not Liable for Pension Debts

On November 2, 2019, the First Circuit ruled in favor of Sun Capital Advisors, holding that its private equity funds were not under “common control” with their portfolio company, Scott Brass Inc., and were thus not jointly and severally liable for Scott Brass’ $4.5 million pension debts. Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. 2019). Generally, the “common control” provision under the Multiemployer Pension Plan Amendments Act of 1980 exists to prevent employers from avoiding ERISA obligations by fractionalizing businesses into various separate entities. This decision reverses the lower court’s finding that there was a partnership-in-fact formed by the private equity funds that resulted in joint and several withdrawal liability when Scott Brass left the Teamsters pension plan and filed for bankruptcy in 2008. The district court had previously held that common control existed because the Sun Capital funds were in an “implied general partnership” that together owned Scott Brass. The First Circuit disagreed, holding that most factors in the multifactored partnership test set forth in Luna v. Comm’r, 42 T.C. 1067 (1964), did not suggest a partnership and common control. The First Circuit noted, for instance, that the funds lacked intent to join together, expressly disclaimed any sort of partnership, lacked significant overlap among limited partners, filed separate tax returns, maintained separate bank accounts and books, and operated independently with respect to investment activity and structure. However, the First Circuit’s ruling is limited in some regards. The First Circuit did not reverse its prior holding that the Sun Capital funds were engaged in a trade or business (versus serving as mere investors), such that either of the funds could have been held responsible for Scott Brass’ withdrawal liability had it met the 80% ownership threshold for “common control” under the Internal Revenue Code. Private equity sponsors should continue to consider joint and several liability concerns among portfolio companies with defined benefit pension plans. A private equity fund that acquires an 80% ownership interest in a portfolio company could be held liable for such company’s unpaid pension liabilities.

Judge Orders EEOC To Continue Collecting EEO-1 Component 2 Pay Data While OFCCP Reports It Will Not Use Component 2 Pay Data in Enforcement

On October 29, 2019, the U.S. District Court for the District of Columbia ordered the Equal Employment Opportunity Commission (EEOC) to continue collecting EEO-1 Component 2 data for 2017 and 2018. National Women’s Law Center v. Office of Management and Budget, No. 1:17-cv-02458. Component 2 data, which includes wage and hour data, must be filed annually by private employers with at least 100 employees and federal contractors with at least 50 employees. As reported in the September 2019 issue of Employment Flash, the EEOC announced that it would stop collecting Component 2 data after 2018, but that did not affect employers’ obligations to collect data for years 2017 and 2018.

The court directed the EEOC to complete Component 2 data collection for 2017 and 2018 by September 30, 2019. Further, the court stated that Component 2 collection would not be complete until the average percentage of reports filed by eligible filers for 2017 and 2018 exceeded the percentage of reports filed for the previous four years. The EEOC argued that covered employers and federal contractors met this threshold as of October 28, 2019, by which time approximately 81% of eligible filers had submitted their 2017 and 2018 reports, compared to approximately 72% of reports that had been submitted by the filing deadline in prior years. The court ruled that the threshold percentage of completed reports to be collected was the number “actually submitted” in prior years to the EEOC, not the number submitted by the filing deadline. The court ordered the agency to “continue to take all steps necessary” to complete Component 2 collection by January 31, 2020.

Nevertheless, on November 25, 2019, the Office of Federal Contract Compliance Programs (OFCCP) announced it would not make use of certain pay data collected by the EEOC in its anti-discrimination oversight of federal contractors and subcontractors. The EEOC collects demographic information about employees in selected job categories on its annual EEO-1 report. The EEOC and the OFCCP share this information to reduce duplicative employer filing. During the Obama administration, the EEOC sought to expand government records on pay gaps and began requiring businesses to provide additional pay data by race, ethnicity and gender. These revised reports required employers to continue to report demographic information (Component 1 data) as well as compensation information (Component 2 data). In its latest announcement, the OFCCP officially stated that it “will not request, accept, or use Component 2 data” submitted on the EEO-1 form. The OFCCP claims that “it does not expect to find significant utility in the data given limited resources and its aggregated nature,” although the agency will continue to accept and use EEO-1 Component 1 data from covered contractors and subcontractors.

Senators Introduce Bipartisan Bill to Ban Noncompetes

On November 14, 2019, the Senate Committee on Small Business and Entrepreneurship reviewed a new noncompete bill, the Workforce Mobility Act of 2019 (Mobility Act), introduced by senators to develop a uniform nationwide noncompete law. The Mobility Act proposes a ban on noncompetes, except for those entered into in connection with (1) the dissolution or disassociation from a partnership; or (2) the sale of a business. Noncompetes that fall under one of the two exceptions may only prevent the restricted parties from “carrying on a like business” in the same geographic region in which the partnership or business operated prior to the respective dissolution, disassociation or sale. The noncompete restrictions in those contexts cannot be longer than one year in duration. The Mobility Act would give the Federal Trade Commission and the Department of Labor the ability to enforce the prohibition on noncompetes by (1) issuing civil penalties, including fines in an amount not to exceed $5,000 per each week the employer is in violation of the law; and (2) pursuing judicial action on behalf of aggrieved employees. Further, the Mobility Act creates a private right of action for aggrieved employees.

President Rescinds Executive Order Granting Job Rights to Employees of Federal Contractors

On October 31, 2019, President Donald Trump issued Executive Order 13987 (EO 13987), which repealed President Obama’s Executive Order 13495 (EO 13495), issued on January 30, 2009. EO 13495 required federal contractors that (1) succeed a prior federal contractor, and (2) provide similar services at the same location as their predecessor, to offer the right of first refusal of employment to workers displaced by the successor contract. EO 13495 allowed employees of the predecessor contractor to avoid displacement as a result of their employer losing its federal contract. The right of first refusal was limited to nonsupervisory employees who were qualified for a position with the successor contractor. EO 13495 did not limit the ability of successor contractors to employ fewer workers than their predecessor for efficiency reasons. As a result of EO 13987, all pending enforcement actions and investigations related to alleged violations of EO 13495 have been terminated. EO 13987 states that the move will “promote economy and efficiency in Federal Government procurement.”

New H-1B Process

On Friday, U.S. Citizenship and Immigration Services (USCIS) confirmed that it will use a new electronic H-1B registration system for the upcoming cap season. The registration period will be open from March 1 to March 20, 2020. Under the new system, all petitioners (i.e., employers) will be required to submit an online registration form and pay a $10 fee for each prospective H-1B beneficiary (i.e., the foreign national employee). USCIS would then conduct a lottery of the registrations received, and the successful petitioners of the lottery would file the full H-1B petition on behalf of the beneficiary named in the selected registration.

Based on screenshots of the proposed H-1B online registration system released by USCIS, the proposed information to be collected includes the petitioner’s legal name, “doing business as” name, employer identification number and primary U.S. office address; and authorized signatory’s legal name, title, telephone number and email address, as well as the beneficiary’s legal name, gender, date of birth, country of birth, country of citizenship, passport number and whether the beneficiary has a master’s or higher degree from a U.S. institution. USCIS has promised additional information and instructions on the electronic registration process in advance of the March registration.

Second Circuit Says Offers of Judgment in FLSA Claims Are Exempt From Judicial Review

On December 6, 2019, the U.S. Court of Appeals for the Second Circuit held that offers of judgment made under Federal Rule of Civil Procedure (FRCP) 68 to settle claims under the Fair Labor Standards Act (FLSA) are not required to undergo a fairness review by a trial court. Yu v. Hasaki Restaurant Inc., No. 17-3388-cv (2d Cir. 2019). FRCP 68 states that before trial, a defendant may offer to allow judgment on issues that would otherwise go to the jury. The plaintiff can accept the offer and then terminate the case. If a plaintiff rejects the offer and obtains a verdict less favorable than the offer they rejected, the plaintiff must pay costs incurred after the offer was made. In Yu v. Hasaki Restaurant Inc., the plaintiff employee sued his employer, alleging it had violated FLSA overtime provisions. The employer responded with an offer of judgment for $20,000 plus attorneys’ fees under FRCP 68, which the employee accepted. The trial court then ordered the parties to submit their agreement for a fairness review, which both parties resisted. In a 2-1 decision, the Second Circuit ruled that a fairness review is not required when an offer of judgment is made under the FLSA. The ruling states that FRCP 68 is absolute — the clerk “must enter judgment” if a plaintiff accepts the agreement. While Congress can expressly exempt certain claims from this absolute command, the Second Circuit said that it had never done so with regard to the FLSA. Further, nothing in the text of the law requires a fairness review. The court also differentiated FRCP 68 judgments from privately negotiated waivers of employees’ FLSA rights. The latter are restricted under the FLSA, on the theory that such agreements are more likely to exploit vulnerable workers. The former require the parties to file pleadings and air their grievances in public. The Second Circuit reasoned that this distinction ameliorated any fears of exploitation when the parties’ enter a stipulated judgment, making a fairness review unnecessary.

Second Circuit Rules Title VII Plaintiffs Need Not Prove Equal Work to Succeed on Pay Claim

On December 6, 2019, the U.S. Court of Appeals for the Second Circuit held that a plaintiff seeking to establish a prima facie pay discrimination claim under Title VII of the 1964 Civil Rights Act (Title VII) need only show that they were discriminated against with respect to compensation on account of sex. Lenzi v. Systemax, Inc., 18-979 (2d Cir. 2019). In doing so, the Second Circuit ruled that a plaintiff need not first establish an Equal Pay Act violation, which requires showing that the plaintiff received lower pay than a member of the opposite sex despite performing equivalent work. In Lenzi, the plaintiff alleged that she was paid below market rate for her position, while her male colleagues at a similar level earned above market rate. She brought suit for pay discrimination, among other claims, under Title VII. A federal trial court in New York rejected the plaintiff’s Title VII claim and granted summary judgment to her employer, finding that the plaintiff had failed to establish that her higher-earning male colleagues held positions that were “substantially equal” to her position. The Second Circuit reversed the dismissal and clarified that Title VII, unlike the Equal Pay Act, does not require a plaintiff to prove unequal pay for equal work. The Second Circuit stated that any sex-based discrimination in compensation is prohibited by Title VII. Thus, a pay discrimination suit can be brought under Title VII even though no member of the opposite sex earns a higher wage for an equivalent job. The Second Circuit believed that the opposite approach — requiring a showing of equal work under Title VII — would undermine the “broad remedial purpose” of Title VII.

New York City Expands Human Rights Law Protections to Independent Contractors

On October 13, 2019, the New York City Council enacted a bill expanding the protections of the New York City Human Rights Law (NYCHRL) to freelancers and independent contractors. Under the new law, freelancers and independent contractors will be able to file claims of discrimination, harassment and retaliation against employers with the New York City Commission on Human Rights. In addition, independent contractors and an employer’s family members who are employees will now count toward the requisite four or more workers that trigger coverage of the NYCHRL for a particular employer. However, an employer’s family members cannot themselves bring claims under the NYCHRL against the employer. The new law will become effective on January 11, 2020, and is expected to extend protections to as many as 1.3 million additional individuals working in the city. The law is broadly drafted and no further guidance has been issued at this time, making it unclear whether independent contractors and freelancers will also be able to bring claims under the various laws passed as amendments to the NYCHRL, such as the Fair Chance Act, Stop Credit Discrimination in Employment Act and reasonable accommodation mandates prohibiting discrimination on the basis of pregnancy or status as a domestic violence victim. Employers should review their policies with respect to discrimination, harassment and retaliation in light of the new and more expansive local law.

New York City Employers Must Have ‘Encouraged, Condoned or Approved’ Sexual Harassment To Be Strictly Liable

In Doe v. Bloomberg, L.P., 109 N.Y.S.3d 254 (N.Y. App. Div. 2019), New York’s Appellate Division, First Department, held that company owner Michael Bloomberg could not be found strictly liable under the NYCHRL for alleged sexual harassment by a Bloomberg, L.P. supervisor. The court determined that to maintain a claim against an individual, the plaintiff must specifically allege that, in addition to having an ownership interest or the power to carry out personnel decisions made by supervising employees, an individual owner or officer of the company also “encouraged, condoned or approved” the specific discriminatory conduct which gave rise to the claim. Nothing in the complaint at issue alleged that Michael Bloomberg was directly involved in any way with the alleged discriminatory conduct. This decision clarifies the requisite standard for employees to maintain a claim against an individual owner or officer of a corporate employer, in addition to the corporate employer, under the NYCHRL.

The NYCHRL imposes strict liability on “employers” for the discriminatory acts of their managers and supervisors, but, the administrative code does not define the term “employer.” It is well established under New York law that corporate employers may be strictly liable for the discriminatory acts of managers and supervisors, and that if the employer at issue concerns only an individual, then that individual can be found strictly liable. However, because the claim at issue was brought against both a corporate employer and the individual owner, the case was an issue of first impression for the state appellate court. Reversing the order of the Supreme Court, Bronx County, below, the court relied on theories of imputed liability for employers in federal case law, as well as the legislative history of the NYCHRL, and ultimately dismissed the complaint against Michel Bloomberg. The lawsuit will continue against Bloomberg’s company and the supervisor who allegedly engaged in sexual harassment.

New 2020 Laws for California Employers

California Gov. Gavin Newsom signed into law a number of employment-related bills passed by the legislature in 2019, most of which will become effective on January 1, 2020. The new laws, some of which are summarized below, pertain to worker classification, discrimination, arbitration, wage and hour issues, leave policies, and sexual harassment trainings.

  • California Assembly Bill 5 (AB 5) in part codifies the California Supreme Court’s “ABC test” set forth in Dynamex v. Super. Ct. of Los Angeles, 4 Cal. 5th 903 (2018), for determining whether a worker should be classified as an independent contractor or an employee. AB 5 adds a new Section 2750.3 to the Labor Code. The law carves out several occupations from the ABC test and applies the multifactor test in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations, 48 Cal. 3d 341 (1989), to determine whether workers in such occupations should be classified as employees or independent contractors. The law goes into effect on January 1, 2020. Please refer to our September 16, 2019, client alert “California Passes Landmark Bill Restricting Classification of Contract Workers” for further information about this development.
  • California Assembly Bill 9 (AB 9) amends California Government Code Sections 12960 and 12965 by extending the period an employee has to file a complaint with the Department of Fair Employment and Housing (DFEH) for alleged violations of the Fair Employment and Housing Act (FEHA). AB 9 extends the filing period from one year to three years. The law goes into effect on January 1, 2020.
  • California Assembly Bill 51 (AB 51) adds Section 432.6 to the California Labor Code and Section 12953 to the Government Code and makes it unlawful for any employer to require an applicant or employee “to waive any right, forum or procedure” under the FEHA or Labor Code as a condition of new or continued employment or to receive any employment-related benefit. AB 51 makes it unlawful for an employer to retaliate against an applicant or employee because he or she refuses to consent to the waiver of “any right, forum or procedure” for a violation of the FEHA or Labor Code. The law applies to agreements entered into, on or after January 1, 2020, and does not apply to post-dispute settlement agreements or negotiated severance agreements, or any arbitration agreement otherwise enforceable under the Federal Arbitration Act (FAA). The law goes into effect on January 1, 2020.
  • California Assembly Bill 673 (AB 673) amends California Labor Code Section 210 by permitting aggrieved employees to bring a private action for an employer’s failure to timely pay wages in order to recover either statutory penalties or to enforce civil penalties under the Private Attorneys General Act. The law goes into effect on January 1, 2020.
  • California Assembly Bill 749 (AB 749) prohibits employers from including “no rehire” provisions in dispute-related settlement agreements with persons who have filed claims against their employers. However, employers may include no-hire provisions for employees who have engaged in sexual harassment or sexual assault. The law goes into effect on January 1, 2020.
  • California Senate Bill 83 (SB 83) amends, repeals and adds sections to the California Government Code, Labor Code and Unemployment Insurance Code by increasing the maximum wage replacement benefits under California’s Paid Family Leave from six to eight weeks. The law goes into effect on July 1, 2020. Employers’ policies and notices addressing such benefits should be updated to address this change.
  • California Senate Bill 778 (SB 778) amends California Government Code Section 12950.1 by extending the deadline for compliance with Senate Bill 1343 (which was passed in 2018) from January 1, 2020, to January 1, 2021. SB 1343 requires all California employers with five or more employees to provide two hours of sexual harassment training to all supervisors and managers, and one hour of training to nonsupervisory employees within six months of hire or promotion into a supervisory role. Employees must receive additional training every two years thereafter.

California Appeals Court Rules Dynamex Applies Retroactively

On October 8, 2019, the California Court of Appeals for the Second Appellate District held that the “ABC” test set forth in Dynamex v. Super. Ct. of Los Angeles, 4 Cal. 5th 903 (2018), applies retroactively to claims made under the California Industrial Welfare Commission Wage Orders (Wage Orders) and under the California Labor Code that are closely tied to the Wage Orders. Gonzales v. San Gabriel Transit, Inc., 40 Cal. App. 5th 1131 (Ct. App. 2019). The court stated that, with respect to the retroactivity of the ABC test in the context of Wage Order claims, the employer had failed to address the issue on appeal and had forfeited any claim that Dynamex was not retroactive. The court also stated that, with the exception of extraordinary circumstances implicating fairness and public policy, judicial decisions in civil litigation are almost uniformly given retroactive effect and applied to pending litigation. The court held that no such extraordinary circumstances were present in this case, and as such, retroactivity was appropriate. Regarding the application of Dynamex to Labor Code claims, the court focused on the “close, if not inseparable, ties between the alleged Labor Code violations and wage order provisions” and noted that Dynamex’s stated purpose was to provide clarity and consistency in resolving Wage Order and Labor Code claims. After listing Labor Code sections such as 1194 (failure to pay minimum wage) and 2802 (failure to reimburse business expenses), the court concluded that the ABC test should be applied to determine employee status under both the Wage Order and Labor Code claims seeking to enforce or advance the Wage Order requirements. However, if a Labor Code claim is not rooted in a Wage Order or is not predicated on conduct alleged to have violated a Wage Order, the multi-factor test in S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal. 3d 341 (1989), applies.

Ballot Initiative Launched to Repeal AB5

As noted in the September 2019 issue of Employment Flash, California Gov. Gavin Newsom signed into law an employment bill (AB 5) that codifies the recent extension of employment protections to workers previously classified as independent contractors under the California Supreme Court decision in Dynamex. Under AB 5, workers are presumed to be employees unless they meet all elements of a three-part test. To limit AB 5’s impact on their industries, certain companies in the ride-sharing and food delivery application industries have launched a ballot initiative called the Protect App-Based Drivers and Services Act (the Act) and are seeking to get the Act on the November 2020 ballot. The Act provides that app-based rideshare and delivery drivers would be allowed to continue working as independent contractors if certain conditions are met. For example, the Act prohibits a hiring entity from unilaterally prescribing specific dates, times or a minimum number of hours that a driver must work and prohibits hiring entities from restricting a driver’s ability to work for other app-based entities or businesses. The Act requires drivers to enter into written agreements prior to performing services that must list the grounds upon which a driver’s engagement can be terminated, and the appeals process for workers to dispute terminations. The Act sets the guaranteed minimum earnings of drivers as tied to 120% of the applicable minimum wage and provides potential benefits such as a health care subsidy consistent with employer contributions under the Affordable Care Act and loss and liability protection. The Act contains anti-discrimination and anti-sexual harassment provisions, as well as a criminal background check policy that prohibits applicants who have been convicted of certain enumerated crimes, including violent felonies and driving under the influence of alcohol or drugs, from working as drivers for the app-based entities.

California Governor Vetoes Worker Retaliation Protections

On October 12, 2019, California Gov. Gavin Newsom vetoed three bills that would have expanded retaliation protections for workers. First, Assembly Bill 403 (AB 403) would have extended the statute of limitations for complaints alleging workplace retaliation from six months to two years and would have authorized the payment of attorneys’ fees to employees who successfully sue for retaliation based on whistleblowing. Second, Assembly Bill 171 (AB 171) would have amended the Labor Code to extend anti-retaliation and anti-discrimination protections to survivors of sexual harassment, while also establishing a rebuttable presumption of unlawful retaliation if an employer takes adverse employment action against an employee within 90 days of the employer receiving notice or obtaining knowledge of the individual’s status as a victim of sexual harassment. Third, Assembly Bill 1478 (AB 1478) would have provided employees with a private right of action to sue their employers for discrimination or retaliation based on their status as a victim of domestic violence, sexual assault or stalking. In addition, AB 1478 would have provided prevailing plaintiffs with reasonable attorneys’ fees.

International Spotlight

The New EU Whistleblower Protection Directive

On October 7, 2019, the Council of the European Union approved the Whistleblower Protection Directive (Directive), which aims to harmonize the protection of whistleblowers in EU member states. The Directive applies to disclosures that relate to breaches of EU law only.

To Whom Does the Directive Apply?

The Directive applies to all employers with respect to protection against retaliation. In addition, employers with at least 50 employees or with an annual turnover or total assets of more than €10 million are required to establish internal whistleblowing procedures. All financial services firms (irrespective of their turnover or number of employees) will be required to establish whistleblowing procedures.

What Does the Directive Provide?

The Directive provides for common minimum standards for the protection of any person reporting a breach of EU law, such as anti-money laundering, data protection, competition law and corporate tax avoidance.

The Directive protects “workers” against dismissal, demotion and other forms of retaliation from their employer. The definition of “workers” is broad and includes consultants, freelancers, interns and volunteers, as well as employees. The Directive places the burden of proof on the employer to demonstrate that an action was taken for a reason other than retaliation.

The Directive also includes common standards for reporting mechanisms and processes. These provide that (1) internal reporting within the employer should be the first point of contact for whistleblowers, unless an internal report could negatively impact a subsequent investigation; (2) a whistleblower can report externally to the relevant authorities if the employer does not respond to the disclosure within three months; (3) a wider disclosure to the media is permitted only if neither the employer nor the relevant authorities have dealt with the issue in a timely manner, or if immediate disclosure to the media is required to protect the public interest; and (4) employers must designate a person or a department responsible for dealing with whistleblowing reports, ensure reporting processes are secure and confidential, and respond to disclosures within three months.

Next Steps for Employers

Within the EU, Directives become law in individual member states when each state implements the Directive into domestic legislation. In this case, member states have two years to do so. However, employers should begin to take steps to evaluate their existing whistleblowing policies and procedures and ensure that compliance teams are adequately staffed to address the new requirements. The steps required will depend on where the employer is located in the EU. Notwithstanding the U.K.’s exit from the EU, for an employer operating solely in the U.K., it is likely that its internal processes and procedures (if they are already compliant with U.K. law) would require little amendment, as many of the principles underpinning the Directive are already part of domestic U.K. legislation. In contrast, in other jurisdictions in the EU, the protection afforded by the Directive extends further than the protections afforded by existing national law.

Differences for US Employers

The Directive applies more broadly than U.S. legislation by protecting all workers (as defined above) rather than solely employees. In addition, unlike U.S. law, the Directive does not provide for financial rewards for whistleblowing, and though the Directive encourages the use of internal reporting channels, a whistleblower is entitled to the same level of protection whether he or she reports internally or directly to public authorities (if the report is made in accordance with the Directive).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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