CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Posts Tagged ‘Senate’

California Attacks Arbitration Agreements …. Yet Again!

Posted on: August 24th, 2018

By: Dave Daniels

On August 22, 2018, the California Senate voted to approve AB 3080, a bill prompted by the #MeToo movement against sexual harassment. Nominally, the bill is intended to combat the use of mandatory arbitration agreements and confidentiality clauses to prevent the public disclosure of workplace sexual harassment, a practice vigorously opposed by the #MeToo movement. As written, however, AB 3080 goes much further, imposing a ban on mandatory arbitration agreements for all claims of employment discrimination, retaliation, and harassment, as well as wage and hour claims.

The bill is currently on Governor Jerry Brown’s desk, awaiting his signature or veto. If signed, the new law would apply to any employment contracts “entered into, modified, or extended” on or after January 1, 2019, and would make several sweeping changes to the California employment law landscape:

Ban on Mandatory Arbitration Agreements

Arbitration agreements are ubiquitous in employment contracts and provide for a low-cost, efficient means of resolving employment disputes.

AB 3080 would put a stop to this by adding Section 432.6 to the Labor Code, which would prohibit any person from requiring an applicant or employee, “as a condition of employment, continued employment, the receipt of any employment-related benefit, or as a condition of entering into a contractual agreement,” “to waive any right, forum, or procedure” for claimed violations of the California Fair Employment and Housing Act (“FEHA”) or the California Labor Code.

In other words, if AB 3080 is signed, it will be unlawful—indeed a misdemeanor—for an employer to require its employees to enter into mandatory arbitration agreements for any claims covered by FEHA (i.e., discrimination, retaliation, harassment) or the Labor Code (i.e., wage and hour claims).

While the bill only applies to mandatory arbitration agreements, Section 432.6(c) makes clear that employers will not be able to sidestep the new prohibitions by using opt-out clauses or otherwise requiring an employee to “take any affirmative action to preserve their rights.”  Moreover, Section 432.6(b) prohibits employers from threatening, terminating, retaliating against, or discriminating against any employee or applicant who refuses to voluntarily sign an arbitration agreement.

Finally, because these new provisions appear in the Labor Code, violations could subject employers to civil penalties under the California Labor Code Private Attorneys General Act, also known as PAGA.

Elimination of Settlement Agreements

Because AB 3080 prohibits any person from requiring an applicant or employee “to waive any right, forum or procedure” “as a condition of entering into a contractual agreement,” it arguably also eliminates or curtails employers’ ability to enter into settlement and general release agreements with their employees for FEHA and Labor Code claims.  Given that the vast majority of these types of claims are settled, the full extent of AB 3080’s impact remains uncertain.

Ban on Confidentiality Agreements for Sexual Harassment

AB 3080 would also add Section 432.4 to the Labor Code, which would bar any person from prohibiting an applicant, employee, or independent contractor, “as a condition of employment, continued employment, the receipt of any employment-related benefit, or as a condition of entering into a contractual agreement,” from “disclosing to any person an instance of sexual harassment that the employee or independent contractor suffers, witnesses, or discovers in the workplace or in the performance of the contract.”

In short, employers will no longer be able to impose confidentiality obligations on their employees or independent contractors with respect to claims of sexual harassment.

Individual Liability

Importantly, AB 3080 applies to any “person” who commits any of the above-noted violations, not just an employer.  An earlier version of the bill was restricted to “an employer,” but was subsequently amended to replace “an employer” with “a person,” signaling the Legislature’s intent to impose individual liability for violations.

What Employers Should Know Now

For the moment, as it awaits Governor Brown’s signature, AB 3080 is still not the law.  In 2015, Governor Brown vetoed a similar bill, AB 465, which would have outlawed the use of mandatory arbitration agreements as a condition of employment.  In his veto message, Governor Brown noted that there is significant debate about whether arbitration is less fair to employees, and explained that he was “not prepared to take the far-reaching step proposed by this bill.”  Remember, however, that Governor Brown’s term ends in January 2019, and a re-introduced version of the bill could find a more sympathetic audience in his successor.

Even if Governor Brown signs the bill, there will be immediate legal challenges arguing that the bill is unenforceable under the Federal Arbitration Act, which the United States Supreme Court has steadfastly enforced, most recently in Epic Systems Corp. v. Lewis. AB 3080 is just the latest in a long history of California’s antagonism towards arbitration agreements, both in the employment context and beyond.

Notwithstanding the hurdles that AB 3080 faces, employers should now begin reviewing their arbitration agreements and practices in light of these potential changes.  In particular, employers will want to think about best approaches to take during the period after the bill is signed and legal challenges work their way through the courts.

If you have any questions regarding the state of arbitration agreements in the Golden State, please feel free to contact Dave Daniels in our Sacramento office at 916-472-3301 or [email protected].

Amendments To Pennsylvania’s CASPA Will Change The Landscape Of Payment Disputes

Posted on: August 3rd, 2018

By: Jonathan Romvary

Anyone who has ever done any amount of work as a contractor or who has represented them in collections cases has learned from hard experience that it can be all but impossible to get paid for one’s work. In Pennsylvania, the Contractor and Subcontractor Act (CASPA) was introduced in 1994 as a complement to the Pennsylvania Mechanic’s Lien Law and was intended to provide contractors (and subcontractors) with additional remedies against those owners/contractors withholding payment for their services. However, the landscape of these payment disputes is likely to significantly change as a result of recent legislation.

Last year, a Pennsylvania state representative introduced a bill, which sought to substantially amend the act and for the first time since 1994, provide further protections for contractors against those withholding funds for the work. That bill has languished in the House Commerce Committee since last year. Nonetheless, a similar bill amending CASPA was referred to the state senate and in June 2018, Governor Tom Wolf signed the bill into law as Act 27. Amongst the numerous amendments to CASPA, Act 27 now provides:

  • If an owner fails to adhere to the terms or withholds payment, contractors and subcontractors may stop performance of the work (subject to contractual limits);
  • There is no permissible waiver of any provision of CASPA;
  • Failure to provide the contractor with a 14 day written notice of a deficiency results in a waiver of the right to withhold payment for the deficiency and requires full payment of the invoice;
  • If a party alleges an invoice contains an error, that party must pay the correct amount on the date payment would otherwise be due otherwise it will be an improper withholding; and,
  • Withholding retention for longer than 30 days after final acceptance of the work generally qualifies as improper withholding.

These new changes are scheduled to take effect on October 10.

Without question, these changes increase the negotiation power of contractors and subcontractors, however, more importantly, the changes reinforce the need for owners and contractors to maintain clear payment records as only clear payment records will provide owners and contractors a sufficient defense in any payment dispute. Owners, contractors and subcontractors involved in payment disputes need to be aware of their respective obligations and rights.

Anyone in the construction industry that has questions about these amendments and how they may affect their business or current projects, please contact Jonathan Romvary at [email protected].

Loss of SEC Commissioners Piwowar and Stein May Wreak Havoc on SEC’s Proposed Fiduciary Regulations

Posted on: June 1st, 2018

By: Ted Peters

On May 7, 2018, Republican SEC Commissioner Michael Piwowar announced that he will resign effective July 7, 2018.  Piwowar’s five-year term expires on June 5, but SEC commissioners are permitted to remain in office for up to 18 months following the end of their term.  Democratic Commissioner Kara Stein’s term expired in 2017 and she too is expected to leave the Commission this year.

Piwowar was admittedly a harsh critic of the U.S. Department of Labor’s fiduciary rule (calling it a “terrible, horrible, no good, very bad” rule), which has since been struck down by the Fifth Circuit Court of Appeal.  He also expressed significant misgivings with the Commission’s April 18, 2018 proposals which attempt to establish standards of conduct for financial advisors.  Despite such concerns, Piwowar wholeheartedly voted in favor of putting the proposals out for public comment lest anyone criticize the SEC for failing to take action.  Stein, however, voted against the proposals, finding them too weak and suggesting they be called “Regulation Status Quo.”

Regardless of their personal views, the loss of Commissioners Piwowar and Stein will undoubtedly put further pressure on the SEC as the agency takes comments on the proposals. On the other hand, the SEC might have an easier go in reaching a compromise with the decision being left to just three commissioners.  In theory, the White House and Senate could quickly take action to replace Piwowar and Stein, as it is customary for the Senate to consider commissioners in pairs (Republican and Democrat).  In the meantime, between the departures of Piwowar and Stein, the SEC will operate with four commissioners including two Democrats, which could lead to deadlocked votes, something for which the SEC is well known.

If you have questions or would like more information, please contact Ted Peters at [email protected].

“Senior Safe Act” Encourages Reporting of Senior Investor Fraud

Posted on: May 25th, 2018

By: Ted Peters

On May 22, 2018, the Senior Safe Act, authored by U.S. Senators Susan Collins (R-ME) and Claire McCaskill (D-MO), passed in the House of Representatives as part of a bipartisan banking reform package after previously being passed by the Senate (67-31) in March.  The Act seeks to curb financial exploitation of senior investors by establishing a safe harbor in which advisors and their firms can report abuses without fear of liability for violation of privacy laws.

The Act extends legal immunity to banks, credit unions, investment advisors, broker-dealers, insurance companies and insurance agencies for reporting suspected exploitation or fraud, provided that they have established controls and procedures that will help employees and advisors identify and report suspected abuses, and provided further that they make the report in good faith and with reasonable care.

The Act has been broadly endorsed by the securities industry and has received bipartisan support.  Says FSI (Financial Services Institute) President and CEO, Dale Brown, “We applaud the House for taking a significant step toward the prevention of elder financial abuse by passing the Senior Safe Act… Financial advisors and financial firms are often the first to detect possible financial abuse, so it is critical that they have proper training to identify potential abuse as well as the ability to report it without fear of violating privacy laws.”

President Trump is expected to sign the Act into law as he tweeted that he would do so.

If you have questions or would like more information, please contact Ted Peters at [email protected].

Latest Developments In DACA

Posted on: February 19th, 2018

By: Kenneth S. Levine

On 2/15/2018 four (4) separate legislative bills that sought to address the March 5th termination of the DACA program, border security, family-based immigration and the Diversity Lottery were put up for a vote in the U.S. Senate.  None of the bills garnered the necessary 60 votes to overcome a filibuster threshold and move the legislation to the House of Representatives.  At this point it seems doubtful that any piece of legislation will pass Congress that addresses DACA recipients, a border wall, the elimination of family-based categories and the Diversity visa lottery.

As to the March 5th date on which the DACA program was set to terminate, within the last several weeks two Federal Judges in the U.S. District Court in California and New York issued nationwide injunctions that, for now, keeps the DACA program intact beyond the March 5th deadline.  While the injunctions mean that the U.S. Department of Homeland Security must continue processing DACA renewal applications, the Judges are not requiring the Department to accept DACA applications from first time Applicants.

The latest major development on this issue is that the U.S. Supreme Court met on 2/16/18 to determine whether to accept a request from the U.S. Justice Department to take up the injunction cases. We expect their decision within the next few days.  An affirmative decision means that the Court would essentially leapfrog the relevant U.S. Court of Appeals in determining whether the injunctions are legally valid.  If the Supreme Court declines to accept immediate jurisdiction of the Justice Department’s appeals, then it will likely take 9-12 months for the 2nd and 9th U.S. Circuit Court of Appeals to render a decision.  Whatever the result, constitutional law legal experts widely anticipate that the U.S. Supreme Court will ultimately decide this issue.

The Immigration Attorneys of Freeman Mathis & Gary, LLP strongly advise all current DACA recipients to consider filing renewal applications immediately.  Although we do expect the DACA program to ultimately be terminated, those with pending renewal applications will likely be in a strong legal position to have their cases adjudicated.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth S. Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected]