Mexico’s new Federal Labor Law (FLL) took effect on December 1, 2012. The reform seeks to modernize Mexico’s labor law. The new FLL’s major, employment related amendments include increased regulation of outsourcing jobs, increased flexibility in hiring and payment of wages, the addition of the concepts of diversity, nondiscrimination and anti-harassment, and parental leave rights.

Previously, companies entering Mexico would set up two entities, one of which would be used to outsource employment to avoid paying worker benefits, including avoiding Mexico’s mandatory 10% employee profiting sharing requirement. Now, among other requirements, employers may only outsource employees if the outsourced employees perform work of a specialized character. In other words, under the new FLL, companies will need to evaluate the way they are structured or risk paying all employees (outsourced or otherwise) all employment related liabilities (such as notice requirements, severance payments, profit-sharing and social security).

The Mexican Labor Law has a mandatory requirement whereby employers must share 10% of their profits with employees. To mitigate this requirement, companies have traditionally set up two separate entities in Mexico: one to run the business with limited employees and the other one to hire and lease out employees to the business. The new FLL puts companies who follow this traditional set-up at risk of having to provide the leased employees 10% of its profits, along with satisfying all other labor law obligations, because very few will qualify as valid outsourcing agencies.

Under the FFL, for outsourcing to be valid, it must meet the following terms and conditions:

1. It may not cover all the activities carried out in the workplace,
2. It must be limited to specialized tasks that fall outside of the beneficiary’s ordinary course of business and thus, justified by its specialized nature,
3. It may not include tasks that are the same or similar to those being performed by the beneficiary’s employees, and
4. It must be documented through an outsourcing agreement.

If these conditions are not met, the beneficiary may be deemed a co-employer of the outsourced employees and, as a result, may be obligated to pay associated labor liabilities, including salaries, local social security contributions, and benefits, which include sharing 10% of its profits with the outsourced employees.

Expanded Hiring Methods and Employment Relationships

The new FLL adds two new hiring methods: Trial Periods and Initial Training Periods. Definite and indefinite term employment over 180 days may now include a Trial Period. This allows employers the ability to evaluate whether a new employee can perform the requisite job functions. Employers may also opt for an Initial Training Period, which allows the employer to train the employee on the skills necessary to perform the job. In both cases, the type of “new hire method” must be explicitly written into the employment agreement.

Both the Trial Period and the Initial Training Period have time limits. The Trial Period may only last up to 30 days for rank-and-file type employees, but for management-level employees and high-level executives, an extension may be granted allowing for a maximum of 180 days in total. The Initial Training Period has a maximum term of three months, with high-level general administrative functions or functions requiring special professional knowledge qualifying for an extension of up to six months in total. Please note that these terms cannot be combined. The advantage of these new hire methods is that once the trial or training period has expired, if the employee is not able to perform the skills for the job, the employer may terminate the employee without having to pay severance.

The FLL also adds to the existing contracts for an indefinite term or specific project. Specifically, in order to allow “seasonal” employees to gain seniority, employers may now offer employment for an indefinite term for un-continuous work when the services required are for fixed and periodic tasks, in the cases of seasonal activities, or that do not require the provision of services throughout the entire week, month, or year. Under this arrangement, the employment relationship can be suspended during off periods in order to relieve the employer of wage payment obligations and the employee of any service obligations.

Wages

Back wages has been an issues of great concern to small and medium-sized businesses. Currently, the prolonged duration of labor trials is the cause of massive economic liabilities due to the accumulation of back wages. Therefore, new FLL limits the accumulation of back wages to 12 months. Once that period has concluded, a monthly interest rate of 2% will be generated on 15 months of the employee's monthly wage, which are to be paid once the process has concluded. Additionally, under the new law, the accrual of back wages will be suspended if the worker has died.

Furthermore, with the reform, employers are now allowed to utilize additional methods to pay wages. With the employee's prior consent, an employer will be able to pay wages by check, direct deposit, transfers, or through any other electronic means. This would provide workers with greater safety given the current circumstances.

The reform also allows employers and employees the option of paying for work at an hourly, rather than a per diem rate, provided that the maximum daily working hours (eight per day) are not exceeded and the employees’ daily income is not less than the minimum daily wage. This latter provision can be interpreted as being in harmony with the definition of minimum wage established by the Law, which would mean that the worker should receive at least the minimum wage, even when working fewer hours than the maximum established under the Law.

Nondiscrimination and Anti-Harassment in the Workplace

The new law introduces the concept of a decent or respectable job, the definition of which includes the concepts of diversity, nondiscrimination, and anti-harassment. The FLL now prohibits discrimination on the basis of race, national origin, gender, age, disability, social status, health condition, religion, citizenship status, sexual preference, marital status, opinions, or any other category of discrimination that contradicts human dignity. The law also prohibits harassment, including sexual harassment and bullying and gives these provisions teeth by adding them to the list of justifiable causes for termination.

Just as in the US, all anti- discrimination and anti-harassment policies and training programs should include reporting mechanisms that will help the employer investigate and, if necessary, put an end to any illegal harassment.

Maternity Leave Changes

Under the previous law, women had the right to a six weeks’ leave prior to the birth of a child and six weeks following the birth of a child. Under certain circumstances, the new FLL allows women to allocate up to four of the six weeks of the pre-birth leave to the post-birth leave period (i.e., a woman may take maternity leave as few as two weeks before the birth of a child and up to ten weeks after the birth of a child). Additionally, if a child is born with disabilities or requires medical attention, the post-birth leave may be extended for up to two additional weeks. In the case of adoption, female employees are entitled to six weeks’ leave following receipt of the child.

While an employee is breastfeeding, working hours may be reduced, for up to a maximum of six-months, by one hour in order to allow a mother to be with her newborn child. In case of a health emergency, pregnant or breastfeeding women shall not be required to work and shall receive full salary and benefit payments.

New Paternity Leave

The FLL provides for a mandatory paternity leave up to five paid working days for the birth or adoption of a child.

Sanctions

Under the FLL, the amount of the fines that employers may incur in the event of non-compliance with any provisions under the Federal Labor Law increase significantly. The fines may now be up to an amount equivalent to 5000 minimum salary days (approximately $311,000 Mexican Pesos or US $24,000 Dollars) in some cases, per occurrence.

Implications

Mexico’s labor law reforms are a positive step toward stimulating job creation and providing greater certainty regarding legal and economic exposure to companies doing business in Mexico. Although the practical implications of the law are yet to be determined, we recommend that U.S. employers with operations in Mexico revisit their employment practices to take advantage of, and ensure compliance with, these reforms.

Furthermore, given the new outsourcing provisions, companies will need to evaluate the structure of their current legal entities in Mexico. Employers that use outsourcing services to staff their operations in Mexico should review their existing practices and policies, as well as their services agreements to ensure they comply with the new legal framework.

On May 8, 2013, the New York City Council, by a 45-3 vote, passed the New York City Earned Sick Time Act which will require employers with 20 or more employees to provide paid sick leave to their employees (the “Sick Leave Act”). While Mayor Bloomberg has stated his intention to veto the Sick Leave Act, the 45-3 vote was more than sufficient to overcome the two-thirds majority needed to override the Mayor’s veto. In passing the Sick Leave Act, New York City has joined Connecticut, the District of Columbia, Portland, San Francisco and Seattle as the latest municipality requiring paid sick leave for employees.

Pursuant to the Sick Leave Act, employees are entitled to use sick time for absence from work due to: “(1) such employee’s mental or physical illness, injury or health condition or need for medical diagnosis care or treatment . . . ; (2) care of a family member who needs medical diagnosis, care or treatment of a mental or physical illness, injury or health condition or who needs preventative medical care; or (3) closure of such employee’s place of business . . . due to a public health emergency or such employee’s need to care for a child whose school or childcare provider has been closed . . . due to a public health emergency.”

Eligible employees are entitled to earn “a minimum of one hour of sick time for every thirty hours worked by an employee.” Sick leave begins to accrue “at the commencement of employment or on the effective date of [the Sick Leave Act].” However, while the accrual of sick leave begins at the commencement of employment, employees are prohibited from taking such sick leave until the employee has worked for the employer for at least four months. While employees are permitted to carry over unused sick time, employers are not required to provide an employee with more than forty hours of sick time in a calendar year. However, employers and employees can agree to eliminate the carryover of time, provided that (i) the employee is paid for any unused sick time at the end of the calendar year in which it was accrued, and (ii) the employer permits the employee to use the amount of paid sick time that the employee would be entitled to in the following calendar year.

The Sick Leave Act also contains a notice provision requiring employers to provide employees, at the commencement of their employment, with a written notice of the employee’s right to sick time payment under the Sick Leave Act. This notice is to include information concerning the “accrual and use of sick time, the calendar year of the employer, and the right to be free from retaliation and to bring a complaint.” The notice must be provided in English as well as the primary language of the employee. The Sick Leave Act requires that the New York City Department of Consumer Affairs create and make available form notices for use by employers.

In light of the Sick Leave Act, and the likelihood that the New York City Council can override a veto from Mayor Bloomberg, covered employers should review their sick leave policies to ensure compliance with the Sick Leave Act’s requirements as the legislation’s April 1, 2014, effective date approaches. Additionally, employers will need to prepare the appropriate employee notices as required by the Sick Leave Act. Finally, as the Sick Leave Act’s effective date approaches, we expect that additional guidance for compliance will be provided by the New York City Department of Consumer Affairs and we will provide updates as such information is made available.

On Friday afternoon, the Fourth Appellate District, Division 3 (Orange County) decided Faulkinbury v. Boyd & Associates (Faulkinbury II). This was a meal period, rest period, and overtime class certification decision in which the trial court had previously denied certification and the Court of Appeal had previously affirmed the denial (in Faulkinbury I).   However, the California Supreme Court issued a grant/hold review on the decision in light of its grant of review in Brinker Restaurant Corp. v. Superior Court (Brinker), and the case was remanded to the court of appeal to consider in light of the Brinker decision.

The new decision reverses the previous denial of class certification and mandates class certification of the meal period, rest period, and overtime claims. Although that is unfortunate for the security guard employer, the decision is actually written fairly narrowly and should not open the door to easy certification in the typical meal and rest period cases.  As explained below, while the court of appeal got the analysis half-right, it still appeared to gloss over the existence of individualized issues that should raise doubts about the ability to try the meal or rest period claims in the case as a class action.

The employer placed security guards with various clients throughout California. The decision does not provide information about any variation in the types of assignments given, but the case indicates that the employer had a uniform rule that all of its security guards had to sign an "on duty meal agreement" that required them to stay on duty for their meals, but to receive continued wages for the on-duty meal times. The employer lacked a formal rest break policy but had a written policy stating that all security guards had to stay at their posts unless relieved by a supervisor or another security guard. The defendant also made certain payments to the security guards that apparently were not included in the regular rate of pay for purposes of calculating overtime compensation: (1) an allowance for uniform cleaning and maintenance and gasoline; and (2) an annual bonus that the defendant claimed was discretionary but plaintiff claimed was non-discretionary.

Plaintiff sought certification of a meal period class on the theory that none of the security guards were provided with off-duty meal periods as a matter of policy. Plaintiffs argued that the on duty meal periods were invalid because they were not voluntary and because the nature of the work was not the type for which on duty meal periods are authorized (i.e., where taking an off-duty meal period is impracticable). 

Plaintiff sought certification of a rest period class on the theory that the law did not allow for an on-duty rest period and the combination of a lack of a rest period policy with a formal policy forbidding employees from leaving their post was tantamount to an unlawful failure to provide rest periods.

Plaintiff sought certification on the overtime claim on the theory that the aforementioned expense allowance and annual bonus payments should have been but were not included in the regular rate of pay for purposes of calculating overtime. As a result, employees who worked overtime received payments below what the law required them to receive.

The Court's Analysis and Its Flaws

Although the court of appeal had previously affirmed the denial of class certification, it now ordered certification based on the notion that the plaintiff was merely challenging an policy that allegedly was facially unlawful. That is, this wasn't simply an allegation that many employees failed to receive all their meal and rest periods, but rather plaintiff challenged a policy that, as written and commonly applied, allegedly violated the law. The Faulkinbury II court interpreted Brinker as requiring certification where the evidence showed that the trial would actually challenge the lawfulness of a common company policy.

In part, this is a fair reading of Brinker, if one assumes that there really existed a commonly applied policy that was either lawful or unlawful as to employees as a group. Common classwide questions suggested by the decision were (1) whether a security guard must have a choice as to whether to sign an on-duty meal period agreement for the on-duty meal period to be lawful; (2) whether the nature of work as a security guard is such that on-duty meal periods are permissible under the governing standards; (3) whether the company policy effectively forbade employees from taking off duty rest breaks; (4) whether the expense allowances should have been included in the regular rate for purposes of calculating overtime; and (5) whether the annual bonus was discretionary or non-discretionary. If one assumed that the terms of the applicable company policies were not in dispute and the only question was whether the policy complied with the law, then it would make sense to decide these issues on a class basis.

The court of appeal's analysis appears flawed, however, in that it failed to address individual liability issues that might have existed at different worksites. Although I am not familiar with this particular company, I know enough about security guard work to know that it can vary widely depending where the security guard is assigned and for what purpose. The legal analysis on on duty meal periods and off-duty rest periods could be impacted by such individual issues as how many other guards are on duty, how remote the worksite is, what time of day or night the security guard is working, and whether the nature of the property being guarded allows for breaks. These individual variations would seem to be material to deciding whether, for that worksite, the "nature of the work" makes an off-duty meal period impracticable.   Rather than address that argument (which I assume the employer raised), the court of appeal fell back on the old saw that the employer treated this as a class issue-- requiring everyone to sign an on duty meal agreement-- so the court could treat it as a class issue as well.

That facile kind of reasoning has been repeatedly criticized in the exemption context. Several courts in the past held that if an employer treated everyone with a certain job title as exempt, that suggested that the issue was properly decided class wide. Numerous courts, including the Ninth Circuit in Vinole v. Countrywide, 571 F.3d 935 (9th Cir. 2009), and the First Appellate District in Walsh v. IKON, 148 Cal. App. 4th 1440, 1461-62 (2007), have held that the mere fact that the employer treated a group as exempt without conducting an individual job analysis for each employee does not mean that the exempt classification decision was uniformly lawful or unlawful. Just as the lawfulness of the decision to classify an employee as exempt could vary depending on the particular job duties of the class member, so too could the lawfulness of an on duty meal period vary depending on the nature of the particular assignment.

A similar flaw exists in the court's rest period analysis. The court indicates that the defendant came forth with declarations reflecting that certain security guards on certain shifts were authorized and permitted to leave their posts for rest breaks or to take rest breaks at their posts. There was not a uniform policy that employee could not take ten minute rest breaks, but rather the policy was that employees could not leave their posts "without permission of a supervisor or proper relief during the absence." That seems quite different from a blanket policy prohibiting rest periods, as there could be individual variation as to whether supervisors granted permission for breaks or whether relief was readily available during breaks. The law does not require recordkeeping on this issue, so it would likely come down to a swearing contest among individual witnesses and individual supervisors.  This is distinguished from Brinker where the California Supreme Court asserted that the policy was commonly applied forbidding a second rest period for employees who worked more than six but fewer than eight hours.  If that were assumed true, there would not be individual liability issues as to rest periods.

The court's analysis of the overtime claim seems on sounder footing. It would seem that the court could decide collectively whether the bonus at issue was discretionary or non-discretionary and whether the expense allowance met the criteria to be excluded from the regular rate.

It will be interesting to see how the trial court handles the individual variations that could go to liability. As many courts tend to do when trying to sweep that issue under the rug, the court of appeal simply labels these variations as individual "damages" issues, as if that is the end of the inquiry. Most likely, the issues will never get to trial as the case will probably settle now. But the fact remains that there appear to be individual issues as to liability and the court gave no hint as to how the trial court should deal with those issues.  All in all, this case makes an incremental contribution to class certification jurisprudence, but it does not support certification outside of the unusual circumstance where the plaintiff is challenging a policy as facially unlawful. 

In McDaniel v. Wells Fargo Investments, LLC, Nos. 11-17017, 11-55859, 11-55943, 11-55958, 2013 WL 1405949 (9th Cir. Apr. 9, 2013), the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of four class action lawsuits filed by employees against brokerage firms Wells Fargo, Bank of America, and Morgan Stanley. In separate lawsuits, the employees alleged that the brokerage firms’ policies prohibiting employees from opening outside self-directed trading accounts violatesSection 450(a) of the California Labor Code, which prohibits employers from forcing its employees to patronize his or her employer. The Ninth Circuit held that the California statute is preempted by theSection 15(g) of the Securities Exchange Act of 1934 (the “1934 Act”), 15 U.S.C. § 78o(g), which requires brokerage firms to take measures reasonably designed to prevent employees from engaging in insider trading. This case of first impression in California reassures brokerage firms that compliance with the securities laws will not violate California labor laws. 

The Securities and Exchange Commission (“SEC”) relies upon the securities exchanges (e.g., the New York Stock Exchange) to enforce Section 15(g). The exchanges are vested with the authority to promulgate their own rules that, once approved by the SEC, have the force of law. The exchanges thus have adopted rules requiring brokerage firms to adopt policies to ensure compliance with the Act.

Each of the brokerage firms in this case adopted policies generally prohibiting their financial advisors from opening self-directed trading accounts outside the firm. The reason given by the firms for doing so is to monitor employee activity to ensure that employees are not engaging in insider trading, and thus ensure compliance with Section 15(g) of the 1934 Act.

Section 450(a) of the California Labor Code provides that no employer “may compel or coerce any employee . . . to patronize his or her employer . . . in the purchase of any thing of value.” The employees here argued that the brokerage firms are violating this provision of California law by forcing them to open self-directed trading accounts inside their firm. According to the employees, they would rather open accounts outside the firm because the trading fees are lower.

The brokerage firms moved to dismiss, arguing that the California statute is preempted by the securities law. The United States District Courts for the Northern and Central Districts of California granted defendants’ motions and dismissed the complaints. The employees appealed.

After consolidating the cases on appeal, the Ninth Circuit affirmed. As an initial matter, the Court rejected the brokerage firms’ argument that when Section 450 is enforced against their policies prohibiting self-directed trading accounts outside their firms, the statute loses its character as a labor law and takes on the nature of a securities regulation. The Court explained that Section 450 regulates the labor market which is an area traditionally of state concern, and therefore, there is a presumption that Congress did not intend to preempt Section 450. However, that was not the end of the Court’s analysis.

The Court next turned to whether Section 450 of the California Labor Code presents an “obstacle” to the accomplishment of a significant objective of the securities laws. The Court concluded that it does. According to the court, Section 15(g) of the 1934 Act calls on the brokerage firms to decide “for themselves how to best monitor their employees’ trading, suggesting that individually tailored policies serve as an important means for achieving the Act’s basic goal of reducing insider trading.” Where federal law grants an actor a choice and the state law would restrict that choice, the state law is preempted if preserving that choice is a significant regulatory objective. Accordingly, the Court held that Section 450 is preempted by the 1934 Act because the state statute would restrict the brokerage firms’ discretion on how to best monitor and prevent insider trading by its employees.

The employees also argued that even if Section 450 of the California Labor Code did impede the firms’ discretion, they could still comply with Section 450 by offering free in-house accounts. The Ninth Circuit did not agree. It held that the plain language of Section 450 forbids mandatory free accounts just as it forbids paid ones. According to the Court, Section 450 not only prohibits forced purchases from the employer, but also prohibits forced purchases from any third party. Thus, free accounts would still violate Section 450 because it would force employees to purchase a thing of value (e.g., a brokerage account) through their employer.

Accordingly, the Court affirmed the dismissals of the lawsuits by the distrct courts, reassuring brokerage firms that may keep and/or implement policies which restrict their employees from opening outside self-directed trading accounts without running afoul of the California Labor Code.

For further information, please contact Jennifer Redmond at (415) 774-2910, John Stigi at (310) 228-3717 or Bram Hanono at (415) 774-3221. 

On April 24, 2013, a federal jury in the Northern District of California found former Korn/Ferry International corporate executive recruiter, David Nosal, guilty on six counts of conspiracy, stealing trade secrets, and violations of the Computer Fraud and Abuse Act (“CFAA”). An appeal is expected, however.

Ultimately, the Ninth Circuit considered the issues related to Nosal’s indictment and whether the CFAA covered the situation presented by Nosal’s actions. In part, Nosal argued that the CFAA was “aimed primarily at hackers” and does not cover employees (such as him) who allegedly misappropriate information or who are accused of violating confidentiality agreements. Nosal further argued that the employees who downloaded the Korn/Ferry information actually were provided access to that information, and, therefore, did not “act without authorization” or “exceed authorized access” as required to be found in violation of the CFAA. In deciding the issue, the Ninth Circuit was principally tasked with determining whether Nosal’s accomplices could have exceeded their authorized access by obtaining information that they were entitled to review only under limited circumstances. Notably, the Korn/Ferry employees were subject to a computer use policy that placed “clear and conspicuous restrictions” on the employees’ access to the system in general, as well as certain databases specifically. Nonetheless, relying on its earlier decision in LVRC Holdings LLC v. Brekka , the Ninth Circuit concluded that “an employee ‘exceeds authorized access’ under [the CFAA] when he or she violates the employer’s computer access restrictions – including use restrictions.” U.S. v. Nosal, 642 F.3d 781 (9th Cir. 2011). However, the Ninth Circuit then reconsidered the issue en banc, and chose to construe the CFAA narrowly. Accordingly, the Ninth Circuit held that the phrase “exceeds authorized access” does not extend to violations of use restrictions, where an employee with approved access then misappropriates the data, because to find otherwise, it concluded, would turn the CFAA from a hacker statute to a broad misappropriation statute, which it refused to do.

The federal jury’s recent verdict identifies an issue that many federal circuits have grappled with: How should the CFAA apply to people who are not “hackers” in any traditional sense of the word? Indeed, the Fifth and Eleventh Circuits have interpreted the CFAA much more broadly, finding, for example, that a Social Security Administration employee exceeded authorized access under the CFAA when he obtained personal information about former girlfriends and potential lovers and then used that information to pursue them. Given the Ninth Circuit’s apparent reluctance to interpret the CFAA broadly (contrary to those other Circuits), it will be interesting to see what the future holds for Nosal’s situation in light of his likely appeal.

On April 11, 2013, the New York City Council’s Committee on Civil Rights debated a proposed bill that would ban employers from using credit checks to evaluate prospective employees. The proposed bill, called the Stop Credit Discrimination in Employment Act (the “SCDEA” and available here), would create a blanket ban on using credit information for hiring purposes, with a narrow exception only where employers are required to use such information by state or federal law.

Proponents of the SCDEA believe it will curb employers’ discriminatory use of credit information which they contend prevents potentially qualified individuals from being hired. Due to the growing unemployment rate in New York City, a larger population of job seekers may have a strained credit history that could negatively impact their ability to gain employment. Meanwhile, those who oppose the bill caution that it will impair employers’ ability to insure the integrity of certain positions, such as those in finance and insurance.

Debate over the SCDEA comes in the wake of the recently passed amendment to the New York City Human Rights Law, Bill 814-A, which provides unemployed applicants a private right of action against employers who consider an individual’s unemployed status during the hiring process, as we reported here. The combination of these bills demonstrates the City Council’s intent to protect unemployed city residents.

The proposed bill must still be passed by the Committee on Civil Rights and then approved by the heavily Democratic City Council. However, an attorney representing Mayor Bloomberg’s administration at the debate over the SCDEA indicated that the Mayor would veto the bill should it pass through the City Council in its current form.

Although the SCDEA has not yet been enacted, it carries significant implications for New York City employers should it be passed into law. Employers who currently rely on credit information may be forced to alter hiring practices and seek alternative methods for ensuring the hiring of qualified employees. We will continue to monitor the status of the SCDEA and provide updates as they occur.

*Brian Garrett is a law clerk at Sheppard, Mullin, Richter & Hampton LLP currently admitted to the New Jersey Bar and awaiting admission to the Bar of the State of New York.

On Friday, March 29th, New York State passed the 2013-14 budget. The budget includes, among other things, a significant increase to the state’s minimum wage over the next two years. Pursuant to the budget, on December 31, 2013, the minimum wage will increase from $7.25 to $8.00/hour. On December 31, 2014, the minimum wage will increase from $8.00 to $8.75/hour. On December 31, 2015, the minimum wage will increase from $8.75 to $9.00/hour.

We will continue to monitor the progress of these changes and keep you apprised of any developments.

*Rachel Tischler is a law school intern currently attending Brooklyn Law School.

On March 13, 2013, one year after we first introduced you to the idea that an individual’s unemployed status may be considered a protected characteristic, the New York City Council, voted into law legislation preventing companies from discriminating, in job advertisements or in the hiring process, against a job applicant who is unemployed. While New Jersey, Oregon and the District of Columbia have enacted similar laws, New York City has broken ground with Bill 814-A by granting unemployed applicants a private right of action, allowing them to sue alleged violators for damages in court - literally creating a new protected class of job applicants: the unemployed.

Importantly, because 814-A amends the NYCHRL, an unemployed job applicant who brings a claim alleging that he/she was discriminated against because of his/her unemployment status can avail him/herself of all of the privileges, protections and remedies available under the NYCHRL. Therefore, an unemployed job applicant, who believes he/she has been discriminated against on the basis of his/her unemployed status, may file an administrative complaint with the City Commission on Human Rights (“CCHR”) or sue in court. If a complaint is filed with the CCHR, the CCHR can order that the employer cease and desist from maintaining discriminatory hiring practices, force an employer to hire the aggrieved candidate and order back and front pay awards, including compensatory damages for emotional distress and other nonmonetary damages. The CCHR can also impose maximum civil penalties ranging from $125,000 to $250,000 per violation, depending on the nature of the employer’s conduct. Moreover, if the unemployed job applicant chooses to go to court, the aggrieved party can, in addition to the damages recoverable above, recover punitive damages, injunctive relief and be awarded attorney’s fees and costs at the court’s discretion.

Employers should also be aware that a claim alleging that an employer’s hiring practices disparately impact the unemployed may be brought on a class-wide basis without the unemployed needing to identify the specific offending policies or practices. This may leave many employers open to class actions while subjecting the plaintiff to minimal pleading standards. An aggrieved applicant or class may also defeat an employer’s legitimate hiring practice if he or she can prove that a better suited “alternative policy or practice with a less disparate impact is available” and the employer cannot establish that the plaintiff’s proposed alternative would not serve the entity as well.

As a result of New York City’s high unemployment rate, this is likely going to be a highly litigated area of the law. Employers should look at their job advertisements and hiring practices to ensure compliance with this new legislation. Specifically, an employer’s recruiting practices, interview techniques, and job requirement postings should be reviewed.

As a testament to both the improving economy and the need for global talent, over 124,000 H-1B visa applications were filed within the first five days of the Fiscal Year (FY) 2014 quota opening, all vying for only 65,000 visas. The U.S. Citizenship and Immigration Services (USCIS) announced that it had received more than the number of H-1B petitions it takes to reach the statutory cap on April 5, 2013. USCIS also stated that the limit had been met for 20,000 H-1B visas that are reserved from the cap based on an advanced degree (Master’s cap) exemption. USCIS further announced on April 8, 2013, that a lottery drawing occurred to select the petitions that would receive the 65,000 H-1B visas available for FY 2014. The last time a lottery system was used to determine which petitioners received H 1B visa numbers was in April of 2008. Any petitions not selected by the lottery, or received after April 5th will be rejected by USCIS and the government will return the petition with all of the filing fees.

By Paul Cowie and Dorna Moini

In a recent panel discussion, one of the speakers was a so-called "ethical hacker" - a hacker-turned-protector of employers' confidential information. As someone at the forefront of cyberattacks, the ethical hacker's opinion was that there are two types of employers: those that know they have been hacked, and those that do not. And with all of the press coverage regarding recent hacks into U.S. confidential security information, it seems our ethical hacker may well be right. Indeed, in March, James Clapper, the director of National Intelligence to the U.S. Senate Intelligence Committee, suggested that cyberattacks now pose the most dangerous immediate threat to the U.S. 

What is a Cyberattack?

Cyberattacks generally fall into three categories: infiltrating a secure computer network, Distributed Denial of Service Attacks (DDOS), and planting inaccurate information.

Perhaps the most well-known cyberattack is the traditional infiltration of a company's computer system through Trojan viruses and malware. Generally, the objective is to extract confidential and/or proprietary information from the target company using specially tailored computer programs.

As someone at the forefront of cyberattacks, the ethical hacker's opinion was that there are two types of employers: those that know they have been hacked, and those that do not.

Recently, however, DDOS attacks have become the most common known type of electronic cyberattack. A DDOS attack is coordinated by "botnets," in which a series of "zombie" computers belonging to unknowing users visit a company's website at the same time, overwhelming the server and shutting it down. Such attacks are prevalent amongst "hacktivists," who attempt to shut down bank and financial websites in an act of activism, protest or civil disobedience.

The third type, planting inaccurate information, is exactly as it sounds: attackers covertly insert inaccurate information into a company's computer system. These attacks confuse and mislead users, and can even cause the computer system to fail.

The Human Element

The most prevalent type of "cyberattack," however, remains the "inside job": both willing and unwilling. According to Diligence Information Security, about 70 percent of security breaches are committed by employees. Christ Nuttall, "Hacking Usually an 'Inside Job,'" BBC. Generally, the intruder only needs physical access and a password. An employee attaches a thumb drive or other storage device to an employer's network and downloads sensitive data. Case examples include an employee who used customer credit card information to go on elaborate spending sprees (United States v. John, 597 F.3d 263, (5th Cir. 2010)); a Social Security Administration employee who accessed former girlfriends' addresses to solicit their affections (United States v. Rodriguez, 628 F.3d 1258, (11th Cir. 2010)); and a recruiter in California who downloaded customer lists to start a competing business (United States v. Nosal, 676 F.3d 854 (9th Cir. 2012)).

How is it happening?

Hackers are developing ever more inventive approaches to hacking. For example, in 2006, Secure Network Technologies, a security consulting firm, seeded USB drives throughout an employer's parking lot. The thumb drives were equipped with Trojan malware that, when plugged into a computer, would collect personal information such as passwords and machine-specific information and email these findings back to the Trojan's creator. The test revealed that employees picked up 15 of the 20 USB drives planted, and all 15 were plugged into the employer's computers. Although this was a controlled simulation, this replicated real life attacks, which have included masked gunmen caught on CCTV using spud guns to fire thumb drives over security fences into a technology company's parking lot.

Legal requirements

Although most employers are concerned about data security, many are unaware of the legal requirements. For example, financial institutions covered by the Gramm Leach Bliley Act (financial institutions that collect nonpublic, personal information about individuals who obtain a financial product or service) must establish appropriate standards of administrative, technical and physical safeguards to protect against unauthorized access to records or information which could substantially harm or inconvenience any customer. 15 U.S.C. Section 6801. Similarly, institutions with private health information must comply with HIPAA, which requires employers to create unique user identifications, an emergency access procedure, automatic logoff, and a mechanism for encryption and decryption of electronic protected health information. 45 C.F.R. Section 164.312(a)(2). In addition, HIPAA mandates standards for auditing policies and procedures, encrypting information, and guarding against unauthorized access. 45 C.F.R. Section 164.312.

This means implementing safeguards with respect to collection, storage and usage of information, conducting risk analysis, appointing an employee to manage these safeguards, and training employees on how to recognize and respond to a breach of security. Examples include frequent password changes; encryption of data; tracking network access; restricting employee access to sensitive information; maintaining firewall configuration and blocking access to file-sharing sites; and maintaining a policy that addresses information security. Another overlooked security risk is the use of third -party vendors that do not have secure networks and practices.

Notification duties

Employers also have affirmative duties to disclose information about a security breach to affected persons. Most state data security breach notification laws mirror California Civil Code Section 1798.82 - the first state law of its kind, and generally recognized as the most expansive. Under Section 1798.82, if a business owning or licensing computerized data discovers a breach of security including "personal information," it must notify any California resident whose unencrypted personal information it reasonably believes was acquired by an unauthorized person. Section 1798.82(a). A breach of security is any unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of personal information. Section 1798.82(d). "Personal information" is defined as an individual's first name or first initial and last name in combination with any of the following: (1) Social Security number; (2) driver's license number or California Identification Card number; (3) account number, credit or debit card number, in combination with any required security code, access code or password that would permit access to an individual's financial account; (4) medical information; or (5) health insurance information. Section 1798.82(e).

Why is a cybersecurity policy necessary?

Electronic communication and recordkeeping are here to stay. Employers must take electronic measures necessary to protect information. This requires a multi-faceted approach, including firewalls, data encryption and security software.

Cybersecurity policies are more important than ever in the battle to protect sensitive information. Such policies are important first to prevent a breach, and later for maximum legal protection in the event of a breach. The Computer Fraud and Abuse Act (CFAA) provides for criminal and civil penalties against an employee who "knowingly and with the intent to defraud, accesses, and by means of such conduct furthers the intended fraud and obtains anything of value." 18 U.S.C. Section 1030. The CFAA also allows employers to recover damages such as the cost of hiring a computer forensic firm to investigate the employee's activities. Recently, employers have brought CFAA claims against former employees who take confidential information from company computers. U.S. Circuit Courts of Appeal are split as to whether the CFAA applies to an employee who has literal authorized access to documents, but uses that access for an unintended purpose. Several courts have held that the CFAA does apply if an employee violates an employer's computer use or confidentiality policy. (The 1st, 5th, 8th and 11th circuits follow this view. The 9th Circuit does not. Nosal, 676 F.3d 854.)

Employers should implement robust confidential information, electronic communications and usage and access policies. Such policies should prohibit employees from accessing data that is not required as part of their job duties and spell out that violation may lead to termination. Best practice would be to physically limit access so as to prevent the possibility of such violation in the first place. Policies should also discuss the types of threats that businesses are facing and how employees can help to minimize such risks. While written policies are a good starting point, ensuring that they are followed in practice is most important. If implemented correctly, such policies can dramatically help reduce the risks posed by cyberattacks.

On February 22, 2013, U.S. District Judge Brian Cogan reversed his prior decision that required a plaintiff to seek court approval of a settlement before her action under the Fair Labor Standards Act (“FLSA”) could be voluntarily dismissed. In Picerni v. Bilingual SEIT & Preschool, Inc., No. 12 Civ. 4938 (BMC) (E.D.N.Y. Feb. 22, 2013), plaintiff Donna Piscerni sued her employer, defendant Bilingual SEIT & Preschool, Inc., alleging that she was not paid the requisite minimum wage for her work. In October 2012, the defendant made an offer of judgment and the plaintiff accepted the offer. The offer was accepted prior to the initial case management conference with the court, and prior to the defendant filing its answer or appearance. In considering the offer of judgment, Judge Cogan initially declined to enter judgment, citing 29 U.S.C. § 216(c), which gives the Secretary of Labor the right of approval over stipulated settlements in FLSA cases. In light of Judge Cogan’s initial ruling, the plaintiff filed a motion for approval.

In bucking this long-standing practice, Judge Cogan noted that, “[a]lthough I have ruled to the contrary in the past, I have come around to the view that the procedure of a court requiring approval before it permits parties to voluntarily dismiss an FLSA action is incorrect.” Id. at *8. As such, Judge Cogan held that the dismissal was valid because actions under the FLSA are not statutorily exempt from Rule 41, and a plaintiff’s right to voluntarily dismiss an action should be honored.

Judge Cogan, however, did acknowledge the risk that remains to the defendant employer because there was no determination by a court of a bona fide dispute as to the wages owed to the plaintiff, thus leaving the door open to a later suit by the plaintiff.

In light of Judge Cogan’s decision, the option of making an early offer of judgment, and having the case dismissed without court approval remains a viable one that employers may wish to explore in certain cases, with the understanding that certain risks do exist.

*Rachel Tischler is a law school intern currently attending Brooklyn Law School.

As many readers of this blog know by now, last week the Supreme Court issued yet another anti-class certification decision in Comcast Corp. v. Behrend (“Comcast”). While the full scope and meaning of the Court’s holding is subject to interpretation by the lower courts, a central holding is that a district court errs if it certifies a class for purposes of liability and damages where the plaintiff lacks collective proof capable of calculating damages to the class consistent with Plaintiff’s theory of liability.

Furthermore, Justice Scalia’s decision repeatedly invoked Wal-Mart Stores, Inc. v. Dukes (“Dukes”) and, at least as a matter of tone, appeared to admonish lower courts to be more hesitant in granting class certification than they have been under past precedent.  Indeed, Justice Scalia announced that the “predominance” analysis under Rule 23(b)(3) is even more rigorous than the strict Rule 23(a) “commonality” analysis announced in Dukes. 

As explained below, the Court’s subsequent orders issued this week that summarily reversed and remanded class certification decisions in two other cases cast serious doubt on the arguments from the plaintiff’s bar that Comcast was limited to its facts and that Comcast will have no impact on class certification jurisprudence.

“For unknown reasons, the plaintiffs in Comcast chose to concede (or at least not contest) that to obtain class certification, they would have to show that they could establish and measure the damages through common proof. As a result, the Court did not consider, let alone overturn, the long-established rule for the mine run of cases in which no such concession was made.”

As I understand Ms. Kralowec's argument, the supposed failure to contest this point means that lower courts remain free to certify classes both as to liability and damages even where the plaintiffs are wholly unable to establish damages for the defined class through common proof. This reading of Comcast continues Ms. Kralowec’s trend of reading decisions that are popularly viewed as defeats for the plaintiff’s bar as either non-events or even plaintiff victories.

For example, while many (including me) interpreted Brinker Restaurant Corp. v. Superior Court as establishing a rule that makes certification exceedingly difficult to obtain in the great majority of meal period class actions, Ms. Kralowec interpreted it as a victory for the plaintiff’s bar that reaffirmed the vitality of meal period class actions. To her credit, she successfully advocated to have three subsequent appellate decisions that rejected her view of Brinker depublished (although her work is not yet done, as similar, new appellate decisions continue to be issued, such as here and here).

Similarly, while the vast majority of plaintiff’s counsel gnashed their teeth and rended their clothes over Dukes and its apparent holding that it is a violation of constitutional due process for a court to conduct a class trial by sampling for liability and damages through “trial by formula,” Ms. Kralowec argued that the decision actually is limited only to massive Title VII cases. In fact, even when the Ninth Circuit rejected this view last month in Wang v. Chinese Daily News and held that the prohibition of “trial by formula” applies to routine wage and hour cases, Ms. Kralowec retorted that the Seventh Circuit had advanced a narrower reading of Dukes in RBS Citizens NA v. Ross that is more consistent with her interpretation of Dukes.

With that in mind, I am curious to read Ms. Kralowec’s eventual post on the Supreme Court’s post-Comcast orders.  In the wake of the supposedly insignificant Comcast decision, the Court issued two summary reversals of decisions in which appellate courts had affirmed class certification orders: Whirlpool Corp. v. Glazer (a consumer class action decision) and  RBS Citizens NA v. Ross (the wage/hour case that Ms. Kralowec argued preserved trial by formula for wage/hour cases). The Court did not explain why these certification orders were defective but it reversed certification and remanded the cases to the courts of appeal for further consideration in light of Comcast. This at least strongly implies that the Court believed that Comcast provided meaningful guidance on these two decisions—neither of which arises under antitrust law or Title VII.

Whirlpool involved certification of a large, multidistrict consumer class action involving purchasers of Whirlpool Duet washers that allegedly were defectively designed so as to lead to the growth of mold. The defendant argued that class certification was inappropriate because most people who purchased Duets never experienced any injury as their machines never developed a mold problem. Furthermore, individuals may have experienced a mold problem not proximately caused by the alleged design defect (e.g., if they regularly overloaded it with liquid detergent).

The Sixth Circuit had nonetheless affirmed class certification on the basis that there were predominant common issues concerning whether a common design defect existed that had the propensity to cause the mold problems and whether Whirlpool issued adequate warnings to consumers. The Sixth Circuit declined to decide whether the expert’s theory or methodology could properly determine classwide damages, holding that issue to be immaterial to the certification decision.

RBS Citizens is a fairly routine wage and hour case. The Seventh Circuit had affirmed a class certification in a wage-hour case alleging an exempt misclassification manager subclass and an hourly employee forced off-the-clock subclass. The two subclasses totaled 1,129 people and RBS Citizens argued that, under Dukes, commonality could not be established because its policies were lawful on their face and it would be entitled to call each witness to address such individualized issues as whether the hourly employees in fact worked off the clock, whether the way a manager performed the job rendered the manager exempt, and whether any particular class member actually worked overtime.  To support this view, RBS submitted declarations of employees that indicated that, at least in their cases, there was no liability.

The Seventh Circuit held those individualized issues did not preclude certification and distinguished Dukes on the ground that it involved a massive Title VII class that was not similar to a wage/hour class. The only response to the defendants’ argument about individualized issues was to point out that the plaintiffs had supported their theories with 96 non-exempt employee declarations and 24 exempt employee declarations that supported the plaintiffs’ theory that there was an unofficial policy to require the managers to perform mostly non-exempt work and the non-exempt employees to work off the clock. The Seventh Circuit found this to be a sufficient basis to support Rule 23 commonality because “this unofficial policy is the common answer that potentially drives the resolution of this litigation.”

The common element of these cases is that both courts waved away arguments that individual issues existed that led to a sizable portion of the class not being injured and which required individualized testimony to sort out. In Whirlpool, a class was certified without taking into account those class members who purchased a Duet and happily used it without suffering any mold issue or who misused the Duet in a way that would generate mold in any machine. In RBS Citizens, the court certified a class without taking into account the existence of employees who performed their job in a way that qualified them as exempt, who never worked off the clock, or who never worked overtime at all. The lower courts simply sidestepped these issues by limiting their focus to the existence of other common issues—such as the common “design defect” in the Duet washing machines or the possible existence of an “unofficial practice” contrary to the written policy to discourage the reporting of overtime. 

Comcast seems to disapprove of shortcuts that ignore these individualized issues in Rule 23(b)(3) certification decisions.  Justice Scalia admonished that class actions are “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only,” and that certification is proper in cases seeking class damages under Rule 23(b)(3) only where predominance is established under standards “even more demanding than [the] Rule 23(a)” standards the Court announced last year in Dukes. 

Ms. Kralowec presumably interprets such language as boilerplate that does not change anything. But the Court's subsequent orders in the wake of Comcast suggest that the majority of the Supreme Court feels otherwise. A court cannot simply wave away the existence of individualized causation and injury issues by pointing to other common issues that have classwide significance.  A court cannot deprive a defendant of its right to establish defenses as to individual class members merely by pointing out that the plaintiffs have submitted a sizable number of declarations in which they argue the individuals were subject to an unwritten unlawful practice. The defendant’s rights to raise individualized defenses cannot be circumvented by taking a small sample of the class and extrapolating liability and damages to the class through trial by formula. 

While it remains to be seen exactly how the appellate courts will interpret Comcast following the remand of Whirlpool and RBS Citizens, the message emanating from the Supreme Court is hard to miss. While I fully expect Ms. Kralowec to continue her advocacy for a liberal interpretation of Rule 23 requirements, the plaintiffs bar is truly whistling past the graveyard if it believes that the steady march of decisions from this Supreme Court reversing class certifications signals anything other than an attempt to greatly narrow the universe of cases where a class can be certified.

This article was originally published by The Recorder.

Eagle v. Morgan, 2013-11-4303 (E.D. Pa. 2013), represents one of the first trials on the issue of who owns social media accounts: the individual employee who first created the account or the employer whose business was promoted using the account? In Eagle a company's founder sued her former employer for the alleged illegal use of her LinkedIn account. The U.S. District Court for the Eastern District of Pennsylvania held that an employer's conduct, absent a company social media policy, resulted in the torts of unauthorized use of name, invasion of privacy by misappropriation and misappropriation of publicity. The court, however, held the employer not liable for conversion, tortious interference with contract, civil conspiracy and civil aiding and abetting. Lastly, the court rejected the employer's counterclaims of misappropriation and unfair competition.

Facts and Claims

Dr. Linda Eagle was a co-founder of a business which was sold to Edcomm. As part of the sale Eagle agreed to continue as an employee of Edcomm. During her employment, Eagle used her LinkedIn account to promote Edcomm's business. She shared her username and password with several Edcomm employees to help respond to invitations and to update the account. Edcomm terminated Eagle's employment on June 20, 2011, and upon doing so, Edcomm changed the password to Eagle's LinkedIn account, thereby locking her out. Edcomm gained exclusive control of the account until July 7, 2011, when LinkedIn took over the account and returned access to Eagle a week later. As of the date of Eagle's termination in June 2011, Edcomm did not have in place a company policy informing the employees that their LinkedIn accounts were the property of the employer.

During Edcomm's control of the account, it changed the account to reflect the name, picture, education and experience of Sandi Morgan, the interim CEO of Edcomm, even though the URL of the account remained http://www.linkedin.com/in/lindaeagle, and a Google search of "Linda Eagle" would return results to said URL.

Eagle sued Edcomm for (1) unauthorized use of name; (2) invasion of privacy by misappropriation of identity; (3) misappropriation of publicity; (4) identity theft; (5) conversion; (6) tortious interference with a contract; (7) civil conspiracy; and (8) civil aiding and abetting. Edcomm counterclaimed for (1) misappropriation; and (2) unfair competition.

Plaintiff's first three causes of action

The court held Edcomm liable under claims of unauthorized use of name, invasion of privacy by misappropriation of identity and misappropriation of publicity because it took over Eagle's account and replaced the content with Morgan's information. Specifically, the court found that Eagle's name and likeness held commercial value because of the investment of time and effort in developing her reputation in the industry; and that Edcomm used Eagle's name without her consent for commercial and advertising purposes. The court said "[when searching for Eagle or visiting Eagle's LinkedIn page,] an individual would unawaringly be put in contact with Edcomm [and Morgan], despite the fact that Dr. Eagle was no longer affiliated with Edcomm." The court concluded that Edcomm's actions were for the commercial benefit of Edcomm and at the same time deprived Eagle of the benefit of her name.

Even though Eagle established the prima facie elements for the first three causes of action, she did not recover any compensation because she failed to establish with sufficient certainty any damages or a causal connection between Edcomm's wrong and any injury.

Plaintiff's Other Causes of Actions

Eagle failed in her other causes of actions.

First, identity theft was not established because Pennsylvania requires an unlawful possession of a person's identifying information, and the court held that mere use of Eagle's name to direct to Morgan's information and keeping Eagle from her personal account, "while perhaps unscrupulous, is not so clearly an 'unlawful' purpose."

Second, conversion was not established because under Pennsylvania law a LinkedIn account is not tangible chattel subject to a conversion claim, but rather it is an intangible right to access a specific page on a computer; the court analogized the LinkedIn account to other intangible property not subject to conversion such as software, domain names and satellite signals.

Third, tortious interference with a contract failed because it required Eagle to prove damages, which she could not establish. The court noted, however, that all of the other requisite elements of this tort were met, and in particular, Edcomm acted with the purpose or intent to harm Eagle when Edcomm locked her out of her account thereby preventing the Eagle-LinkedIn relationship to continue. The court expressly rejected Edcomm's argument that it owned Eagle's LinkedIn account under Edcomm's policy, because (a) no such policy existed, and (b) LinkedIn's User Agreement clearly indicated the contrary.

Counterclaim For Misappropriation

Unsurprisingly, given its rulings in Eagle's favor, the court held that Eagle's reclaiming of her LinkedIn account was not misappropriation because: (i) "Edcomm never had a policy requiring that its employees use LinkedIn, did not dictate the precise contents of an employee's account, and did not pay for its employee's LinkedIn account."; (ii) the LinkedIn User Agreement expressly stated that Eagle's account was between LinkedIn and Eagle; and (iii) Edcomm failed to show Eagle's contact list was "developed and built through investment of Edcomm['s] time and money as opposed to Eagle's own time, money and extensive past experience."

Importance of a Social Media Policy

This case provides employers with guidance regarding what steps should be taken if they wish to obtain ownership rights to LinkedIn and other social media accounts. Of particular interest, the judgment included an entire email exchange wherein company executives had discussed the importance of LinkedIn accounts and the need to introduce a policy that such accounts were the property of the company. However, despite this email exchange the policy was never formulated and implemented. The lesson is clear: Employers wishing to protect social media accounts which they view as company marketing and branding should act now and introduce clear policies regarding ownership.

On March 21, 2013, the Second Circuit issued its opinion in Parisi v. Goldman Sachs & Co., Case No. 11-5229, reversing a decision from the Southern District of New York, and holding that arbitration agreements which preclude Title VII class actions are enforceable. In reaching this decision, the Second Circuit affirmed the “liberal federal policy in favor of arbitration” and found that “there is no substantive statutory right to pursue a pattern-or-practice claim” as a class action.

On appeal, the Second Circuit determined that the question is whether Congress intended for Title VII pattern-or-practice claims to be arbitrable. While Plaintiff argued that she has a substantive right to pursue pattern-or-practice claims, the Second Circuit held otherwise. The Second Circuit found that “there is no substantive statutory right to pursue a pattern-or-practice claim . . . [and that] in Title VII jurisprudence ‘pattern-or-practice’ simply refers to a method of proof and does not constitute a ‘freestanding cause of action.’” In support of its conclusion, the Second Circuit, relying upon the Supreme Court’s decision in Int’l Bd. of Teamsters v. United States, 431 U.S. 343 (1977), observed that “references to ‘pattern-or-practice’ in the statute do not confer a particular right per se . . . .” In conclusion, the Second Circuit held that “we see no reason to deviate from the liberal federal policy in favor of arbitration and conclude that the district court erred in denying the motion to compel arbitration.”

The Second Circuit’s opinion is another positive development for employers in connection with ongoing battle over the enforceability of arbitration agreements. In light of this ruling, employers can be more confident that their arbitration agreements, if sufficiently broad, will bar Title VII class actions, including pattern-or-practice claims brought by employees under Title VII.

*Rachel Tischler is a law school intern currently attending Brooklyn Law School.