California Bill to Mandate Women on Boards Faces Challenge From Businesses

California Bill to Mandate Women on Boards Faces Challenge From Businesses

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

Massachusetts Enacts New Restrictions on Non-Compete Agreements

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

Uber and Lyft End Forced Arbitration of Sexual Harassment and Assault Claims

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

California Supreme Court Adopts Tighter Standard for Contractor Classification

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

State–Federal Clash on Immigration Squeezes California Employers

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

GrubHub Prevails in Contractor Classification Suit

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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ICE Step ups Workplace Raids, Targeting California’s ‘Sanctuary Cities’

ICE Step ups Workplace Raids, Targeting California’s ‘Sanctuary Cities’

Last week, federal Immigration and Customs Enforcement agents raided 98 7-Eleven stores throughout the US, arresting 21 people, including undocumented workers and franchise owners who were caught employing them. The point of the raids was not so much the arrests themselves, but rather a show of force intended to scare employers away from employing undocumented immigrant workers by demonstrating that the federal government was serious about cracking down on them, New York Times reporter Natalie Kitroeff noted earlier this week:

[A]ccording to law enforcement officials and experts with differing views of the immigration debate, a primary goal of such raids is to dissuade those working illegally from showing up for their jobs — and to warn prospective migrants that even if they make it across the border, they may end up being captured at work. Targeting 7-Eleven, a mainstay in working-class communities from North Carolina to California, seems to have conveyed the intended message.

“It’s causing a lot of panic,” said Oscar Renteria, the owner of Renteria Vineyard Management, which employs about 180 farmworkers who are now pruning grapevines in the Napa Valley. When word of the raids spread, he received a frenzy of emails from his supervisors asking him what to do if immigration officers showed up at the fields. One sent a notice to farmhands warning them to stay away from 7-Eleven stores in the area.

Employers in Northern California, in particular, are expected to be the targets of ICE’s next round of raids, the San Francisco Chronicle reported on Wednesday, in what has been described as retaliation against the wave of “sanctuary” laws passed by numerous localities and the state of California limiting the degree to which local authorities can cooperate with federal agents in immigration enforcement. Another law passed last fall bars employers in the state from voluntarily allowing ICE agents onsite to conduct immigration inspections or to access employee records without a warrant or court order.

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