Employment Arbitration Agreements Are Not for Every Business

Posted by on Jul 2, 2018 in Newsflash | 0 comments

Last month, we reported some good news for employers when the United States Supreme Court upheld the validity of employment arbitration agreements.  However, just because they are legal does not mean that they automatically make sense for every business.  In fact, a majority of small businesses may opt not to include arbitration provisions in their employment agreements. Properly worded arbitration provisions in employment contracts are generally favorable to employers because such provisions allow a business to avoid the bulk of employment-related class action lawsuits and allow a business to handle its internal disputes outside of the public eye.  As a business grows, class action lawsuits by employees alleging wage and hour violations and other improper treatment on a class-wide basis can be a major looming threat to the long-term viability of the enterprise.  Now that their general enforceability has been approved by the US Supreme Court, this class action avoidance aspect alone is often enough to make the decision on whether to include arbitration provisions a no brainer for large, established businesses.  However, just because a business can include an arbitration provision in its employment contracts does not mean that it always makes sense to do. Though avoiding class actions by employees can be a huge potential benefit, arbitration can come with some downside to a business.  First, an arbitrator is a private judge, and that private judge must be paid.  Arbitrators normally charge at least $500-$600 per hour (and often closer to $800-$1,000) for all time spent on a case, and in the employment context the employer is required to pay for all of the extra costs associated with arbitration which an employee would not have had to pay if the matter had been filed in court (meaning, basically, all arbitrator fees).  Thus, even a totally bogus claim may force an employer to pay thousands of dollars in arbitration fees. A case moves through arbitration at a much faster pace than most court cases, which can be a positive or a negative in any given situation.  Once an arbitration case is finished and a decision is made, it is normally a lot more difficult to have that decision reviewed by an appellate court.  While more private than court proceedings, arbitrations can result in judgments that do not seem correct as a matter of law but which an employer may be powerless to challenge on appeal.  This is obviously a very frustrating result. Moreover, in the seemingly never-ending whack-a-mole game between employee-side attorneys and their employer-side counterparts, employees have carved out claims relying on the California Private Attorney General Act (“PAGA”) from those matters which an employer may force into individual arbitration.  Without getting into the fine details of such claims or why they are exempt from being sent to individual arbitration, a PAGA claim can approximate many of the bad parts of a class action lawsuit for an employer whether or not there is a properly worded arbitration provision in the employer’s contract. The bottom line is that whether to include an arbitration provision in your employment contracts is not a “one size fits all” decision.  Like every decision affecting your business, it requires an analysis of the pros and cons of arbitration along with an analysis of the flow of your business to determine what types of...

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Briana Collings has joined the firm as an associate attorney

Posted by on Jul 2, 2018 in Newsflash | 0 comments

Navigato & Battin is pleased to announce Briana Collings has joined the firm as an associate attorney. Briana will focus on corporate formation, corporate governance, and civil litigation. Briana’s background in business includes a Bachelor of Arts degree in Economics from the University of Nevada, Reno, as well as a law degree with a Concentration in Business Law and Litigation from California Western School of Law. Briana’s interest in business began as she grew up watching her father operate his own small business in Carson City, Nevada. As a result of observing her father all those years, Briana has a unique insight into the behind-the-scenes of successfully running a small business, and believes this knowledge will allow her to better support the firm’s small business clients. Briana comes to the firm from the chambers of The Honorable Peter C. Lewis in the United States Federal District Court in El Centro, California, where Briana has served as a clerk. There, Briana has written lengthy opinions for Judge Lewis and provided extensive support during settlement conferences in civil cases. Briana is thrilled to be returning to San Diego to join Navigato & Battin. Briana attended California Western School of Law, and graduated magna cum laude. There, Briana served as an Associate Editor and Writer of the California Western Law Review Journal, as well as the Treasurer for the Student Bar Association. Upon graduation, Briana has become licensed to practice in both California and...

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The Supreme Court Sides with Companies on Arbitration Clauses in Employment Agreements

Posted by on Jun 1, 2018 in Newsflash | 0 comments

On May 21, 2018, the U.S. Supreme Court issued a groundbreaking decision, ruling that companies are permitted to use arbitration clauses in employment contracts to prevent workers from banding together to take collective legal action (class actions) over workplace issues.  The ruling stems from three consolidated cases that involved allegations of employers underpaying their workers. (Epic Systems Corp. v. Lewis, No. 16-258 (Chicago); Ernest & Young v. Morris, No. 16-300 (San Francisco); and National Labor Relations Board v. Murphy Oil USA, No. 16-307 (New Orleans).  Each of the workers’ employment contracts required that the employees resolve any disputes through arbitration instead of a court of law, and required that employees file their arbitration claims one by one rather than through a class action lawsuit. Previously, many state courts have ruled such provisions unenforceable because they discourage workers from bringing small claims against employers, on the theory that employees are much more likely to actually pursue a claim if the workers can spread the costs of litigation amongst each other.  Class actions also have the potential to reduce the risk of employer retaliation. However, writing for the majority, Justice Neil Gorsuch argued that if workers were allowed to band together to press their claims, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.” Therefore, as the law now stands, employment agreements may include a mandatory arbitration provision that requires employees to bring their claims in arbitration separately instead of jointly.  While this is a huge win for employers, it is unclear how many employers will revert back to using such provisions in their employment agreements.  If you have any questions regarding this ruling, your employment agreements, or the arbitration process itself, the attorneys at Navigato & Battin are here to provide...

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Navigato & Battin Says Goodbye to Stephanie Sciarani

Posted by on Jun 1, 2018 in Newsflash | 0 comments

We are sad to announce that after nearly six years with Navigato & Battin, attorney Stephanie Sciarani will be leaving the firm to return back to her home state of Nevada. During her time with the firm, Stephanie specialized in assisting our corporate clients with entity formation, drafting various agreements, advising on employment issues, and participating in all facets of litigation. Of her time with Navigato & Battin, Stephanie said: “I could not be more appreciative of my opportunity to begin my career at a firm that always puts its clients’ interests first. The mentorship I received from Dan, Mike and Travis has been invaluable and will influence me for the rest of my career. I will greatly miss working with all of the firm’s wonderful clients but look forward to seeing how the companies continue to grow.” Stephanie will be working as an Assistant General Counsel at Blockchains LLC, a start-up located in Reno, Nevada.  We wish Stephanie the best of luck in her new endeavor.  While she will be missed, we are committed to making the transition smooth for our clients and will be announcing the newest addition to the firm in next month’s...

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The California Supreme Court Adopts a New Test for Classifying Workers

Posted by on May 1, 2018 in Newsflash | 0 comments

For years, California and other states have gradually restricted employers’ ability to classify workers as independent contractors.  California tends to frown upon classifying workers as independent contractors since independent contractors do not receive the same protections under labor laws as employees and, perhaps more importantly to the state, do not generate the same tax revenue as employees.  For example, independent contractors do not get meal and rest breaks, they are generally not subject to wage and hour laws, and they are not protected under federal employment laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, or the Family Medical Leave Act, among others. For the past 30 years, California has used the Borello standard when classifying independent contractors, which primarily relied upon whether the hiring company had the right to control the manner and means by which the worker performs the work.  Additional factors considered under the Borello test included: the degree of skill required to perform the work, the method of payment, and whether the services being performed for the company are part of the company’s regular scope of business. On April 30, 2018, the California Supreme Court issued its unanimous ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, changing the above rule, and making it even harder for employers to classify workers as independent contractors.  The case was brought by drivers of a package and document delivery company, Dynamex Operations West, who alleged that the company misclassified them as independent contractors in order to avoid paying wages and benefits.  After a lengthy opinion, the court adopted a new test for classification. The New Test for Worker Classification The new test adopted by California presumptively considers all workers to be employees and only considers workers to be properly classified as independent contractors if all three of the following prongs of the test are satisfied: The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; and The worker performs work that is outside the usual course of the hiring entity’s business; and The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity. As an example, the court stated that a plumber hired by a retail store to repair a bathroom leak would not be performing work that is part of the store’s usual business and would therefore be considered an independent contractor of that store.  However, seamstresses sewing at home using materials provided by a clothing manufacturer would probably be considered employees of the manufacturer. This latest ruling is yet another stern reminder to California businesses that they must take care in classifying their workers.  If you need assistance in properly classifying workers, the attorneys at Navigato & Battin are here to offer help.  In particular, if you have independent contractors who perform tasks for your business on a regular basis or which fall within the scope of your primary business focus, it is essential to have an experienced attorney review the relationship to ensure that you are properly classifying the...

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Does Your Business Website Need a Privacy Policy?

Posted by on May 1, 2018 in Newsflash | 0 comments

Chances are if you are doing business in 2018, your company has some sort of online presence.  It is important to remember that there are regulations that businesses must comply with when operating a website.  In particular, many businesses need to have written privacy policies under California’s Online Privacy Protection Act (the “Act”). The Act applies to any person or company whose website or mobile application collects “personally identifiable information” from California consumers who use or visit the website.  This includes websites which require individuals to enter a username, password, email address, physical address, phone number, social security number, or any other identifiers that could permit the user to be contacted either physically or online.  If the website does collect such information, the website must feature a conspicuous privacy policy stating what information is collected and with whom it will be shared.  The law also requires that the operator of the website comply with the listed privacy policy. In the event your company collects “personally identifiable information,” you need to ensure that your website is compliant with the requirements of the Act.  Compliance under the Act requires the privacy policy to: Be conspicuously posted on the website. This may be done by putting the policy on the website and/or providing a link to the policy on the website; Identify the effective date of the privacy policy; Provide a list of the categories of personally identifiable information collected; Provide a list of the categories of third parties with whom the operator may share such personally identifiable information; Provide a description of the process, if any, by which the consumer can review and request changes to the personally identifiable information collected; and Provide a description of the process by which the operator notifies consumers of any material changes to the privacy policy. The Act additionally requires privacy policy disclosures for tracking of visitors on websites and by online services, defined as “the monitoring of an individual across multiple websites to build a profile of behavior and interests.”  To comply, a privacy policy is required to: Disclose how the website responds to Do Not Track signals from web browsers; Disclose whether third parties may collect visitors’ personal identifiable information on a website; and Provide a conspicuous hyperlink within the privacy policy to an “online location containing a description, including the effects, of any program or protocol the operator follows that offers the consumer that choice.” If your company needs assistance in drafting a website privacy policy, the attorneys at Navigato & Battin are experienced in creating policies that comply with California and federal...

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Do Online Legal Forms Actually Save Money?

Posted by on Apr 2, 2018 in Newsflash | 0 comments

A quick Google search for the phrase “online legal forms” returns 2,620,000 results.  Everyday people are using online legal forms to incorporate a business or draft important legal documents such as contracts and wills.  While these forms are convenient, quick to obtain, and admittedly significantly cheaper than hiring an attorney (at least in the short term), they may not be cheaper in the long run. All too often, clients come to us to finish completing the incorporation of their company or to fix problems that have arisen from the form contracts they purchased online.  Sometimes the issues are small and only require finishing the incorporation documents or drafting an addendum to the contract at issue.  However, at other times the issues have escalated to a point where a quick fix or simple addendum is impossible and the only way to unwind what should never have been a problem in the first place is through costly litigation. In the age of technology, it is easy to rely on a form found on the internet.  However, it is virtually impossible to determine the qualifications of the individual who prepared the form.  Most people assume that an attorney drafted the forms they are viewing, but that is not always the case.  Even if it was an attorney who drafted the form, you have no knowledge of the attorney’s experience or whether the form has been created with the state and local rules and laws which may apply to your transaction in mind.  Furthermore, these forms do not take individual situations into account.  Each transaction is different, with individualized nuances.  A legal form more often than not leaves out significant issues that are particularized to your matter, leaving you with an incomplete contract which does not protect your best interests. While using online legal forms may be cheaper in the short-term, always remember you get what you pay for and the fee typically does not include personalized advice.  Thus, in the long run for the protection of yourself or your company, your sanity, and your pocketbook, it is usually cheaper to hire an attorney to get the proper legal advice from the outset.  The attorneys at Navigato & Battin are experienced in contract drafting and always strive to ensure that our clients have protections in place to put them in the best position to avoid costly disputes down the...

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New California Employment Notice Requirements for Businesses

Posted by on Apr 2, 2018 in Newsflash | 0 comments

Most California business owners know that the state has certain posting requirements with regard to employee notifications.  However, the standard postings that most employers purchase may not include all of California’s mandatory and required postings. Thus, in addition to the traditional notifications outlining employees’ rights (such as time off for voting, equal protection, unemployment insurance benefits, minimum wage requirements, and sick leave), California also requires a number of other employee notifications to be posted in the workplace.  These notifications include: Transgender Rights in the Workplace, which applies to businesses with 5 or more employees and took effect on January 1, 2018; Human Trafficking notification, which took effect on January 1, 2018 and must be posted by the following: on-sale general public premises licensees under the Alcoholic Beverage Control Act, businesses or establishments that offer massage or bodywork services, adult or sexually oriented businesses, primary airports, intercity passenger rail or light rail stations, bus stops, truck stops, emergency rooms, urgent care centers, farm labor contractors, privately-operated recruitment centers, and roadside rest areas. California Prohibits Workplace Discrimination and Harassment (may use any version from December 2014 to the present); Family Care and Medical Leave/Pregnancy Disability Leave, which applies to businesses with 50 or more employees (may use any version from July 2015 to the present); and Your Rights and Obligations as a Pregnant Employee, which applies to businesses with 5 or more employees (may use any version from April 2016 to the present). Failure to post the appropriate notifications can lead to steep civil penalties and/or action by the Department of Fair Employment and Housing, among other things.  Fortunately, if your business does not already post these notices, you may print the notifications from the embedded links above and post.  If you have any questions regarding any employee notification requirements or California law as it relates to employees, the attorneys at Navigato & Battin are here to provide...

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Five Strategies to Help You Avoid Business Litigation

Posted by on Mar 1, 2018 in Newsflash | 0 comments

It is no secret that litigation is an expensive way to resolve business disputes.  Not only are court costs high and attorney’s fees steep, but lawsuits take your focus away from running your business for significant stretches of time.  In order to help avoid the cost and stress of litigation, follow the tips below: Enter into Effective and Enforceable Contracts Each and every business relationship should be memorialized in a written contract.  This includes but is not limited to: agreements between owners, agreements with clients and customers, agreements with employees, agreements with vendors, and agreements with anyone who will have access to confidential business information.  Such contracts should be drafted in a customized way to govern the specific relationship at hand and should clearly spell out the rights and obligations of each party.  While it is tempting to simply copy and paste a contract from an Internet search, it is a much smarter practice to retain an attorney to help craft the contracts in order to avoid or at least minimize disagreements down the road.  A few hundred dollars in drafting fees only seems like a lot of money until you are forced to pay thousands of dollars to litigate disputes over a poorly drafted contract. Obtain Appropriate Insurance Coverage Insurance is a necessity in today’s business world.  Thus, it is critical to fully understand all of the risks of your business to ensure that the company has insurance policies to adequately cover those risks.  Failure to have the proper insurance can prolong the case and subject the company to financial stresses it would not otherwise have to face.  The most common types of insurance to consider are: general liability insurance, commercial property insurance, professional liability insurance, product liability insurance, and workers’ compensation insurance. Properly Train and Supervise Employees When employees are performing within the scope of their job responsibilities, they are an extension of the company.  This includes both time spent in the office and time spent running errands benefiting the company.  Any wrongdoing by an employee while on the job is likely to be attributed to the company.  Therefore, it is vital to ensure all staff members are fully trained on their respective job responsibilities and expectations, understand the company’s policies and procedures, and know that such policies and procedures will be strictly enforced.  In addition, providing employees warnings and/or discipline for violating company policy will go a long way toward stopping risky conduct in the future. Keep Records Often, disputes arise due to mistaken impressions or misunderstandings.  In such cases, the practice of maintaining relevant records to clear up a misunderstanding can be the end of a conflict.  Failure to keep such records can quickly turn the dispute into a game of “he said, she said.”  Records to retain should not only include contracts but also notes of any substantive communications surrounding the contracts.  For employees, keep track of employees’ time, complaints, discipline, and reviews.  Doing so will allow you to quickly establish your position in the event of any employment-related issues, and will serve as a strong deterrent for employee-side attorneys to pursue a case against your company. Be Mindful of Rising Conflicts Paying attention to minor conflicts can be a powerful tool in preventing the conflict from escalating into a large conflict which is...

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Employers Receive a Rare Win in GrubHub’s Independent Contractor Classification Case

Posted by on Mar 1, 2018 in Newsflash | 0 comments

In February, a Ninth Circuit magistrate in San Francisco ruled that drivers providing services to the popular food delivery service company, GrubHub, Inc., are properly classified as independent contractors and thus do not qualify for the protections of employees under California labor laws.  Judge Corley surmised: “Under California law, whether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition.  With the advent of the gig economy, and the creation of a low wage workforce performing low skill but highly flexible episodic jobs, the legislature may want to address this stark dichotomy.” In making her decision, Judge Corley emphasized that the most important consideration in determining worker classification revolves around the employer’s control over the “manner and means of accomplishing the desired result” (not its control over the desired result – i.e., the delivery of food to customers).  Ultimately, she found GrubHub exerted minimal control over the details of its drivers’ work, including when they work, how long they work, and how and when they made deliveries. This is a dramatic win for employers across California.  This could be a large step in the right direction for certain types of businesses struggling with the employee/independent contractor decision, not only because it comes down in favor of classifying these workers as independent contractors but also because it was decided in federal court (as opposed to state court).  California is notorious for having a high standard for establishing that workers are truly independent contractors, and this ruling may have an impact on future employee classification cases (particularly for gig companies). Back in early 2015, Uber lost a motion for summary judgment in federal court, because the court determined the workers had met their initial burden in seeking to establish that they should have been classified as employees.  Thereafter, Uber went on to negotiate a $100 million settlement in the case.  Since then, gig companies (i.e., companies which operate primarily through temporary positions and short-term engagements) have been forced to make difficult and uncertain decisions as to whether their workers can validly be treated as independent contractors or not. Regardless of the outcome of this particular case, this latest ruling is a stern reminder to California businesses that they must take care in classifying their workers properly.  The wrong call could subject your company to tens of thousands of dollars in otherwise unnecessary liability.  If you need assistance in properly classifying workers or have further questions, please do not hesitate to contact...

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