STUDENT SCHOLARSHIP SERIES (July 2024) | By David Beglin, J.D., Berkeley Law, Class of ‘24
In Fuentes v. Empire Nissan, Inc., a case currently pending in the California Supreme Court, the underlying appellate court decision ruled that an employment arbitration agreement was not unconscionable and was enforceable, despite significant abuses in how the contract was formed. Finding a contract unenforceable under the unconscionability doctrine requires a showing of both unconscionability in how a contract was formed (“procedural unconscionability”) and in the terms of the agreement itself (“substantive unconscionability”). Taking a formalistic approach, the Fuentes court views procedural and substantive unconscionability as conceptually distinct inquiries. But California courts must analyze unconscionability on a sliding scale, allowing significant procedural unfairness to compensate for less significant substantive unfairness, and vice versa. This sliding-scale aspect of California’s unconscionability jurisprudence is functional and recognizes that the unconscionability analysis must be holistic. This Note argues that the Court should reject the Fuentes court’s formalism and embrace the sliding-scale approach’s functionalism.
LAW & POLICY NOTE (March 2024)
Olson v. California—a case pending before the Ninth Circuit en banc in which plaintiffs Uber and Postmates have alleged that AB 5, California’s worker classification statute that codifies the ABC test, violates their equal protection rights—should be an easy case to resolve against plaintiffs under settled equal protection doctrine. But a panel of the Ninth Circuit found otherwise, in an astounding decision holding that the district court erred in dismissing plaintiffs’ equal protection claim. Plaintiffs’ claim essentially centers on one provision of the law, California Labor Code § 2777, known as the “referral agency exemption” from the ABC test. They object because they are carved out of this exemption and argue there is no rational basis for doing so. In this Note, we point out a key rationale for the distinctions drawn in the referral agency exemption that is clear on the face of the statute but has not received attention: the exemption’s carve-out, which excludes services provided in certain high hazard industries like the ones in which plaintiffs operate, is rationally related to one of AB 5’s stated purposes, namely, to protect workers when they are injured on the job from the harm of misclassification. This presents a straightforward path for the en banc Court to affirm dismissal of plaintiffs’ equal protection claim.
REPORT (December 2023)
In 2021, California launched Social Entrepreneurs for Economic Development (SEED), an innovative grant program that funded a demonstration project on worker cooperative development, spearheaded by community-based organizations (CBOs) that organize excluded workers (individuals who cannot access stable, gainful employment relationships and whose economic opportunities are severely constrained due to their immigration status or other significant barriers to employment). Through an impressive collaboration between these CBOs (CLEAN Carwash Worker Center, Cooperacion Santa Ana, Pilipino Workers Center of Southern California, and United Taxi Workers of San Diego), and experts in cooperative development (Democracy at Work Institute and L.A. Co-op Lab), SEED propelled the development of worker cooperatives in four low-wage industries: carwash, child care, homecare, and taxicab. The model built through SEED has already taken root as a compelling prototype of public investment in worker cooperatives. In this report, we identify and examine SEED’s key components and highlight some emerging indicators, both quantitative and qualitative, of the model’s considerable potential to raise wages, improve working conditions, and promote worker self-determination.
LAW & POLICY NOTE (September 2023)
The old common-sense idea that representatives of business, labor, and the public should sit down together to negotiate over industry labor standards is new again. The California budget bill in July 2023 revived the Industrial Welfare Commission (IWC) from an almost 20-year quiescence due to funding cuts in the early 2000s. The IWC is a 110-year-old mechanism for setting standards for wages and working conditions through a collaborative process involving representatives of California workers, businesses, and the public. We explain how the IWC works, its importance as an exemplar of effective sectoral bargaining, the relationship between the IWC’s renewed mandate and ongoing disputes over last year’s Fast Food Accountability and Standards (“FAST”) Recovery Act, and what the IWC’s revival could mean for workers, business, and the public alike.
LAW & POLICY NOTE (August 2023)
In 2021, California created a groundbreaking grant program, Social Entrepreneurs for Economic Development (SEED), which awarded nonprofit community-based organizations almost $10 million in state funds to provide entrepreneurial training and microgrants to individuals facing substantial barriers to gainful employment due to their immigration status or limited English proficiency. SEED supported individuals in launching or maintaining a small business to address a social problem or meet a community need, as well as the development of worker-owned cooperatives in low-wage industries. The state codified SEED, in order to eliminate even the smallest risk that an anti-immigrant provision of federal welfare law, 8 U.S.C. § 1621, could be used in an attempt to invalidate the program. Section 1621 was passed by Congress in 1996 to restrict the eligibility of undocumented individuals for “state or local public benefits”—and has been the basis of lawsuits attacking state and locally funded initiatives for undocumented individuals. We discuss section 1621, with a focus on how state and local grant programs like SEED for undocumented workers can be shielded against a section 1621 challenge.
AMICUS BRIEF (May 2023)
The Center, along with 28 labor and constitutional law scholars, filed an amicus brief in support of the state of California’s petition for rehearing or rehearing en banc in a case before the Ninth Circuit, Olson v. State of California. In Olson, a panel of the Ninth Circuit held that the district court erred when it dismissed Uber’s and Postmates’ claim that AB 5 (California’s worker classification law that codifies the ABC test) violates the Equal Protection Clause. The Center’s amicus brief argues that the panel’s opinion, far from a paradigm of judicial restraint that is required under the rational basis standard, represents a form of judicial activism that radically diverges from well-established equal protection jurisprudence and conflicts with the Ninth Circuit’s previous interpretation of AB 5.
LAW & POLICY NOTE (November 2022)
In the union organizing campaigns of the 1930s, companies paid legions of spies to report everyone who attended a union meeting and what was said. Union meetings were held at night in pitch dark rooms so that no one could tell who else was there and who said what. Today, Starbucks needn’t hire spies. They just use subpoenas in civil litigation. In an outrageous decision, a judge in the Western District of New York let them get away with it. Starbucks issued a subpoena in the NLRB’s litigation to obtain an injunction under section 10(j) of the National Labor Relations Act against the company’s ongoing unfair labor practices against its workers in Buffalo and Rochester. Through the subpoena, Starbucks sought an enormous amount of confidential information about virtually every aspect of the entire nationwide Workers United campaign at every Starbucks across the country. In September 2022, the judge ordered the union and the workers to produce a staggering number of emails, text messages, and records of other communications in response to the subpoena. This Note explains why the court’s order is contrary to law. The matter is now on appeal in the Second Circuit, and if the court of appeals does not overturn the ruling, it will turn any enforcement action brought by the NLRB into a hunting license for companies to harass unions and workers.
LAW & POLICY NOTE (July 2022)
The U.S. Supreme Court June 2022 decision in Viking River Cruises, Inc. v. Moriana held that the Federal Arbitration Act (FAA) does not preempt a rule of California law that invalidates contractual waivers of the right to assert representative claims under the California Private Attorneys General Act (PAGA) in any forum. However, in a portion of the majority opinion that four justices refused to join, the Court created confusion about whether plaintiffs subject to arbitration lose standing under state law to maintain representative PAGA claims in court. We explain why the majority’s view of PAGA standing in Viking River Cruises clashes with the California Supreme Court’s authoritative approach to PAGA standing, announced two years ago in Kim v. Reins International California, Inc. We conclude that California courts are not bound by the portion of Viking River Cruises that posits the loss of representative standing to litigate PAGA claims on behalf of other employees, and instead must follow Kim.
LAW & POLICY NOTE (June 2022)
California’s Assembly Bill (A.B.) 257, the Fast Food Accountability and Standards Recovery (FAST Recovery) Act, creates a partnership between fast food restaurant workers, their advocates, businesses, and state agency officials through a Fast Food Sector Council empowered to set labor standards specific to the industry. Regardless of whether the bill is signed into law, A.B. 257 will remain a consequential piece of legislation that serves as a template for improving labor standards in the fast food sector and in other low-wage industries. Analyzing the bill in print as of June 9, 2022, we propose model language that ensures the labor standards developed by the council cannot fall below existing state standards applicable to fast food workers and are fully enforceable under the Labor Code, and that strengthen the franchisor liability provisions of the bill.
On March 11, 2022, Amazon announced a new policy on freedom of association under international standards. Citing International Labor Organization and United Nations principles, Amazon pledged to comply with global norms on union organizing and collective bargaining, even when national labor law reflects a “gap in governance” with international standards. Published by the UC Berkeley Labor Center and CLAW, this report finds that Amazon’s freedom of association policy, on its face, is non-compliant with international labor standards, and Amazon management’s conduct before and after issuing the policy continues to violate international standards.