2015 Cal-Peculiarities

cartoon businessman run away from vaccinationBy Dana Howells and Ben Conley

Post-termination medical coverage costs can be a powerful inducement for some employees losing their jobs to sign a separation agreement releasing legal claims. In the past, it has been common for employers to offer to pay all or part of the ex-employee’s COBRA premium for a fixed period of time, such as 3 months. With the Affordable Care Act and Covered California (the Golden State’s insurance marketplace) now part of the landscape, there are more options—but more complications.

Coverage through Covered California can be much less expensive than COBRA. But, there are key differences between traditional COBRA and Covered California that both ex-employees (making coverage choices) and employers (drafting separation agreements) should consider. Moreover, the Affordable Care Act prohibits, in almost every circumstance, employers from reimbursing employees for individual insurance premiums (for policies issued through Covered California or otherwise). Thus, an employer wishing to include payment for continued medical coverage as part of a severance package must consider whether it is willing to offer (i) payment or reimbursement for COBRA, or (ii) an unconditional cash payment that the employee can choose to apply to the cost of Covered California, or COBRA, or some other non-health care related purpose.

So how do the Affordable Care Act and Covered California impact separation agreements with a traditional COBRA reimbursement or subsidy feature?  Unlike some states, California embraced healthcare reform. California’s insurance exchange, Covered California, is on line, in storefronts and functioning. Anecdotally, paying for Covered California is potentially much cheaper than paying an ex-employee’s COBRA premium. (Both COBRA and Covered California plans qualify as coverage for avoiding the new tax penalties for failing to purchase coverage at all.)

But comparing COBRA to Covered California is like comparing a Washington apple to a California orange, especially when you are talking about potential gaps in coverage. This is virtually impossible to avoid when the event that triggers special enrollment in Covered California is loss of employer coverage. Consider the following:
Continue Reading Separation Anxiety: The ABCs of Affordable Care Act & Covered California at Separation From Employment

By Daniel Whang

In plaintiff-friendly California, it may be surprising to learn that the California Supreme Court threw a few bones to employers during 2014. First, although lower courts seem determined to make it easier for plaintiffs to obtain certification in wage and hour class actions, the California Supreme Court’s decision in Duran v. U.S. Bank signaled that certification of wage and hour claims has become too perfunctory.

The Duran decision, covered in far more detail in a client alert, requires trial courts to consider an often neglected requirement for class certification: that the trial of the certified claims would be manageable. Duran is one of the few wage and hour class actions that went to trial, and the disastrous consequences of a poorly planned trial provided a powerful lesson that courts need to be far more careful in certifying class actions.

If Duran provided a useful weapon to oppose class certification, the California Supreme Court threw employers another bone by solidifying an employer’s ability to enforce class action waivers in arbitration agreements. In Iskanian v. CLS Transportation Los Angeles, LLC, the California Supreme Court acknowledged that, under the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, class action waivers in arbitration agreements are enforceable.

But this was not a total employer victory. The California Supreme Court also held that claims under the Private Attorneys General Act of 2004 (“PAGA”) are not subject to mandatory arbitration, because the State (and not the employee) is the real party in interest and the State is not a party to an employer’s arbitration agreement. While employers were hopeful that the United States Supreme Court would grant the petition to review the PAGA exception that the California Supreme Court had created, the U.S. Supreme Court declined to hear the petition, leaving Iskanian good law for now, and permitting employees to pursue PAGA claims in court even if they have signed arbitration agreements that waive the right to pursue class and representative actions.


Continue Reading California Supreme Court: What It Did To Employers In 2014 And What’s Pending

By David Kadue

On Tuesday, January 20, 2015, the Court declined to take the case of CLS Transportation Los Angeles, LLC v. Iskanian, in which an employer asked the Court to reverse a ruling of the California Supreme Court. At issue was whether an employee who has agreed to submit all employment-related claims to arbitration, and who has also agreed to waive participation in class and representative actions, can evade that agreement and sue the employer under California’s Private Attorney General Act (“PAGA”). The California Supreme Court in June 2014 had sided with the suing employee.

Many observers expected that the case would be the latest episode in a drama that features a complicated relationship between two supreme courts. To simplify a bit, the U.S. Supreme Court traditionally has read the Federal Arbitration Act (“FAA”) to require the enforcement of private arbitration agreements by their terms. The California Supreme Court, meanwhile, has often searched creatively for some Cal-centric reason to deny enforcement to arbitration agreements.

Recent examples of the contrasting supreme viewpoints have occurred in the context of arbitration agreements that waive the procedural right to proceed or participate in a class action. The California Supreme Court once held, in both the consumer-claim context and in the employee-claim context, that a class-action waiver in an arbitration agreement is unenforceable, because any such waiver offends the California public policy favoring class actions. But then the U.S. Supreme Court, in Concepion v. AT&T Mobility, ruled in 2011 that the FAA preempts the California ban on class-action waivers. Concepion involved a consumer complaint. For several years, California courts resisted the clear implication that Concepcion also applies to employee complaints. Finally, in Iskanian, the California Supreme Court relented, acknowledging that, under the FAA, class-action waivers in arbitration agreements are enforceable, even in California.
Continue Reading U.S. Supreme Court Declines to Referee Slugfest Between Federal and California Courts on Enforceability of Arbitration Agreements

By Colleen Regan

New guidance on how to comply with the California Family Rights Act (CFRA) is nigh. 

On January 13, 2015, the California Fair Employment & Housing Council approved revised regulations interpreting the CFRA, attached here. Procedurally, the regulations now go to the Office of Administrative Law (OAL) for additional consideration and eventual approval. We have it on
Continue Reading COMING IN 2015: REVISED CFRA REGULATIONS, or “How To Comply With Mandatory Family Leaves in the Golden State”

By Michele Haydel Gehrke and Colleen M. Regan

Cal Pecs Blog is a BLAWG 100 Fan Favorite!!!!

In November, we announced that our Cal Pecs blog was selected as one of the ABA Journal’s 2014 “BLAWG 100.”  Today, we are thrilled to further proclaim that we earned the most votes from YOU, our devoted readers, in the ABA Journal
Continue Reading Thanks for Making Us A Fan Favorite!!! . . . and a Couple of Nitty Gritty Wage Hour Decisions