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Friday, July 30, 2010

Governor Vetoes Agricultural Overtime Bill


On July 28, 2010 Governor Schwarzenegger vetoed a bill that would have removed the exemption for agricultural employees from overtime and meal period requirements under California law. 
As previously reported, on July 20, the bill was enrolled and sent to the Governor’s desk.  With the veto, the bill is likely dead, as a legislative override requires a two-thirds vote in each house and has not occurred in over 30 years.
In his veto message, Schwarzenegger said “this measure, while well-intended, will not improve the lives of California's agricultural workers and instead will result in additional burdens on California businesses, increased unemployment, and lower wages.”
Please check back regularly for updates on California legislation.

Thursday, July 22, 2010

California Legislative Update: Governor Approves Bill on Appeal Bonds as Agriculture Bill Slowly Makes its Way to His Desk

By Jonathan Judge

Late last week, Governor Schwarzenegger approved a clarification of the law on appeals of Labor Commissioner decisions.  Meanwhile, SB 1121, concerning overtime for agricultural workers, reached the Governor's desk on July 20, and the Senate amended a bill concerning background checks.  A summary of these bills and key developments follow below.

AB 2772 (Swanson) Appeal Bonds - This bill clarifies that an employer wishing to appeal an administrative judgment by the Labor Commissioner is required to first post a bond.

As previously reported, the Legislature sent this bill to the Governor on July 6. The Governor approved the bill on July 15, and the Secretary of State Chaptered the bill the same day. As a non-urgency bill, the changes will take effect January 1, 2011.

Labor Code Section 98.2 currently provides: “Whenever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the decision, order, or award.”

The bill will amend Section 98.2 to read: “As a condition to filing an appeal pursuant to this section, an employer shall first post an undertaking with the reviewing court in the amount of the order, decision, or award.”

This bill was in response to a California appellate court decision (Progressive Concrete Inc.,v. Parker, 136 Cal. App. 4th 540, 548 (2006)) that held that the language in Section 98.2 was merely “directory,” and that a specific court order was necessary before an employer can be required to post a bond.

The effect of the court’s holding was to leave entirely to the discretion of a court whether or not to issue an order requiring the positing of the bond. Section 98.2 will expressly state that as a condition to filing an appeal of an administrative judgment, an employer must first post a bond with the reviewing court.

SB 1121 (Florez) Overtime - This bill would remove the exemption for agricultural employees from overtime and meal period requirements.

As previously reported, the California Legislature passed this bill on July 1 and it was expected to go to the Governor’s desk for veto or signature shortly thereafter. However, it appears the bill had been stalled in the enrollment process, according to the online official California Legislation Report.

On July 20, the bill was enrolled and sent to the Governor’s desk.  During the legislative session, the Governor must sign or veto legislation within 12 days of the day of transmittal or it becomes law without signature.

AB 482 (Mendoza) Consumer Credit Reports - This bill would prohibit employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information meets specified requirements (see below).

Updating a previous report, the California Senate recently amended this bill to include an exception for trade secrets.

The bill language now allows for consumer credit reports for employment purposes if the information sought is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or trade secrets or other confidential information, and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.

Please check back regularly for updates on these and other bills.

Wednesday, July 21, 2010

California Anti-Labor Injunction Law Held Invalid as Applied to Picketing on Private Property

By Ronald W. Novotny

In one of the first decisions interpreting the legal enforceability of California’s anti-labor injunction statute, a California appellate court held on July 19, 2010 that the law did not prevent a grocery store from obtaining an injunction against a union for picketing on its private property. The court specifically held that the statute, Labor Code section 1138.1, was unconstitutional as applied to that dispute because it conferred greater legal protection on picketing than other forms of speech, and declared labor protests on private property to be legal even though a similar protest concerning a different issue would constitute trespassing.

In Ralphs Grocery Co. v. U.F.C.W. Local 8, a union picketed a Ralphs Grocery store in Sacramento with 8 to 10 pickets for an extended period of time, after Ralphs opened the store using non-union employees in 2007. The picketing occurred at an “apron” leading into a parking lot, which the court found to constitute private property. When Ralphs went to court to seek an injunction against such picketing, a trial court denied it based on the anti-labor injunction statute, which placed onerous burdens on property owners to show entitlement to such relief including the need to establish that they would suffer “substantial irreparable injury” if it were not granted.

The Court of Appeal reversed the decision and held that an injunction should issue, on the ground that application of the statute in this instance would “effectively force Ralphs to provide a forum for speech with which it disagrees. . .” The court also stated that the Union’s continuing trespass constituted “irreparable harm” for injunction purposes because there was no way of knowing or quantifying how much business Ralphs lost by reason of the picketing.

The decision is welcome news to employers who face picketing by labor unions on private property such as malls and shopping centers.

Wednesday, July 14, 2010

California Court Rejects Age Discrimination Claim Despite Failure to Interview or Consider Applicant

By Ronald W. Novotny


Sometimes, in refusal to hire cases, older applicants argue that they were victims of age discrimination if they were not offered job interviews or considered for the position applied for. In the case of Reeves v. MV Transportation, Inc. filed July 9, 2010, a California appellate court rejected just such a claim, in the case of a transportation company who hired a younger attorney for an in-house general counsel position based on a favorable general impression and a recommendation from a known colleague.

The 56-year old plaintiff in that case, David Reeves, had worked two stints as an attorney for the National Labor Relations Board and as an in-house attorney for two private companies over a period of 27 years. He applied for the position of a labor and employment attorney with MV Transportation, but was not interviewed for the job. Instead, a 40-year old attorney was hired for the job, after the company’s General Counsel John Baird formed an “extremely favorable impression of her” following her interview and her recommendation from an attorney he knew at the firm at which she worked. Baird did not interview Reeves for the job, based on both his positive interview of the successful candidate and the lack of time. He also considered a message Reeves sent about his qualifications to be arrogant, and was put off by Reeves responding to the ad for the position by sending his resume during working time from a government-owned computer.

The court noted that there is “nothing unlawful about an employer’s basing its hiring decision on subjective criteria, such as the impression an individual makes during an interview,” so long as the older candidate does not have demonstrably superior qualifications. Accordingly, although it is usually more preferable from a risk management perspective to interview all qualified candidates, the Reeves case provides support to employers who choose to cut short the hiring process due to time constraints or other factors once it is convinced that it has found the right person for the job.

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Friday, July 9, 2010

California Legislature Sends Two Employment-Related Bills to Governor Schwarzenegger

By Jonathan Judge

Two employment-related bills we have been tracking were sent to Governor Schwarzenegger this month:


AB 2772 (Swanson) Appeal Bonds - This bill would clarify that an employer wishing to appeal an administrative judgment by the Labor Commissioner is required to first post a bond.

Labor Code Section 98.2 currently provides: "Whenever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the decision, order, or award."

This legislation is in response to a recent California appellate court decision (Progressive Concrete Inc.,v. Parker, 136 Cal. App. 4th 540, 548 (2006)) that held that the language in Labor Code Section 98.2 is merely “directory,” and that a specific court order is necessary before an employer can be required to post a bond.

The effect of the court’s holding is to leave entirely to the discretion of a court whether or not to issue an order requiring the positing of the bond. This Bill would expressly state that as a condition to filing an appeal of an administrative judgment, an employer must first post a bond with the reviewing court.

The Legislature sent this bill to the Governor on July 6.  During the legislative session, the Governor must sign or veto legislation within 12 days of the day of transmittal or it becomes law without signature.  If this bill becomes law, it will place additional financial burdens on employers attempting to appeal rulings made by the Labor Commissioner.

SB 1121 (Florez) Overtime - This bill would remove the exemption for agricultural employees from overtime and meal period requirements.

In general, California law requires daily overtime after eight hours in a day for non-exempt employees. The law also requires a 30 minute unpaid meal period before the start of the fifth hour of work, unless the work period is no more than six hours, and both the employer and the employee choose to waive the meal period by mutual consent.

Currently however, under Labor Code Section 554, an exemption exists for agricultural employees as defined in Industrial Welfare Commission Wage Order 14 from the daily overtime and meal period requirements. The current exemption allows agricultural employers to employ such employees up to ten hours in a day without paying overtime. If passed, this bill would remove these exemptions for agricultural employers, driving up the cost of employment of such workers in California.

Dozens of farm groups oppose the bill, and plan to urge the Governor to veto the bill, out of concern that farmers faced with higher employment costs could be driven out of business. A spokesman for the Governor stated that the Governor has not taken a position on the bill.

Please check back regularly for updates on these and other bills.

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Thursday, July 1, 2010

Court Rules that Party Waived Right To Arbitrate by Seeking Discovery in Court Proceeding


When employers seek to compel employees to arbitrate their claims under an Arbitration Agreement, they are often met with arguments that they have “waived” their right to arbitrate by waiting too long to seek it or by engaging in acts inconsistent with the arbitral process.  In the recent case of Zamora v. Lehman, filed June 29, 2010, the California Court of Appeal held that just such a waiver occurred, by virtue of a party having sought extensive discovery in court proceedings before it tried to enforce an arbitration agreement.
This case was brought by a trustee in bankruptcy for breach of fiduciary duty against three principals of an infomercial production firm.  After litigating the case for over a year and requesting the production of voluminous documents they would not otherwise have been able to obtain in arbitration, two of the principals moved to compel arbitration after “discovering” their arbitration agreements with the company.  Finding that these parties had acted inconsistently with their arbitration agreements and wasted the court’s time by not moving to arbitrate sooner, the court denied the motion.
Significantly, the arbitration agreement in that case was governed by the labor arbitration rules of the AAA, under which no discovery at all was permitted.  Most agreements adopt the AAA employment arbitration rules which allow discovery, and if that had been the case it might have changed the result.  In addition, the court still compelled arbitration of the claim against the third principal, who waited almost as long as the others to seek arbitration but did not engage in the extensive discovery that the others did.