HR Legal and Compliance Excellence - July 2022

JULY 2022 • Vol.9 • No.07

(ISSN 2564-2022)

Workplace Protections For AbortionRelated Decisions: An Employer's Guide - Lorie Maring Partner, and Carlton C. Pilger, Fisher & Phillips LLP

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SCOTUS And President Biden’s Approach To Cannabis

Pay Equity Reporting Requirements

Claire Fox Hodge,

Sheppard Mullin

- Whitt Steineker and

Bradley Arant Boult Cummings LLP

- Shawn D. Fabian and

Katherine Oblak,

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Remote Work Reimbursements - Emily C. Gifford, Taylor L. Wendland and Mark S. Spring, CDF

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Here’s Why You Shouldn’t Tolerate Racial Discrimination In Your Workplace - Janette Levey Frisch, Founder, Levey Law, LLC

INDEX

HR Legal & Compliance Excellence JULY 2022

Vol.09

No.07

(ISSN 2564-2022)

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Workplace Protections For Abortion-Related Decisions: An Employer's Guide

On the Cover

What employers must do in the aftermath of SCOTUS’ controversial decision to overturn Roe v. Wade ruling

- Lorie Maring Partner, and Carlton C. Pilger, Of Counsel, Fisher & Phillips LLP

Articles 11 Employee Verification: Why Verifying Remote And Gig Workers Are Critical Here’s what can be done to combat identity theft - Gergo Varga, Senior Content Manager/Evangelist,

SEON

18 Roe vs. Wade: Here’s How Employers Can Prepare For The Abortion-Related Law It’s time to review and potentially tailor your policies to accommodate views on the legality and morality of abortion - Brian Peterson, Attorney, Spencer Fane LLP

26 AI In Hiring: How To Minimize The Risks Of Discrimination?

The new EEOC initiative targeting AI technology used in the hiring process presents an increased risk of class litigation - Steven Moore, George Brand, Nikki Howell, and Heidi Wilbur, Fox Rothschild LLP

32 Arbitration Agreements: Enforceable Waivers Of Employees’ Individual PAGA Claims Now Included The Viking River Cruises, Inc. v. Moriana ruling is one of the most important decisions for California employers this year - Jeffrey S. Horton Thomas, Partner, and Steven P. Gallagher, Associate, Fox Rothschild

41 Ensuring Safety As We Return To Office HR teams should remain flexible in helping employees switch out of the Covid-19 mode - Marshal Sterio, CEO, Surgically Clean Air

TOP PICKS

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INDEX

SCOTUS And President Biden’s Approach To Cannabis What the court’s treatment of Roe and a workers’ compensation case reveal about President Biden’s approach to Cannabis - Whitt Steineker and Claire Fox Hodge, Attroneys, Bradley Arant Boult Cummings LLP

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Pay Equity Reporting Requirements

Now is the time for employers to report pay equity data to the Illinois labor department - Shawn D. Fabian, Partner, and Katherine Oblak, Associate, Sheppard Mullin

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Remote Work Reimbursements Are employers supposed to cover all work-fromhome-related expenses?

- Emily C. Gifford, Taylor L. Wendland, Attorneys, and Mark S. Spring, Office Managing Partner & Chair, CDF

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Here’s Why You Shouldn’t Tolerate Racial Discrimination In Your Workplace Key takeaways for employers - Janette Levey Frisch, Founder, Levey Law, LLC

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How to Support and Legally Protect Employees Seeking Abortion?

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n a controversial decision, the Supreme Court of the United States (SCOTUS) overturned the landmark Roe vs. Wade case, which guaranteed abortion as a constitutionally protected right in 1973.

While there is a widespread protest against this decision, and some states’ courts have legalized abortion in the meantime, it is going to be a tough walk for employers who want to support employees in their decision to undergo an abortion.

Employers should carefully monitor how the states in which they operate and where their employees work regulate abortion.

Depending on the benefits an employer offers, it may have to specifically tailor its health and welfare benefits and policies to match the unique mix of abortion laws/ regulations to which it is subject.

Given the ruling, people in states with strict abortion limitations may end up traveling to other states to receive abortion-related care. Can employees take job-protected leave to obtain such services? What other rights might employees have under federal employment laws?

In Workplace Protections For AbortionRelated Decisions: An Employer’s Guide, Lorie Maring and Carlton C. Pilger, attorneys from Fisher & Phillips LLP, share a few points employers should keep in mind in light of the June 24 Dobbs v.

Jackson Women’s Health Organization decision.

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The Dobbs decision serves as a reminder for employers to remain compliant with existing employment laws implicated by employees’ privacy, reproductive health decisions, and workplace dialogue on sensitive and divisive political, religious, and personal topics. Check out Roe vs. Wade: Here’s How Employers Can Prepare For The AbortionRelated Law, to learn how you can tailor your policies to accommodate views on the legality and morality of abortion.

In Remote Work Reimbursements, CDF attorneys Emily C. Gifford, Taylor L. Wendland, and Mark S. Spring, will help you understand what are the various kinds of expenses that employers should cover when employees are working from home.

Also, read SCOTUS And President Biden’s Approach To Cannabis by Whitt Steineker and Claire Fox Hodge, and Pay Equity Reporting Requirements by Shawn D. Fabian and Katherine Oblak.

This is not all! This issue of HR Legal & Compliance Excellence also focuses on other legal aspects and highlights that should help you keep your workforce healthy, safe and secured.

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COVER ARTICLE

Workplace Protections For Abortion-Related Decisions: An Employer's Guide What employers must do in the aftermath of SCOTUS’ controversial decision to overturn Roe v. Wade ruling

By Lorie Maring and Carlton C. Pilger, Fisher & Phillips LLP

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mployers likely have questions about abortionrelated employment protections and healthcare benefits after SCOTUS’ controversial decision that overturned Roe v. Wade. Given the ruling, people in states with strict abortion limitations may end up traveling to other states to receive abortion-related care.

have under federal employment laws? Here are a few points you should keep in mind in light of the June 24 Dobbs v. Jackson Women’s Health Organization decision.

Anti-Discrimination Laws Protect Abortion-Related Decisions

Employers should understand the workplace protections employees have under existing federal anti-discrimination laws and how they apply to an employee’s decision whether to have an abortion.

Can employees take job-protected leave to obtain such services? What other rights might employees

The Interplay of Employment Discrimination Statutes

Title VII of the Civil Rights Act of 1964 bans employment discrimination based on color, national origin, race, religion, and sex. Additionally, in 1978, Congress enacted the Pregnancy Discrimination Act (PDA) to clarify that discrimination based on pregnancy, childbirth, and related medical conditions is considered unlawful sex discrimination under Title VII.

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Workplace Protections For Abortion-Related Decisions: An Employer's Guide

Under these laws, employers are prohibited from firing an employee for having or considering having an abortion, according to the Equal Employment Opportunity Commission (EEOC). Likewise, employees are protected from adverse employment actions based on their decision not to have an abortion. For example, the EEOC said, a manager can not pressure an employee to have an abortion in order to keep a job, get promoted, or be assigned better projects.

Coverage under Health Insurance Plans

“However, Title VII makes clear that an employer that offers health insurance is not required to pay for coverage of abortion except where the life of the mother would be endangered if the fetus were carried to term or medical complications have arisen from an abortion,” the EEOC noted in enforcement guidelines that were issued in 2015.

Still, under federal law, employers may choose to provide health insurance coverage for abortion-related services. “If an employer decides to cover the costs of abortion, it must do so in the same manner and to the same degree as it covers other medical conditions,” the EEOC said. Additionally, an employer may provide abortion benefits directly or through a collective bargaining agreement.

Notably, states have their own rules on abortion coverage for private insurance plans, which vary significantly. For example, half the states limit or prohibit abortion coverage in healthcare plans that are offered through a state-regulated Affordable Care Act Marketplace. On the opposite end of the spectrum, several states – including California, Illinois, and New York – require state-regulated plans to cover abortions and related care.

The decision overturning Roe v. Wade did not make abortion illegal nationwide. Rather, it lifted the federal right to abortion access and gave states the ability to pass stricter abortion laws. For multi-state employers that are fully insured, monitoring of activity of state departments of insurance will also be important as states are free to regulate the insurance industry within their state, including insurance issued in another state that covers individuals within such state.

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In addition, questions remain regarding the impact of state abortion restrictions and bans on employers with self-insured plans. While fully insured medical plans are subject to state insurance laws, employers with self-funded healthcare plans are governed by the federal Employee Retirement Income Security Act (ERISA), which generally preempts state law. Litigation on the ERISA preemption and state regulation issues are surely going to follow – in particular for employers who adopt travel benefits for abortion access.

Employers Providing Travel Benefits

Many employers have already announced that they will provide travel benefits to employees and family members, who live in states where abortion is outlawed or severely curtailed. Travel benefits for medical care are not uncommon in group health plans and can be provided tax-free up to certain limitations in the Internal Revenue Code.

Providing travel benefits outside of the group health plan to all employees raises additional tax, Affordable Care Act, and ERISA compliance issues.

Therefore, you should discuss the consequences of such decisions with benefits counsel. Of course, the provision of any travel benefits should be monitored in light of the state laws that are being changed and updated across the country.

You should consult with your employee benefits counsel to determine how to best comply with applicable federal and state laws for any decisions regarding abortion coverage and travel access.

Job-protected Leave May Be Available

Although Title VII and the PDA protect workers from employment discrimination based on their decision to have (or not to have) an abortion, additional issues involving absenteeism may arise if an employee needs time off to travel to another state for abortionrelated care.

Is such leave job-protected? It depends. Title VII does not require an employer to provide pregnancy-related leave if it doesn’t provide leave for other temporary illnesses or family obligations, according to the EEOC. However, employees can take job-protected leave

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Workplace Protections For Abortion-Related Decisions: An Employer's Guide

as a reasonable accommodation under federal law in some circumstances, and state laws may provide additional protections.

what you would normally provide under a sick leave policy, unless the leave accommodation would result in an undue hardship for the business.

Here are some of the federal laws that may come into play:

Family and Medical Leave Act (FMLA): While Title VII, the PDA, and ADA apply to employers with at least 15 employees, pregnant workers at larger companies (with 50 or more employees) may be entitled to take time off under the FMLA.

Pregnancy Discrimination Act: In addition to protecting workers from pregnancy discrimination, the PDA covers reasonable accommodations for pregnant workers, but only if such accommodations are offered to other employees with similar limitations. “Under the PDA, an employer must allow women with physical limitations resulting from pregnancy to take leave on the same terms and conditions as others who are similar in their ability or inability to work,” according to the EEOC. A worker who is temporarily disabled due to pregnancy should be allowed to take unpaid leave “to the same extent that other employees who are similar in their ability or inability to work are allowed to do so.”

Americans with Disabilities Act (ADA): Notably, pregnancy alone is not considered a disability under the ADA. However, a pregnancy-related impairment may be covered by the ADA, in which case you should engage in an interactive dialogue with the employee to explore reasonable accommodations.

Employers that are covered by the FMLA must provide eligible employees with up to 12 weeks of leave in a 12-month period for various reasons, including to address the employee’s own serious health condition.

Employees with qualifying medical conditions are eligible for FMLA leave if they worked for a covered employer for at least a year and for at least 1,250 hours during the previous year.

An employee may be eligible to take FMLA leave for abortion-related care if their healthcare provider determines that they have a qualifying serious health condition. When administering such leave requests, you should follow FMLA guidelines for obtaining certification from the employee’s healthcare provider and maintaining the confidentiality of the employee’s medical information.

A pregnancy-related impairment is considered a disability if it substantially limits a major life activity (such as walking, standing, and lifting) or a major bodily function (such as the musculoskeletal, neurological, cardiovascular, circulatory, endocrine, and reproductive functions). Therefore, an employee who is seeking an abortion due to a disability may be entitled to take ADA-protected leave in addition to

Importantly, you should note that state laws may cover smaller businesses and provide employees with additional leave rights, as well as privacy, confidentiality, and anti-discrimination protections. Consult with local counsel to discuss the interplay between federal, state, and local employment laws.

Lorie Maring is the Partner at Fisher & Phillips LLP.

Carlton C. Pilger is Of Counsel at Fisher & Phillips LLP.

This article originally appeared here.

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Employee Privacy, Identity Protection, and Compliance

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Managers and HR leaders have the huge responsibility of protecting this type of information and creating a culture of security in the workplace.

Topics will also touch on considerations and privacy safeguards for modern issues such as phishing and ransomware, mobile devices, nonsecure network connections, and social media.

Employee Verification: Why Verifying Remote And Gig Workers Are Critical Here’s what can be done to combat identity theft

By Gergo Varga, SEON

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re you certain that your employees are who they say they are?

Perhaps that sounds alarmist, but employee fraud is very real. Action Fraud UK states that nearly one in five businesses has been defrauded by an employee.

Increasingly, there are also opportunities and ways for people to exploit companies by using false identities.

The widespread rise of remote working and the increasing use of freelancers play a significant role. Nowadays, more and more people work for companies without the need to turn up to an office and “show their face.”

Furthermore, there’s an increasing trend towards global and “remote by default” teams. Many companies, very often tech startups, pride themselves

July 2022

In this article, we look at the increasing importance of employee identity verification and background screening – both as part of the hiring process and on an ongoing basis when working with remote teams and freelancers.

What Problems Can Occur?

Long gone are the days when bosses and HR teams would, by default, know everyone in person, perhaps even socializing with them and becoming acquainted with their families.

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on this way of doing business and make it a key part of their company culture. It allows them to access a pool of global talent and provide flexible working options to attract the best people. But it also puts them at more risk of identity fraud.

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Failing to verify the identity of everybody working for your company can lead to all kinds of issues, from compliance problems to the risk of fraud or corporate espionage.

On the compliance side, there’s the danger of employing people who don’t have the correct work permits or professional qualifications. Deceitful practices around location are also surprisingly common.

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Employee Verification: Why Verifying Remote And Gig Workers Are Critical

Remote employees or freelancers can use technology like VPNs to appear to be in a different country. The implications of this can be relatively trivial, such as a legitimate employee working from their holiday home without authorization. However, it can also involve the risk of hiring somebody in a completely different part of the world to where they claim to be.

This can have knock-on effects regarding everything from taxation to valid insurance.

There are clearly all sorts of different risks around false (or tweaked) identities, but what can companies do to mitigate them?

What Can Be Done to Combat the Problems?

Broadly, there are two sides to combating the problem: Firstly, it’s crucial to verify the identity of all new recruits – both employees and freelancers.

While “fraud” often leads people to think of financial fraud or the stealing of company secrets, there’s also the risk of working with completely different people to those you thought you were. This is a particularly prevalent risk with freelancers.

Secondly, in situations where people aren’t attending an office regularly, it’s important to have a way to check that they are consistently who and where they say they are.

“Drop servicing” is the practice of taking on freelance work, and further outsourcing it to third parties. This is fine when done transparently, as described here by Wise. However, it also happens illegitimately, without the end client’s approval or even knowledge.

As with so many things these days, you have a choice of performing manual checks and using technology to automate some of the processes. A hybrid of the two methods proves most effective and is often recommended by fraud prevention vendors.

A freelancer can apply for work with a client, win the gig, and complete it themselves, to begin with. They then replace themselves with a worker who may not have the same skills and qualifications or may not even be in the “correct” country.

Basic identity checks, with passports, driving licenses, and birth certificates, are something HR teams have been carrying out for decades. Often, their completion is mandatory for compliance reasons, to verify individuals’ credentials and ensure they have the right to work.

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Employee Verification: Why Verifying Remote And Gig Workers Are Critical

wider IT infrastructure. For example, using an API, you may be able to integrate employee verification as part of background screening in your human resources information system (HRIS).

As we noted above, it’s not only about checking people who they say they are during the recruitment process.

You also need to check they are not “swapped out” for other people while they’re working for you.

For instance, with IP analysis the system can alert you if your London-based freelancer suddenly logs on from Asia, triggering you to do some checks. Perhaps, that person is simply working while on holiday – but there may also be something more underhand going on. Again, you can use manual checks or integrate authentication into how they log on to your corporate systems.

With remote and global teams, there is also now the option to use automated or outsourced services for employee identity verification. Freelance platforms use such systems, but they don’t altogether mitigate against things like drop servicing, as described above.

Ultimately, every company needs to be carrying out thorough checks of its own.

Another useful tool for the armory is digital footprint analysis. This allows you to find extensive data on an individual from something as simple as an email address or telephone number.

For example, a prospective employee or freelancer may provide a “local” phone number. However, it’s very simple to acquire something like that from a service like Skype, making it easy to appear as though you’re based in London or New York. Identify verification software can quickly alert you to things like that, triggering further checks.

Working with “fake” employees may seem like the stuff of science fiction, but it’s really not. Remote working, gig working, and the rise of global teams all bring with them a certain layer of anonymity. You best believe that fraudsters already seek to exploit that.

Gergo Varga has been fighting online fraud since 2009 at various companies – even co-founding his own anti-fraud startup. He’s the author of the Fraud Prevention Guide for Dummies – SEON Special edition. He currently works as the Senior Content Manager / Evangelist at SEON, using his industry knowledge to keep marketing sharp, communicating between the different departments to understand what’s happening on the frontlines of fraud detection.

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Similarly, you can check whether people’s email addresses are legitimate and that they are logged on from where they say they are.

Tools like this allow you to do manual lookups, but you will also be able to integrate some of them with your

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Top Pick

SCOTUS And President Biden’s Approach To Cannabis What the court’s treatment of Roe and a workers’ compensation case reveal about President Biden’s approach to Cannabis

By Whitt Steineker and Claire Fox Hodge, Bradley Arant Boult Cummings LLP

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he leaked opinion overturning Roe, combined with a largely unknown workers’ compensation case pending before the Supreme Court, reveals the Biden administration’s position on cannabis:

so much about cannabis issues to leave them in the hands of the current judiciary? Or something in the middle?

The Biden administration doesn’t care about cannabis issues. Or is it that the Biden administration cares

Regardless of your opinion on the correctness or wisdom of Roe v. Wade, the possibility that it may be overturned as reflected in the recently leaked opinion

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The Immediate Future of Roe

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SCOTUS And President Biden’s Approach To Cannabis

represents a potential sea change in the court’s jurisprudence. It further represents the current court’s willingness to take strong and decisive opinions on matters of broad political and cultural significance.

Cannabis is certainly one of those issues that sits at the intersection of law and order, popular opinion, and individual liberty.

So, what does Roe have to do with the Biden administration’s approach to cannabis? Stay with us: In the words of Andy Dufresne, if you have come this far, maybe you are willing to come a little further.

Why Are You Reading about a Workers’ Compensation Case?

This Spring, the court has received a briefing in a case presenting the question of whether the Controlled Substances Act (CSA) preempts an order under a Minnesota workers’ compensation law requiring an employer to reimburse an injured employee for the cost of medical marijuana used to treat a work-related injury.

Specifically, the petitioner, Daniel Bierbach, sustained a work-related injury that required surgery and physical therapy. Bierbach was certified as suffering from intractable pain, which is a qualifying medical condition under Minnesota’s Cannabis Act. Bierbach subsequently purchased marijuana in accordance with the act and sought reimbursement from his employer.

After the company refused the reimbursement on both state law and federal-preemption grounds, a state workers’ compensation judge held an evidentiary hearing and sided with Bierbach. The Minnesota Supreme Court reversed, holding that the federal CSA preempted state law. Bierbach petitioned the Supreme Court for a review of the decision.

The court then invited the United States solicitor general to express an opinion on the question presented. In that brief, the solicitor general argued against granting Bierbach’s petition, relying largely upon the doctrine of obstacle preemption. Obstacle preemption comes into play when a state law “stands as an obstacle to the accomplishment and

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July 2022

execution of the full purposes and objectives of Congress,” an inquiry that requires courts both to assess congressional intent with the presumption that Congress generally intends to leave state laws undisturbed.

The solicitor general focused on the fact that “Congress’s classification of marijuana as a Schedule I controlled substance ‘reflects a determination * * * that marijuana has no currently accepted medical use’” and that Congress has yet to change that classification. The solicitor general concluded that the Minnesota Supreme Court’s decision was “correct for the straightforward reason that when a federal law such as the CSA prohibits possession of a particular item, it preempts a state law requiring a private party to subsidize the purchase of that item” (U.S. Br. 9).

Despite the seemingly clear-cut nature of marijuana’s classification under the CSA, the solicitor general did concede that medical marijuana law is a “rapidly evolving” field, even characterizing it as “a hazy thicket.” Nevertheless, the solicitor general appeared to consider Congress’s failure to affirmatively act and amend the CSA to be dispositive, largely dismissing recent Congressional actions that belie preemptive intent.

For example, Congress has consistently passed appropriations riders prohibiting the federal government from using appropriated funds to prevent states “from implementing their own laws that authorized the use, distribution, possession, or cultivation of medical marijuana.” The solicitor general brushed off the appropriations rider issue as merely “a limitation on funding” that did not amount to “a repeal of the CSA’s substantive criminal prohibitions.” The solicitor general was similarly unperturbed by Congress’s decision to narrow the definition of. Instead, the solicitor general repeatedly returned to the idea that requiring reimbursement was tantamount to allowing “state laws compelling thirdparty reimbursement for federal crimes.”

So What Are We to Make of This?

We think there are three possible explanations for the solicitor general’s approach, and while they aren’t

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SCOTUS And President Biden’s Approach To Cannabis

mutually exclusive they are all significant in their own ways.

But first, one thing is true. Almost two years into the Biden administration, during which Democrats have enjoyed majorities in the Senate and the House of Representatives, no meaningful cannabis reforms have become law. Nor, in our judgement, is any meaningful reform likely to occur before the midterms, even though there appears to be majority support in both houses of Congress for commonsense reform.

That said, here are the three most likely possibilities we can take away from the latest solicitor general’s brief: 1. President Biden does not support meaningful cannabis reform.

Maybe President Biden simply does not support liberalizing federal cannabis policy. We don’t think this is correct – at least not entirely and unequivocally – but there is evidence for this view in the president’s earlier political life.

Conventional wisdom has it that the Biden administration is generally good for the cannabis industry, but perhaps not as good as, for example, Sen. Bernie Sanders or Sen. Cory Booker – or even, depending on who you ask, Vice President Harris.

But Biden is certainly better than… [insert generic Republican presidential nominee] – even if one could make the case that the Trump administration essentially continued the hands-off approach of the Obama administration.

But close observers have always wondered whether President Biden’s history on cannabis issues was an indication that he was, at best, ambivalent. In the runup to the 2020 election, we wrote: While the DNC’s 2016 platform championed a “reasoned pathway to future legalization,” DNC members voted to strike language from the platform regarding legalization in the 2020 platform – instead focusing on federal recreational decriminalization, legalized medical use, and allowing states to set their own rules and regulations. The 2020 platform tracks the recommendations made by the Biden-Sanders Unity

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Task Force organized by former Vice President Biden and Sen. Bernie Sanders, and more broadly reflects the measured approach Biden appears to be taking take toward broad-scale recreational legalization.

And for Biden’s personal opinion? He was far from the most pro-cannabis Democrat that was running for president this cycle. During his long tenure in the Senate, he championed several pieces of “tough on crime” legislation. For example, in 1986, Biden introduced the Comprehensive Narcotics Control Act, which sought to establish a cabinet-level office to coordinate the federal government’s drug enforcement policies, and in 1993, Biden sponsored the Violent Crime Control and Law Enforcement Act, a pre-cursor to the 1994 Crime Bill. With this track record, one might reasonably conclude that a Biden presidency would take a dim view of the cannabis industry.

People can change their minds on issues over time, and politicians are no different. But reasonable people can disagree about whether cannabis reform is an issue that President Biden would like his administration to undertake. And, to that end, whether the solicitor general’s recent opinion is a reflection of his reticence to do so.

2. President Biden is an institutionalist protecting federal power.

Maybe the solicitor general’s approach represents the president’s long-held view on the extent of federal power – specifically, that it’s a protection of the authority of the federal government and its singular authority to devise and enforce a national policy on controlled substances. He has spent nearly his entire adult life as a federal officeholder and has used his various positions to push positions he believes to be good for the American people.

Does that history lead him to the conclusion that the federal CSA’s prohibition on marijuana as a Schedule I narcotic necessarily trumps any state law to the contrary and, by extension, mean that a state (here, Minnesota) cannot reimburse payments because doing so would constitute a violation of federal law (either aiding and abetting or perhaps conspiracy to violate the federal CSA)? Our gut is that the president doesn’t personally prefer that outcome, but is it at

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SCOTUS And President Biden’s Approach To Cannabis

least possible that his institutionalist-bent leads him to that conclusion? We think so.

3. President Biden is strategically preventing the current Court from ruling on an important cannabis issue.

Third, maybe the president has concluded that his opinion on cannabis must yield to the practical realities that bringing the issue in front of the Court as it is presently constituted would ultimately hurt the cannabis industry, regardless of his personal opinion of the matter.

This is the Roe analogy. Nearly all Court observers view the current Court as a conservative one, and the specter of Roe being overturned demonstrates to many the extent to which this Court will place a firm thumb on cultural issues that many have viewed as settled. And, as the thinking among many of those goes, if the Court is willing to pursue this type of sea change on what they view as settled law, the Court may be willing to go even further on an issue such as cannabis that has long existed in a grey area of the law.

Our sense is that this concern is the basis of the solicitor general’s position in the workers’ compensation case, which is that the cannabis industry is allowed to exist under current federal law and enforcement policy. If the Court takes a harsh view of what constitutes aiding and abetting

or conspiring to violate the federal CSA, it could be devastating to the industry because it could cause otherwise willing participants in the industry to reconsider that participation. Not only cannabis operators, but all service providers – from banks and real estate companies to insurance companies and public utilities, just to name a few. If that is a valid concern, then the solicitor general’s approach has the benefit of maintaining the status quo, even if it does not move the industry forward.

Whether you consider it waiving the white flag or a tactical retreat to win the long game, the immediate reality is that cannabis advocates will not get what the want – but at least they may not get what they fear.

What’s Next?

One of the most frustrating things to hear from a lawyer is “I’m not sure.” So we won’t say that, even if it’s true. Instead, we’ll reiterate our earlier message: Congress should vote or get off the pot. Congress could change the CSA and render these issues moot, or it could modify other federal rules that would give cannabis operators and service providers more confidence to participate in the industry.

To bring it back to one of the author’s favorite movies: Remember, hope is a good thing. Maybe the best of things.

This article first appeared here.

Whitt Steineker is a Partner and Cochair of the Cannabis Industry team at Bradley Arant Boult Cummings LLP. He and the Cannabis Industry team advise non-cannabis clients – from banks to commercial real estate companies to insurance companies and high-net-worth individuals – on best practices for doing business with cannabis companies.

Claire Fox Hodge is an Attorney and Litigation Practice Group at Bradley Arant Boult Cummings LLP. She focuses her practice on complex commercial litigation, government investigations, and white-collar criminal defense.

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Roe vs. Wade: Here’s How Employers Can Prepare For The AbortionRelated Law It’s time to review and potentially tailor your policies to accommodate views on the legality and morality of abortion

By Brian Peterson, Spencer Fane LLP

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n June 24, 2022, the United States Supreme Court issued a decision that overrules Roe v.

Wade. See Dobbs et al. v. Jackson Women’s Health Org. et al., Case No. 19-1392 (slip opinion). According to the decision, the federal constitution does not bestow the right to an abortion or protect an individual woman’s personal liberty interest concerning the same, but rather each state may fully regulate and outright ban or criminalize procedures as each state sees fit. As is discussed further below, this decision has important implications for employers that will now need to carefully review and potentially tailor their policies to accommodate individual states’ varying views on the legality and morality of abortion and individual liberty interests.

In Roe v. Wade, the Court held that individual citizens have a constitutional right to privacy that entitles them to obtain an abortion without government interference. However, in subsequent cases the Court also held that an individual’s privacy right, as applied to abortion, was not absolute and waned over time as the fetus reached “viability.” The Court created the

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Roe vs. Wade: Here’s How Employers Can Prepare For The Abortion-Related Law

“trimester framework” under Roe where a state’s ability to pass laws that limit or criminalize abortion depended on the stage of the pregnancy. Generally, the Roe framework prohibited states from restricting abortion before 14 weeks gestation, but permitted states to regulate abortion procedures in ways reasonably related to material health from 14 weeks until viability, and allowed states to ban abortions altogether once a fetus reached a stage of viability.

Some employers have responded to Dobbs by pledging to offer insurance, travel, and other compensatory benefits to employees living in states that may criminalize or ban abortions in order to work around such restrictions. For example:

In 2018, the state of Mississippi passed a law that generally prohibits abortions performed after the 15th week of pregnancy (Miss. Code Ann. § 41-41-191, i.e. The Gestational Age Act, GAA). Although there is disagreement as to the exact point that a fetus becomes “viable” (i.e., can live outside of the womb), it was undisputed that a fetus is not yet viable at 15 weeks and therefore that the Mississippi law sought to completely prohibit some pre-viability abortions in contravention of the framework established under Roe v. Wade.

●● Dick’s Sporting Goods announced that if an employee lives in a state that restricts access to abortion, then the company will provide up to $4,000 in travel expense reimbursement for that employee to travel to the nearest location where abortions are legally available. See here.

Jackson Women’s Health Organization (JWHO) is the only abortion provider in the state of Mississippi.

It filed a lawsuit challenging the constitutionality of the GAA in Federal District Court. The district court granted summary judgment in JWHO’s favor and permanently enjoined enforcement of the GAA. The Fifth Circuit Court of Appeals affirmed. However, the state of Mississippi appealed the case to the Supreme Court, which granted review on the issue of whether all pre-viability prohibitions on elective abortions are unconstitutional.

In a 6-3 ruling, the Dobbs majority overruled Roe v.

Wade altogether, holding that pre-viability prohibitions on elective abortions do not violate the United States Constitution. The majority wrote, “Abortion presents a profound moral question. The Constitution does not prohibit the citizens of each State from regulating or prohibiting abortion. Roe and Casey arrogated that authority. We now overrule those decisions and return that authority to the people and their elected representatives.” See Slip Opinion, pgs. 78–79. Additionally, the Dobbs majority held that, going forward, abortion regulations will be subject to “rational basis” review.

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●● Microsoft announced that it will extend its abortion and gender affirming care services for employees in the United States to include travel expense assistance. See here.

Despite quick pronouncements of reproductive rights support from some employers, it is unclear how such initiatives will interact with state laws that criminalize and/or recognize civil liability for the “aiding and abetting of abortion.” For example, some states (e.g., Texas and Oklahoma) permit private individuals to file civil lawsuits against third parties, including employers, that “knowingly engage in conduct that aids or abets the performance or inducement of an abortion, including paying for or reimbursing the cost of an abortion through insurance or otherwise.” This means, for example, that an employer who “aids and abets” a woman in Texas by covering the cost of abortioninducing medication or the expenses to travel to another state to obtain a lawful abortion may find itself on the receiving end of a lawsuit subjecting it to civil liability for such actions.

The Supreme Court’s decision in Dobbs implicates other employment law considerations, as well. For example, Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act of 1978, protects women against discrimination and harassment in employment based on pregnancy, childbirth, or related medical conditions. The Equal Employment Opportunity Commission (EEOC) takes the position that these laws prohibit an employer from taking adverse employment action against an employee for having an abortion or not having an abortion.

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Employers should also remember that the Americans with Disabilities Act and certain state laws require preservation of the confidentiality of employee medical information, including a decision to have or not have an abortion. Employers sponsoring group health plans should also bear in mind the HIPAA privacy and confidentiality requirements applicable to their group health plans.

Employers are also grappling with questions relating to health plan coverage for abortion-related procedures in the wake of Dobbs. The Affordable Care Act does not require health plans to cover abortion procedures. In the wake of Dobbs, state insurance laws could be enacted that prohibit public employer and fully-insured group health plans with insurance policies issued in that particular state from covering certain types of abortions. (This is because state insurance laws typically are “saved” – or exempted – from ERISA’s preemption of state laws.) In contrast, private sector self-funded plans may be able to claim that ERISA preempts such state abortion laws if the plan’s coverage of abortion conflicts with those state laws. However, whether and how ERISA’s preemption clause will apply to state abortion laws has not yet been tested, so the success of such an assertion is unknown.

Additionally, abortion rights can be a divisive topic that creates conflict in a workplace. In general, employees do not have a “right of free speech” to discuss abortion-related topics in the workplace of private employers since the First Amendment only precludes the government from restricting free speech. However, the National Labor Relations Act requires employers in both union and non-union settings to permit “protected concerted activity” among employees to discuss topics related to the “terms and conditions” of employment. Such topics might include the availability (or lack thereof) of insurance coverage or employer reimbursement of travel expenses incurred to obtain abortion procedures.

specifically tailor their health and welfare benefits and policies based on their geographic footprint.

Key Takeaways ● Roe v. Wade has been overruled. Therefore, each individual state may regulate abortion as it sees fit, including outright prohibition regardless of pregnancy term, as long as there is a rational basis for the law. ● Employers should carefully monitor how the states in which they operate and where their employees work regulate abortion. Depending on the benefits an employer offers, it may have to specifically tailor its health and welfare benefits and policies to match the unique mix of abortion laws/regulations to which it is subject. A one-size fits all policy is unlikely to prove workable. ● The Dobbs decision serves as a reminder for employers to remain compliant with existing employment laws implicated by employees’ privacy, reproductive health decisions, and workplace dialogue on sensitive and divisive political, religious, and personal topics.

Reprinted with permission from Spencer Fane LLP. Copyright © 2022 Spencer Fane LLP, Kansas City, MO; www.spencerfane.com. All Rights Reserved.

Brian Peterson is an Attorney at Spencer Fane LLP. Brian Peterson helps businesses, both large and small, avoid employment-related lawsuits by drafting and reviewing employee handbooks and policies and, conducting employee training programs.

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Employers should carefully monitor abortion-related legislation in the wake of Dobbs on a state-by-state basis and plan accordingly. One potential result of Dobbs is that employers may be required to

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Pay Equity Reporting Requirements Now is the time for employers to report pay equity data to the Illinois labor department

By Shawn D. Fabian and Katherine Oblak, Sheppard Mullin LLP

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or those larger Illinois employers, who have not yet reported payroll and diversity data to the Illinois Department of Labor (the “IDOL”), now may be the time. The IDOL recently issued guidance to help employers navigate their reporting requirements (the “Guidance”).

work remotely outside of Illinois. A business with multiple locations must only include those employees who work for an Illinois location.

In March 2021, Governor J.B. Pritzker signed an amendment to the Illinois Equal Pay Act of 2003 (the “Act”). The amendment requires private businesses with 100 or more employees in Illinois, that are required to file an EEO-1 report with the Equal Employment Opportunity Commission (“Covered Employers”), to report certain employee payroll and diversity information to the IDOL. It also requires Covered Employers to apply for an Equal Pay Registration Certificate (“EPRC”). The law imposes some of the nation’s most expansive and rigorous reporting requirements. See generally 820 ILCS 112/11. Employers’ reporting obligations began on March 24, 2022.

(i) A copy of their most recently filed EEO-1 report; and (ii) A list of all employees employed during the past calendar year. The employees must be categorized by gender, race and ethnicity. The list also must contain each employee’s start date; the total wages paid to each employee during the past calendar year; and “any other information the Department [of Labor] deems necessary to determine if pay equity exists among employees.”

The Guidance helps clarify which employers are “Covered Employers” for purposes of the Act. The Guidance explains a Covered Employer’s total number of employees is the total number of people who worked in or were based out of Illinois on December 31 of the 12-month calendar year immediately prior to their EPRC application submission. The Guidance further provides that Illinois-based employees should be included in the total employee count, even if they

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The Act contains two separate reporting requirements. First, Covered Employers must submit:

The Guidance clarifies two important points concerning this reporting requirement. One, the Guidance explains “wages” means any compensation paid to an employee, including wages, salaries, earned commissions, earned bonuses, stock and ownership shares but does not include retirement, health, or other fringe benefits. Two, the Guidance explains when reporting employee data for promoted employees, employers should list the employee’s original hire date, and then list the termination date as the date the employees were promoted. Employers should then create another row in the spreadsheet for that same employee with the “hire” date as the promotion date. Notwithstanding, neither the

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Guidance nor the Act defines what constitutes “any other information the Department deems necessary to determine if pay equity exists among employees.”

Second, Covered Employers must submit a signed certification of compliance with the Act and other relevant anti-discrimination laws. Specifically, the Covered Employer must attest:

● Employees of one sex are not restricted to certain job classifications; ● Retention and promotion decisions are made absent consideration of sex; ● When identified, the employer corrects wage and benefit disparities;

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● The approach the employer takes when evaluating the wages and benefits that will be paid.

Covered Employers authorized to transact business in Illinois as of March 23, 2021, must submit an application to obtain an EPRC, between March 24, 2022, and March 23, 2024, and must recertify every two years thereafter. A business with employees in multiple Illinois locations or facilities must submit a single application to the IDOL for all of its Illinois operations. Pursuant to the Guidance, employers should visit the IDOL Business Registration Page and submit their business’ contact information to determine whether they are a Covered Employer for purposes of the Act. If so, then the IDOL will put the business on the list to provide a deadline to submit the application (within the two-year response timeframe).

● The average compensation for female and minority employees is not consistently below the average compensation for male and non-minority employees within each of the major EEO-1 job categories for which the employee is expected to perform work, taking into account factors such as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions of the job, education or training, job location, use of a collective bargaining agreement, or other mitigating factors;

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● The frequency of which wages and benefits are evaluated; and/or

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If a business does not currently have more than 100 employees, registration is unnecessary. However, if a business’ workforce surpasses 100 employees, the business must submit its contact information to the IDOL. Further, any business with more than 100 employees but not authorized to transact business

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The Act’s nuanced reporting requirements underscore the caution and care employers must exercise in adhering to their obligations. Notably, the IDOL’s failure to assign a business a registration date does not exempt the business from compliance with the Act’s reporting requirements. However, should the IDOL determine a business has failed to comply with the Act, it may consider its own failure to notify a business of the recertification deadline as a mitigating factor.

Failure to comply with the Act’s reporting requirements has serious repercussions. Noncompliant employers may receive a penalty “up to $10,000” for “a violation.” Neither the Act nor the Guidance clarifies whether a business can be subject to fines for multiple, separate Section 11 violations. See 820 ILCS 112/11.

To the extent Covered Employers have not already performed pay equity audits to ensure they can properly certify compliance with the Act’s requirements, they should promptly do so to rectify any disparate pay practices.

in Illinois until after March 23, 2021, must submit an application to obtain a certificate within three years of commencing business operations, but not before January 1, 2024, and must recertify every two years thereafter.

This article first appeared here.

Shawn Fabian is a Partner in the Labor and Employment Practice Group at Sheppard Mullin. Shawn represents management-side clients before federal and state courts across the country and before administrative agencies, including the DOL, EEOC, NLRB and various state and municipal human rights commissions and labor agencies.

He also regularly represents clients in arbitrations and other avenues of alternative dispute resolution.

Katherine H. Oblak is an Associate in the Labor and Employment Practice Group at Sheppard Mullin. Katherine’s practice covers a wide range of employment litigation and counseling.

She defends employers in state and federal courts and before various administrative agencies such as the Equal Employment Opportunity Commission and the Illinois Department of Human Rights.

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AI In Hiring: How To Minimize The Risks Of Discrimination?

The new EEOC initiative targeting AI technology used in the hiring process presents an increased risk of class litigation

By Steven Moore, George Brand, Nikki Howell, and Heidi Wilbur, Fox Rothschild LLP

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he Equal Employment Opportunity Commission (EEOC) and Department of Justice (DOJ) have recently announced plans to monitor employers’ use of artificial intelligence (AI) tools in hiring decisions that may discriminate against applicants with disabilities. On May 12,

2022, both agencies issued guidance outlining areas for concern regarding the use of AI in hiring decisions, which provide some insight into their intentions for litigation.

Employers are increasingly using AI and other technologies to

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assist with employment decisions, including screening and hiring employees, monitoring their performance, and assessing pay or promotions for current employees. For example, many companies use computer-based tests or software to screen or score applicants for positions.

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AI In Hiring: How To Minimize The Risks Of Discrimination?

In their recent announcements, the agencies warn that screening/ assessment technologies may violate the Americans with Disabilities Act (ADA) if they do not provide an avenue for individuals with disabilities to request reasonable accommodations. For example, employers using AI decision-making tools may not have systems in place to offer reasonable accommodations to workers.

The agencies have flagged the following examples of technology/AI that might be potentially discriminatory:

The agencies raised concerns that, without proper safeguards, workers with disabilities may be screened out of jobs or promotions even if they could do the job with reasonable accommodation. Without proper care, the use of AI may also elicit information about disabilities, medical conditions, or medical restrictions from individuals that could result in prohibited disability-related inquiries or medical exams.

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● Facial and voice analysis technologies that evaluate applicants’ skills and abilities may adversely affect people with autism or speech impairments ● Computer-based tests that require applicants to watch a computer screen may adversely affect people with vision impairments who would still be able to do the job ● A timed math test where applicants submit their answers by typing on a keyboard could adversely affect individuals with arthritis who cannot type quickly, but would otherwise score well on the math test ● AI features that automatically screen out candidates who

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say they cannot stand for three hours straight would adversely affect people who use wheelchairs who could perform the job if allowed to remain in their wheelchair instead of stand; and ● Chatbots automatically screen out resumes with significant gaps in an applicant’s employment history without giving the applicant a chance to explain that the gap may have been due to a disability that required extensive medical treatment.

In addition to its news release, the EEOC also released a technical assistance document that outlined steps employers can take to minimize the risk of discrimination through the use of these types of AI tools and some additional tips for applicants and employees.

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● If using a vendor’s services, ask the vendor if the software was developed and/or tested with individuals with disabilities in mind

Some of the pointers: ● Tell applicants before they apply about the type of technology being used in the application and screening process and how the applicants will be evaluated

● Ask third-party vendors to forward all requests for reasonable accommodations promptly to be processed by the employer

● Provide enough information to applicants about what assessments or screening procedures will take place so that they may decide whether to seek a reasonable accommodation

● Ensure that technologies that screen out applicants are only screening out applicants who would be unable to perform the job even with reasonable accommodations

● Clearly advertise that applicants may request accommodations if they choose ● Implement procedures for requesting reasonable accommodations and make sure that asking for one does not hurt an applicant’s chances of getting hired ● Train staff members to recognize and process requests for reasonable accommodations promptly

● Avoid using AI tools that make decisions based on abilities and qualifications that are not necessary to perform the job at issue This new strategic initiative paves the way for large-scale litigation by the EEOC and DOJ that could have major impacts on employers who use AI to screen applicants

Steven W. Moore is a Partner at Fox Rothschild LLP.

and employees. In particular, the EEOC may pursue AI-based discrimination claims against employers under a disparate impact theory. In this type of claim, the EEOC would not need to show that an employer intended to discriminate against disabled individuals. Instead, the EEOC could argue that employers’ AI tests or criteria have the effect of screening out disabled individuals. To defend against such a claim, an employer would have to show that any AI tests or criteria are job-related and a business necessity.

Employers should consider auditing their Human Resources processes to get ahead of potential claims by the EEOC. Employers also cannot simply rely on their vendors to either shoulder the risks or bring their technology into compliance: The ultimate burden rests with the employer to comply with the ADA. This article originally appeared here.

George R. Brand is an Associate at Fox Rothschild LLP.

Nikki Hininger Howell is a Partner at Fox Rothschild LLP.

Heidi Wilbur is an Employment Law Partner at Fox Rothschild LLP.

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Remote Work Reimbursements Are employers supposed to cover all work-fromhome-related expenses?

By Emily C. Gifford, Taylor L. Wendland, Mark S. Spring, CDF

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alifornia employers have recently experienced a material uptick in lawsuits from employees seeking reimbursement for expenses incurred while working from home. These lawsuits seek a wide variety of expense reimbursement for increased utility costs and for the costs of losing out on the ability to rent out their home offices. Employees typically bring these claims under Labor Code section 2802.

Sometimes employees also bring derivative PAGA actions for wage-statement “inaccuracies.”

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Labor Code section 2802 requires employers to reimburse employees for “all necessary expenditures or losses” incurred by the employee in the discharge of their duties or under “obedience to the directions of the employer.” Importantly, Labor Code section 2802 clarifies that “necessary expenditures or losses” include all “reasonable costs, including but not limited to attorney’s fees incurred by the employee enforcing the rights granted by this section.”

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Many California businesses continue to have employees work from home or are now using a hybrid structure. These employers should be aware of their reimbursement requirements under California law and review their policies and telecommuting agreements to ensure employees are being properly reimbursed.

CDF covered remote work expenses and employer reimbursement requirements in 2020, which readers can view here.

What Defenses Are Available to Employers Sued for Work-from-home Related Expenses?

This question was very recently considered by the Federal District Court for the Northern District of California on June 1, 2022. In Williams v. Amazon. com Services LLC, the court denied Amazon’s Motion to Dismiss after Amazon raised two (unsuccessful) arguments: 1. Amazon’s adherence to government-issued stay-at-home orders absolves them of liability, and 2. Williams did not submit reimbursement requests to Amazon so they could not know that Williams incurred work-related expenses that required reimbursement. The court found that despite these arguments, the plaintiff had sufficiently pled his claim under Section 2802 and denied the motion to dismiss.

The court also held that Amazon’s expectation for Williams to work from home after the stay-at-home orders were imposed was sufficient to establish Amazon’s liability. Thus, California employers who adhered to state and/or county mandates to shelter in place and/or work remotely are not likely to be shielded from liability for employee’s work-related expenses incurred during the mandated time period, even though employers were not the “cause” of the shift to remote work. That argument did not work in the Northern District and is not likely to work elsewhere.

The court’s analysis of Amazon’s second argument provides guidance on how to determine an employer’s “reasonable” expectations. The court considered both

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Amazon’s status as a tech company and Williams’ position as a senior software development engineer (which entailed duties, such as writing design documents for software systems and being on-call for production system) to determine that Williams’ duties “plausibly requires the use of physical space, internet, and electricity.” Therefore, “Amazon, a major tech company, surely knew or at the very least had reason to know” that its software engineers incurred “basic costs” related to their work while they worked from home and actual notice of the costs was not required.

How to Determine Basic Costs

Across a number of cases, employees’ most common “basic costs” include reliable access to the Internet, a phone, and a computer. Importantly, prior to the pandemic, courts have held that employers need only reimburse a “reasonable percentage” of an employee’s use of a personal phone or Internet costs.

Beyond that, the “physical space” requirement as referenced in Williams v. Amazon is more difficult to define. Some of the newly filed lawsuits are now demanding payment for the potential revenue employees could have collected had they rented out their home office instead of using it for work.

In these cases, employees claim that they lost out on potential revenue of renting out the rooms they used as offices, even where there is no actual rental agreement or even a prospective tenant. There is no published authority supporting an award of such expenses in California, and we believe it is unlikely that a court would find that such theoretical expenses are compensable.

In other cases, employees have claimed that they were required to purchase office furniture and equipment to work remotely. In these lawsuits, the employee is likely to be successful if the employee can show that the furniture/equipment was necessary as a direct consequence of the employee’s duties.

The date of purchase of the furniture/equipment may be relevant because if the employee purchased the furniture before being approved to work from home, the employer has a strong argument that the furniture/equipment purchase was not a “necessary expenditure or loss incurred by the employee in direct

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consequence of the discharge of his or her duties.”

Labor Code Section 2802.

Prior to the pandemic, some employers, particularly tech-based startups, offered on-site perks, such as free meals and dry-cleaning. Some disgruntled employees have since complained about the cost of preparing or purchasing their own meals while working remotely and are now seeking reimbursement for these costs as well. By their nature, perks are not necessary for employees to discharge their duties, so we believe it may be difficult for employees to successfully recover these costs, but in California, one never knows what the courts will do.

The Takeaway

Based on current trends, California employers can expect to be on the hook for at least the “basic costs” of Internet usage, personal cell phone and laptop usage, and some utilities for workers that the employer requires or encourages to work remotely.

However, plaintiff attorneys are now testing the bar

Mark S. Spring is Office Managing Partner & Chair of CDF’s Traditional Labor Law Practice Group. Mark S. Spring has over thirty years of experience handling labor and employment law matters throughout Northern California. Spring’s practice is focused on the representation of management in union-management relations and handling litigation triggered by all types of employmentrelated disputes.

by seeking reimbursement for furniture, the value of potential rent, and other less traditional expenses. It remains to be seen how broadly the California courts will interpret the law in this area.

To protect against liability (and attorneys’ fees), California employers should explicitly define each employee’s job duties and use these definitions to determine “reasonable” expectations of the costs of remote work. In addition, California employers should always meet with any employees, who they are allowing/requiring to work from home before the work from home arrangement is commenced.

Expectations should be outlined with particularity and expenses should be explored and agreed to. A remote work agreement outlining the expectations (including expenses) would be ideal and may help act as a shield in these types of lawsuits and claims.

This article first appeared here.

Taylor L. Wendland is an Attorney at CDF. Taylor has experience drafting motions, discovery, research memorandums and briefs. Wendland has worked on cases involving Covid compliance, class actions, retaliation, harassment, wage and hour, trade secrets, and wrongful termination.

Emily C. Gifford is an Attorney at CDF. Emily provides litigation and advisory services to California businesses and non-profit organizations in all aspects of labor and employment law. Her employment litigation experience involves claims of harassment, discrimination, retaliation, wrongful termination, unfair competition, breach of contract, and wage and hour issues

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Arbitration Agreements: Enforceable Waivers Of Employees’ Individual PAGA Claims Now Included The Viking River Cruises, Inc. v. Moriana ruling is one of the most important decisions for California employers this year

By Jeffrey S. Horton Thomas and Steven P. Gallagher, Fox Rothschild LLP

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n a much-needed win for employers, the U.S. Supreme Court has ruled that waivers of employees’ individual claims under California’s Private Attorneys General Act of 2004 (PAGA) are enforceable. The court’s decision in Viking River Cruises, Inc. v. Moriana, released on June 15, is a lifeline for employers in California and will prove to be one of the most important decisions for California employers this year.

For many years, employers operating in California have suffered a barrage of costly lawsuits brought under PAGA. The Viking River decision gives employers the most valuable means of protecting themselves from PAGA since the enactment of the law.

However, to benefit from the decision, employers must update their arbitration agreements to bring them in line with the Viking River decision and take related actions explained below.

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Setting the Stage

PAGA authorizes employees and former employees to sue their employer for civil penalties arising from the employer’s alleged violations of the California Labor Code. PAGA plaintiffs typically claim that their employer failed to pay for off-the-clock work, underpaid overtime, did not provide meal periods or permit rest breaks, failed to pay final wages when due, etc. As long as the plaintiff alleges they suffered at least one violation in one pay period, they may bring a PAGA action for penalties arising from Labor Code violations suffered by not only the plaintiff, but all other nonexempt employees in the subject time period.

Even in a modest-sized workforce, potential penalties for the alleged violations can quickly amount to hundreds of thousands or millions of dollars.

When a PAGA plaintiff recovers money from an employer, 25% is distributed among the “aggrieved

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Arbitration Agreements: Enforceable Waivers Of Employees’ Individual PAGA Claims Now Included

employees” identified in the case and the remaining 75% is paid to the California Labor & Workforce Development Agency. A prevailing plaintiff also may be awarded their attorney’s fees.

The Issue in Viking River

For some time, to prevent PAGA lawsuits, employers have included in their arbitration agreements a waiver by the employee of the right to bring a PAGA claim.

The California Supreme Court, however, ruled in 2014 in the Iskanian decision that such “PAGA waivers” are unenforceable. The California Supreme Court reasoned that, because plaintiffs, in an important respect, bring PAGA lawsuits on behalf of the State of California, they do not have the power to waive the right to bring a PAGA action.

The Viking River case involved Angie Moriana, who entered into an arbitration agreement when she was hired by Viking River Cruises, Inc. The agreement included a PAGA waiver. When her employment ended, contrary to the PAGA waiver, Moriana filed a PAGA lawsuit against Viking River.

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In the state trial court and on appeal, Viking River sought to enforce Moriana’s PAGA waiver. Adhering to the Iskanian decision, the California trial court and Court of Appeal ruled against Viking River, finding Moriana’s PAGA waiver to be unenforceable, and ruling that Moriana’s PAGA lawsuit could move forward.

The U.S. Supreme Court had long refused to consider the issue of PAGA waivers. Nevertheless, Viking River sought review by the Court, asking it to decide — once and for all — whether PAGA waivers are enforceable. In a happy surprise for employers and their counsel, on December 15, 2021, the U.S. Supreme Court accepted the Viking River case for review.

The U.S. Supreme Court’s Ruling

The court, in an opinion written by Justice Samuel Alito, found that a PAGA action does not consist of a single legal claim. Rather, a PAGA claim consists, first, of the plaintiff’s claim for penalties arising from Labor Code violations plaintiff suffered — “the

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Arbitration Agreements: Enforceable Waivers Of Employees’ Individual PAGA Claims Now Included

Individual PAGA Claim” — and second, the claim for penalties arising from Labor Code violations suffered by all of the other “aggrieved employees” on whose behalf plaintiff brought the lawsuit — “the Non-Individual PAGA Claim.” Prior to the Viking River decision, neither California state courts nor the U.S. Supreme Court had viewed PAGA claims as consisting of two claims in this manner.

By refusing to enforce the PAGA waiver contained in Viking River’s arbitration agreement — at least insofar as Moriana’s Individual PAGA claim was concerned — the California state courts had run afoul of the Federal Arbitration Act (FAA), Justice Alito reasoned. The U.S. Supreme Court found that the FAA mandates that Moriana be free to agree with Viking River as she wished with respect to her Individual PAGA Claim and that, to that extent, the FAA preempted the rule set out in Iskanian that PAGA waivers are unenforceable. According to the U.S. Supreme Court, the rule declared by Iskanian, in effect, bars parties from dividing PAGA actions “into [their] constituent parts” and “unduly circumscribes the freedom of parties to determine ‘the issues subject to arbitration’ and ‘the rules by which they will arbitrate,’ and does so in a way that violates the

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fundamental principle that ‘arbitration is a matter of consent.’”

Thus, the U.S. Supreme Court held in Viking River that employees are free to agree in an arbitration agreement to submit their Individual PAGA Claim to arbitration and to waive them.

The court then held that once the plaintiff’s Individual PAGA Claim is diverted to arbitration, the plaintiff no longer has standing in the PAGA lawsuit pending in Superior Court, as the plaintiff is not an “aggrieved person” in the PAGA lawsuit. “When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit [under PAGA].” As a consequence, Justice Alito wrote, “the correct course is to dismiss [the employee’s] remaining claims” under PAGA in the trial court.

In summary, the U.S. Supreme Court found in Viking River that employees are free to agree by an arbitration agreement to submit their Individual PAGA Claim to arbitration (and to waive their Individual PAGA Claim) and that upon enforcement of such a

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Arbitration Agreements: Enforceable Waivers Of Employees’ Individual PAGA Claims Now Included

provision, the PAGA plaintiff loses standing to litigate the Non-Individual PAGA Claim in court, requiring dismissal of the court action.

Action Items for Employers

Viking River offers employers a valuable opportunity to protect themselves against future PAGA lawsuits.

In order to take advantage of the opportunity, however, employers must act.

Important action items include:

obviously comply with California law. Arbitration agreements should be standalone documents and be fair, straightforward and clear. ● Where an arbitration agreement is electronically signed, confirm that audit trails are enabled and that appropriate security measures are taken to ensure that only the assigned employee has access to sign the agreement. ● Translate arbitration agreements to reflect the languages of the workforce. ● Do not use “browserwrap” agreements in electronic arbitration agreements. That is, the terms of the agreement should be on the electronic display in the agreement, as opposed to making any terms accessible only through a hyperlink.

● Update your arbitration agreements to ensure they expressly comply with Viking River. ● Determine whether you will use your new arbitration agreement only with new hires going forward or you will attempt to get current employees to sign the new agreement in the place of any earlier agreement.

Key Takeaways

● Evaluate whether you will adopt a mandatory or voluntary arbitration program. Employers’ risk tolerance will vary. The jury is still out, so to speak, on the question of whether mandatory arbitration programs are lawful in California.

The challenge to California Labor Code section 432.6, which seeks to make mandatory programs unlawful, is still pending. ● This is an opportune time to review your arbitration agreements from top to bottom and revise them in ways that may be helpful in enforcing them. Ensure they clearly and

There is no time more important than the present to review and update arbitration agreements for use with California employees. Arbitration agreements should be revised to take advantage of the Viking River decision. Keep in mind that California law concerning arbitration agreements has become intricate and that Viking River leaves open questions.

Whenever you revise your arbitration agreement, involve counsel knowledgeable in California employment law.

This article first appeared here.

Jeffrey S. Horton Thomas is Partner at Fox Rothschild.

Steven P. Gallagher is an Associate at Fox Rothschild.

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Here’s Why You Shouldn’t Tolerate Racial Discrimination In Your Workplace Key takeaways for employers

By Janette Levey Frisch, Levey Law, LLC

Y

ou can not believe it. You are still reeling.

won– tens of millions of dollars in punitive and other damages. That shocked you.

You were not surprised when approximately 15 employees sued your company in federal court, alleging racial discrimination. After all, it is not unheard of for employees to sue for discrimination.

What did surprise you was that you never got an EEOC (Equal Employment Opportunity Commission) charge, just a summons, and complaint to court.

In their claims, they alleged –and ultimately

Don’t employees have to bring an EEOC charge before they can go to federal court? Isn’t there like a $300k cap on punitive damages? You did not think they had a case. Your counsel even filed a motion for summary judgment, hoping to get the claims dismissed. The court granted some of the motions, but some claims remained. You were so sure a jury would agree that the employees could not prove their case. Clearly, the jury had a different take. How does this happen?

Keep reading and learn how…

As always (or at least usually), I do have a real case in mind. It is Yarbrough v CSS Corp et al. In a nutshell, here is what went down: Approximately 15 employees sued Glow Network (aka CSS Corp). Most, if not all, of them were Black. Their allegations included, without limitation, unequal pay, promotion and raise denials, hostile work environment and retaliation (in the form of firing, layoffs, demotions, etc). More specifically, they alleged that some workers were assigned to sit in a room with

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Here’s Why You Shouldn’t Tolerate Racial Discrimination In Your Workplace

video surveillance, while others were not, and that almost all of those subjected to video surveillance were Black. Some alleged that they were demoted, whereas whites or others who were not Black were not. Some of the claims were dismissed through a summary judgment motion.

OK, are there any key takeaways for employers? In my humble opionion, yes. Here they are:

By the time of trial, the case, (which was not preceded by an EEOC charge) involved 10 employees, 9 of whom were Black. The jury delivered a whopping $70 million verdict. Yes, you read that right. Instead of focusing on the specific allegations or the employer’s response to complaints (or perhaps lack of response) I actually wanted to focus on some other points.

First: How is it the employees could sue in federal court without first filing an EEOC charge? An employee can bring discrimination charges in federal court without alleging a violation of Title VII of the Civil Rights Act of 1964. There is another remedy, often overlooked, known as a Section 1981 claim (because it is under Sec 1981 of the US Code).

Like Title VII, Section 1981 outlaws employment discrimination based on race. One downside, however, is that it only outlaws intentional discrimination. Title VII outlaws facially neutral practices that adversely impact a disproportionate number of people from any of the classes enumerated in the statute. Section 1981 also only applies to racial discrimination.

Section 1981 does not require an employee to first file a charge with the EEOC and, therefore, an employee is not subject to EEOC filing deadlines.

Second: Isn’t there a cap on punitive (and all) damages for employment discrimination claims? That cap only applies to Title VII claims, which cap both compensatory and punitive damages at $300,000 for larger employers, $100,000 for mid-size and $50,000 for small employers. Employees can get awarded back pay under Title VII, though. Here the employees sued under Section 1981 for punitive and compensatory/emotional distress damages. That resulted in a much greater payout to these employees, specifically about $3m in emotional distress and $4m in punitive damages each. Note that this amount does not include attorneys’ fees and court expenses that the court may at a later time order Glow Network to pay.

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1. Employees (with the help of attorneys) can be very creative. If the usual remedies will not help them, they will often find other remedies. Those other remedies can actually pack a harder punch than the ones you normally expect. In this case, it means that an employee who missed EEOC filing deadlines may not only still have a way of suing, but, as this case shows, they might get far more in damages than they would have from the usual Title VII claim.

2. Lawsuits like these often make a big splash in the news — often because they are not the usual method and because of the extraordinarily large verdict. The notoriety though, can lead to damage to your brand and hamper your ability to attract and retain good talent.

3. Be mindful, not only of lawsuits. Many employees now are taking to social media. I read, hear — and write– about many stories of viral TikTok videos or subreddit posts from employees calling out their employers. Don’t think those are not damaging.

The above takeaways lead to, perhaps, the most overarching one of all: Strive to do right by your employees — or be prepared to live with consequences, that you cannot always anticipate.

I am fairly certain this employer did not anticipate a $70 million verdict, along with hefty legal fees and a splash in the media.

This article originally appeared here.

Janette Levey Frisch is an Employment/ HR Attorney and the Founder of Levey Law, LLC.

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Ensuring Safety As We Return To Office HR teams should remain flexible in helping employees switch out of the Covid-19 mode

By Marshal Sterio, Surgically Clean Air

A

s Covid-19 transitions from pandemic to endemic, many businesses are shifting from an all-remote workforce to either a full return to the office or a hybrid model. It’s hard to believe we are now going on our third year in the business world and discovered it could still function with most

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employees working from home.

However, now many companies are planning to at least return to providing a space for people to work together, if not insisting they do so. Just as there were important considerations at play when moving from mandatory office attendance to lockdown-era

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telecommuting, the switch back to office attendance requires thought and planning, especially where worker safety is concerned.

The health and well-being of employees is key to a successful return to the office. In fact, the Biden Administration recently laid

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Ensuring Safety As We Return To Office

out a roadmap and a challenge to organizations to move the country forward safely while continuing to combat Covid-19. If offices become the super-spreader locations of tomorrow, we will be forced to return to fully remote work after an avoidable loss of health and life.

What role do HR teams play in envisioning and leading the new healthy office paradigm, and what strategies can they implement to help hire, retain, and manage the company of the endemic future?

Safety in Hybridity

The first thing to consider when returning to the office is whether a mandatory return for all employees is necessary. For one thing, the truth is most employees would prefer to remain at least partially remote. The pandemic proved that workers, especially thought workers, could do their jobs just fine from home, without destroying company culture or driving their employers to bankruptcy. HR leaders, who oversee unilateral decrees wherein everyone must once more commute to work five days a week, are going to find themselves with positions to fill as key hires go seek more flexible employers.

Luckily, a hybrid work structure is just what the doctor ordered.

Specifically, the doctor studying Covid-19. Social distancing remains a must to prevent the spread of the novel coronavirus, and the fewer employees in an office at one time, the easier it is to keep apart. Office spaces can be reconfigured to go from small

conference rooms to spacious conference lounges in common areas or larger rooms. Companies can also save significantly on rent by switching to smaller office spaces to account for fewer people being present at one time, and these savings trickle down to IT, climate control, and air filtration.

Hybrid attendance also carries the invaluable benefit of hiring flexibility. Employers are no longer limited to candidates, who are local or willing or relocate. And every employee who does not come into the office is one fewer to potentially catch Covid at work.

A hybrid system promotes the safest workforce, while giving workers a place to meet in person, and even get some peace from the kids.

Keep Following the Rules

No matter whether you bring your whole workforce back to the office or stick to a hybrid model, the rules for Covid-19 safety should remain in effect. People should stay masked indoors at all times and should wash their hands after leaving the office. Food in the break room should be kept in discrete packages, without any communal or shared items. And social distancing should continue as much as possible. Furthermore, unvaccinated individuals without a legitimate medical excuse should not be allowed on the premises for their own and others’ safety.

Covid-19 is transferred most commonly via droplets carried in the air from an infected individual to a new host. Even the best masks and strictest hygiene cannot prevent droplets from entering one’s system some other way. Normal HVAC filters cannot catch and cleanse these tiny particulates, making offices a potential breeding ground for Covid exposure — and the negative PR from turning one’s office into a super-spreader hotspot is only the least of your problems when employees get sick and risk death from Covid.

Thankfully, more powerful filtration systems are available to scrub dangerous droplets from the air. Embracing cutting-edge filtration technology is a great way for HR leaders to keep their teams productive and disease-free upon their return to the office.

Marshal Sterio is the CEO of Surgically Clean Air.

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Clearing the Air

When looking to ensure the safety of workers in an enclosed space, it is important to remember that

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