Employment Flash - June 2018

This edition of Employment Flash provides an overview of employment laws going into effect in July 2018 in certain jurisdictions, three recent employment-related U.S. Supreme Court decisions and the National Labor Relations Board's plan for addressing the joint-employer standard under the National Labor Relations Act. This edition also looks at recent California and New York state court rulings regarding independent contractor classification, New York City's recently enacted anti-sexual harassment legislation and the U.K.'s new gender pay gap reporting requirements, among other developments.

Update: New Employment Laws Taking Effect in July 2018

US Supreme Court Upholds Class-Action Waivers in Employment Agreements

US Supreme Court Limits Tolling for Class Actions

US Supreme Court Does Not Resolve Circuit Split Over Entitlement to ADA Leave

NRLB’s Joint Employer Plan

California Uses “ABC” Test for Independent Contractor Classification

California Court of Appeals Confers Expanded Standing Under PAGA

New York Appellate Division Court Addresses Independent Contractor Classification

New York City Enacts Anti-Sexual Harassment Legislation

New Jersey Enacts Equal Pay Act

International Spotlight

There are several employment-related laws coming into effect in July 2018. We have reviewed employment developments at the state and local level where Skadden has U.S. offices (i.e., California, Delaware, Illinois, Massachusetts, New York, Texas and Washington, D.C.), and all laws are effective July 1, 2018, unless otherwise stated.

California enhances the Fair Employment and Housing Act protections by prohibiting employers from maintaining English-only work environments unless there is a business necessity, and by revising the meaning of “national origin.” The San Francisco “Parity in Pay” Ordinance, which is similar to ordinances in New York City, Massachusetts and Delaware, prohibits employers from inquiring about an applicant’s compensation history and from using an applicant’s salary history in determining whether to hire an applicant or determining compensation.

In Massachusetts, “An Act to Establish Pay Equity” is a statute that amends the Massachusetts “Pay Equity Law” by enhancing the state’s existing equal pay laws. The statute explicitly defines “comparable work” as “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability.” “Comparable wages” includes all forms of compensation, not just salary. The law prohibits asking job candidates for salary history and other forms of compensation. In addition, the law extends the statute of limitations to three years and increases penalties. Employers also will have an opportunity to cure violations discovered in a self-evaluation under the law’s safe harbor provisions.

As discussed in a previous edition of the Employment Flash, effective July 11, 2018, a New York law will prohibit mandatory arbitration of sexual harassment complaints. (Employers will likely challenge its enforcement as a violation of the Federal Arbitration Act.) In addition, the law prohibits having nondisclosure agreements that cover sexual harassment claims unless the employee requests confidentiality and certain requirements are met. Like long-standing California law, employers must provide sexual harassment training to employees and create a sexual harassment policy and complaint procedure. Effective July 18, 2018, New York City will require employers to allow covered employees to make two temporary schedule changes per year for certain permissible uses, which include, without limitation, caregiving and attending legal proceedings. Effective July 9, 2018, Westchester County, New York will prohibit employers from inquiring about an applicant’s compensation history.

In a 5-4 decision, the U.S. Supreme Court held that class action waivers in employee arbitration agreements are enforceable under the Federal Arbitration Act (FAA) and do not violate the National Labor Relations Act (NLRA). Epic Sys. Corp. v. Lewis, No. 16-285, 2018 WL 2292444 (May 21, 2018), consolidated with Ernst & Young LLP et al. v. Stephen Morris et al., No.16-300, and NLRB v. Murphy Oil USA Inc., No. 16-307. This decision resolved a circuit split and, at the same time, overturned the position of the National Labor Relations Board (NLRB or Board) that class and collective action waivers violate employees’ rights under the NLRA. The Court’s decision was based on its finding that the FAA requires arbitration agreements to be enforced on the same grounds as any other contract, and the NLRA, though enacted after the FAA, does not exclude class action waivers from the scope of the FAA.

On June 11, 2018, in the matter of China Agritech v. Resh, 584 U.S. ___ (2018), the U.S. Supreme Court limited the application of its decision in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), in which the Court held that the filing of a class action suit tolls the running of the statute of limitations for all purported members of the class who make timely motions to intervene after the court has denied class certification. Six appellate courts had since interpreted American Pipe to allow for tolling for individual actions only and not serial class actions, whereas three other circuits had applied the ruling more broadly to mean that the limitations period is tolled not only as to individual claims but also as to future class action claims. In China Agritech v. Resh, the Court agreed with the six appellate courts that its American Pipe decision bars untimely successive class actions by would-be class members because the “‘efficiency and economy of litigation’ that support tolling of individual claims … do not support maintenance of untimely successive class actions.” The decision reverses and remands a U.S. Court of Appeals for the Ninth Circuit decision that had revived a securities class action that was filed against China Agritech after two failed attempts for class certification.

On April 2, 2018, the U.S. Supreme Court denied certiorari in a case from the Seventh Circuit, Severson v. Heartland Woodcraft, Inc., 872 F.3d 476 (2017), cert. denied, No. 17-1001, 2018 WL 489210...