California

Will California’s Mandate of Women on Boards Change Corporate America’s Thinking on Gender Equality?
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Oct 17, 2018 - 3:45pm
Will California’s Mandate of Women on Boards Change Corporate America’s Thinking on Gender Equality?
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California recently became the first state in the US to enact a law requiring companies based there to include at least some women on their boards of directors. The legislation, signed by Governor Jerry Brown on the last day of September, mandates that all publicly traded companies headquartered California (not just those chartered there) have at least one woman on their boards by the end of 2019. For companies with at least five directors, at least two or three of those seats must be filled by women by 2021, depending on the size of the board. Companies that do not comply will be subject to fines by the state.

California’s mandate has ignited a firestorm of controversy, with business groups like the California Chamber of Commerce saying it violates constitutional principles and effectively requires companies to discriminate against men, while even some advocates of diversity in corporate leadership question whether it will have the kind of impact it is intended to have. The state will likely be sued over the law and may lose, which Brown acknowledged in his letter to the state Senate announcing his signature of the bill. “I don’t minimize the potential flaws that may indeed prove fatal to its ultimate implementation,” he wrote. The constitutional issues at hand concern not only the issue of reverse gender discrimination but also a question of jurisdiction, as the Supreme Court has ruled in the past that a corporation’s internal affairs are governed by the statutes of the state in which it is chartered, not where its headquarters is located.

Nonetheless, even if the law is ultimately defeated in court, it is intended partly as a marker of determination on the part of the California state government to ratchet up pressure on companies there to make more progress on diversity and inclusion, particularly in leadership roles where women and minorities remain heavily underrepresented. Simply bringing visibility to the issue counts as a win for some advocates of gender equality, Vox‘s Emily Stewart reported:

“If nothing else, what this law is doing is increasing the visibility and awareness on the issue itself and the importance, and that is a win in and of itself,” said Serena Fong, the vice president of strategic engagement at Catalyst, a nonprofit focused on promoting women in business.

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California Bill to Mandate Women on Boards Faces Challenge From Businesses
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Aug 14, 2018 - 5:01pm
California Bill to Mandate Women on Boards Faces Challenge From Businesses
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The California legislature is considering a bill that would make it the first state in the US to require women’s representation on the boards of companies headquartered there, but the business community is pushing back, saying the proposed mandate is unconstitutional and counterproductive, Antoinette Siu reports at TechCrunch:

SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine. …

Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, as well as conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California. … Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.

Legislative mandates or quotas for women on corporate boards are rare, with only a few European countries having adopted them. Norway was the first to do so, introducing a 40 percent quota in 2003, while France, Germany, Iceland, and Spain have since introduced their own mandates. Sweden had an opportunity to join this group but declined it early last year, when the parliament voted down a proposal to fine listed companies where women make up less than 40 percent of directors. In these countries, quotas have proven effective at driving gender equality on boards; critics acknowledge this, but argue that making women’s representation a matter of compliance isn’t changing corporate cultures to really value women in leadership.

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Massachusetts Enacts New Restrictions on Non-Compete Agreements
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Aug 14, 2018 - 3:24pm
Massachusetts Enacts New Restrictions on Non-Compete Agreements
Massachusetts State House (Keith J Finks/Shutterstock)

After several years of legislative wrangling, Massachusetts Governor Charlie Baker on Friday signed a bill into law that will limit the conditions under which employers in the state can enforce non-compete agreements on their employees. The law goes into effect on October 1 and will apply to all non-compete agreements signed after that date. Lisa Nagele-Piazza outlines the law’s provisions at SHRM:

The Massachusetts law aims to prevent overuse of such agreements by prohibiting noncompetes with employees who are:

  • Nonexempt under the Fair Labor Standards Act.
  • Under age 18.
  • Part-time college or graduate student workers.

For a noncompete to be valid, it must be:

  • Limited to 12 months in duration (with some exceptions).
  • Presented to new hires either with an offer letter or 10 days prior to an employee’s start date, whichever is earlier.
  • Signed by the employer and the worker.

The agreement must also inform employees of their right to consult legal counsel before signing it. If employers want existing staff to sign noncompetes, they will need to offer “fair and reasonable” consideration beyond continued employment for the agreements to be valid.

The new law is also the first in the U.S. to require that employers offer “garden leave” pay to former employees bound by non-competes. The law requires to pay these employees 50 percent of the highest base salary they earned in the prior two years for one year after their departure, or some other “mutually agreed upon consideration.”

That alternative represents a huge loophole in the law, Michael Elkon, an attorney with Fisher Phillips in Atlanta, tells Nagele-Piazza. What sort of “consideration” counts as valid for the purposes of this law will likely be hashed out in court in the coming years, but Elkon notes that employers will expose themselves to a risk of litigation (before an unsympathetic judge) if they attempt to get around this provision by offering an employee a “consideration” that undercuts the law’s guidelines.

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Uber and Lyft End Forced Arbitration of Sexual Harassment and Assault Claims
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May 15, 2018 - 3:40pm
Uber and Lyft End Forced Arbitration of Sexual Harassment and Assault Claims
Jason Doiy/iStock

Uber announced on Tuesday that it would no longer require employees, drivers, or customers who experience sexual harassment on the job or while using the ride-sharing service to adjudicate their claims in arbitration proceedings. Coming in response to pressure from former employees and customers, the change will allow alleged victims of sexual harassment in the US to pursue claims against the company in court. Uber will also no longer bind accusers to confidentiality requirements as a condition of receiving a settlement on the company, though it will continue to keep financial details of such settlements confidential.

In a blog post, Uber’s Chief Legal Officer Tony West said the company would also publish a public safety transparency report including data on sexual assaults and other incidents that take place on its platform.

Hours after Uber’s announcement, Lyft also announced that it was waiving its standard arbitration agreement for sexual assault claims and would no longer impose confidentiality requirements on alleged victims of sex crimes, Recode’s Johana Bhuiyan reported later on Tuesday. Lyft also intends to release a safety report on sexual assault complaints it receives on its platform; Lyft COO Jon McNeil wrote on Twitter later Tuesday afternoon that his company would be happy to work together with Uber on this reporting project.

West said Uber had made its decision in the interest of transparency, but also acknowledged the risk the company was taking in being more open about these allegations (albeit a risk mitigated to some extent by the participation of its chief competitor):

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California Supreme Court Adopts Tighter Standard for Contractor Classification
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May 1, 2018 - 5:29pm
California Supreme Court Adopts Tighter Standard for Contractor Classification
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In a ruling handed down on Monday, the California Supreme Court found in favor of drivers for the last-mile delivery service company Dynamex, who claimed to have been misclassified by the company as independent contractors when they were really its employees. Gizmodo’s Brian Menegus outlines the facts at issue in the lawsuit, first filed in 2005:

Starting in 2004, drivers were required to provide their own vehicles—and pay for all the incurred costs that came with that, like gas, maintenance, insurance, and tolls—while being “generally expected to wear Dynamex shirts and badges […] and/or the customer’s decals to their vehicles when making deliveries for the customer.” … They were converted from employees to this new, more precarious classification “after management concluded that such a conversion would generate economic savings for the company,” the ruling states, creating a deeply lopsided power dynamic.

The court’s decision will have far-reaching consequences, as it ruled not only on the merits of these drivers’ complaint, but also on the manner in which the distinction between employees and contractors should be drawn. The judges significantly reinterpreted their predecessors’ ruling in the 1989 case of S. G. Borello & Sons, Inc. v Dept. of Industrial Relations, which had historically been cited as establishing a standard for classifying workers as contractors based largely on the degree of control a company exercised over their work. The court instead favored the “ABC” standard used in other jurisdictions like Massachusetts and New Jersey, which treats workers as contractors only under the following conditions:

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State–Federal Clash on Immigration Squeezes California Employers
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Feb 16, 2018 - 8:48am
State–Federal Clash on Immigration Squeezes California Employers
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US President Donald Trump’s agenda of expanded detention and deportation of undocumented immigrants has been frustrated by the refusal of some states and cities to participate the federal authorities’ crackdown, which opponents say unfairly targets non-criminals and makes immigrant communities less safe by eroding their trust in the police. Last September, California passed a law prohibiting employers in the state from voluntarily allowing Immigration and Customs Enforcement (ICE) agents onsite to conduct immigration inspections or to access employee records without a warrant or court order.

In an apparent response to the state’s defiance, ICE has stepped up enforcement raids in California this year, as well as other jurisdictions that have passed “sanctuary” laws barring local authorities from cooperating with federal agents in immigration enforcement. These laws have enraged Trump and ICE director Thomas Homan, who have accused legislators in these areas of endangering citizens and officers to protect undocumented criminals. California lawmakers counter that they are merely insisting that ICE agents show documents they are already federally required to present before conducting inspections.

This tension between Sacramento and Washington has put California employers between a rock and a hard place, Nour Malas reports at the Wall Street Journal, as they receive conflicting instructions from state and federal authorities and fear being targeted by one for cooperating with the other. In response to the recent wave of raids, Democratic State Attorney General Xavier Becerra warned employers that they could face legal action by the state if they voluntarily hand over information about their employees to ICE.

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GrubHub Prevails in Contractor Classification Suit
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Feb 9, 2018 - 12:45pm
GrubHub Prevails in Contractor Classification Suit
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US Magistrate Judge Jacqueline Scott Corley issued her ruling on Thursday in a case brought against GrubHub late last year by former food delivery driver Raef Lawson, who claimed that the company’s gig economy business model had violated his rights as an employee under California law. Corley was not persuaded, however, by Lawson’s argument that GrubHub exerted enough control over when and how he worked for him to qualify as an employee and instead found that the company was correct to treat him as an independent contractor, TechCrunch’s Megan Rose Dickey reports:

A key element of the case centered around the Borello test, which looks at circumstances like whether the work performed is part of the company’s regular business, the skill required, payment method and whether the work is done under supervision of a manager. The purpose of the test is to determine whether a worker is a 1099 contractor or a W-2 employee.

On the basis of the Borello standard, Corley concluded that “GrubHub’s lack of all necessary control over Mr. Lawson’s work, including how he performed deliveries and even whether or for how long, along with other factors persuade the Court that the contractor classification was appropriate for Mr. Lawson during his brief tenure with GrubHub.” She also expressed concerns over Lawson’s honesty, noting that he misrepresented his education in his résumé and “intentionally manipulated the app to get paid for not working,” undermining the credibility of his testimony.

Being the first to weigh in on whether gig economy workers enjoy rights as employees, Corley’s ruling could set a precedent with implications for other gig economy companies. However, as Dickey notes, the judge hesitated to cast her ruling as dispositive with regard to the gig economy as a whole:

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