Another Court Rules on When Ride-Sharing Drivers Are Exempt From Arbitration

In this time of concern regarding the COVID-19 pandemic, there are other challenges still confronting companies. One involves the standard for enforcing arbitration agreements involving transportation workers. Or, stated differently, when drivers may be exempt from the Federal Arbitration Act (FAA). We have previously covered the courts’ struggles to deal with the fallout from New Prime v. Oliveira, 139 S. Ct. 232 (Jan. 12, 2019), on the transportation industry and gig drivers. See our blog posts of Jan. 17, 2019, Mar. 12, 2019, Apr. 29, 2019 and Sept. 13, 2019.

Now, U.S. District Court Judge Indira Talwani has waded into the legal thicket to determine those workers who are covered by the FAA Section 1 exemption and if the arbitration agreement with class waivers could be enforced under the Massachusetts Uniform Arbitration Act. See Cunningham v. Lyft, Inc., Case No 1:19-cv-11974, Order of Mar. 27, 2020.

In Cunningham District Judge Talwani considered the application of the FAA’s Section 1 exemption in the context of a class action alleging misclassification as independent contractors, brought by ride sharing drivers who transport paying passengers rather than goods. After analyzing Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001), and Singh v. Uber Techs. Inc., 939 F. 3d 210 (3d Cir. 2019), (among others) the court concluded that there was “no basis in the statute or precedent” to restrict the Section 1 exclusion only to workers who transport goods rather than passengers. (Slip Op. at 12). Continue Reading

Dealing With COVID-19 In Your Workplace Without Inviting Future Class Actions

You don’t need us to tell you that it’s not an easy time to be an employer.  With ever growing concerns over employee safety, business operations, costs, and complying with new and rapidly evolving legislation as a result of COVID-19, getting your business through the next day can seem overwhelming enough.  However, it is important to remember that the current crisis will eventually pass.  And when it does, the last thing you’ll want to do is defend against a class or collective action lawsuit, particularly when it could have been easily avoid  To help make sure this doesn’t happen, we have identified below five important issues to consider as part of your COVID-19 response.  [*Note: For a comprehensive analysis of employment-related COVID-19 issues and how to navigate them, please check out our COVID-19 response site at].

Make sure your telecommuting non-exempt employees are recording all their time, including boot-up/boot-down time

It goes without saying that if you are one of the many employers who have non-exempt employees working from home, they need to be paid for all their worktime done at home.  However, it is important to remember that compensable worktime includes things such as logging into and out of computer systems for the day – processes which can be unexpectantly delayed and complicated in a mass work from home situation.  Therefore, it is crucial that you reiterate in writing that all such time is compensable, and that your non-exempt employees have a way to record such boot-up and boot-down time.  One option is to allow telecommuting employees to record their time on paper or e-mail and make them responsible for submitting that time for payment.  You should also ask your employees if they are having any issues logging in/recording time as part of your regular check-in sessions. Continue Reading

California Supreme Court Creates More Problems for Employers Under PAGA

As we have noted throughout the years, interpreting the California Private Attorneys General Act (PAGA) can be a difficult task. See our blog articles of July 14, 2017, Aug. 4, 2017, Nov. 29, 2017 and Sept. 12, 2019. California adopted PAGA to support the state Labor and Workforce Development Agency’s enforcement burden by empowering workers to bring claims on the state’s behalf.

Now in a case of first impression the California Supreme Court has determined what “aggrieved” means under PAGA and the impact of an employee’s settlement of his individual claims. The court determined that “[s]ettlement of individual claims does not strip an aggrieved employee of standing, as the state’s authorized representative, to pursue PAGA remedies.”

The Underlying Facts

In Kim v. Reins International California, Inc., March 12, 2020, Case No. 5246911, Reins International California, Inc. (Reins) employed Justin Kim as a training manager in its California restaurants. When he was hired, Kim signed an individual arbitration agreement. After he brought a putative class action claiming misclassification against Reins, the company moved to dismiss the class claims and for individual arbitration while acknowledging that the PAGA claim could not be waived or arbitrated. See Iskanian v. CLS Transportation, Los Angeles, LLC (2014) 59 Cal. 4th 348, 382-384. Continue Reading

Illinois District Court Denies Certification of ADA Claims in Airplane Mechanic Case

It’s been awhile since we’ve addressed attempts at bringing class action disability claims (September 27, 2013 and March 6, 2014), but as we’ve noted in the past, they make poor candidates for class action treatment. Disability claims almost by definition involve more, and more highly individualized, inquiries and quickly run into trouble satisfying Rule 23’s requirements.

A case from the Northern District of Illinois well illustrates this point. In DeFreitas v. United Airlines, Case No. 19 C 3397 (N.D. Ill. Feb. 11, 2020), the plaintiff was an airline maintenance worker who claimed that he was suffering from a degenerative and painful cervical disc disease. He contended that he sought sedentary work as an accommodation, but despite multiple requests was never hired for any such positions within the airline. He ended up taking a position with a delivery service that better accommodated his condition. Continue Reading

California District Court Releases Opinion Invalidating AB 51

Two Centuries of Federal Precedent Given Effect

We’ve blogged several times the ongoing saga involving AB 51, California’s attempt to prevent the mandatory arbitration of employment claims largely by sanctioning employers who use such agreements. (Oct. 11, Dec. 30 and Jan. 16) Much of that saga currently focuses on the case of Chamber of Commerce of the United States of America v. Bacerra, No. 2:19-cv-02456 (E.D. Cal.), a case brought to challenge AB 51’s implementation. Most recently, we noted that the district court in that case, by minute order, had preliminarily enjoined AB 51’s enforcement. (Feb. 3) Several days later, on Feb. 6, the district court explained the reasons supporting that order in a 36-page opinion reiterating its decision to enjoin enforcement of the Act.

As most of us learned in high school, the Constitutional Convention was called in 1787 to address crippling issues caused by the weak central governing structure of the Articles of Confederation. Chief among the problems was that the 13 former colonies acted too much like 13 different countries over the intervening decade or so, making interstate commerce impracticable. After extensive debate, the framers of the Constitution concluded that a more centralized federal government was necessary, and that its laws would be binding on the states. To effect that principle, Article VI, Clause 2 of the Constitution (the “Supremacy Clause”) provides:

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding. Continue Reading

California District Court Denies Certification of Off-the-Clock Case

We’ve commented in the past that off-the-clock cases can make poor candidates for class certification, particularly when the employer’s policies require that employees perform work only while clocked in. A recent case involving a decade-old dispute again illustrates the basic problems with these kinds of claims.

In Troester v. Starbucks Corp., Case No. CV 12-07677-CJC(PJWx) (C.D. Cal. Jan. 27, 2020), the plaintiff worked as an hourly shift supervisor at a company-owned Starbucks restaurant. While it was undisputed that Starbucks paid him for the time in its system, and while Starbucks policy required that employees perform all work while on the clock, he contended that he spent 4-10 minutes per shift off the clock performing tasks like sending sales data to company headquarters, locking the door, and escorting coworkers to their cars. He brought suit under the usual series of California claims for unpaid wages, inaccurate wage statements, unfair competition, and the like.

The case had an extensive procedural history, but ultimately Starbucks moved for partial summary judgment on certain of the California claims, and the plaintiff moved for class certification. The court granted the company’s motion with respect to wage statements and liquidated damages under California law, leaving the claims for unpaid wages and for the derivative claim of unfair competition. It denied, however, the plaintiff’s motion to certify these remaining claims. Continue Reading

District Court Preliminarily Enjoins Enforcement of California’s A.B. 51 Anti-Arbitration Law

Since Oct. 11, 2019, we have been blogging about California’s new anti-arbitration law and the injunctive action filed before Chief District Judge Kimberly J. Mueller to enjoin it. Chamber of Commerce of the United States of America v. Bacerra, No. 2:19-cv-02456 (E.D. Cal.). See our blog articles of Oct. 11, 2019, Dec. 30, 2019 and Jan. 16, 2020.

Judge Mueller filed a Minute Order Friday granting the motion for preliminary injunction but will follow up “[i]n the coming days” with “a detailed, written order.” The Minute Order states, in pertinent part:

  1. Defendant Xavier Becerra, in his official capacity as the Attorney General of the State of California, Lilia Garcia Brower, in her official capacity as the Labor Commissioner of the State of California, Julie A. Su, in her official capacity as the Secretary of the California Labor and Workforce Development Agency, and Kevin Kish, in his official capacity as Director of the California Department of Fair Employment and Housing are:

a. Enjoined from enforcing sections 432.6(a), (b) and (c) of the California Labor Code where the alleged “waiver of any right, forum, or procedure” is the entry into an arbitration agreement covered by the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (“FAA”); and

b. Enjoined from enforcing section 12953 of the California Government code where the alleged violation of “Section 432.6 of the Labor Code” is entering into an arbitration agreement covered by the FAA.

  1. There is no realistic likelihood of harm to defendants from preliminarily enjoining enforcement of AB 51, so no security bond is required. It is so ordered.
    (Emphasis added).

Continue Reading

Second Circuit Finds That Nurses Are Professionals, Even if They Work for Insurance Carriers

Not quite two years ago, the Supreme Court decided the case of Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134 (2018), a case we blogged here. The case itself involved the issue of whether service consultants at auto dealers were exempt from overtime under the FLSA. While the Supreme Court held that they were, the case had far broader implications because the Supreme Court rejected the view that the FLSA’s exemptions were to be construed narrowly, but, instead, were integral parts of the statute that should be given a “fair reading.” We noted at the time that this view likely undercut many of the arguments relied upon by plaintiffs’ counsel and some courts regarding potentially exempt work.

A recent case from the Second Circuit reflects just how that view can in practice defeat wage and hour class claims. In Isett v. Aetna Life Insurance Co., Case No. 18-3271-cv (Jan. 14, 2020), the plaintiff was a registered nurse who worked as a nurse consultant for a health insurance carrier, responsible for reviewing appeals regarding health benefit claims. She sought to assert claims on behalf of a class of similarly situated nurses, contending that she was misclassified as exempt and entitled to overtime. Continue Reading

Seventh Circuit Now Addresses When Notices of Collective Action Can be Given to Employees Who May Have Arbitration Agreements Waiving Their Right to Join

Whether to give notices of a collective action under the Fair Labor Standards Act (FLSA) to employees who may join presents some nuanced and challenging questions for district courts. The court must “respect judicial neutrality and avoid even the appearance of endorsing the action’s merits.” See Hoffmann-LaRoche Inc. v. Sperling, 493 U.S. 165, 171-174 (1989). Merely sending the notice can increase the settlement pressure on an employer regardless of the merits of the underlying claim. And, “[a] related danger is that notice giving . . . may become indistinguishable from solicitation of claims.” Id. Numbers do have a monetary impact. The notice decision becomes even more complex when some of the employees may have entered into arbitration agreements waiving their rights to proceed in an aggregate manner.

What does an employer have to show to establish an enforceable agreement and avoid the notice? In Bigger v. Facebook, Inc., (No. 19-1944) (decided Jan. 24, 2020), Judge Michael S. Kanne, writing for a Seventh Circuit panel, grappled with these impactful issues in a case of first impression. Continue Reading

California District Denies Certification of Race Claim Involving Claimed “English-Only” Restaurant Policy

While class actions may prove lucrative for the plaintiffs who bring them, most cases just aren’t suitable for class action treatment and many would likely fare far better if the plaintiffs simply limited themselves to a single employee or location.

Case in point. In Guzman v. Chipotle Mexican Grill, Inc., Case No. 17-cv-02606-HSG (N.D. Cal. Jan. 15, 2020), the plaintiffs sought to assert that all of the hundreds of California Chipotle restaurants operated under an unwritten policy requiring aspiring managers to speak at least good English and possibly only English. They sought to certify a class spanning the entire state (roughly 400 restaurants) and over 40,000 employees of either Hispanic or Mexican national origin.

Common sense tells you that the claims and their scope are going to be problematic. Many of those of Hispanic or Mexican national origin speak excellent English. Many class members (students, for example) may have career plans that don’t involve managing the fast food restaurant where they have worked as an hourly employee. Particularly in restaurants with significant numbers of workers who don’t speak Spanish, some level of English proficiency on the part of a manager may be necessary simply to direct the workforce. Continue Reading