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Employment Law Specters Haunting Management Attorneys

Law360—Aaron Vehling

Horror movies aren’t the only things frightening management-side employment attorneys this Halloween. Recent agency actions and court rulings have unleashed speedy union elections, altered relationships for joint employers and set up ways to bypass classwide arbitration, all moves that attorneys say could lead to more than a few employment-related scares.

The National Labor Relations Board and the courts are part of an overall legal landscape that leave employers and their attorneys awake at night, according to Marc A. Mandelman of Epstein Becker Green.

"The employment law landscape is disturbing and becoming increasingly so," Mandelman said. 

Not only is there a growing number of pro-worker rulings and governmental enforcement initiatives, there is also increasing legislative activism at the state and local level, creating a patchwork of disparate laws and requirements that employers operating in multiple jurisdictions have to reconcile, according to Mandelman.

But while these developments may give workers reason to celebrate, to employers and their attorneys they can be specters, haunting their efforts to stay out of spine-tingling legal predicaments. Here, management-side attorneys highlight recent changes to the employment landscape they find truly scary, and what employers can do about them.

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Haunted by PAGA

California’s complex labor laws can seem supernatural to management attorneys, but the Ninth Circuit in September gave them an especially good reason to be spooked. In Shukri Sakkab v. Luxottica Retail North America Inc., the court gave workers a new tool to bypass class action waivers in mandatory arbitration agreements.

It found that workers can’t waive away their right to sue on behalf of themselves and current and former employees over workplace violations under California’s Private Attorneys General Act.

Although PAGA claims have been around for a while, they were primarily in the background until the Ninth Circuit's ruling, according to Paul Mollica of plaintiffs' firm Outten & Golden LLP.

"Now they're concerned they can't write their way out of [a PAGA action]," Mollica said, noting that this levels the playing field in what has become a "one-sided system that is deeply disadvantageous" to workers.

With the door open for PAGA claims, management attorneys are left with knocking knees, according to Mandelman.

He said employers have spent a lot of time and effort making agreements and class action waivers enforceable in states where they operate.

“Then you get a claim in California adding a PAGA claim and all that hard work sort of goes down the drain,” Mandelman said. “It undermines the effectiveness of having predispute arbitration with employees.”

Class action waivers have become more common since 2011, when the nation’s high court ruled in AT&T Mobility LLC v. Concepcion that state laws barring them are preempted by the Federal Arbitration Act. Courts in California have likewise sanctioned PAGA waivers, but in 2014 the California Supreme Court ruled in Iskanian v. CLS Transportation that PAGA waivers are unenforceable — a decision the Ninth Circuit upheld in Sakkab.

“[Sakkab] was both surprising and dangerous [and] is an issue the Supreme Court ultimately will have to decide,” Ogletree Deakins’ Chapman said. “The implications for the enforceability of arbitration agreements are significant.”

The high court had previously declined to review the Iskanian ruling, and Chapman says until it changes its mind there will be ambiguity that employers have to face.

“As a result, employers should consider revising their arbitration agreements to provide that any claims not subject to arbitration will be stayed pending resolution of the claims that are subject to arbitration, as the latter are likely to be dispositive of the former,” Chapman said.

The cases are Shukri Sakkab v. Luxottica Retail North America Inc., case number 13-55184, and Jose Sierra v. Oakley Sales Corp., case number 13-55891, in the U.S. Court of Appeals for the Ninth Circuit.