On August 10, 2018, Governor Baker signed into law the Massachusetts Noncompetition Agreement Act (the Act). The new law brings significant changes to the use and enforcement of noncompetition agreements in Massachusetts. The Act was passed as part of a comprehensive economic development bill and applies to noncompetition agreements entered into on or after October 1, 2018.
On July 26, 2018, the California Supreme Court issued a long-awaited decision in Troester v. Starbucks Corporation, in which it considered the applicability of the de minimis doctrine to claims for unpaid wages under the California Labor Code. The de minimis doctrine is an application of the legal maxim that “the law does not concern itself with trifles,” and has been applied in certain circumstances to excuse the payment of wages for small amounts of otherwise compensable time upon a showing that the units of time are administratively difficult to record.
On July 18, 2018, Governor Brown signed AB 2282, the Fair Pay Act Bill, into law to clarify Labor Code sections 432.3 and 1197.5 (also known as the California Equal Pay Act), which collectively dictate how employers can use salary history information of employees and applicants for employment. Existing law prohibits California employers from asking job “applicants” for salary history information and requires them to provide “applicants” with the “pay scale” for a position upon “reasonable request.” Existing law also prohibits employers from paying employees of one sex less than the other for substantially similar work and prohibits prior salary, by itself, from justifying any pay disparity.
On June 28, 2018, Massachusetts Governor Baker signed into law “An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday.” The new law will gradually increase the minimum wage over the next five years; phase-out premium Sunday pay for retail employees; and create a paid family and medical leave program for Massachusetts employees.
Jordan D. Grotzinger authored an article for The Recorder titled “Proactive Trade Secret Protection: Your Company’s Best Investment?” The article discusses what measures are sufficient for protecting trade secrets and how companies can invest in proactive trade secret protection.
To read the article, click here.
Massachusetts employers are reminded that key amendments to the Massachusetts Equal Pay Act (MEPA) take effect on July 1, 2018.
“An Act to Establish Pay Equity” was signed into law on Aug. 1, 2016, with an effective date of July 1, 2018. A previous GT Alert (“Massachusetts Enacts Comprehensive Pay Equity Law,” August 2016) discusses the law’s major provisions.
The New York City Department of Consumer Affairs has issued a revised Notice of Employee Rights under the Earned Safe and Sick Time Act (ESSTA), formerly the Earned Sick Time Act (ESTA), codified at § 20-911 et seq. Effective May 5, 2018, ESSTA now permits employees to use sick and safe time to address safety issues and access critical services related to specific criminal offenses.
Jordan D. Grotzinger authored a Daily Journal article titled “What’s Different About Early Assessment in Trade Secrets Cases.” The article discusses the value of early case assessment for trade secret plaintiffs, as well as strategies to consider at the outset of trade secrets cases.
To read the article, click here.
James M. Nelson authored an article for The Recorder titled “Dynamex and the Future of Independent Contractors (and Perhaps Freedom of Contract) in California.” The article discussed a recent game-changing California Supreme Court Decision with a potentially significant impact on established business using an independent contractor model.
To read the article, click here.
On May 21, 2018, in a 5-4 decision, the United States Supreme Court issued a long-awaited decision in Epic Systems Corp. v. Lewis, 584 U.S. ____ (2018), holding that mandatory employer-sponsored arbitration agreements do not offend the National Labor Relations Act (“NLRA”). Justice Gorsuch, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito, delivered the opinion.
The Court reiterated that the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”) instructs “federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” Relying on that rule, the Court held that employers can require employees to submit all work-related disputes to individual arbitration. The Court thus concluded that nothing in the NLRA trumps the FAA’s mandate, particularly because the specific provision of the NLRA on which the employees relied “does not express approval or disapproval of arbitration” and “does not even hint at a wish to displace the Arbitration Act—let alone accomplish that much clearly and manifestly, as our precedents demand.” In reaching its ruling, the Court notably chipped away at Chevron deference, rejecting the contention that it must defer to the National Labor Relations Board’s (“NLRB”) interpretation of the interplay between the NLRA and FAA. In support, the Court made specific reference to the fact that, as recently as 2010, the NLRB had expressed a view contrary to what it was now espousing. But, regardless of the seeming position changes, the Court held no such deference was warranted because the employees could not show any rule or precedent that authorizes the NLRB to interpret, much less oversee, the FAA. Justice Gorsuch’s “straight talk” on Chevron deference may portend further such rulings on the issue in the future.
The decision is a significant victory for employers. It confirms that arbitration programs with class action waivers are enforceable, even when they are a mandatory condition of employment. It thus rejected and put to rest the prior view of some lower courts which had distinguished between mandatory arbitration programs and optional ones, i.e., where employees could “opt-out” of arbitration. Employers who already use mandatory arbitration agreements that include class action waivers can now take comfort that the NLRA is no longer a potential obstacle to enforcement of such agreements. Employers who have previously held off implementing such an arbitration program should now reconsider in light of this new decision, as such a program will be enforced even as to putative class claims.
Employers who have employed an “optional” arbitration program containing a class action waiver but giving employees the right to “opt-out” may wish to consider removing the opt-out right. Employers may still conclude, for sound cultural reasons or to avoid potential state law pitfalls, not to utilize mandatory arbitration but the Supreme Court’s ruling appears to make clear that the validity of the agreement to arbitrate will not depend on the existence of an opt-out right.
Expect the Epic Systems decision to change significantly the landscape of employment-related class and collective action litigation. More employers are likely to adopt arbitration programs with class action waivers; so that portends less group litigation. At the same time, however, we do not see this as the end to aggregated claims and proceedings. As plaintiff counsel know and understand, employers may still sometimes conclude that a class or collective resolution, whether in court or arbitration, is still more efficient and cost-effective. Ask any employer that has had to arbitrate 50 or 100 individual employment matters which it could have litigated/tried collectively; and we expect employers will have no trouble finding employees’ counsel amenable to broader resolutions. Accordingly, we do not expect employees just to accept the ruling and go away; rather we assume several will continue to pursue claims individually in the hope of reaching a critical mass that effectively compels employers to agree to or even seek aggregation. Finally, be on the watch for statutory reactions at the state and local level. Rulings such as this make those more attractive venues, particularly in states and localities whose employment laws are already more favorable to employees.