California Considering Ban on Employer Forced Arbitration

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Last year, a bipartisan coalition in the United States Senate sponsored legislation to ban the use of mandatory arbitration agreements with regard to claims of sexual harassment and sex discrimination. The federal bill is still pending. 

Now, a similar bill has been filed in the California legislature. If it passes, the California bill would prohibit employers from requiring mandatory arbitration agreements as a condition of employment. And unlike the federal bill mentioned above, the California bill would prohibit arbitration clauses as a condition of employment as to all types of employment claims—not just sexual harassment and sex discrimination claims.

If passed, the California law would be an important start to a movement to get rid of employer-based, forced arbitration. Statistics show that arbitration is unfair to employees and is used by some employers to effectively opt out of the judicial system into a rigged, pseudo-court where wrongdoing can be effectively covered up by companies. 

And claims that arbitrating claims is more cost-effective than traditional adjudication in court are are not supported by the available statistical data. Many employment corporate defense lawyers point out that research shows arbitration is neither faster nor less expensive than litigation

There has long been data showing that a solid majority of Americans oppose forced arbitration in the employment context.  If this bill passes and becomes law in California, perhaps it will be the beginning of a nation-wide movement to allow employees back into the courtroom. 

 

Read More: National Law Review

New Expert Report Offers Policy Recommendations for Non-compete Agreements

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As this blog has discussed before, non-compete agreements are a real problem. A new report from the Brookings Institution’s Hamilton Project seeks does a deep dive on this nationwide problem, compiling the most comprehensive recent studies on non-compete agreements. The report’s author, Matt Marx, has several key policy recommendations for lawmakers who want to promote economic growth rather than stifle it:

  • Employers should inform employees if they will be required to sign a non-compete agreement before they accept the job. Employers routinely hide the fact that employees are required to agree to a non-compete until after an employee has accepted a position and presumably turned down other offers. (This takes away employees' negotiating power and hurts the economy.)
  • If existing employees are asked to sign new non-compete agreement, employers should be required to compensate them. (In Texas, employers often require long-time employees to sign new non-compete agreements with the promise of nothing more than continued at-will employment.)
  • Allow judges to rewrite overreaching non-compete agreements so that they are in-line with state law. (In Texas, judges already have this power. The problem is that in order to get the issue to a judge, a lawsuit needs to be filed by either the employer or employee, taking time and costing legal fees.)
  • Give attorneys general the power to go after firms that require workers to sign predatory non-competes. (This could be helpful in some states. Unfortunately in Texas our current Attorney General would have no interest in helping Texas workers in this way.)
  • Bolster non-disclosure agreements so that they make a better substitute for non-competes. (This sounds good but I'm not sure how much stronger they could be without creating a real imbalance of power in the workplace.)

You can read the entire report here.

Non-Compete agreements are not evil per se. In fact in some cases they make sense. But companies have gone way beyond using non-competes to protect legitimate trade secrets and now routinely abuse them in attempt to gain a competitive advantage over other businesses by keeping employees out of the labor pool. 

2nd Circuit Rules Title VII Protects Against Employment Discrimination Based on Sexual Orientation

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In an en banc decision, The US Court of Appeals for the 2nd Circuit in New York ruled on Monday that Title VII of the Civil Rights Act of 1964, a federal law that bans employment discrimination because of sex, also protects claims of discrimination based on sexual orientation.

"Sexual orientation discrimination is a subset of sex discrimination because sexual orientation is defined by one's sex in relation to the sex of those to whom one is attracted," a 10-3 opinion issued by the 2nd US Circuit Court of Appeals stated.

The court, based in New York, becomes the second appeals court to rule that the civil rights law covers discrimination based on sexual orientation. Last year, the 7th Circuit Court of Appeals issued a similar ruling. The ruling means that employees in those two circuits can use existing civil rights law to sue for discrimination based on sexual orientation. 

Eventually, this issue will likely work its way up to the U.S. Supreme Court.  

You can read the 2nd Circuit’s opinion here

The Weekend File - February 10, 2018

Trump Seeks to Undo Protections for Tipped Employees

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Under the Obama administration’s 2011 regulations, tips, according to the Fair Labor Standard Act, are considered the “property of the employee,” specifically service-facing employees such as waiters, bussers and bartenders. Tips can be shared in a valid tip pool only among those employees but not with dishwashers, cooks, chefs and janitors, who are paid at least the federal minimum wage ($7.25 an hour) and therefore aren’t customarily tipped.

As it stands in Texas and most states, employers may take a “tip credit,” allowing them to pay their tipped service-facing staff less than the minimum wage, at $2.13 an hour, as long as workers' tips will bring that hourly pay up to $7.25. For some servers, a busy night could yield well more than that.

The Trump administration’s proposal would allow restaurants to keep tips for themselves or force waitstaff to share them with untipped workers such as cooks, dishwashers and other back-of-house employees.

Read the entire article at the Dallas Observer

News From Around The Web

Union Membership Plummets in Most Right-To-Work States

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Terry Potter has an article out this past week on the insidious effect of so-called “Right to Work” laws on unionization across the country. As anticipated, the nationwide trend of enacting “right-to-work” (RTW) legislation has continued to grow – in the past few years alone, Indiana, Michigan, Wisconsin, West Virginia, and Kentucky have joined the growing list of RTW states. In these states, and the approximately twenty others that have adopted RTW legislation, employers are prohibited from requiring employees to join a union or pay union dues as a condition of employment. This has caused dramatic drops in union membership over time.


If you had to pick only one reason for the vanishing middle class and the increasing gap between rich and poor in America, this would be it. Sadly, most workers don’t understand that they are voting against their own interests when they vote for “Right to Work” legislation or the politicians who push for such laws.

Visit Labor Relations Law Insider for the rest of the article.