On June 15, 2022, the U.S. Supreme Court issued its highly anticipated opinion in Viking River Cruises, Inc. v. Moriana, which considered whether or not claims brought under the California Private Attorneys General Act (“PAGA”) can be waived by an arbitration agreement. Existing case law in California held that PAGA claims could not be waived via an arbitration agreement because these claims are brought on behalf of the state. The defendant in Viking River Cruises challenged this California rule on the grounds that it was preempted by the Federal Arbitration Act (“FAA”). The Court’s nuanced opinion in Viking River Cruises delivers good news to California employers who use arbitration agreements with their employees insofar as the Court ruled that the FAA preempts California’s rule that PAGA actions cannot be divided into individual and representative claims. Thus, while the Court stopped short of invalidating California’s rule preventing wholesale waivers of PAGA claims via an arbitration agreement, the Court held that an enforceable arbitration agreement can mandate arbitration of individual PAGA claims. Therefore, in the case at issue, the Court ruled that the named PAGA representative’s individual PAGA claims were subject to an arbitration agreement she had signed with her employer. Although the arbitration agreement included a waiver of class, collective or representative PAGA actions, it also included a severability provision specifying that if the waiver was found invalid, such a dispute would be litigated in court, and any portion of the waiver that remained valid would be enforced in arbitration. As a result of having to arbitrate her individual PAGA claims, the Court further held that the named PAGA representative, therefore, lacked statutory standing to maintain her representative PAGA claims in court, and that these claims must be dismissed. While the precise implications of the Viking River Cruises case will likely be refined through further litigation, the Court’s opinion represents a favorable shift in the law for California employers who can now compel arbitration of an employee’s individual claims where that employee has signed an enforceable arbitration agreement that covers such claims, and seek dismissal of any related representative PAGA action for lack of standing. Additionally, following the Supreme Court’s decision in Viking River Cruises, the Ninth Circuit is set to consider a Petition for Rehearing en banc in another case, Chamber of Commerce of United States v. Bonta, which deals with the enforceability of AB 51, a new California law prohibiting mandatory arbitration agreements as a condition of employment which has been stayed pending the Court’s decision in Viking River Cruises. In light of the Viking River Cruises decision, employers will want to immediately review their arbitration agreements to evaluate whether they are effectively written to cover individual PAGA claims and avoid wholesale waivers of PAGA claims. As issues relating to California arbitration agreements continue to make their way through the courts, Polsinelli attorneys will be monitoring new developments in this area and remain prepared to assist employers with navigating these issues.

On September 15, 2021, the Ninth Circuit, in a 2-1 split decision, partially upheld a California law passed in 2019 governing the use of mandatory arbitration agreements by employers in California.  The state law, AB 51 (codified as California Labor Code section 432.6), prohibits employers in California from requiring employees to agree to arbitration as a condition of employment.  Before AB 51 went into effect on January 1, 2020, a group of employers and the U.S. Chamber of Commerce challenged the law in federal district court as preempted by the Federal Arbitration Act (“FAA”), and the federal court issued a preliminary injunction on January 31, 2020 temporarily preventing enforcement of the law. A Ninth Circuit panel reviewing the district court’s decision on appeal disagreed, vacating the preliminary injunction and holding that the provisions of AB 51 prohibiting employers in California from requiring employees to agree to arbitration as a condition of employment and from retaliating against applicants who refuse to sign an arbitration agreement are not preempted by the FAA. Curiously and somewhat confusingly, the Ninth Circuit distinguished in its analysis between an employer’s conduct before and after an employee signs an arbitration agreement.  The Court held that, while the FAA does not preempt AB 51 insofar as AB 51 regulates an employer’s pre-signing conduct (including an employer’s requiring that an employee sign an arbitration agreement as a condition of employment), the FAA does preempt AB 51’s attempt to prevent enforcement of executed arbitration agreements (even those that are mandatory and, therefore, consummated in violation of AB 51) by imposing civil and criminal penalties on employers as punishment for entering into arbitration agreements otherwise enforceable under the FAA. The upshot for California employers is that the ruling does not impact the enforceability of executed arbitration agreements, including existing mandatory arbitration agreements. However, for new employees or those who have not already signed an arbitration agreement, the Court’s decision preserves AB 51’s ban on employers requiring that such employees sign arbitration agreements as a condition of employment, and continues to prohibit employers from retaliating against an employee for refusing to do so.  Although the ruling eliminates the imposition of civil and criminal penalties in connection with an executed arbitration agreement, civil and criminal penalties could still be imposed if the employer were to terminate, refuse to hire or otherwise retaliate against an employee or applicant because they refused to sign an arbitration agreement. Following the Ninth Circuit’s decision, AB 51 will go back to the district court pending another appeal, where the case has been remanded for further proceedings.  However, the Ninth Circuit’s decision does not immediately allow for enforcement of AB 51.  The Court’s decision takes effect only once the Court issues its “mandate” relinquishing jurisdiction over the case.  Additionally, the U.S. Chamber of Commerce has been granted an extension of time to file a Petition for Rehearing en banc of the Ninth Circuit’s decision, and issuance of the Ninth Circuit’s mandate is likely to be automatically stayed if and when such a Petition is filed.  Moreover, the U.S. Chamber of Commerce may ultimately file a Petition for Certiorari to the U.S. Supreme Court, in which case the Chamber may move to stay issuance of the Ninth Circuit’s mandate pending review by the U.S. Supreme Court. Practically speaking, employers in California are left in limbo while they await final resolution of this case and a final determination as to AB 51’s constitutionality.  Employers with existing mandatory arbitration agreements in place and those who wish to continue to require their employees to enter into arbitration agreements as a condition of employment should reach out to employment counsel to discuss their various options and the associated risks.  As always, Polsinelli attorneys continue to monitor new developments relating to AB 51 and mandatory arbitration issues, and they remain prepared to assist employers with navigating these issues.

As California moved forward with reopening most of its economy on June 15, 2021, many employers in the state were left wondering whether and when the California Division of Occupational Safety and Health (“Cal/OSHA”), the state agency tasked with regulating workplaces to protect public health and safety, would update its regulations to conform to the latest guidance from the Centers for Disease Control and Prevention (“CDC”) and the California Department of Public Health (“CDPH”) for vaccinated individuals.  Although Cal/OSHA had previously voted to adopt proposed revisions to the COVID-19 emergency temporary standards (“ETS”) which had been in effect since November 30, 2020, Cal/OSHA subsequently voted to withdraw the proposed revisions and offered to make further revisions in light of updated CDPH face covering guidance and other concerns raised by Board members. Relief finally arrived on June 17, 2021, in the form of revised Cal/OSHA regulations that track the state’s latest COVID-19 public health guidance and instruct California employers regarding rapidly changing state policies on requiring masks, proof of vaccination, and physical distancing in the workplace.  Following the Cal/OSHA Board’s adoption of the revised regulations, Governor Newsom issued an executive order allowing them to take effect immediately on June 17. Among the regulations’ biggest changes are the removal of physical distancing and physical partitioning requirements in the workplace, regardless of employees’ vaccinations status, with certain limited exceptions for COVID-19 outbreaks. In addition to greatly limiting physical distancing and physical partitioning requirements in the workplace, the revised ETS do away with face covering requirements for all employees working outdoors, regardless of vaccination status, with certain exceptions for outbreaks.  Fully vaccinated employees no longer need to wear face coverings indoors, with certain exceptions for public transit, classrooms, health care and long-term care settings, correctional and detention facilities, and homeless shelters.  Vaccinated employees who wish to go mask-less in the workplace must document their vaccination status in one of two ways: (1) by either providing proof of vaccination to their employer; or (2) by self-attesting to their vaccination status.  Employers are required to record the vaccination status of any employee not wearing a face covering indoors and must keep these records confidential. Face coverings continue to be required indoors and in vehicles for unvaccinated employees, and employers are now required, upon request, to provide unvaccinated employees with approved respirators for voluntary use when those employees are working indoors or in a vehicle with others.  When there is a major outbreak of COVID-19 in the workplace, employers must offer respirators to employees regardless of vaccination status and without waiting for a request from the employee.  Employers must also offer COVID-19 testing at no cost to any symptomatic, unvaccinated employees, regardless of whether there is a known exposure to COVID-19, in addition to unvaccinated employees after an exposure, vaccinated employees after an exposure if they develop symptoms, unvaccinated employees in an outbreak, and all employees in a major outbreak. Polsinelli attorneys will continue to monitor state and federal COVID-19 relief efforts and remain prepared to assist employers with navigating these evolving issues.

On March 19, 2021, California Governor Gavin Newsom signed into law S.B. 95, which requires covered California employers to provide qualifying employees with up to 80 additional hours of COVID-19-related paid sick leave through September 30, 2021, upon oral or written request by the employee.  The new state law, which goes into effect beginning March 29, 2021, applies to all California employers with more than 25 employees.  Some of the more notable features of the new state law include: Establishing a new “bank” of 80 hours of COVID-19-related supplemental paid sick leave for covered employees Expanding the qualifying reasons for COVID-19-related sick leave under state law, including the addition of a COVID-19 vaccination appointment and recovery from COVID-19 vaccination-related symptoms as qualifying reasons for leave Requiring employers to provide employees with notice of their rights to expanded COVID-19-related leave Providing special COVID-19-related leave for providers of in-home supportive services and waiver personal care services Authorizing retroactive payments to employees who took unpaid leave for qualifying COVID-19-related reasons on or after January 1, 2021 The provisions of the new state law providing for retroactive payments to employees who took qualifying leave on or after January 1, 2021 are likely to cause problems for employers, who may find it difficult to question employee requests for such retroactive payments in the absence of detailed record-keeping that memorialized these employees’ stated reasons for having taken leave.  However, employers should note that they are not required to make such retroactive payments unless and until they receive an oral or written request from a covered employee. Additionally, employers should note that SB 95 allows for employers to offset any COVID-19 related leave provided to employees on or after January 1, 2021 that was payable for the same reasons and at the same rate as provided in SB 95. As COVID-19-related sick leave and other employment-related issues regarding COVID-19 continue to evolve, Polsinelli attorneys continue to monitor new developments in this area and remain prepared to assist employers with navigating these issues.

On February 25, 2021, in In Donohue v. AMN Services, LLC (2021) San Diego Superior Court, Case No. 37-2014-00012605-CU-OE-CTL, the California Supreme Court weighed in on two important issues pertaining to meal periods.  First, the Court held that California employers cannot round time punches for meal periods (although it is arguably permissible for work start and stop times).  Second, the Court held that employee time records showing non-compliant meal periods raise a rebuttable presumption of meal period violations and are sufficient to defeat a defendant’s dispositive motion for summary judgment. The Court emphasized that California’s meal period requirements are designed to prevent even minor infringements on employees’ meal periods and that rounding employees’ meal period time punches for even a de minimus amount violates state law. In Donohue, the defendant-employer, a healthcare services and staffing company, used a timekeeping system that rounded employees’ time punches for meal periods to the nearest 10-minute increment.  For example, if an employee punched out for lunch at 11:03 a.m. (rounded back to 11:00 a.m.) and punched back in at 11:24 a.m. (rounded forward to 11:30 a.m.), the system recorded a 30-minute meal period (even though only 21 minutes had actually elapsed).  The Court found that this rounding policy resulted in many employees not taking their full 30-minute meal breaks. The Court also noted that employees were paid a premium payment only if the employee proactively indicated that their meal period was missed, short, or late.  As a result, the Court found that there was sufficient evidence to suggest that employees worked over five hours before taking their meal break in violation of California Labor Code § 512 and Industrial Welfare Commission Wage Order No. 4-2001.  The case now heads back down to the Court of Appeals where the parties will submit further briefing on the plaintiffs’ meal period claims. Additionally, in reversing the defendant’s motion for summary judgment win, the Court ruled that records that demonstrate a non-compliant meal period raise a rebuttable presumption of labor code violations, which, the Court clarified, can be overcome by presenting evidence that either (1) the employees were compensated for noncompliant meals or (2) the employees were provided compliant, 30-minute, duty-free meal periods during which time the employee voluntarily chose to work. The Donohue decision serves as helpful guidance on two fronts.  First, it should be used as a warning for employers who use rounding policies for recording meal periods.  Employers who apply time rounding policies in the meal period context likely need to suspend these practices.  Moreover, based on the court’s guidance, employers that utilize general rounding practices should be wary of the potential problems that rounding policies may cause.  Second, employers should utilize paper or electronic acknowledgement forms from employees that confirm that employees are taking their meal breaks and rest breaks on a daily basis or, to the extent they are not, that this is documented as either a voluntary decision by the employee, or if it is not voluntary, that the employee is paid their statutory premium payment. Polsinelli attorneys will continue to monitor developments in this area and remain prepared to assist with any questions regarding timekeeping policies or other employment law issues.

On January 14, 2021, the California Supreme Court held that the “ABC Test” for classifying workers as independent contractors applies retroactively.  The high court first articulated this standard, which makes it tougher for businesses and employers to classify their workers as independent contractors, in its 2018 decision in Dynamex Operations West, Inc. v. Superior Court.  Under the ABC Test, a worker is presumed to be an employee unless the employer can show that all three of the following conditions are satisfied: 1) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, 2) the worker performs work that is outside the usual course of the hiring entity’s business, and 3) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. Last week, in Vazquez et al. v. Jan-Pro Franchising International, the California Supreme Court considered the question of how to classify workers in suits that were pending at the time that the Court first articulated the ABC Test in Dynamex.  The Court declined to depart from the general rule that judicial decisions are given retroactive effect unless stated otherwise, holding that the ABC Test applies to workers in all cases that were pending at the time Dynamex was decided.  Notably, the Court declined to take up the issue of whether an employer’s use of franchising arrangements with its workers has any effect on the applicability of Dynamex and the ABC Test.  The Ninth Circuit has previously determined that it does not.  The case now returns to the Ninth Circuit where the court will determine whether the Jan-Pro franchisees were employees or independent contractors using the ABC Test. The Vasquez decision does not, however, apply to AB 5, which codified and expanded the ABC Test by integrating the standard into California’s Labor Code and Unemployment Insurance Code. Polsinelli attorneys are continuing to monitor the evolution of worker classification issues in California and remain prepared to assist with navigating these critical matters.

In response to the recent Emergency Use Authorization granted by the U.S. Food and Drug Administration (“FDA”) for the COVID-19 vaccine, the Equal Employment Opportunity Commission (“EEOC”) published guidance today outlining employer compliance mandates under the Americans with Disabilities Act (“ADA”), Title VII of the 1964 Civil Rights Act (“Title VII”) and the Genetic Information Nondiscrimination Act (“GINA”). The EEOC’s guidance addresses a number of pressing questions posed by employers and employees alike regarding the vaccine. Some of the more important takeaways from today’s guidance include the following: The administration of an FDA-approved or authorized COVID-19 vaccine to employees is not a “medical examination” for purposes of the ADA, and, therefore, may generally be required by employers under federal law. Although the vaccine is not considered a “medical examination” under the ADA, pre-screening questionnaires given to employees by an employer in connection with a vaccination may implicate the ADA’s provision on disability-related inquiries. In such case, the employer would need to demonstrate that the pre-screening questions are “job related and consistent with business necessity.” If an employer requiring a COVID-19 vaccine determines that an employee who cannot be vaccinated due to a disability poses a direct threat at the worksite, the employer cannot exclude the employee from the workplace (or take any other action) unless there is no other way to provide a reasonable accommodation (absent an undue hardship) that would eliminate or reduce this risk. Under the ADA, “undue hardship” is defined as “significant difficulty or expense” incurred by the employer in providing an accommodation. Employers requiring the vaccine must also provide a reasonable accommodation for an employee’s sincerely held religious belief, practice or observance that prevents the employee from receiving the vaccination unless doing so would pose an undue hardship under Title VII. Notably, under Title VII, “undue hardship” is defined as having more than a de minimis cost or burden on the employer. Title II of GINA is not implicated when an employer administers a COVID-19 vaccine to employees or requires employees to provide proof that they have received a COVID-19 vaccination. However, if any pre-screening questions by the employer ask about genetic information (e.g., immune systems of family members), such inquiries could violate GINA. This new guidance sheds further light on how employers might best structure their employee policies and procedures relating to COVID-19 vaccinations in the coming months.  Employers who choose to mandate the vaccine should consider requiring vaccination from a pharmacy or other third-party health care provider to avoid the ADA implications associated with any pre-screening vaccination questions.  These employers will also want to educate and train their managers and supervisors so that they are prepared to field and appropriately respond to any requests for accommodation, and should carefully consider privacy laws surrounding the employer’s receipt and maintenance of employee medical information.  Further, employers must be prepared to consider all applicable state laws that may impact their ability to mandate COVID-19 vaccinations. Employers who are inclined to simply encourage employees to get vaccinated may want to consider certain measures to promote participation, including, but not limited to, making the vaccine convenient and accessible by providing vaccinations on-site or near the workplace, covering any cost associated with the vaccine, and/or ensuring that employees are compensated for time spent getting vaccinated. Polsinelli attorneys are prepared to assist with navigating these critical issues surrounding the arrival of the COVID-19 vaccine.

On November 3, 2020, California voters passed Proposition 22, a ballot measure that classifies certain app-based rideshare and delivery drivers as independent contractors. Under the new law, which will take effect immediately following the certification of California’s election results in mid-December, app-based drivers may be properly classified as independent contractors if the hiring entity: Does not unilaterally prescribe specific dates, times of day, or minimum number of hours during which the driver must perform services; Does not require the driver to accept any specific service request or assignment as a condition of maintaining access to the company’s application or platform; Allows drivers to perform rideshare or delivery services for any other company, including direct competitors; and Does not restrict the worker from performing any other kind of lawful work. Proposition 22 also provides certain benefits and protections to app-based drivers who are classified as independent contractors. These benefits and protections are similar to but less comprehensive than those provided to employees, including, but not limited to, a guarantee of 120% of the applicable minimum wage for “engaged time” spent on rides or deliveries, healthcare subsidies for workers driving 15 hours per week or more, certain vehicle expense reimbursements, and occupational accident insurance for on-the-job injuries. Proposition 22 also requires companies to adopt anti-discrimination and anti-harassment policies and practices, provide background checks and safety training, and enter into written agreements with their drivers that protect workers from termination for reasons other than those specified in the agreement. It remains unclear whether Proposition 22 will apply retroactively and/or whether it will render moot pending or future claims for misclassification or violation of AB 5 prior to the passage of Proposition 22. Although Proposition 22 has limited application to app-based drivers, California employers should pay close attention as courts grapple with these issues and others surrounding the recent amendments to AB 5, as these changes will no doubt continue to affect the classification landscape in California and nationally. Polsinelli attorneys will continue to monitor and analyze the evolution of these issues and remain prepared to assist clients with navigating the changes to come.