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Murphy Oil:  Use of Employee Arbitration Agreements Affirmed By U.S. Supreme Court

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In a welcome decision for California employers, the U.S.  Supreme Court ruled in National Labor Relations Board v. Murphy Oil USA, Inc., by a vote of 5-4, that employers can still require employees to arbitrate their disputes individually, and to waive the right to litigate those disputes through the Court process.

Today’s decision was part of three cases dealing with essentially same question relating to the validity of arbitration agreements in light of increasing legal activity pertaining to both labor rights (under the NLRA) and class action actions that employers are facing.  In Murphy Oil, the Court held that an employee, who had signed an employment agreement that contained an arbitration provision filed a class action lawsuit in federal court, must proceed to individual arbitrations under the Federal Arbitration Act.

It should be no surprise that California is one of three states where mandatory arbitration agreements are most prevalent. According to a study released by the Economic Policy Institute, more than 67 percent of private-sector workplaces in California are covered by mandatory arbitration agreements. Recent cases such as the Dynamex case, explain why employers in California should really consider implementing arbitration agreements as part of their employment practices.

In fact, I recommend that employers in California ensure that their employees sign arbitration agreements at the earliest point possible.   Arbitration agreements are subject to attack if they are unreasonable or unconscionable in any way, companies should hire an attorney’s help to draft an agreement that is both fair and clear to the employee.  For instance, in Murphy Oil, the arbitration agreement required the employer to foot the bill for the arbitration under the American Arbitration Association rules. Although such arbitration fees can be costly, most clients find that the amount of money expended in litigation in state and federal court are significantly higher in comparison to the fees/costs associated with private arbitration.

 

For an evaluation of your company’s arbitration agreement policy or any employment-related matter, please feel free to contact Sergio H. Parra (sergio@jrgattorneys.com)

 

 

May an Employer and its Attorney Be Sued by a Former Employee for Calling ICE to Deport Him?

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by Sergio H. Parra li_sp

sergio@lg-attorneys.com

This question was answered last week by the 9th Circuit of Appeal in the case of Arias v. Raimondo, (2017 BL 214215, 9th Cir., No. 15-16120, 6/22/17). This case arose from an earlier lawsuit in 2006 wherein Jose Arias sued his former employer Angelo Dairy in State Superior Court for various wage and hour violations, including failure to provide overtime, rest and meal periods, and under PAGA. The case had been hotly contested for over five years before it had been finally set for trial for August 15, 2011.

Ten weeks before trial, however, the Angelos’ attorney, Anthony Raimondo, hatched an ”underhanded plan” to have Immigration and Custom Enforcement (“ICE”) arrest and deport Arias at an upcoming deposition. Evidently, after Plaintiff Arias became aware of the plot, he instead agreed to settle the case to avoid the threat of deportation hanging over him and his family. It seemed liked the plot had worked.

However, two years later on May 8, 2013, Plaintiff Arias filed a federal lawsuit against his former employer and their attorney for retaliation under the Fair Labor Standards Act (FLSA). Although Angelo Dairy and its owners settled their part of this case early on, Arias continued his case against the attorney on the theory that he, acting as the Angelos’ agent, retaliated against him, by trying to him deported during the earlier lawsuit.
Although the FLSA primary wage and hour obligations fall squarely on the shoulders on the employers, the 9th Circuit held that the anti-relation provision of the FLSA, was specifically also applied to any agent or “person acting directly or indirectly in the interest of an employer in relation to an employee.” As such, the 9th Circuit rejected Mr. Raimondo’s argument that because he was never Arias’s actual employer, he could not be held liable for retaliation under the FLSA. There is no current word yet if Mr. Raimondo will try to seek review by the United States Supreme Court.

Regardless, this case presents several lessons that all employers should heed. First off, an employer must try to avoid temptation, during the heat of the litigation battle, to create additional risk for the company and, instead focus on narrowing the issues involved and winning a case on its merits. Involving federal authorities in a state law dispute not only raises certain moral and ethical concerns, but may also be a double-edged sword. A telephone call to ICE by an employer to report that one of its employees may not be legally entitled to work in the US, may lead ICE itself to also wonder about the reporting employer’s I-9 and employment verification practices. Most importantly, as evident by the Arias case, an employer must analyze and appreciate there are many protections under both federal and state law that prevent retaliatory conduct after a lawsuit or claim had been filed by the employee.

Lastly, any person involved in making HR decisions, whether as an employee or as attorney, must be cognizant that their own actions and electronic communications may be later scrutinized. In reaching its opinion, the Ninth Circuit Court’s opinion quotes from various text messages sent by Mr. Raimondo to ICE and other attorneys not only where he describes his deportation plot, but where Mr. Raimondo admits doing the same thing on five other occasions. Ouch.  As stated by the Court, the FLSA is “remedial and humanitarian in purpose. We are not here dealing with mere chattels or articles of trade but with the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others… Such a statute must not be interpreted or applied in a narrow, grudging manner.”

Click here for the full written opinion.

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

https://centralcoastemploymentlaw.com/

Liability of Corporate Individuals for Labor Code Violations under the new Fair Day’s Pay Act

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A strong reason for establishing a corporation or limited liability company is to attain protection against personal liability as the result of the company’s debts or liabilities. While it is traditionally true that the corporate form provides direct protection for owners, directors and officers, California courts are increasingly holding owners liable for labor code violations.

This trend led to the enactment of California’s so-called “A Fair Day’s Pay Act” on Jan. 1, 2016, which formalized and extended the case law even further.

Labor Code Section 558.1 now holds that “any owner, director, officer, or managing agent of the employer” that is “acting on behalf of an employer” who violates, or causes certain wage and hour laws to be violated, may be held liable as the employer for such violation.

This expanded liability encompasses most of the common wage and hour violations, such as overtime, minimum wage, pay stub violations, meal and rest periods, and failure to reimburse business expenses, as well as waiting time penalties. A “managing agent” under Civil Code 3294 is one who exercises substantial discretionary authority over decisions that ultimately determine corporate policy. In most cases, personal liability would not reach payroll managers and may not reach HR managers. From the employee/plaintiff’s point of view, individual defendants are chosen for their deep pockets or for their control of the litigation.

Because of this, owners (including directors, officers and managing agents) of corporate entities must be cognizant that if they are wrongly directing employees in regards to work schedules, wages etc., that they may be unknowingly creating liability for themselves as individuals. If possible, owners etc., should train and rely upon its work supervisors and HR staff to supervise wage/hour compliance. This new liability risk should provide even more incentive for businesses to have strong employment policies in place and to review their labor and employment practices on an annual basis to avoid liability in the first place.

Sergio H. Parra li_sp

sergio@lg-attorneys.com
http://www.lg-attorneys.com/expertise/labor-and-employment/