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Job Killer Bills Hurt Arbitration, Expand Avenues for Employment Litigation

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Sacramento, Ca - January 27, 2017

Four bills the California Chamber of Commerce has identified as job killers early in the new legislative session hamper employers’ ability to manage their workforce effectively, discriminate against arbitration, expand employment litigation and mandate another leave of absence.

Sample letters to legislators are available at www.calchambervotes.com.


Hampers Workforce Management
AB 5 (Gonzalez Fletcher; D-San Diego/Kalra; D-San Jose) hurts small businesses and job seekers by attempting to base a statewide law on a couple of local ordinances.

The bill mandates small employers with as few as 10 employees to offer all employees who have the skills and experience to perform additional hours of work that become available before hiring a new employee, temporary employee, or contractor.
 
A CalChamber analysis finds the bill limits employers’ ability to effectively manage their workforce to address both consumer and employee requests. The bill will create unnecessary delays and burdens on small employers to accommodate employee and consumer demands, subject employers to costly fines and multiple avenues of litigation for technical violations that do not actually result in any harm to the employee, limit an employer’s ability to communicate truthful information, and reduce job opportunities for the unemployed.

Anti-Arbitration
 SB 33 (Dodd; D-Napa) seeks to ban arbitration agreements, which studies have shown provide individuals with a better remedy than pursuing lengthy class action litigation.
 
The bill discriminates against arbitration agreements made as a condition of entering into a contract for goods or services and interferes with the fundamental attributes of arbitration, which is likely pre-empted by the Federal Arbitration Act (FAA). This will lead to confusion, uncertainty and costly litigation for such contracts.

SB 33 applies to any contract that requires an individual to submit any and all disputes to arbitration, including those arising from claims alleging fraud, identity theft, or misuse of personal identifying information.
 
CalChamber is concerned that this proposal basically sets up a pleading pathway for consumer attorneys to avoid arbitration by allowing them to allege numerous claims, including a claim for identity theft or wrongful use of identifying information in the complaint in order to avoid arbitration. Thereafter, the attorney can dismiss the claims for fraud, identity theft, or wrongful use of identifying information, and move forward on the remaining claims in litigation that would have been subject to arbitration. Accordingly, despite the intent or argument that this bill is limited only to certain claims, it will actually have an impact on all contracts.
The U.S. Supreme Court has been consistently clear that a prohibition of arbitrating certain claims is pre-empted under the FAA.

Expands Employment Litigation
SB 62 (Jackson; D-Santa Barbara) will significantly expand the type of individuals for which employees can take leave under the California Family Rights Act (CFRA), allowing California employees to take up to 24 weeks/6 months of protected leave in a 12-month period. Governor Edmund G. Brown Jr. vetoed a similar proposal in 2015.
 
SB 62 expands the family members for whom an employee may take a 12-week protected leave of absence to care for to include a grandparent, a grandchild, and siblings. Given that the individuals SB 62 proposes to add to the protected leave list are not covered under the corresponding and similar leave provided by the federal Family Medical Leave Act (FMLA), the change will potentially provide a California employer with an obligation to provide up to 24 weeks of protected leave.
 
Under SB 62, an employee could utilize his/her 12 weeks of CFRA to care for the serious medical condition of a grandparent, who is not a family member covered under FMLA, and therefore would not trigger FMLA leave. Upon returning, the employee still would be entitled to another 12-week protected leave of absence under FMLA.
 
CFRA includes a private right of action with the opportunity to obtain compensatory damages, injunctive relief, declaratory relief, punitive damages, and attorney’s fees. This private right of action creates costly litigation for employers, even when employers take reasonable steps to address abuse under CFRA. Despite allegations otherwise, employers regularly accommodate employees’ personal needs with regard to caring for family members without being forced to do so by law or the threat of litigation.
 
California already has extensive family-related protected leaves of absence. A recent study ranked California No. 2 for work and family policies that support workers keeping their jobs and also caring for their family members

New Leave of Absence
SB 63 (Jackson; D-Santa Barbara) is a more expensive version of a job killer bill vetoed last year. The CalChamber has identified SB 63 as a job killer bill because it will overwhelm small employers by adding to the burden under which they already struggle.
 
SB 63 requires a California employer who employs as few as 20 employees within a 75-mile radius to provide 12 weeks of protected parental leave. This proposed mandate comes on top of the current requirement that employers with only 5 employees allow up to 16 weeks of protected pregnancy-related leave.
 
This mandate exposes small employers to costly litigation under the Fair Employment and Housing Act by labeling failure to provide the 12-week leave of absence as an “unlawful employment practice.”

More to Come
The CalChamber will release the full list of job killer bills in the spring.
More information on these bills is available at www.calchamber.com.

Jennifer Barrera, “Job Killer Bills Hurt Arbitration, Expand Avenues for Employment Litigation”, http://calchamberalert.com/2017/01/27/job-killer-bills-hurt-arbitration-expand-avenues-for-employment-litigation, January 27, 2017

Photo or Graphic Source: CalChamber



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