Category: Employment Law

Last summer, the Washington DC Council unanimously passed a bill prohibiting employers from refusing to hire, terminating, suspending, failing to promote, demoting, or penalizing any employee who uses marijuana, even if he or she fails a test. drugs. In October 2022, the bill, known as DC Marijuana Protections Amendment Act of 2022, was signed by Mayor Bowser. The law takes effect from July 13, 2023.(1)

Under the Act, employers are generally prohibited from refusing to hire, terminate, or take other adverse actions against employees for recreational marijuana use, participation in a medical marijuana program, or for failing a marijuana drug test. However, employers will be able to take action against employees for marijuana use if “the employee manifests specific articulable symptoms while at work or during the employee’s work hours, which diminishes or substantially diminishes the employee’s performance in the functions or tasks of the employee’s work position” or if such “specific articulating symptoms interfere with the employer’s obligation to provide a safe and healthy workplace as required by District or federal occupational safety and health law.”

The Act also amends the District of Columbia Human Rights Act to require employers to treat the medical marijuana use of a patient qualifying for a disability the same way they would treat the legal use of other controlled substances prescribed or taken under the supervision of a licensed healthcare professional (subject to certain exceptions).

Exceptions:

The law identifies several exceptions, including: (1) exceptions for employees in “security sensitive” jobs; (2) if an employer is required by federal law, regulation, contract or funding agreement to prohibit the use of marijuana; or (3) if the employee used or possessed marijuana while working for the employer or during the employee’s work hours.

A “safety-sensitive” position is an employer-designated position of employment in which it is reasonably foreseeable that the employee would be likely to cause actual, immediate and serious bodily harm or loss of life to himself or others if he performed his job duties while under the influence of drugs or alcohol. The Act provides examples of jobs that qualify as safety sensitive, including jobs that require (1) regular or frequent operation of a motor vehicle or heavy or dangerous equipment or machinery, (2) regular or frequent work on a busy construction site or occupational safety training, (3) regular or frequent work on or near power or gas lines or handling hazardous materials (as defined by district law), (4) supervision or provision of routine care for individuals unable to care who live in an institutional or custodial setting, or (5) administering medication, performing or supervising surgery, or providing other medical treatment that requires professional credentials.

While the law applies to most employees, employees of the federal government and the DC court system are excluded from the scope of the law. However, the Act will provide protections for other government officials within the District.

Employee Complaints:

Under the Act, aggrieved employees will have several remedies: (1) file a complaint with the Office of Human Rights; (2) file a private cause of action (recreational marijuana users must first exhaust their administrative remedies with an OHR complaint); and/or (3) file a complaint with the Attorney General.

An employer found to have violated the Act could face civil penalties, along with compensatory damages, loss of wages, other equitable relief, and attorneys’ fees and costs. Civil penalties include the following: for employers employing 1 to 30 employees, a fine of up to $1,000 per violation; for employers employing 31 to 99 employees, a fine of up to $2,500 per violation; and for employers employing 100 or more employees, a fine of up to $5,000 per violation. The penalty will be doubled for employers who violate the Law more than once a year.

Employer Responsibilities Looking Ahead:

Within 60 days after the law goes into effect, employers will be required to notify workers of their rights, including if the employer has designated a worker’s role as safety sensitive and the employer’s protocols for drug and alcohol testing. . This notice must be provided to all new hires at the time of hire and to employees annually. Additionally, employers should review their drug and alcohol policies to ensure they comply with the law.

FOOTNOTES

(1) The Act will not take effect until its tax effect is included in an approved budget or on July 13, 2023, whichever is later.

On March 7, 2023, the National Labor Relations Board (NLRB) and the Consumer Financial Protection Bureau (CFPB) signed a Memorandum of Understanding (“CFPB MOU”) that created a formal partnership between the two agencies. According to the CFPB MOU, the basis for this collaboration is a shared interest to “protect American consumers and workers” to “better eradicate financial practices that harm workers”, to “improve the enforcement of federal laws” and to coordinate interagency goals, outreach, and training. According to NLRB, practices targeted are “surveillance, monitoring, data collection, and employer debt,” which may include equipment purchased by employees, supplies, or necessary training. O CFPBThe company’s focus is on “gig economy” practices, and while “employer surveillance and employer-generated debt” are areas of “immediate concern”, the CFPB’s specific concern is directed at companies that may violate Fair Credit Reporting Act selling workers surveillance data and that, regarding employer debt, necessary purchases may not be competitively priced and/or may subject the employee to debt collection efforts.

In essence, the purpose of the CFPB MOU is “to share information and preserve the confidentiality of that information to meet the objectives of this (CFPB) MOU”. (CFPB MOU, §II.) Notably, the CFPB MOU provides that all Shared information – whether oral, written or electronic – constitutes “non-public information” that is considered confidential and not subject to disclosure unless the party providing the information “expressly consents or designates the information as publicly available”.(1) (CFPB MOU, §III.) Thus, both information requested and information provided by any agency is protected from the view of employers.

Even though the CFPB MOU does not create new obligations (MOU, §VI), it potentially increases risk and liability for employers, not only because of this sharing of confidential information, but because it is the fifth interagency collaboration that the NLRB has established since the formalization of its initiative of February 10, 2022, in Memorandum GC 22-03, discussed here.

The NLRB has entered into an unprecedented five MOUs with other federal agencies since the appointment of Jennifer Abruzzo as General Counsel of the NLRB (“GC”) on July 22, 2021. Just four months after her appointment, the NLRB entered into an MOU on November 29 2021 with the Office of Labor Management Standards (OLMS) to share investigation information and a second MOU on December 8, with the Department of Labor Wage and Hour Division to share information, including investigation files and complaint referrals, in support to the implementing mandates of both agencies. In July 2022, a third MOU was entered into with the Federal Trade Commission to “root out practices that harm workers in the ‘gig economy’” and a fourth MOU was entered into with the Antitrust Division of the Department of Justice. Compare this activity to the previous GC that signed only two MOUs during its term from November 17, 2017 to January 20, 2021. Notably, only one of these MOUs under the previous GC referenced information sharing and even then only contemplated a “formal information sharing agreement at a future date”.(two)

In practice, the NLRB’s increased focus on interagency collaboration and the sharing of confidential information could result in employers potentially finding themselves under investigation by multiple agencies based on the same action or practice in the workplace. Even if the investigating agency does not have enforcement authority, these multiple MOUs can allow the matter to be promptly referred to an agency with enforcement authority.

For the CFPB MOU, targeted practices are those governed by a variety of laws, including federal law (Fair Labor Standards Act, Occupational Health and Safety Act, Fair Credit Reporting Act) and California law (Wage Laws and Wage Orders, Cal/OSHA and the California Privacy Rights Act of 2020), and employers must already be in compliance with these rules. However, employers should carefully review their policies and practices to ensure they comply with applicable federal and state laws regarding: employee monitoring; workplace tracking or surveillance programs or tools; retention, use and protection of any employee data collected, including data generated by such programs or tools; any purchases required by employees; equipment or tools provided by the employee; and payment for any necessary training for employees.

FOOTNOTES

(1) The MOU deletes information provided to the CFPB pursuant to 12 CFR §1082.1 and seq. (relating to the application of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010).

(two) The other MOU between the US Postal Service, the Office of Worker Compensation Programs and the NLRB concerned the release of workers’ compensation records.

On March 20, 2022, the General Counsel of the National Labor Relations Board (“NLRB” or “Board”), Jennifer Abruzzo, issued a memo to all Regional Directors, Charge Directors and Resident Directors, updating the cases they must submit to the NLRB Advisory Division before proceeding with processing, in order to “allow the Regional Advisory Division to re-examine these areas and advise the NLRB’s office General Council on whether (the) change (in the law) is necessary to fulfill the mission of the Law.”

Shortly after its confirmation by the Senate, General Counsel Abruzzo issued Memorandum 21-04 in August 2021, found here, outlining its priorities and listing three broad categories of cases that should be submitted to the Counseling Division. Earlier, we reported here on the impact of GC 21-04. Now, more than a year and a half later, the General Counsel has decided to revise the list, noting that “most of the issues identified in the (August 2021 memo) no longer require submission to the Advisory Division.”

Specifically, in GC 23-04, General Counsel Abruzzo identified 46 issues on which the Advisory Division has already provided guidance, either in the form of Meaningful Advice Memoranda or inserts to be used in summaries for ALJs and/or Board, thus reducing the current list of required submissions for 15 issues:

• Cases involving the applicability of the inherently concerted doctrine, provided for in art. Hoodview Vending Co.359 NLRB 355 (2012);
• Cases involving applicability of Shamrock Food Co.369 NLRB No. 5 (2020) (differentiating past Board cases and making it legal to offer significantly more late payment than is due in exchange for a waiver of reinstatement);
• Cases involving the applicability of United Nurses and Allied Professionals (Kent Hospital)367 NLRB No. 94 (2019) (requiring unions to provide non-member objectors with verification that financial information disclosed to them has been independently audited and that lobbying costs are not charged to such objectors);
• Cases involving the applicability of Johnson Controls, Inc.368 NLRB No. 20 (2019) (among other things, nullifying the “last in time” rule of Levitz Furniture Co. pacific333 NLRB 717 (2001));
• Cases involving the applicability of Ridgewood Health Care Center, Inc.367 NLRB No. 110 (2019) (providing that a successor employer that discriminates by refusing to hire a certain number of the predecessor’s workforce to avoid a succession negotiation obligation does not necessarily forfeit the right to set initial employee terms);
• Cases involving the applicability of Pittsburgh Post-Gazette, 368 NLRB No. 41, slip op. at 3, n.5 (2019) (determining whether the post-employment status quo required increases in employer fund contributions);
• Cases involving the applicability of Brevard Achievement Center, Inc.342 NLRB 982 (2004) (refusing to extend coverage of the National Labor Relations Act (“NLRA”) to individuals with disabilities on the grounds that such individuals, when working in a rehabilitation setting, are not employees);
• Cases involving the applicability of united states postal service371 NLRB No. 7 (2021) (refusing to find a pre-disciplinary interview right to information, including the questions to be asked at the interview);
• Cases involving the applicability of ABM Onsite Services-West (2018).
• Cases of refusal to provide information regarding relocation or other decision subject to Dubuque Packaging (see former President Liebman’s dissent in Embarq Corp., 356 NLRB No. 125 (2011) and OM-11-58);
• Cases involving the applicability of Shaw’s Supermarkets, Inc.350 NLRB 585 (2007) (to determine whether permission for this case of mid-term recognition withdrawals occurring after the third year of a longer term contract should be rejected);
• Cases involving the applicability of Wal-Mart stores368 NLRB No. 24 (2019) (broadly defining an intermittent strike);
• Cases involving the applicability of Electric Services Co.281 NLRB 633 (1986) (allowing an employer to unilaterally set terms and conditions of employment for replacements, even when those terms are higher than those paid to employees in the striking unit);
• Cases involving the applicability of Former Cell-O Corp, 185 NLRB 107 (1970) (refusing to provide a complete compensatory remedy for negotiation failures); It is
• Cases involving the applicability of Cordua Restaurants, Inc.368 NLRB No. 43 (2019) (Board Finding, among other things, that an employer does not violate the National Labor Relations Act by enacting a binding arbitration agreement in response to employees involved in class actions).

In addition to the above list, the General Counsel memo also states that regions will continue to be required to file cases involving electronic surveillance and algorithmic management that interfere with employees’ rights under Section 7 of the NLRA, a notable development we addressed in November 2022, found here.

main conclusions

General Counsel Abruzzo hails significant progress toward her goal of overturning many of the Trump-era Council’s key decisions. This memorandum is consistent with the General Counsel’s stated objectives to aggressively seek to expand employee rights while severely limiting the options previously available to employers. Employers should consult with the specialist labor council to discuss the updated guidance and issues presented by the General Counsel memorandum.

Developments on the NLRB are likely to continue, we will monitor developments in this area and provide updates where relevant.

In a decision that had been brought forward, the National Labor Relations Board (“NLRB” or “Board”) abandoned its short-term load transfer test to determine the legality of employer discipline of employees who engaged in abusive conduct or inadequate. Deprived of the ability to simply demonstrate such discipline was not retaliation for protected conduct. Employers will once again be called upon to deal with an undefined list of factors that have often made similar outrageous conduct in the workplace immune to discipline.

The GM Decision

As we covered earlier, the “Board issued a decision in General Motors, LLC (GM)369 NLRB No. 127 (2020), maintaining that certain abusive or inappropriate speeches in the workplace by employees engaged in concerted or union activities (“PCA”) were no protected by Section 7 of the National Labor Relations Act (“NLRA” or “Act”). To see Sticks and Stones… The NLRB rethinks its position on abusive speech in the workplace by employees while they are engaged in protected union and concert activities. The decision in GM reversed 40 years of Board precedent and emphasized the employer’s motive for taking adverse action, giving employers the ability to discipline workers for engaging in abusive or inappropriate conduct, provided the discipline was not retaliation for protected conduct. The Council in GM said it would now apply its well-worn test first established in Wright Line251 NLRB 1083 (1980), enfd. 662 F.2d 899 (1st Cir. 1981), cert. denied 455 US 989 (1982), approved in NLRB v. Transportation Management Corp., 462 US 393 (1983), for cases involving employees who were disciplined for making abusive statements related to the PCA. In doing so, the GM The Board overturned three separate tests previously used to determine whether speech in the workplace constituted PCA: (1) the four-factor test established in Atlantic Steel, 245 NLRB 814 (1979), which governs the conduct of employees in relation to management in the workplace, considering (a) the location of the discussion, (b) the subject of the discussion, (c) the nature of the employee’s outburst, and (d) whether the outburst was, in any way, caused by an unfair labor practice by the employer; (2) the totality of circumstances test, which governed social media posts and most cases involving conversations between employees in the workplace, announced on Desert Springs Hospital Medical Center, 363 NLRB 1824, 1839 fn. 3 (2016) and Pier Sixty, LLC, 362 NLRB No. 59 (2015); and (3) the pattern announced in clear pine frames, 268 NLRB No. 173 (1984), enfd. mem. 765 F.2d 148 (9th Cir. 1985), in which the Board considered whether, in all circumstances, non-strikers would have been reasonably coerced or intimidated by the picket conduct.

The Lion II Decision: A Return to Protections for Abusive Speech in the Workplace

On May 1, 2023, in Lion Elastomers, LLC372 NLRB No. 83 (2023), the NLRB overturned GM and has again made it more difficult for employers to discipline employees for abusive or inappropriate speech in the workplace while engaging in otherwise protected concert or union activities. Originally, on May 29, 2020, the Board issued its first decision on Lion Elastomers, LLC, 369 NLRB No. 88 (2020), finding that the employer violated Section 8(a)(1) and (3) of the Act by threatening an employee with dismissal and then disciplining and ultimately dismissing the employee for his conduct in a safe environment meeting and why he engaged in union activity. Finding that the employee did not lose the protection of the Act when he raised concerns about employees’ working conditions to the employer’s safety manager at a safety meeting, the Board adopted the judge’s application of the four-factor test set forth in Atlantic Steel. The employer filed a petition for review of the Order of Counsel with the United States Court of Appeals for the Fifth Circuit, and the Board filed a cross-application for enforcement of the Order. While the case was pending in the Fifth Circuit, the Board issued its decision in GM, in which it held that it would no longer apply a number of specific establishment standards to determine whether employers have unlawfully disciplined or dismissed employees who allegedly engaged in abusive conduct in connection with activities protected by Section 7 of the Act. The Fifth Circuit duly referred the matter back to the Board in light of GM.

At the request of the Fifth Circuit, the Board upheld its earlier decision and seized the opportunity to restore forty years of precedent by setting aside GM and confirming the employer in Lion Elastomers violated the Law. In an attempt to “find a balance different from the General Motors Board between the Section 7 rights of employees and the legitimate interests of employers,” the Board elevated the rights of employees over the ability of employers to regulate employee speech in the workplace, noting that “(i) if an employer can dismissing an employee for offending would defeat the purposes of the Act – either ‘collective bargaining would cease to be between equals (an employee having no parallel method of retaliation)’ or ’employees would hesitate to personally participate in negotiations, leaving such matters entirely to their representatives’,” The Board emphasized that conduct that occurs in the course of protected activity must be assessed as part of that activity, not separately or in the context of the ordinary workplace. Recognizing that misconduct in the course of Section 7 activity is treated differently from misconduct in the normal work environment that is unrelated to Section 7 activity, the Board further noted that “disputes over wages, hours and conditions of work are among the races most likely to generate hard feelings and strong responses,” serving as a backdrop to the Board’s criticisms of the Trump Board’s adoption by the Wright Line test on GM. The Council in Lion Elastomers stated, “the focus on why Wright Line standard completely fails to meet the policies of the (NLRA) in the context other than misconduct committed during the protected activity. It gives too little weight to the statutory rights of employees and too much weight to the interests of employers.” Notably, the majority of the Council also argued that the GM test created more unpredictability for employers, and countered the argument that setting specific standards he revived raises potential conflicts with federal anti-discrimination law, stating “(i) in determining whether employee misconduct is sufficiently serious to lose the protection of the Act , the Board is free to consider a possible conflict with another federal statute if the misconduct is found to have retained the protection of the law.” Intertwined throughout the majority opinion in Lion Elastomers is the practical argument that “labor disputes often remain hot topics” and while employees certainly it is not necessary engage in abusive behavior to exercise their rights under Section 7, they could and often do engaging in uncivil behavior, citing the constant stream of cases to be brought before the Board, evidencing such conduct as the main point of the Board’s traditional establishment specific standards.

main conclusions

The Chamber’s decision in Lion Elastomers removes the bright line that briefly existed between protected conduct and unprotected PCA-related abusive language and conduct. This will undoubtedly make it more difficult for an employer to balance its obligations under anti-harassment and anti-bullying laws and the NLRA. As Kaplan, a dissenting member of the Board concluded, “(i) if the past is any guide, the Board will now protect employees who engage in a wide range of indefensible misconduct, such as profane ad hominem attacks and threats to supervisors at the workplace. work, social media posts, media attacks against a manager and his family, shouting racist epithets at other employees, or carrying signs sexually harassing a particular employee.” As employers are potentially barred from responding to most employees’ PCA-related abusive language, employers may now be faced with an undesirable legally binding dilemma – violating the NLRA or being subject to liability under anti-harassment and anti-bullying laws for not considering action necessary to prevent an employee’s abusive language and/or conduct toward other employees.

Despite the potential risk of not disciplining an employee who engages in abusive speech, employers should be cautious when disciplining or terminating employees who use abusive or inappropriate language when the employee is also engaging in PCA. Even with a valid legal basis for taking adverse action, an employer may be found to be in violation of the NLRA if the disciplined employee is involved in PCA.

The Department of Homeland Security (“DHS”) announced on May 4, 2023, a planned end to the COVID-19 remote I-9 flexibility. Flexibility ends July 31, and prior pandemic I-9s must be corrected by August 30, 2023. Therefore, employers must act quickly to review and correct I-9s that have been remotely verified within the past three years.

Recommended procedures for correcting remotely completed I-9s:

• Create a list of all companies new hires March 20, 2020 to present. Pull up all your I-9s and determine which ones have had their documents remotely verified.
• Also pull all I-9s from March 20, 2020 from existing employees that have been rechecked (i.e., expired EAD work permits, expired I-94s for H-1B and other visa holders, etc.) and determine which have been remotely verified.
• Then arrange for the employee to come to the office with their original work authorization documents or authorize an individual who lives close by to complete the task on behalf of the company.
• In any case, Section 2 should be updated with a notation in the additional information box: “Original documents seen in person on date x” with your signature.

Best Efforts and Risk Assessment:

Of course, your company will want to do the best it can and try to achieve 100% compliance. As it can be difficult for some employers to achieve perfect compliance, it is helpful to consider the broader risk assessment. Specifically, US Immigration and Customs Enforcement (“ICE”) I-9 audits are very rare. Statistically, probably 1 in 1,000 companies are audited. While no one knows how ICE will handle an audit that also involves I-9s created during the pandemic, it seems unlikely that ICE will take a punitive approach toward a company that has not personally re-verified. DHS has a proposed rule to make remote verification via email, fax or video permanent. But the rule is not final yet, which is why the agency is telling employers to complete the verification task as per the old rule.

DHS has proposed making the remote I-9 pandemic rule permanent:

O proposed rule may become definitive as early as August. While no one is quite sure what the final rule will look like, our guess is that DHS will indicate that the rule only applies to new I-9s in the future and won’t make it formally retroactive.

Vendors to assist with remote checks:

as for brand new hires going forward who are 100% remote or hired during the pandemic, the ideal practice is to authorize someone who lives in that city acting on behalf of the company as an authorized signatory to review the original I-9 work authorization documents in the field and then complete either Section 2 or 3 of the I-9 in the field . Currently, there are quite a few providers that provide this service. In addition, large payroll providers have started a network for remote I-9 assistance. In some situations, a notary may also be willing to help. However, in California, notaries cannot do this unless they are also bonded immigration consultants.

Historical Perspective – The I-9 was created in 1986 before remote working:

It’s good that the USCIS has proposed a regulation to make remote I-9 verification permanent. This would be beneficial for several reasons.

First, of course, is the growing wave of telecommuting jobs where the employee cannot come to the office where the company’s human resources department is located.

Second, the personal verification requirement was created in 1986 by the INS legacy as part of the IRCA I-9 requirement. The rule was well intended – namely, that the employer would examine the documents and determine whether they are real. At the time, there were only fax machines, and the quality of a fax of a work authorization document was not very clear.

However, in the 1990s, the ability to create fake documents that looked very real became rampant. Then came scanners, crystal-clear PDFs, high-quality email, video calls, and more. So today, regardless of whether documents are reviewed in person or remotely, an employer never knows for sure if the documents are real. They can only attest that they look real and that the person’s documents verify work authorization. Therefore, the proposed rule allowing remote verification is a good practical solution in light of technological advances.

Strategies to minimize risk with I-9s:

I-9 Software: Purchasing an I-9 digital software system compatible with ICE protocols can be very helpful in minimizing I-9 completion errors. Being ICE compliant means the software provides a complete audit trail of who accessed the I-9, when and what they did. Digital software will flag many errors at the time of completion. Please note that just scanning an I-9 paper into an Adobe PDF will not meet ICE requirements.

Training: Any individual involved in the I-9 process must be properly trained.

DOJ Immigrant & Employee Rights (“IER”): The IER unit in DOJ is very aggressive. If an employer wrongly denies employment to someone they didn’t think was authorized work, no matter how well intentioned, the DOJ will issue a large civil investigation demand, name and shame the company, and fine them.

Consult the lawyer: When you encounter any unusual I-9 issues, consult an experienced employment attorney to avoid creating liability, both on integration and terminations.

On April 19, 2023, the California Court of Appeals ruled that an employer’s arbitration agreement was unenforceable due to inconceivable terms found in other documents provided to employees during the onboarding process. The decision was ratified for publication on May 10, 2023. Albert v. Cambriano Home Assistance (April 19, 2023, No. B314192) ___Cal.App.5th, the Court of Appeal upheld the lower court’s decision that a standalone arbitration agreement was inconceivable based on the terms contained in the employer’s nondisclosure agreement. As the arbitration and confidentiality agreements were presented to the employee at the time of hiring and related to the employee’s employment, the Court held that the employer’s confidentiality agreement formed part of the arbitration “contract” and the two agreements should be read together. The Court then argued that inconceivable terms in the confidentiality agreement permeated the arbitration agreement, rendering it unenforceable. O albert The decision is an important development for employers using arbitration agreements alongside other types of employment agreements, as it creates a new risk of losing the benefits of arbitration.

Cambrian Homecare hired Jennifer Playu Alberto in 2019. Cambrian is a provider of home care services. Alberto was hired as an administrative employee. As part of the onboarding process, Cambrian required employees, including Alberto, to sign an independent arbitration agreement and a separate confidentiality agreement. The arbitration agreement required that most claims arising from the employment relationship be submitted to binding arbitration. The arbitration agreement also contained a class action and representative waiver. Cambrian did not sign the arbitration agreement, a point the lower court made but the Court of Appeals did not reach.

As is common with non-disclosure agreements, Alberto has agreed to keep Cambrian’s trade secrets confidential. Cambrian defined its trade secrets to include “compensation and salary data and other employee information”. The confidentiality agreement also required Alberto to consent to a court injunction without Cambrian filing if there is an actual or threatened breach of the non-disclosure agreement, and if a lawsuit were filed to enforce the confidentiality agreement, the prevailing party was entitled to recover its attorneys’ fees.

On October 27, 2020, Alberto filed a class action lawsuit against Cambrian in Los Angeles Superior Court, citing multiple wage and hour claims. On January 25, 2021, Alberto amended his complaint to add a request for penalties under the General Law of Private Lawyers (“PAGA”). Cambrian has petitioned to compel Alberto’s individual claims to arbitration pursuant to the parties’ arbitration agreement.

The lower court denied Cambrian’s petition on two grounds. First, the lower court held that there was no arbitration agreement formed because Cambrian had not signed the contract. Second, the arbitration agreement, which must be read in conjunction with the non-disclosure agreement, was procedural and substantially inconceivable.

On appeal, the Second Appellate District upheld the lower court’s denial of the petition to compel arbitration on grounds of inadmissibility. The Court did not reach the question of the formation of the contract. In reaching its conclusion, the Court of Appeals argued that the arbitration and confidentiality agreements must be interpreted together pursuant to section 1642 of the California Civil Code. Section 1642 states “several contracts relating to the same matters, between the same parties, and made as parties substantially to one transaction, are to be taken together.” Although the arbitration agreement and the nondisclosure agreement were independent documents and made no reference to one another, the Court considered the two agreements to be related because both agreements: (1) were filed on the same day: (2) were entered into as part of the Alberto agreement hiring; and (3) governed the process of resolving employment-related disputes.

Therefore, the Court conducted its inconceivability analysis by reading the two agreements as a single contract and affirmed the lower court’s conclusion that the arbitration agreement was inconceivable. The Court agreed with the lower court that the arbitration agreement was procedurally unfair as an adhesion contract and substantially unfair because it was: (1) not mutual; (2) prohibited Alberto from discussing compensation and salary information; and (3) required a “bulk” waiver of Alberto’s PAGA claims. The settlement was deemed non-mutual because the arbitration agreement required Alberto to bring his claims only to arbitration, while the confidentiality agreement allowed Cambrian to seek an immediate injunction. The prohibition on discussing pay in the non-disclosure agreement was deemed inconceivable because it violated Section 232 of the Labor Code, which expressly allows employees to discuss pay. PAGA’s wholesale waiver was based on language contained in the arbitration agreement itself. Although the arbitration agreement contained an express termination clause, the Court found that the lower court did not abuse its discretion by refusing to cut out the inconceivable clauses and apply the remainder of the arbitration agreement.

In the light of albert decision, employers should review their onboarding documents with counsel to determine the potential effect these documents may have on their arbitration agreements.

On April 19, 2023, the California Court of Appeals ruled that an employer’s arbitration agreement was unenforceable due to inconceivable terms found in other documents provided to employees during the onboarding process. The decision was ratified for publication on May 10, 2023. Albert v. Cambriano Home Assistance (April 19, 2023, No. B314192) ___Cal.App.5th, the Court of Appeal upheld the lower court’s decision that a standalone arbitration agreement was inconceivable based on the terms contained in the employer’s nondisclosure agreement. As the arbitration and confidentiality agreements were presented to the employee at the time of hiring and related to the employee’s employment, the Court held that the employer’s confidentiality agreement formed part of the arbitration “contract” and the two agreements should be read together. The Court then argued that inconceivable terms in the confidentiality agreement permeated the arbitration agreement, rendering it unenforceable. O albert The decision is an important development for employers using arbitration agreements alongside other types of employment agreements, as it creates a new risk of losing the benefits of arbitration.

Cambrian Homecare hired Jennifer Playu Alberto in 2019. Cambrian is a provider of home care services. Alberto was hired as an administrative employee. As part of the onboarding process, Cambrian required employees, including Alberto, to sign an independent arbitration agreement and a separate confidentiality agreement. The arbitration agreement required that most claims arising from the employment relationship be submitted to binding arbitration. The arbitration agreement also contained a class action and representative waiver. Cambrian did not sign the arbitration agreement, a point the lower court made but the Court of Appeals did not reach.

As is common with non-disclosure agreements, Alberto has agreed to keep Cambrian’s trade secrets confidential. Cambrian defined its trade secrets to include “compensation and salary data and other employee information”. The confidentiality agreement also required Alberto to consent to a court injunction without Cambrian filing if there is an actual or threatened breach of the non-disclosure agreement, and if a lawsuit were filed to enforce the confidentiality agreement, the prevailing party was entitled to recover its attorneys’ fees.

On October 27, 2020, Alberto filed a class action lawsuit against Cambrian in Los Angeles Superior Court, citing multiple wage and hour claims. On January 25, 2021, Alberto amended his complaint to add a request for penalties under the General Law of Private Lawyers (“PAGA”). Cambrian has petitioned to compel Alberto’s individual claims to arbitration pursuant to the parties’ arbitration agreement.

The lower court denied Cambrian’s petition on two grounds. First, the lower court held that there was no arbitration agreement formed because Cambrian had not signed the contract. Second, the arbitration agreement, which must be read in conjunction with the non-disclosure agreement, was procedural and substantially inconceivable.

On appeal, the Second Appellate District upheld the lower court’s denial of the petition to compel arbitration on grounds of inadmissibility. The Court did not reach the question of the formation of the contract. In reaching its conclusion, the Court of Appeals argued that the arbitration and confidentiality agreements must be interpreted together pursuant to section 1642 of the California Civil Code. Section 1642 states “several contracts relating to the same matters, between the same parties, and made as parties substantially to one transaction, are to be taken together.” Although the arbitration agreement and the nondisclosure agreement were independent documents and made no reference to one another, the Court considered the two agreements to be related because both agreements: (1) were filed on the same day: (2) were entered into as part of the Alberto agreement hiring; and (3) governed the process of resolving employment-related disputes.

Therefore, the Court conducted its inconceivability analysis by reading the two agreements as a single contract and affirmed the lower court’s conclusion that the arbitration agreement was inconceivable. The Court agreed with the lower court that the arbitration agreement was procedurally unfair as an adhesion contract and substantially unfair because it was: (1) not mutual; (2) prohibited Alberto from discussing compensation and salary information; and (3) required a “bulk” waiver of Alberto’s PAGA claims. The settlement was deemed non-mutual because the arbitration agreement required Alberto to bring his claims only to arbitration, while the confidentiality agreement allowed Cambrian to seek an immediate injunction. The prohibition on discussing pay in the non-disclosure agreement was deemed inconceivable because it violated Section 232 of the Labor Code, which expressly allows employees to discuss pay. PAGA’s wholesale waiver was based on language contained in the arbitration agreement itself. Although the arbitration agreement contained an express termination clause, the Court found that the lower court did not abuse its discretion by refusing to cut out the inconceivable clauses and apply the remainder of the arbitration agreement.

In the light of albert decision, employers should review their onboarding documents with counsel to determine the potential effect these documents may have on their arbitration agreements.