Articles Posted in Employment Law Updates

Recently, a national news source reported a finding by the National Labor Relations Board (NLRB) regarding Tesla’s illegal termination of a California employee. The findings affirmed a 2019 ruling that found that Tesla illegally threatened workers if they engaged in union activities. The employee, in this case, was organizing union participation by distributing pamphlets in the company’s California parking lot. Tesla fired the employee, attributing the termination to the employee’s posting of employees’ profiles on social media. About seven months after the termination, Elon Musk tweeted a statement that said, “why pay union dues & give up stock options for nothing?”

An NLRB administrative judge found that the termination was in retaliation for the employee engaging in union activities. Further, the judge ruled that the company engaged in employment law violations when it issued warnings to another worker for sending screenshots and sending them to the employee. Finally, the board ruled that Tesla’s confidentiality agreement contains an illegal provision that prohibits employees from speaking with the media without the company’s permission. The NLRB ruling requires Tesla to amend the provision in their confidentiality documents. Tesla has not issued a comment on the recent Board findings.

Certain federal and state laws protect California employees in organizing and joining a union. Unions are a critical way for employees to ensure that their employer negotiates in good faith over terms and conditions of employment, including work hours, and compensation. The National Labor Relations Act (NLRA) protects certain California employees from engaging in unionizing activities. Some protected activities include allowing employees to self-organize, form, join, or assist labor organizations, engage in collective bargaining agreements, and other related activities.

California employees should familiarize themselves with the state’s strict mandates against non-compete and non-solicitation agreements. Unlike many other states, California Business and Professions Code section 16600 does not permit non-compete clauses, even if they are reasonable in scope and purpose. A non-compete clause or agreement, is also known as a “restrictive covenant.” These agreements dictate and restrict an employee’s actions after they are no longer working for an employer. In most cases, they work to restrict an employee’s ability to work for a competitor.

These clauses are against California employment law, and employers may be liable for wrongful termination if they terminate an employee who refuses to agree to the agreement. Public policy dictates that these agreements are unenforceable because of the fundamental power disparity between employers and employees. However, the bar on non-compete clauses generally only apply after termination, because employees have a common-law duty to their employer, while employed.

Despite these agreements’ illegality, California employers often present these agreements and take advantage of an employee’s lack of legal knowledge. Further, employers often evade liability for wrongful termination by utilizing a choice-of-law provision. This provision is an agreement that if the employer and employee are ever engaged in a dispute, they will use an agreed-upon state’s law to resolve the contention. However, California law prohibits employers from using choice-of-law provisions to get around the non-compete laws.

Recently, the California Supreme Court decided that its ruling in Dynamex Operations West, Inc. v. Superior Court applies retroactively. The Dynamex case set a new legal standard for determining a California worker’s employee classification. Before the decision, businesses relied on a judicial “right to control” test for classifying workers under California’s Wage Orders. California Wage Orders regulate worker rest breaks, meal periods, and overtime. In line with several other states, the court replaced the “right to control” test, with the stringent “ABC” test.

Under the new legal standard, California wage orders carry a presumption that any worker performing work for a business is an employee. As such, the law entitles these employees to the protection set forth by California Wage Orders. A hiring entity can only overcome the presumption if they can prove three elements:

  • That the worker is free from the control and direction of the hiring entity, related to the worker’s performance and in connection with the parties’ contract;
  • The worker is engaged in work outside the hiring entity’s usual course of business; and
  • The worker is routinely engaged in an independently established trade, occupation or business, of the same nature as the work performed for the hirer.

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Like all laws, over time, employment laws change. In the wake of what was undoubtedly a tough year, 2021 is no exception. While both state and federal government laws govern the employer-employee relationship, California employment laws are generally more favorable to employees than federal laws. So, when state employment laws change, it is important that workers understand the changes and how they may impact their rights. Below are a few of the major changes to California employment law that have already gone into effect, or will be coming in the near future.

An Increase to the California Minimum Wage

As of January 1, 2021, California’s minimum wage increased. The state uses a tiered approach to determine the applicable minimum wage. Thus, the minimum wage for employers with 25 or fewer employees is $13, and the minimum wage for employers with more than 26 employees is $14. This is a one-dollar increase from last year. Notably, California is unique in that some cities impose their own minimum wage laws. Employers are required to pay the highest of the applicable state, federal, or local minimum wage.

Gov. Gavin Newsom signed nearly two dozen labor and employment bills in 2020, many of which go into effect on New Year’s Day.

Some laws are in response to the COVID-19 pandemic, while others expand reporting deadlines and leave protections and rights for those working for large and small businesses.

Coronavirus protections for workers

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