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Casual Friday Report: Employment Mandatory Arbitration & Employee Marijuana Use

Myriad of mandatory pre-dispute employment arbitration happenings across the nation…

Here in California the state courts continue to hue to the provisions of the seminal Iskanian decision, holding that a PAGA claim may not be  compelled to arbitration absent the express consent of the government, as the “real party in interest.”  So held the court of appeal last month in Correia v. NB Baker Electric, Inc., 32 Cal. App. 5th 602 (2019).  Therein the plaintiffs sued for wage and hour violations. The court of appeal upheld the trial court’s granting of the defendant’s arbitration petition as to all causes of action except the PAGA claim, which it stayed pending the conclusion of the arbitration; the court of appeal also upheld such determination, notwithstanding defendant’s invocation of SCOTUS’s decision in Epic Systems. The court explained that Epic did not address the specific issues before the Iskanian court involving a claim for civil penalties brought on behalf of the government and the enforceability of an agreement barring a PAGA representative action in any forum.  The court of appeal also reasoned that, in a PAGA action, the government entity is always the real party in interest, analogizing such form of action to a qui tam action.  Thus, it is the state who must consent to arbitration in order to effectively waive the right to bring the PAGA claim into court.

Out in Kentucky, last fall the Kentucky Supreme Court in a decision by its Chief Justice, Northern Kentucky Area Development District v. Snyder, 2017-SC-000277-DG (9/27/19), enforced KRS 336.700(2) which prevented an employer from conditioning employment on the employee’s agreement to arbitration.  The court held the statute not preempted by the FAA for the reason that the “statute only proscribes conditioning employment on agreement to arbitration, not the act of agreeing to arbitration.” [emphasis in original]  The Kentucky Legislature responded by enacting an amendment, effective March 25, 2019, to “undo” this ruling and to authorize mandatory employment predispute arbitration agreements.

Meanwhile, back on the East Coast, the State of New Jersey earlier this month enacted amendments to the New Jersey Law Against Discrimination (NJLAD) with two key purposes: the first being to proscribe and render unenforceable, on the basis of public policy, confidentiality provisions in any employment or settlement agreement which would prohibit current or former employees from revealing information pertaining to claims of discrimination, retaliation or harassment, and the second being to proscribe and render unenforceable, on the basis of public policy, any provision in an employment contract that “waives any substantive or procedural right or remedy” pertaining to a claim of discrimination, harassment or retaliation and holding that employees cannot prospectively waive any other right or remedy under the NJLAD or other statute or case law.  Predictably, management firms opine that, as to the second category of proscription, a ruling of FAA preemption is likely.

On the federal side, on February 28, 2019 Rep. Hank Johnson (D GA) and Senator Richard Blumenthal (D CT) introduced the FAIR Act – the Forced Arbitration Injustice Repeal Act which would prohibit mandatory predispute arbitration agreements requiring arbitration of future employment, consumer, antitrust and civil rights disputes or prohibiting representative actions. S610 has 33 cosponsors, all Democratic; HR 1423 has 160 cosponsors.  Two additional bills are anticipated this year:  Nadler’s Restoring Justice for Workers Act to ban mandatory predispute arbitration agreements in the employment context and to amend the NLRA to prescribe relief as in the Civil Rights Act, and Gillebrand’s Ending Forced Arbitration of Sexual Harassment Act.

Also, a recent, lengthy decision by an NLRB Administrative Law Judge, Keltner W. Locke, in Pfizer Inc. (3/21/29), while holding lawful the employer’s requirement, as a condition of continuing employment, that employees waive the procedural right to sue in court, held unlawful under Section 7 of the NLRA the employer’s requirement that employees waive substantive rights to publicize and disclose terms and conditions of employment, i.e., the ALJ held that employees cannot be required to keep information concerning arbitration confidential.

Medical & Recreational…

And, in other news, efforts in the New Jersey legislature, including hearings this past Monday, to pass the so-called New Jersey Cannabis Regulatory and Expungement Aid Modernization Act apparently have faltered. Notably,  this bill would not only legalize recreational use of marijuana, establish a tax and sale system and provide for expungement of offenses, but also would provide employment protection in terms of prohibiting employment discrimination on the basis of recreational marijuana use.  And, notwithstanding that all use of marijuana is still illegal as a matter of federal law, across the nation, courts currently are tangling with issues as to use of medical marijuana and associated questions of reasonable accommodation.