Washington State is considering sweeping legislation (SB 5376) to govern the security and privacy of personal data similar to the requirements of the European Union’s General Data Protection Regulation (“GDPR”). Under the proposed legislation, Washington residents will gain comprehensive rights in their personal data. Residents will have the right, subject to certain exceptions, to request that data errors be corrected, to withdraw consent to continued processing and to deletion of their data. Residents may require an organization to confirm whether it is processing their personal information and to receive a copy of their personal data in electronic form.

Covered organizations will be required to provide consumers with a conspicuous privacy notice disclosing the categories of personal data collected or shared with third parties and the consumers’ rights to control use of their personal data. Significantly, covered businesses must conduct documented risk assessments to identify the personal data to be collected and weigh the risks in collection and mitigation of those risks through privacy and cybersecurity safeguards.

Washington’s proposal follows the recent enactment of the California Consumer Privacy Act (see EBG’s Act Now AdvisoryCalifornia’s Consumer Privacy Act What Employer’s Need to Know). Washington’s legislation, however, will grant rights beyond those contained in the California Act and is more closely aligned with the GDPR’s framework. The heightened protections are grounded in the sponsors’ recognition of the detrimental effect of data breaches and the resulting loss of privacy. The Act cites to the GDPR as providing for “the strongest privacy protections in the world” and adopts the GDPR’s expansive definition of “personal data” – any information relating to any identified or identifiable natural person.

Businesses that process the personal data of more than 100,000 Washington residents are covered, as well as “data brokers” that derive 50 percent of their revenue from the brokered sale of personal information. Notably, “data sets” (i.e., Protected Health Information (“PHI”)) regulated by the federal Health Insurance Portability and Accountability Act of 1996, Health Information Technology for Economic and Clinical Health (“HITECH”) Act, or the Gramm-Leach-Bliley Act of 1999 are not covered. Financial and health care institutions may need to comply as to other personal data not protected under these statutes. If a health care or financial institution collects or processes other personal data and meets the thresholds above, then it is likely covered.

Employers should take note that data sets maintained only for employment records purposes are excluded. Notably, the Act excludes from coverage “an employee or contractor of a business acting in their role as an employee or contractor.” The Act will impact organizations that use facial recognition technology for profiling consumers with effects on “employment purposes” and “health care services” requiring human review prior to final decisions. Organizations who contract with facial recognition firms may see pass through contractual restrictions prohibiting use for unlawful bias.

There is no private right of action. Enforcement actions may be brought by the Attorney General to obtain injunctive relief and to impose civil penalties. If enacted, the Act, scheduled to become effective December 31, 2020, will have wide-ranging impacts requiring significant advance planning, risk assessments and consideration of privacy and security by design principles.

Featured on Employment Law This Week:  A California federal judge has ruled that a former GrubHub delivery driver was an independent contractor, not an employee.

The judge found that the company did not have the required control over its drivers for the plaintiff to establish that he is an employee. This decision comes as companies like Uber and Lyft are also facing lawsuits that accuse them of misclassifying employees as independent contractors. Carlos Becerra, from Epstein Becker Green, has more.

Watch the segment below and read our recent post.

Our colleagues , at Epstein Becker Green, have a post on the Wage and Hour Defense Blog that will be of interest to many of our readers in the technology industry: “Labor Issues in the Gig Economy: Federal Court Concludes That GrubHub Delivery Drivers are Independent Contractors under California Law.”

Following is an excerpt:

Recently, a number of proposed class and collective action lawsuits have been filed on behalf of so-called “gig economy” workers, alleging that such workers have been misclassified as independent contractors. How these workers are classified is critical not only for workers seeking wage, injury and discrimination protections only available to employees, but also to employers desiring to avoid legal risks and costs conferred by employee status.  While a number of cases have been tried regarding other types of independent contractor arrangements (e.g., taxi drivers, insurance agents, etc.), few, if any, of these types of cases have made it through a trial on the merits – until now.

In Lawson v. GrubHub, Inc., the plaintiff, Raef Lawson, a GrubHub restaurant delivery driver, alleged that GrubHub misclassified him as an independent contractor in violation of California’s minimum wage, overtime, and expense reimbursement laws.  In September and October 2017, Lawson tried his claims before a federal magistrate judge in San Francisco.  After considering the evidence and the relevant law, on February 8, 2018, the magistrate judge found that, while some factors weighed in favor of concluding that Lawson was an employee of GrubHub, the balance of factors weighed against an employment relationship, concluding that he was an independent contractor. …

Read the full post here.

Steven R. Blackburn, Member of the Firm in the Employment, Labor & Workforce Management practice will co-present a Practising Law Institute in-person event and webcast on January 25, 2018 at 10:00 a.m. PST titled “Tech Sector Employment Law Hot Topics for the California Lawyer.

This event will address current California employment law issues, with the added focus of how the latest, state-specific legal developments impact the tech sector, in particular.

Steven R. Blackburn’s program is titled, “Sexual Harassment in the Tech Sector – Employer Duties, Investigations and Managing Claims,” and will address the following:

  • Employer, board and fiduciary duties in a harassment claim
  • Avoiding common pitfalls when investigating harassment
  • Assessing risk vulnerability to high level employees
  • Recent wave of sexual harassment revelations – what makes this time different?
  • Social media’s role in exposing sexual harassment, it’s impact in how investigations are managed

MCLE credit is available for participating in the program.

For more information and to register for this webcast, click here.

For the second time in as many years, California Governor Jerry Brown has vetoed “wage shaming” legislation that would have required employers with 500 or more employees to report gender-related pay gap statistics to the California Secretary of State on an annual basis beginning in 2019 for publication on a public website. Assembly Bill 1209 (“AB 1209”), which we discussed at length in last month’s Act Now advisory, passed the Legislature despite widespread criticism from employers and commerce groups.  This criticism included concerns that publication of statistical differences in the mean and median salaries of male and female employees without accounting for legitimate factors such as seniority, education, experience, and productivity could give a misleading impression that an employer had violated the law.  Opponents also decried the burden the bill would place on employers to do data collection and warned that it would lead to additional litigation.  In vetoing the measure, Governor Brown noted the “ambiguous wording” of the bill and stated he was “worried that this ambiguity could be exploited to encourage more litigation than pay equity.”

However, the same pen that vetoed AB 1209 signed another pay-equity law last week: Assembly Bill 168 (“AB 168”).  AB 168 precludes California employers from asking prospective employees about their salary history information.  “Salary history information” includes both compensation and benefits.  Like similar laws passed recently in several other states and cities, the policy underlying the inquiry ban is that reliance upon prior compensation perpetuates historic pay differentials.  Opponents have argued that such a ban will make it more difficult for employers to match job offers to market rates.  Go to our Act Now Advisory on AB 168 for a comprehensive review of this new law.

On December 9, 2016, Los Angeles Mayor Eric Garcetti signed ordinances no. 184652 and 184653, collectively referred to as the “Fair Chance Initiative.” These ordinances prohibit employers and City contractors (collectively “Employers”), respectively, from inquiring about job seekers’ criminal convictions until after a conditional offer of employment has been made. Both ordinances will go into effect on January 22, 2017 and will impact all employers in the City of Los Angeles and for every position which requires an employee to work at least an average of two hours per week within the City of Los Angeles and all City contractors and subcontractors, regardless of their location.

No Criminal Inquiry Until After Offer

Specifically, these ordinances prohibit Employers from inquiring about a job applicant’s criminal history, at any time or in any manner, unless and until a Conditional Offer of Employment has been made to the applicant. Following the Conditional Offer of Employment, Employers are permitted to request information regarding the applicant’s criminal history. However, Employers can only withdraw or cancel the conditional offer as a result of the applicant’s criminal history after engaging in the “Fair Chance Process.”

New “Fair Chance Process” Required

The “Fair Chance Process” requires Employers to prepare a written assessment highlighting the specific aspects of the applicant’s criminal history that pose an inherent conflict with the duties of the position sought by the applicant. Employers must provide the applicant with written notification of the proposed withdrawal of the conditional offer, a copy of the written assessment regarding the risks posed by the applicant’s criminal history, and any other relevant documentation. The applicant is then given an opportunity to provide the Employer a response to the written assessment, including any supporting documentation. Employers must wait at least 5 business days after the applicant is informed of the proposed withdrawal before taking any action, including filling the position for which the applicant applied.

New Posting and Recordkeeping Requirements

Additionally, Employers’ job postings must now include a notice stating that they will consider all qualified applicants regardless of their criminal histories, in compliance with these ordinances. Employers must also conspicuously post a notice regarding the “Fair Chance Initiative” in a location in the workplace visible to all job applicants; this notice must also be sent to each union or workers’ group with which the employers have any agreement that governs over employees. Further, Employers must retain all job application documents for three years. Penalties for violations of these ordinances may be assessed at up to $500 for the first violation, up to $1,000 for the second violation, and up to $2,000 for subsequent violations. The City may then, at its discretion, distribute a maximum of $500 from that penalty directly to the applicant. The penalty provision of the ordinances will not go into effect for employers in Los Angeles City until July 1, 2017. However, the penalty provision for City contractors is effective immediately.

Exceptions from these ordinances include: (1) employers who are required by law to seek a job applicant’s criminal history; (2) positions for which an applicant would be required to possess or use a firearm; (3) positions which, by law, cannot be held by an individual with a criminal history; and (4) employers who are prohibited, by law, from hiring persons with criminal convictions.

Employers with operations in the City of Los Angeles should:

  1. Remove questions regarding criminal history from job applications;
  2. Ensure future job postings include required equal employment notices;
  3. Defer inquiries regarding criminal history until making conditional job offers; and
  4. Ensure the Fair Chance Process is followed before denying employment based on criminal history.

Following on the tails of recent updates in New York and California’s equal pay laws, New Jersey, Massachusetts, and California all have bills pending in their state legislatures that would seek to eliminate pay differentials on the basis of sex and other protected categories.

The NJ Amendment

NJ employers may be curious why this amendment is necessary, as the state’s Equal Pay Law already prohibits discrimination in the rate or method of payment of wages to an employee because of his or her sex. The NJ Amendment, which has passed in the Senate and must now move through the House before being delivered to the Governor, would amend the Law Against Discrimination to prohibit differentials among employees of different sexes who perform “substantially similar” work. The NJ Amendment would, like the federal Lilly Ledbetter Fair Pay Act, allow a plaintiff to bring a claim based on “continuing violations” of the law, thereby expanding the statute of limitations on pay differentials.

The law mimics the New York and California laws, in that employees may bring claims based on a disparate impact – i.e., a neutral factor produces a wage differential based upon sex, and the employer did not adopt an alternative business practice that would serve the same purposes without the wage differential.

The NJ Amendment provides that comparisons of wages are based on rates “in all of an employer’s operations or facilities.” This broad definition is troublesome for employers, as it does not clearly state the reach of the law. In contrast, the New York law limits geographic comparisons based upon regions no larger than a county. The California law does not have any type of geographic limitation on wage comparisons.

The MA Amendment

The MA Amendment goes significantly further than the NJ Amendment, and follows more closely with the recent changes in the New York laws, as part of the NY Governor Cuomo’s Women’s Equality Agenda. In addition to prohibiting pay differentials on the basis of gender without a justifiable factor other than sex, the MA Amendment (1) provides that an employees’ seniority for pay purposes may not be reduced due to time spent on protected family, medical, and parental leave (including pregnancy-related leave), (2) establishes pay transparency provisions, and (3) creates an affirmative defense for employers who perform self-evaluations of pay practices.

The MA Amendment, which also has passed in the Senate and must now move through the House before being delivered to the Governor, amends the current Massachusetts Equal Pay Act to define “comparable work” to mean “work that is substantially similar in content and 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.”

Unlike all other recent equal pay laws, the MA Amendment permits employers to base pay differentials based upon geographic location if one location has a lower cost of living based upon the Consumer Price Index.

Interestingly, the MA Amendment would also prohibit employers from obtaining an applicant’s salary history on an application or during interviews. Earlier this year, the California legislature passed a bill that would prohibit employers from seeking past pay information from applicants; however, that bill was vetoed by Governor Brown.

The CA Amendment

The CA legislature has recently introduced a new amendment to the fair pay law, which was just amended earlier this year. The Wage Equality Act of 2016 would expand the law’s protections to race- and ethnicity-based pay differentials.

While states are leading the charge with updates to equal pay laws, the EEOC is also stepping up equal pay enforcement with their proposal to modify the EEO-1 forms to include pay information. This push to gather more information regarding pay among various categories may lead to an increase in pay-related claims over the next few years. To help avoid such claims, employers should consider auditing job titles and compensation methods to ensure compliance with each jurisdiction’s equal pay laws.

 

By Meg Thering

On May 27, 2014, employees of high-tech firms in the Silicon Valley filed a motion in the Northern District of California seeking approval of a settlement agreement releasing antitrust claims they had brought against Adobe Systems, Incorporated, Apple Inc., Google, Inc., and Intel Corporation.  In the complaint, the plaintiffs alleged that the defendants had agreed to refrain from hiring each other’s employees in an effort to drive down compensation levels in the Silicon Valley. Specifically, the complaint alleged that Defendants entered into “illegal agreements not to recruit each other’s employees; (2) illegal agreements to notify each other when making an offer to another company’s employee; and (3) illegal agreements that, when offering a position to another company’s employee, neither company would counteroffer above the initial offer” and that they entered into such agreements “to reduce employee compensation and mobility by eliminating competition for skilled labor” in violation of the Sherman Act, 15 U.S.C. § 1 and the Cartwright Act, Cal. Bus. & Prof. Code § 16720, et seq. See In Re High Tech Emp. Antitrust Litig., No. 5:11-cv-02509 (LHR) (N.D. Cal. May 22, 2014).

While the issue of liability was never reached, the cost to defendants was high.  As part of the proposed settlement, defendants would pay a total of $324,500,000 (not counting earlier settlements by other defendants).  Not only are the defendants paying now, the litigation has been costly and time intensive.  This proposed settlement has been agreed to only after three years of litigation which included “the completion of extensive fact discovery, including the taking of 107 depositions, the review of millions of pages of documents, and analysis of over 50 gigabytes of data consisting of approximately 80,000 different files produced by Defendants; two rounds of class certification briefing and argument, including the exchange of eight expert reports by four economists; completion of expert merits discovery (covering a total of 10 experts across the parties); and briefing, argument, and partial denial of Defendants’ motions for summary judgment and exclusion of expert testimony.” In their motion seeking approval of the settlement, Plaintiffs noted that eBay and Intuit had been sued by the Department of Justice and the California Attorney General “regarding an alleged agreement between eBay and Intuit not to poach each other’s employees, which later became a no-hire agreement between the companies.”

This proposed hefty settlement is a reminder to employers in California and nationwide that the overlap of antitrust laws and employment laws cannot be ignored.  Additionally, California employers, especially, should revisit how they are protecting their trade secrets as non-compete and non-solicitation agreements are generally not enforceable in the Golden State. Cal. Bus. & Prof. Code § 16600 makes many restrictive covenants unlawful.  That Section provides: “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” The three exceptions to this rule provided for in the Business & Professions Code relate to professional partnerships, limited liability company members and the sale of a business (though see our recent blog posting about a California resident who was forced to litigate a non-compete dispute in Illinois).  California employers seeking to protect their trade secrets through contractual provisions should look to measures other than non-compete agreements, such as  return of property provisions, and confidentiality agreements. California employers will be hard pressed to keep information about employee compensation confidential though since California Labor Code § 232 prevents employers from prohibiting employees from disclosing the amount of their wages to others (or terminating them or disciplining them for doing so).