Teukolsky Law Files NEW Lawsuit UNDER AB 51 CHALLENGING EMPLOYER'S REQUIREMENT THAT EMPLOYEE WAIVE HER ACCESS TO COURTS AS A CONDITION OF EMPLOYMENT
On Friday, April 8, Teukolsky Law filed a lawsuit in Los Angeles Superior Court on behalf of April Blackwell, a 37-year-old Black woman, against The Pendry West Hollywood, a luxury hotel owned by Montage International on the iconic Sunset Strip. The lawsuit is the first of its kind, alleging that the Pendry terminated Ms. Blackwell because she said she did not want to sign a mandatory arbitration agreement giving up her ability to sue the Pendry for race discrimination and similar claims in a court of law.
Forcing job applicants and employees to sign forced arbitration agreements was recently made illegal in California by Assembly Bill 51 (AB 51). Under forced arbitration agreements, all claims made by workers—regardless of their severity—must be resolved under private arbitration, a process that overwhelmingly favors employers, disproportionately harms historically marginalized communities, and shields corporations from public scrutiny and accountability. As a condition of employment, The Pendry required Ms. Blackwell to give up her right to access the courts, her right to a jury trial, her right to appeal an erroneous decision, and her right to conduct full discovery to prosecute her claims. When she refused to give up her rights, the Pendry fired her after just one day of work.
California Governor Gavin Newsom signed AB 51 into law in late 2019 after widespread public outrage over arbitration agreements that hid allegations of sexual harassment and assault against Hollywood producer Harvey Weinstein and other prominent figures. The fate of AB 51 is currently in limbo. In 2021, the Ninth Circuit Court of Appeals upheld AB 51 in Chamber of Commerce of United States v. Bonta, 13 F.4th 766, 771 (9th Cir. 2021) (“Bonta”). However, the Ninth Circuit is deferring a vote on whether to rehear Bonta until after the United States Supreme Court issues a ruling in another arbitration case argued in late March 2022.
Still, even if AB 51 is ultimately struck down, Ms. Blackwell’s claims against the Pendry will survive because California law protects employees who are terminated for expressing opposition to conduct they reasonably believe is unlawful, which is exactly what Ms. Blackwell did.
To view the complaint, click here.
Lauren Teukolsky Publishes "Wage And Hour Case Notes" in the California Labor & Employment Law Review
In the March 2022 edition of the California Labor & Employment Review, Lauren Teukolsky published the "Wage and Hour Case Notes," describing five new decisions from California's appellate courts that impact wage-and-hour law. The column includes a discussion of notice requirements for Private Attorneys General Act ("PAGA") cases, the application of California's paystub requirements to flight attendants, the legal standard for reviewing PAGA settlements, whether pizza delivery drivers are exempt from arbitration, and whether non-profits may use unpaid volunteers.
Wage-and-hour law is a dynamic field, with new appellate decisions that regularly reshape the legal landscape. Ms. Teukolsky is an expert in California wage-and-hour law, and speaks regularly on wage-and-hour topics at national and state conferences.
If you would like to consult with Ms. Teukolsky on a wage-and-hour matter, you can use this page to get in touch.
U.S. Senate passes landmark law to protect victims of sexual assault and harassment from arbitration
Last week, the United States Senate passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, signaling a huge victory for victims of sexual assault and harassment across the country. The law prevents employers from using forced arbitration clauses to protect themselves from lawsuits alleging sexual assault and harassment. The bill invalidates forced arbitration clauses in “any dispute or claim that arises or accrues” after the date it is signed into law. This appears to mean that it applies to existing agreements that an employee has already signed, but does not revive sexual assault or harassment cases that have already been arbitrated.
Employers often include forced arbitration clauses in their employees’ employment contracts to ensure that employees’ claims of sexual assault or harassment are resolved through private arbitration, rather than normal court. Many employers do this because the employees tend to fare worse in private arbitration than they do in court. According to a paper published by the Economic Policy Institute, employees in private arbitration win only about a fifth of the time (21.4 percent), whereas employees in federal court win over one-third (36.4 percent) of the time. Employees also tend to be awarded less in damages in mandatory arbitration than in federal courts.
The new bill, H.R. 4445, has not been signed into law yet, but has now been passed by both chambers of Congress with strong bipartisan support. President Biden has indicated support for the bill in the past and is expected to sign it into law soon.
If you believe you have faced sexual assault or harassment at work, or have questions about arbitration, contact Teukolsky Law today for a free consultation.
On October 27, the Washington Post reported that U.S. employers closed nearly 14,000 private arbitration cases in 2020, a 17 percent increase from 2019. The Post wrote about findings from a report by the American Association for Justice.
“Critics say the system, in which cases are decided by private arbitrators, keeps employment disputes out of the public eye and fails to hold corporations accountable,” the Post wrote. Mandatory arbitration agreements are increasingly common, both as a condition of employment and for consumers signing up for products and services.
This week, the House Judiciary Committee is marking up the Forced Arbitration Injustice Repeal (FAIR) Act, which would ban mandatory arbitration. According to a 2018 report from the Economic Policy Institute, arbitration disproportionately affects low-wage workers and the retail industry; arbitration typically favors companies while shielding them from accountability for working conditions. According to the new report, employees were awarded money in just 1.6 percent of arbitrations in 2020. Decisions in arbitrations are final and cannot be appealed.
California has moved to prohibit mandatory arbitration for employees, but nationwide, just three states, including California, require arbitration companies to self-report certain data, like claim types and the prevailing party in each case.
Lauren Teukolsky is one of the leading experts in California on arbitration agreements. She is a frequent speaker at statewide conferences on the topic of arbitration, including for the California Employment Lawyers Association and the California Lawyers Association (formerly State Bar). If you have questions about whether an arbitration agreement is enforceable, contact us today for a consultation.
Teukolsky Law Asks Chateau Marmont To Reconsider Request To Move Lawsuit from Open Court To Secret Arbitration Proceedings
Last week, Teukolsky Law asked Chateau Marmont's attorney to reconsider the Chateau's request that TL client, Thomasina Gross, dismiss her race discrimination and sex harassment lawsuit against the famed Hollywood institution and refile her claims in private arbitration proceedings. Here is the letter:
Dear Mr. Stone:
We are in receipt of your March 10 letter in which you ask our client, Thomasina Gross, to dismiss the lawsuit she filed in Los Angeles Superior Court against your client, the Chateau Marmont, and instead file her race discrimination and sexual harassment claims with JAMS, a private arbitration company whose proceedings are not open to the public. We recognize that the arbitration agreement Ms. Gross signed when she started working for the Chateau appears to be enforceable. However, we would ask that you reconsider your request for the following reasons.
First, the Chateau’s treatment of its employees is a matter of substantial interest to the public and should accordingly be evaluated in a public forum, so that the public can make informed decisions about whether or not to give their business to the Chateau. Whereas arbitrations are essentially a “secret system controlled by the wrongdoers,” court cases ensure that the public has access to information that affects them. If Ms. Gross’s claims proceed in arbitration, none of the documents filed in the case will be a public record, and the testimony provided by witnesses will not be accessible to the public.
Second, a plaintiff’s ability to conduct discovery to learn information about the defendant’s case is far more constrained in arbitration than in court. For example, the JAMS Employment Arbitration Minimum Standards provide for only one deposition per party, while California state courts allow for the parties to take the depositions of all witnesses with relevant information. Given the nuances involved in evaluating a race discrimination and sexual harassment claim, we believe broader discovery is necessary.
Third, while forced arbitration is unfair to all workers (Americans are more likely to be struck by lightning than to win their cases in arbitration), it disproportionately affects female workers and Black workers, who are the most likely groups to be bound by forced arbitration. Meanwhile, only 28.84% of JAMS arbitrators are women, and only around 4% are African-American. We believe that our client, an African-American woman alleging race discrimination and sexual harassment in the workplace, deserves to have her case heard by a jury of her peers that is reflective of the community of Los Angeles.
For these reasons, we would respectfully request that you permit Ms. Gross to proceed with her claims in court, and not require her to proceed in arbitration. We appreciate your consideration of our request.
In a unanimous decision issued today in the closely-watched case of Lawson v. ZB, N.A., the California Supreme Court held that employees who file claims against their employers for penalties under the Private Attorneys General Act ("PAGA") to enforce the Labor Code may not seek to recover unpaid wages under Labor Code section 558 on behalf of employees. In the lower courts, the parties fought about whether a PAGA plaintiff subject to an arbitration agreement seeking both penalties and unpaid wages through Labor Code section 558 would be required to arbitrate the unpaid wages portion of their claim. The Cal Supremes cut off this argument at the knees, holding that a PAGA plaintiff may not even seek unpaid wages under Section 558 because the statute authorizes only the State, not a private plaintiff, to bring such a claim. Because the Court previously held that a PAGA plaintiff seeking penalties may not be compelled to arbitration, the Lawson plaintiff -- now stripped of her claim for unpaid wages -- could not be compelled to arbitration.
Sadly, this case is a big victory for employers. It limits the scope of the remedies a private plaintiff may seek under PAGA, the only remaining claim that can be brought in court (as opposed to arbitration) for Labor Code violations. The Supreme Court issued a bright-line ruling that private plaintiffs may seek only penalties (which have a one-year statute of limitations and which must be shared with the State) and can't seek unpaid wages (which arguably have a three-year statute of limitations and which go 100% to the employees). The case is a victory for employees only to the extent that the Court reaffirmed its previous ruling that PAGA claims for penalties may not be compelled to arbitration.
The practical effect of this ruling will be to send much more PAGA settlement money to the State. Previously, in a PAGA-only settlement, the plaintiff could designate a significant portion of the settlement money as unpaid wages and distribute that portion 100% to the employees. The plaintiff could designate the remaining portion as pure PAGA penalties, 75% of which must be shared with the State. Now, PAGA plaintiffs will no longer have the option to designate any portion of a PAGA-only settlement as unpaid wages, which means that 75% of the settlement must go to the State. This means less money in the hands of employees who actually suffered the violations. Hopefully, the State will use the money to hire more attorneys to enforce the Labor Code.
For you legal eagles out there, the critical passage of Lawson states: [T]he amount for unpaid wages referenced in section 558 is not part of that section’s civil penalty and is not recoverable through a PAGA action. Instead . . . this part of a section 558 citation represents compensatory damages. Section 558, in other words, authorizes only the Labor Commissioner to issue a citation that includes both a civil penalty and the same unpaid wages Lawson can alternatively recover under section 1194 through a civil action or an administrative hearing. But section 2699, subdivision (a) does not authorize employees to collect section 558’s unpaid wages through a PAGA action."
If you believe that you have not been paid all of the wages owed to you by your employer, contact us today for a free consultation.
Teukolsky Law founder Lauren Teukolsky was quoted in a Courthouse News story on the Private Attorneys General Act ("PAGA"), a California law that allows private attorneys to stand in the shoes of the State to bring labor enforcement actions against employers who break the law. PAGA is under attack by a consortium of businesses that are suing to have PAGA declared unconstitutional. Teukolsky Law represents a group of 57 nurses who have sued a Tenet-owned hospital in Templeton, CA for labor violations, including failing to provide rest breaks because the hospital was understaffed and the nurses did not want to leave their patients unattended.
Nine of the nurses have brought a PAGA action in San Luis Obispo Superior Court to represent all nurses at the hospital because they all signed arbitration agreements requiring them to bring their claims in secret, private arbitration proceedings. Courts currently allow employees to bring PAGA claims in open court, even if they have signed arbitration agreements. The arbitration agreements the nurses signed contain class action waivers, which means that the nurses are not allowed to bring an action to represent all of the nurses with similar claims at the hospital -- except through PAGA.
If business groups are successful in having PAGA declared unconstitutional, this could greatly impair the ability of employees to vindicate their workplace rights. Teukolsky Law will continue to fight every day for the rights of employees against powerful business lobbies that seek to take away their rights. If you believe that your rights have been violated, contact us today for a free consultation.
Today, the California Senate voted to approve AB 3080, a bill that would prohibit employers from requiring their employees to arbitrate employment-related claims against their employers. Under current law, employers can require their employees to sign arbitration agreements as a condition of employment. Arbitration is a private court system without judges and juries. Instead, arbitrators -- usually retired judges -- are paid to adjudicate claims. Arbitrations are usually confidential, and held in hotel conference rooms or other private locations. If the bill becomes law, employers in California will no longer be allowed to require employees to give up their right to go to court. Instead, employees will be able to sue their employers in court for discrimination, retaliation, sexual harassment, and a host of other claims that employees can bring under California's Fair Employment and Housing Act, one of the strongest anti-discrimination laws in the country. Employers will also be prohibited from requiring employees to arbitrate wage-and-hour claims under the California Labor Code.
Governor Brown has until September 30 to sign or veto the bill. If he signs AB 3080 into law, it will almost certainly be challenged by employers as contrary to the Federal Arbitration Act, a federal law which expresses a preference for cases to be resolved through private arbitration. Nonetheless, today's Senate vote is a huge win for employees. Many of our clients have no idea that they have signed arbitration agreements giving up their rights to sue their employers in court. Forced arbitration agreements are contrary to American values, and should be ended.
On July 13, 2017, the California Supreme Court issued a blockbuster decision in Williams v. Superior Court, holding that plaintiffs who bring representative wage-and-hour actions under California's Private Attorney General Act ("PAGA") have broad discovery rights and are entitled to obtain a the names and contact information of other "aggrieved employees" without making a heightened showing that the employer has violated the law. This is the most significant PAGA decision since the Supreme Court held in Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014), that an employee’s right to bring a representative PAGA action may not be waived through a forced arbitration agreement.
While employers will undoubtedly bemoan the Williams decision, let's just remember that we are on the precipice of a Supreme Court decision in the 2017-2018 term that will likely eviscerate wage-and-hour class actions on a nationwide basis. If the Supreme Court rules as I suspect they will, PAGA will be the only remaining vehicle for employees to bring representative wage-and-hour actions. This shifting class action landscape was undoubtedly on the minds of the Cal Supremes when they issued the pro-employee Williams decision yesterday.
While employment class actions are likely on their way out the door, employees in California can still pursue representative claims on behalf of themselves and other affected employees under the Private Attorney General Act, aka "PAGA." Under PAGA, an "aggrieved employee" can seek penalties and unpaid wages against an employer for violations like the failure to pay overtime and minimum wage, and the failure to provide meal and rest breaks. In Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014), the California Supreme Court held that an employee cannot be compelled to waive her right to bring a representative PAGA claim in a predispute arbitration agreement. In a trio of cases decided in the past year, the California Court of Appeals held that employers cannot use predispute arbitration agreements to compel a PAGA case to arbitration. See Betancourt v. Prudential Overall Supply, 9 Cal.App.5th 439 (2017); Hernandez v. Ross Stores, Inc., 7 Cal.App.5th 171 (2016); and Tanguilig v. Bloomingdale’s, Inc., 5 Cal.App.5th 665 (2016). This means that employees who have signed arbitration agreements can still bring their representative PAGA actions in court. In response to Iskanian and its progeny, the employer lobby, including the Chamber of Commerce, is hard at work trying to pass legislation to limit PAGA's reach. Their efforts so far have been largely unsuccessful, but who knows what next year's legislative session will bring.
Lauren Teukolsky is the founder and owner of Teukolsky Law, A Professional Corporation.