Does Your Business Pay Commissions To Employees In California? Get Ready To Put It In Writing!

by Sayema Hameed

Employers who pay commissions to employees in California must comply with the new California law, AB 1396.  Recently signed into law by Governor Jerry Brown, AB 1396 amends California Labor Code Section 2751 to require all employers who pay commissions to employees to enter into written commission contracts with those employees.  Employers must comply with this law by January 1, 2013.

The written commission contract must explain the method by which commissions are computed and paid.    In addition, employers must also give a copy of the signed contract to each employee and obtain a signed receipt for the contract from each employee.

Iskanian v. CLS Transportation Los Angeles, LLC: California Court Applies Concepcion To Uphold Class Action Waiver In Employee Arbitration Agreement

by Sayema Hameed

In the ever changing legal landscape of employee arbitration agreements, there has been a lot of tension between federal law and California law concerning the enforcement of such agreements.

California case law previously prohibited class action waivers in arbitration agreements when included in consumer contracts of adhesion (known as the “Discover Bank Rule” from Discover Bank v. Superior Court (Boehr) (2005) 36 Cal. 4th 148, 153). Then in April 2011, the United States Supreme Court decided AT&T Mobility LLC v. Concepcion (2011) ___ U.S. ___ [131 S.Ct. 1740] (“Concepcion“), holding that the Federal Arbitration Act preempts the Discover Bank Rule and upholding the enforceability of class action waivers in arbitration agreements.

But even after Concepcion, the question remained whether another California Supreme Court case, Gentry v. Superior Court (2007) 42 Cal. 4th 443 (“Gentry“), survived Concepcion. Gentry specifically concerned class action waivers of unwaivable statutory rights (Labor Code claims including overtime) in employee arbitration agreements. Gentry held that a class action waiver in an employee arbitration agreement should not be enforced if “class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration.”  Because the U.S. Supreme Court in Concepcion did not specifically address Gentry , there was a question whether Gentry still applied to the analysis of class action waivers in employee arbitration agreements in California.

Now the California Court of Appeal has answered the question as follows: “Now, we find that the Concepcion decision conclusively invalidates the Gentry test.”  In a new decision, Iskanian v. CLS Transportation Los Angeles, LLC (Second District, Div. Two, Case No. B235158; filed 6/4/12), the Court of Appeal has found that Concepcion invalidates Gentry and that a class action waiver in an employee arbitration agreement is enforceable under the Federal Arbitration Act.

Lidow v. Superior Court: California Law Applies To Wrongful Termination Claim By Officer of Foreign Corporation

by Sayema Hameed

In a new decision, the California Court of Appeal has answered the following novel question:  Under the conflict of law principle known as the internal affairs doctrine, does California law or foreign law apply to a claim brought by an officer of a foreign corporation for wrongful termination in violation of public policy?  In Lidow v. Superior Court (International Rectifier Corp.) (filed May 23, 2012, Second District, Div. Two, Case No. B239042), the Court of Appeal answered the question as follows: “We hold that under the circumstances alleged here, specifically where a foreign corporation has removed or constructively discharged a corporate officer in retaliation for that person’s complaints of possible harmful or unethical activity, California law applies.”

Does FEHA Support A Retaliation Claim By A Partner Against Her Partnership? The California Court of Appeal Says “Yes.”

by Sayema Hameed

The California Court of Appeal has issued a new decision holding that the California Fair Employment and Housing Act (“FEHA”), Government Code section 12900 et seq., supports a claim for retaliation by a partner against her partnership for opposing sexual harassment of an employee.  Fitzsimons v. California Emergency Physicians Medical Group (filed May 16, 2012, First District, Div. Three, Case No. A131604).

Samaniego v. Empire Today LLC: California Court of Appeal Finds Contractor Arbitration Agreement Unconscionable

by Sayema Hameed

The California Court of Appeal has issued a new decision holding an employee arbitration agreement to be unenforceable: Samaniego v. Empire Today LLC (First District, Div. Three, Case No. A132297; filed 4/5/12; publication ordered 5/7/12).

In Samaniego, carpet installers filed a class action against Empire Today, LLC (“Empire”), a national carpet and flooring business, alleging that Empire misclassified them as independent contractors.  The complaint alleged numerous California Labor Code violations.  Empire appealed from the superior court’s refusal to compel contractual arbitration of the carpet installers’ claims.  The superior court found the arbitration agreement unconscionable under California law.

The Court of Appeal affirmed and held that the employee arbitration agreement was unconscionable and unenforceable under the California Supreme Court case Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83.  The Court of Appeal further held that this issue was governed by California law and that the recent U.S. Supreme Court decision in AT&T Mobility LLC v. Concepcion (2011) ___ U.S. ___ [131 S.Ct. 1740, 179 L.Ed.2d 742] did not change the Court’s analysis.

California DFEH Launches “Intake To Decision” Video Series

by Sayema Hameed

The California Department of Fair Employment and Housing (“DFEH”), which investigates, mediates and prosecutes employment violations under California’s Fair Employment and Housing Act, has launched a new video series, “DFEH Intake To Decision,” to educate employees, employers and the public at large about the employment discrimination complaint process.  “DFEH Intake To Decision” presents a typical sequence of the DFEH’s administrative process for handling an employment discrimination complaint from the initiation of the complaint to the decision.  Based on a fact pattern fictionalized from an actual case of perceived disability discrimination, the seven-part series features: 1) initial contact; 2) intake interview; 3) investigation; 4) conciliation or mediation; 5) accusation; 6) hearing; and 7) conclusion or decision.

You can view the seven-part series on the DFEH’s YouTube channel:

NLRB Delays Employee Rights Poster Rule

by Sayema Hameed

The National Labor Relations Board (“NLRB”) has delayed implementation of its rule requiring employers covered by the National Labor Relations Act (“Act”) to post a notice in the workplace advising employees of their rights to organize under the Act.  The poster rule, which was originally scheduled to go into effect on January 31, 2012 and then delayed to April 30, 2012, has been the subject of several lawsuits.  On April 17, 2012, the U.S. Court of Appeals for the District of Columbia Circuit issued an emergency injunction against the poster rule, in National Association of Manufacturers v. NLRB, No. 12-5068.  The Court also ordered briefing and oral argument in September 2012.

California Supreme Court’s Brinker Decision Clarifies Employers’ Obligations Regarding Meal and Rest Breaks

by Sayema Hameed

On April 12, 2012, the California Supreme Court issued its long-anticipated decision in Brinker Restaurant Corporation et al. v. Superior Court (Hohnbaum) (Cal. Sup. Ct. Case No. S166350).  This case concerns a class action for failure to provide meal and rest breaks brought by non-exempt employees against defendant Brinker Restaurant Corporation, which owns and operates restaurants throughout California including Chili’s Grill & Bar and Maggiano’s Little Italy.  The Supreme Court’s decision is important in clarifying an employer’s obligations under California law with respect to providing meal and rest breaks to employees.  In a unanimous decision, the Supreme Court held as follows:

California DLSE Revises Wage Theft Prevention Act Notice and FAQs

by Sayema Hameed

On April 12, 2012, the California Division of Labor Standards Enforcement (DLSE) issued revised FAQs regarding the new California Wage Theft Prevention Act of 2011.  The DLSE also issued a revised Notice template for use by employers.  The Wage Theft Prevention Act of 2011, which adds Section 2810.5 to the California Labor Code, went into effect January 1, 2012.  The law requires all employers to provide non-exempt employees, at the time of hire, a written notice that contains specific employment information.

EEOC Issues Final Rule on “Reasonable Factors Other than Age” Under the ADEA

by Sayema Hameed

The U.S. Equal Employment Opportunity Commission (EEOC) has issued a final rule clarifying an employer’s defense against claims under the Age Discrimination in Employment Act of 1967 (ADEA).  The ADEA prohibits employment discrimination against people who are 40 years of age or older.  In addition to prohibiting intentional discrimination against older workers, the ADEA also prohibits facially neutral policies and practices that have the effect of harming older workers more than younger workers (known as “disparate impact”).  The final rule explains the “Reasonable Factors Other than Age” defense to disparate impact claims under the ADEA.