The New Trap Doors in Employment Litigation

One of the most evolving and dynamic categories of litigation risks relates to a company’s employees. Crewmember litigation is what we refer to as the fifth C of the Five Litigation Risks. Each year, new legislation is signed into law and landmark decisions are issued, broadening this risk and the duties of employers to employees. Invariably, the scope and nature of the risk increases, as the trend is to provide employers with more protections. Metaphorically, the trap door on which employers may unwittingly be standing may spring at any minute with a new litigation claim. 

 In this encore episode, California-based Dorsey Partners Nisha Verma, Heather Dillion, and Podcast Host and Partner Kent Schmidt return to SharkCast to highlight trends on the horizon and offer practical insights on how to navigate these litigation risks. Among other topics, this episode discusses cannabis in the workplace, workplace violence prevention, regulating debates among employees on political and social issues, and new trends in wage and hour litigation.

This podcast is not legal advice and does not establish an attorney-client relationship or create any duty of Dorsey & Whitney LLP or those appearing in this podcast to anyone. Although we try to assure that the content of this podcast is accurate, comprehensive, and reflects current legal developments, we do not warrant or guarantee those things. The opinions expressed in this podcast are the opinions of those appearing in the podcast only and not those of Dorsey & Whitney. This podcast is considered attorney advertising under the applicable rules of certain states.

Transcript

Voiceover
Welcome to another episode of the Shark Cast on Litigation Risks Management, where we explore why businesses are so frequently sued and how to mitigate and navigate the dangers lurking in these risky waters. Join us now as we welcome our host, Kent Schmidt, litigation partner at the law firm of Dorsey & Whitney.

Schmidt
Welcome to another episode of Shark Cast. I really like to begin Shark Cast by talking about any unusual aspects of an episode, including milestones in the short history of this podcast and today we have another milestone. We covered a number this year, including our first international guest several weeks ago but this is the first time we’ve had what I’m calling an encore episode, back by popular demand. You know, you got to give the people what they want. I have my partners, Nisha Verma and Heather Dillion, joining me here in Southern California to talk about one of our favorite subjects, a subject that certainly is reflective of how often companies are sued and that is of course Labor and Employment Litigation. If you missed our earlier episode, we focused a little more specifically on the post COVID world and some of the challenges that that brings to Employers in Employment Litigation claims and adapting their policies and practices to the brave new world in which we live, but the world moves on, and one of the interesting things about Employment Law is how nimble it is to whatever the issue or controversy or trend is of the day, and certainly COVID was reflected of that. You saw all sorts of new COVID legislation and new theories that came about by employment lawyers as a result of COVID, but all sorts of new trends and new phenomenon are occurring in our society today. So I thought we would talk about some of those and what changes those shifts in our society and new emphasis bring to employment litigation risk. So first of all, thanks both of you for agreeing to come back to Shark Cast and congratulations on being the first encore guest.

Dillion
We are honored. Thank you for having us.

Verma
Great to be here.

Schmidt
All right, well, let’s jump right in. I would first like to address something that used to be somewhat unique to a handful of jurisdictions, including I think first Colorado and then California, but now is spread to I believe half or close to half, maybe over half of the U.S. states and that is the legalization in some form or another of cannabis. Many jurisdictions, such as California, begin with medical use of cannabis being permitted and then move thereafter into recreational use. Other states go straight to recreational use, but in California, we are dealing more and more, with the various implications of legalized cannabis and somewhat increasing popularity of cannabis use, and that bumps up against certain employment practices and employee policies. So using California somewhat as a catalyst, but also to the extent you want to comment on other jurisdictions, how is the use of legalized cannabis in a particular State impacting employers rights and obligations.

Dillion
It’s impacting it quite a bit, I mean there has been a big shift change into the overall appetite, if you will for cannabis or ability to be okay with it, it used to be so in taboo, and when I was in law school, which was a little over 10 years ago, I remember California had a bill and it was shot down to legalize cannabis and now here we are, advising employers on what they need to do because it’s legal here in California. Cannabis is interesting because it’s very different than alcohol, right? Alcohol you could have a breathalyzer and it’s, hey, you are you are over the limit currently. You are currently under the influence, at this minute…

Schmidt
At this minute.

Dillion
…under the influence of this, there is some leeway way there, but of this substance. With cannabis, you have this THC that stays active in your system, for it could be over a month, so someone could have used cannabis and then three weeks down the line get tested for it and show up positive even though they were not under the influence of it at that time. So it’s the psychoactive aspect of THC that California now says employers can care about. So what that means is California now, as of as of January 1st, employers cannot make an employment decision based on a non-psychoactive identification of cannabis. So meaning you can only use tests that show that the psychoactive portion of cannabis is present, meaning that they are currently under the influence of cannabis.

Schmidt
So I want to make sure I understand this. If I’m operating a small business in California and for whatever reason, social reasons, or drug history in my family, I voted against, you know, the legalization of cannabis when there’s a proposition in California, I don’t like cannabis use. I think it’s one of the bad things in our society. I cannot bring that personal view and policy to my workforce and say, you know, we’re still a drug free work zone. No cannabis users.

Dillion
Well, that was kind of a loaded question there. There’s two parts, right. The first part I thought you were going to say this, I don’t ever want anyone to ever be able to use cannabis.

Schmidt
On the job?

Dillion
No, that stays, on the job is fine. You are, employers can still have a drug free and alcohol free and violence free workplace. It’s that you cannot, and this is where I kept saying the psychoactive sounded a little bit like a biologist there, but the psychoactive versus non-psychoactive aspects of THC so you cannot make an employment decision for an employee based on the presence of non-psychoactive THC, which means at some point in time they have used marijuana. But was it being used at the workplace.

Verma
Or at the time they showed up for their drug test, which could be like 5 days before they started work, right? But if your applicant is responsible enough to not be impaired or have used recently enough for their drug test at which they’re not working yet, but they know they’re what’s happening then that is essentially what we’re looking at. Can your applicant plan ahead enough to make sure that they have not been impaired any time right before their drug test as opposed to, can your applicant plan ahead enough to make sure they’re not using, taking an edible five weeks before their drug test, which is the old system. Either way, you’ll never know whether the person doesn’t use marijuana like you’ll just know what was captured at the moment in time test.

Schmidt
So everything you’re talking about really is about is the liability is triggered by the drug testing and decisions on employment made based on drug tests.

Verma
Correct.

Schmidt
Is that correct?

Verma
And what California is saying now is that if you are going to drug test for marijuana, you need to make sure you are using a test that only identifies or that at least marks out that this is the psychoactive THC. They exist. The tests exist, they’re not as commonplace, but I imagine with it becoming legal we’re going to see it more everywhere, because we want police officers to be able to find out. Is this person impaired while driving? You know, let me figure this out right now. So that’s really the change in it is that you cannot make an employment decision based on a non-psychoactive aspect of marijuana. Think about it as, think about it with alcohol. If I had a drink two nights ago at dinner. Are you and I’m interviewing with you right now. Are you going to deny me an employment because I had a drink two nights ago? No, and that’s kind of how it is. If I had an edible two nights ago, is that something that is gonna, you’re going to deny my decision based on now.

Dillion
Or five weeks ago? Before you applied for the job to be fair, 5 weeks ago, before you applied for the job or knew the job existed. Or had any interest in it, right? Like that is what the old system was hatching.

Schmidt
So let me go back to my question. Not the first time I’ve been accused of asking a loaded question, but let me revert to that and say, let’s suppose in my scenario I’m not going to do any drug testing, but I just make it clear we’re a drug free zone. It’s still illegal on a federal level. It’s still a listed narcotic, it’s a listed substance, and so I say, I don’t know. I don’t care what California is doing, I want a drug free zone and if I hear about someone using marijuana, even recreationally, even on the weekend, I’m not interested in you to continue to work at my small business.

Verma
Yeah. The law directly addresses that because while the more often talked about provision of the law addressing drug testing is what we were talking about a moment ago, and that’s what’s in the media more that’s what’s in discussion more it is still prefatory. It is still a prompt that an employment, an employer cannot make a decision based on the person’s use of cannabis off duty and off site.

Schmidt
Let me pivot the question then a little bit. So I’m a prudent employer. I understand I can’t expressly make a decision, but I’m very concerned about drug use and my employees being impaired on the job. I’m not going to do any testing, but I know when someone’s high, I’ve been around the block of time or two. Can I make an employment decision based on my perception?

Verma
I would do the test. I don’t mean to cut off your question, but why wouldn’t you? I would do the test. Before 2188, right AB 2188, pre-employment testing has been legal in California and there’s always been the right to test for reasonable suspicion or post accident. So if you’re saying that there’s objective criteria, typically we want by two separate managers have seen that the person’s impaired, then what I would do in that situation is require a drug test, which was perfectly legal before and after 2188, and only test using the 2188 standards…

Dillion
The active.

Verma
…that Heather was describing, and if your suspicions are correct, it will come back positive and fire the guy, done.

Dillion
There’s also another test that’s allowed. It’s called the impairment test, but you really have what you have to do is take a baseline measure of all your employees. So we see how you are today.

Schmidt
Maybe he acted like they were high before but before.

Verma
Right, just come in, blubbering idiot, you save that job, use that as your baseline, but you can. So there is another way to do it. I think it’s dangerous. The impairment test I think really allows for a lot of personal biases to come in. So I would not advise towards that. But if you see someone clearly impaired by whatever it might be it’s that you can still potentially have grounds for termination.

Schmidt
So let me bottom line this, if you’re going to start focusing on or making employment decisions or you face an issue of impairment from cannabis, or any other substance for that matter? You may have some rights as an employer, but tread carefully. Get some legal advice. Just don’t go making decisions that instinctively feel like, yeah, this is this is the right decision to make, right?

Verma
I would say that was so much with so many things. I feel like a lot of our instincts as business owners tend to be very personal and yeah, use your counsel.

Dillion
Second, I second.

Schmidt
And with cannabis is sort of understandable since it’s still illegal on a federal level, so when you say…

Verma
It is, but for how long?

Schmidt
…yeah, well, we’ve been hearing that for a few years. Well, let’s pivot to another issue relating to the workplace and relating to what is happening in our society and it’s the it’s the sad reality of workplace violence every several weeks or a month or so, you turn on cable news and you see some other act of violence that occurs in our schools or in our workplace and obviously, we’re going to focus on the workplace. What are legislatures doing to address workplace violence, particularly in California?

Verma
California has a new OSHA standard, which is first in the nation, specifically addressing workplace violence. A little bit of background, right? Federal OSHA governs workplace safety. There are a number of states that have special permission from federal OSHA to run their own state program. California State program has been tasked with addressing workplace violence and putting in specific rules around that, and not just general safety for years and those rules have been unfinished and we’ve had a very active legislature this year and one of the examples of that is a legislator just stepped in and said I know how long you guys are going to take, sick of waiting. I want my own rule. I like this rule and that’s where we are right? So was this drafted by people who have been working on it for six years and have every insight into workplace safety, no? This happens through the political process.

Schmidt
Somewhat reflexively and reactively, which Sacramento is just famous for.

Verma
Sure, and in this case, I completely understand the legislature that sponsored this bill had a mass shooting in his district, at a workplace and I’m thinking of one. There were probably more than one and so that’s how we got here and we didn’t, this law did not get passed without controversy because you may have heard of this law previously as the one that legalizes shoplifting in California. So a couple of reasons that’s not possible. It’s not a criminal law. It’s a workplace standard law. However, there was a provision early on that said, that prohibited employers from requiring individuals to confront shoplifters and that drew heavy opposition from business leaders, small business leaders, eventually was pulled, and after that we ended up with this workplace safety standard.

Dillion
There’s a lot of misconception about that, that the California passed a, “You cannot do anything about your shoplifters”, but that’s not true. That’s not the version that finally went through.

Schmidt
Okay, so where is the law today, and it’s going to be effective and in place January 1st?

Dillion
Actually July.

Verma
July.

Schmidt
July. July of 2024.

Verma
2024.

Schmidt
So what solution has Sacramento come up with that is going to address workplace violence, and what does it mean for employers going forward after July 1st?

Verma
I could say objection assumes facts, not in evidence …to the to the term solution, right?

Schmidt
Another loaded question.

Verma
I think there’s questions around how solution oriented the ultimate policy is here, and so I’ll tell you exactly what the three prongs are, right and the three new requirements are, a workplace production plan that is, you know, technically a piece of paper, but I would hope employers make it a little bit more live and interactive like than that. A log in which someone has to record all workplace violence incidents and then specific training that addresses both the plan and the law. So my concern around results here is that this creates a lot of homework, a lot of ticking off of boxes to get…

Schmidt
Record keeping.

Verma
…record keeping to keep to get the plan exactly perfectly right that there is the possibility that whoever’s tasked with that will feel so proud of themselves when they’re done, they’ll just put in a binder and there it goes away and will that make anybody’s life safer? Will that save a life? Right, and so I think that employers have to do a lot of work here but not lose sight of the goal, not lose sight of the fact that this is actually important to their employees.

Schmidt
So when you make a plan, what are the basic components of what you’re referring to as the workplace violence plan?

Verma
Yeah. So this is one of those statutes that goes all the way down to like, “z”, but that the highlights are the place, so there’s already a requirement to have an injury prevention, illness and injury prevention plan. Their players are subject to. As separate from that or and kind of appendix of that plan, they need to have a specific workplace violence prevention plan that hits on a lot of topics, including how to alert employees regarding emergencies, how to identify and resolve existing workplace hazards. But what I think is interesting about this because look, there’s a lot of requirements, somebody who’s very smart can figure all that out right? But I think what’s interesting about it and this is going to come up again, because it’s a theme in this legislative session, and nationally is almost bargaining level relationship with employees on what they want around this, because this law specifically requires that the plan include active involvement by the workforce, supervisory and non-supervisory and developing the procedures.

Dillion
So you can’t just have someone sitting in an ivory tower determining what is going to happen for their company?

Verma
Right.

Schmidt
All the staples involved, including the rank and file of employees that are having some sort of contribution to the plan.

Verma
Correct, and we do expect Cal OSHA to release some sort of blueprint as to what this should look like. You know, how detailed will it be. We don’t know yet, but we are expecting them to roll out some sort of example soon.

Schmidt
Yeah, I can think of all sorts of litigation, perhaps not directly related to this. This is going to start bumping up against these type of issues, privacy, you know, once you start creating your record of workplace violence. What are the rights of employees to know what is in that record and what are the obligations of the employer once they create a record? Then you don’t even have defamation that comes up. You know, if I lost my cool at the water cooler the other day and someone jotted it down in the workplace violence log. Then I have some sort of defamation claim, is there any immunity for recording these, by the employer?

Verma
So to answer your access question first, yeah, the access is broad, so the workplace violence log, which I’ll describe in a second, ultimately can’t be accessed by employees, and employees have to be trained on that. There’s requirements that the information has to be prepared in a way that doesn’t identify anyone. But look, if you only have one water cooler and you only have one guy that loses it at the water cooler, then that information of what happened is without that person’s name or other identifying characteristic, it’s going to be there, and that’s a, that’s a reality.

Schmidt
Well, I am as against workplace violence as the next person, but I could just see a lot of litigation that comes from this record keeping requirement and perspective. This is going.

Dillion
Logistical nightmare and litigation.

Verma
Yeah I think that, you know, from a litigation perspective the fact is that it requires a significant investigation or requires conclusions as to essentially what factors led to the violent incident and I will just note them, the type of violence can include threats, and it can include a threat of what psychological trauma, right? Not necessarily harm. So I would note that I have definitely work with plenty of employers that have multiple members of their family in the workplace and you can see how something that happened at home can bubble over into work, and yeah, that usually would involve some, at least a threat of psychological trauma. So there’s a lot of thinking through about what needs to be put in the log. But then, when the person is, when this designated person, and I would recommend it be one person, is preparing the log while they need to be thinking most importantly about what this says about the culture of the workplace, what this says about safety overall, unfortunately in the back of their head, they have to also be thinking about litigation because obviously this is discoverable and it’s kind of requiring an admission as to aspects that could have prevented this incident that you are now describing in detail.

Schmidt
That’s a scary proposition, that you’re going to record something that could later be used against you in a workplace violence claim or other type of claim ranging from defamation to just wrongful discharge. But maybe that’s, maybe there’s no solution to that.

Verma
We’ll see. Give it some time, I mean hopefully we’ll figure it out and there needs to be kinks or changes that they work.

Dillion
I mean, I think you’re going to ask about this in a little bit, just in terms of speech in the workplace and what can be discussed in the workplace and everything so this is just, you know, this is just another example of almost everything being out in the open.

Schmidt
Speaking of all these interactions among employees and heated conversations that may be, arguably in some instances, clearly in others, rise to the level of workplace violence, obviously our society is becoming more and more polarized. Issues in the news and world news, including what’s going on in the Middle East, with Israel and Gaza are causing people to bring their viewpoints into the workplace and arguments are erupt, we’re heading into an election year next year. So we have those issues also. How is an HR director or someone in charge of employment able to reduce the number of incidents that are distracting from the work in a normal employment place? I’m not talking about a news room or something of that nature, just a regular employment place. When you have people that have diametrically opposed opinions politically, or socially, or based on world events. That are arguing with each other and things are escalating.

Verma
So I’ve spoken on this topic a few times since 2020 and I have some updates in terms of what’s gone on in 2023, but my answer is there’s a certain extent where you just need to let people feel their feelings, and you need to grow a thicker skin around those feelings, and find a way to manage through and find productivity wherever you can. I think the issue of workplace speech and employees bringing their opinions relating to the outside world to work is here to stay. I also think that there is no outside world when it comes to work. For a lot of employees in the sense that they have such a strong expectation of, they have such a strong connection, or at least an expectation that their organization participate in every aspect of the outside world. As opposed to just their kind of area of commerce that most employees are not going to be willing to separate, say their expectations of their employer from what they expect to happen at work.

Schmidt
So let me again ask a semi-loaded question, pushing back a little bit.

Verma
Yeah.

Schmidt
I’m going to put myself in the small business owner position again and I’m going to say a very I think intuitive policy that I might implement. Let’s suppose I’m running a factory and I’ve had a lot of arguments in the break room, not on the line because the machines running too loud, but in the break room where they’re preparing for the next shift about politics, or about world events, and I just want to have a policy that says. Come in, you can talk about the weather, you can talk about what you did the last weekend, but we’re not going to have any more political debates or arguments in the break room or in the locker room where you’re getting ready to start your shift. Is that prohibited?

Verma
I think so. I think that you can credit conduct in the break room.

Dillion
Right, it requires civility and that you’re not screaming at each other. You’re not you know no fists are being thrown, but regarding something like political speech, I mean and under the NLRB, I think you can’t do much. An NLRB for this case covers all employers.

Verma
Correct. Meaning the conduct of yelling in the break room or the conduct of fighting whatever they’re fighting about even if it’s about, you know, Beanie Babies, it can be prohibited. I think the content is much harder to do. So there’s very specific developments under the NLRB through the NLRB, National Labor Relations Board, which some employers think only apply only to unionized employers, but the rights that I’m talking about grant employees the right to engage in protected concerted activity, meaning the right to discuss among themselves what would be in their best benefit, which you know maybe is a union, but if it’s not, it’s still protected by the NLRB. That has time and time been extended to conversations about one workplace safety, about understaffing, but also just about how is my employer responding to Black Lives Matter? That for sure has gone before the NLRB, right? And so an update from this year’s NLRB is that the kind of workplace rules you can put into effect have changed. There have always, there’s been a lot of flip flop in terms of like a handbook rule. What is an impermissible handbook rule and the standard has been tightened this year in the sense that any rule banning overly broad confidentiality policies, discussions in the workplace, taking photos in the workplace, social media about the workplace. The NLRB can challenge those or an individual employee through the agency can challenge those if they could just show that the rule has a reasonable tendency to chill employees from exercising their rights. And if the NLRB meets that standard, then the employer has to show a very substantial business interest and very often, you know, you hurt our feelings, or you hurt someone’s feelings, and I do deal with NLRB all the time, more than I like to, but almost every day, but you know, you hurt my feelings or someone’s feelings were hurt, is not a substantial business interest.

Schmidt
What about the substantial business interest of, I just don’t want politics discussed in the workplace because it’s distracting and it undermines the unity in our workforce, so we want to make this a nonpolitical environment?

Verma
So there’s already, though long before any of the recent social events we’ve been talking about, there has always been our prohibition on taking any measure against anyone relating to their off duty political conduct, right?

Schmidt
But even if it’s even handed like, I don’t want to hear from the right or the left. In other words, I’m not just saying I don’t want to hear from one political viewpoint, I just don’t want any politics in the world, that’s not permitted?

Verma
I don’t think so. If the person’s doing their job and they’re talking about politics in the break room one, their discussion of politics very well could be seen as protected concerted activity under Section 7 and second, because you know that they’re talking about politics now, you know something about their political views. So they very easily can say that you’re taking action on off duty political conduct because you’re talking about it, right?

Schmidt
So here we have another example where the intuitive common sense approach of an employer could get them into some hot water, because it seems to me and I think you would agree that a common sense approach would be let’s just have a non-political workplace, right?

Verma
I don’t, what is politics, right? Politics is not just something that happens in Washington or in Sacramento. It’s a system. It’s how our government is run, which results in rules and regulations that dictate how we act in every business, everywhere and in not businesses, at home too, right? So.

Schmidt
So it’s not just elections, it’s social issues in the world that we all live in, and so to stifle that speech, you’re running into some trouble.

Verma
But I also don’t think it’ll work.

Schmidt
It’s not possible to stop it.

Dillion
I do think that that’s what.

Verma
I also, yes that’s what I’m saying, I think I spent a lot of time talking to employers about this, particularly relating to the situation in Gaza that you mentioned, and I think that we live in an age of protest. We have been for a while that when the Hollywood Strike was happening, I could just tell my employers, my clients as shorthand. Half of LA’s on strike and you know, I made the point very like, succinctly. Kind of sad that’s over cause it’s just not so easy to make that point anymore, but we absolutely live in an age of protest and typically effort that’s seen by any employee as suppressing speech. More than likely, it’s just going to result in more speech, even if the employer doesn’t hear it all and it may also create distrust and resentment among people that aren’t even engaging in the speech that you were worried about.

Schmidt
So the medicine could be worse than the disease?

Verma
That’s kind of what I’m, that’s something that I spend a lot of time thinking about, yeah.

Dillion
I think I lean in a bit different of a direction than Nisha, just that I hear you and I believe there is some happy medium and there was actually a case recently in the news for a brochure chain where their employees were prohibited from wearing BLM masks. And the court did throw that case out and said that the grocery chain was able to say, listen, this is our, we said you have to wear a mask during, you know when COVID was at its height, or you still can wear a mask, but it has to be plain. We want absolutely plain, so they said they wanted to foster an inclusive, welcoming environment for their customers and the court agreed with them. So there, there are still potentials to say I, you know, you can’t.

Schmidt
We’re going to be neutral on these issues.

Verma
But speaking amongst one another, prohibiting them saying I support BLM, that might, that probably runs afoul.

Dillion
I am of the same mind. I tell my clients all the time. Most jobs other than being Miss America don’t require to be Miss America all the time, and I don’t think there’s very many jobs that require you to be Miss America or Miss Congeniality in the break room, and if you’re upset about something that you saw on the news today and you want to talk about it with someone, I think the break room very often will be a place where you feel your feelings, and I think employers might have to just manage through that.

Schmidt
Well, that’s very, very interesting takes on both of those issues. Let’s turn now to an economic issue that’s driving our employment matters that are emerging. We’re talking about the inflation that we’ve been living with for many months now, the cost of living increasing in and on a number of different levels and wage disparity. What is California doing to lead the nation and be the cutting edge state and maintain that reputation that there always has on wage issues.

Verma
You get more money, you get more money, not…

Schmidt
That’s right.

Verma
…Everybody gets more money though. California has been a leader in the minimum wage, I would say, with some exceptions potentially, but they have again increased their wage, their minimum wage, which is really interesting in California specifically. We’re seeing new regulations pass through on an industry specific basis. So we have hotels, we have healthcare workers…

Dillion
And fast food.

Verma
…And fast food. So three very different industries.

Schmidt
And very significant employers on the volume.

Verma
Correct, correct.

Dillion
Yeah.

Verma
And I think the healthcare one, correct me if I’m wrong, started basically after COVID and most of us were. Yes, please, give them more money, my gosh.

Dillion
Yeah.

Verma
What have they been going through? And then was hotel and most recently this past legislative session was fast food.

Dillion
So specifically, California wide, I believe the fast food, food and the healthcare increases are the first industry specific which is this session. I believe prior to that it was on a municipal level like certain healthcare workers in city of X.

Schmidt
Palo Alto.

Verma
Right.

Dillion
Or hotel workers in Beverly Hills, and so I would note that, I think it’s important to note that both of these measures, the fast food worker and the healthcare worker statewide measure, I would say one of the reasons it passed, they passed is because they at least created a consistent standard statewide, as opposed to what is the next City Council going to do and where and time wise, right? Like we’re on a very much, with the healthcare minimum wage that’s going up, June, June, June on specific years. Whereas if you’re talking about a City Council, they could implement something mid-year any year, right, and I think it’s very important to understand one of the reasons the healthcare minimum wage, which will go to $25.00 but it differs as to when, depending on the employer, is that one of the reasons that passed and that there were some entities that supported it, right? It ultimately passed because some employers or some representatives, employers withdrew their opposition because a very key provision is that there’s a moratorium on local municipal minimum wage hikes for these workers.

Schmidt
I see. So that’s the tradeoff. They don’t have to worry about, you know, Palo Alto, or San Francisco, or Los Angeles increasing it even more.

Dillion
That’s right.

Schmidt
So it’s kind of like a stay preemption.

Dillion
It’s express preemption, right? Going back to law school, if you wanted to, yeah, cause you know, when you’re reading a statute, which is a bear to read but like, you get down to this moratorium that I’m describing, like, ohh, that’s what express preemption looks. Looks like okay like.

Schmidt
So do you expect to see industry focused wage regulations spreading to other jurisdictions as well, or is that something you think is going to be unique to California?

Dillion
I don’t think it’s unique to California because I think the thread that between the fast food minimum wage and the healthcare minimum wage is labor organizations, I would say one very specific labor organization that has a major presence in California politically and has a lot of members in California and that is definitely. If we’re looking at this as, don’t underestimate organized labor and that’s how I look at it, then absolutely I would say Washington or on, you know, another western state could absolutely be next because this is the long game. I talked to people a lot about how we got here and the kind of legislative compromises that occurred in both instances. There were very nasty ballot propositions that were insanely expensive that had to be that had to go forward and then be pulled for these loss to go on a place, and we’re talking about a lot of money and a lot of power if a certain result is wanted on either side. On the industry side or on the union side, right and so where there’s that sort of circumstances to allow that, I think I think it’s entirely possible.

Schmidt
Very unique aspect of California politics with the legislature and the ballot propositions sometimes acting in concert with one another and one providing leverage for certain stakeholders with respect to the other though.

Dillion
It was a wild session in California.

Verma
Fascinating. I just had popcorn, just shoveling popcorn.

Dillion
What is gonna happen?

Schmidt
Well, I think Nisha you need to find a thing more enjoyable to well, watch while you eat your popcorn. So what common thread in all of these as we head into 2024, what are you seeing that employers need to focus on and what’s the major take away?

Dillion
Your employees. I mean, I don’t know how, so long we’ve been concerned with the bottom line and I get it. You’re a business, you have to operate and turn a profit, but if you have unhappy employees, they’re going to cost you. Whether it be in litigation, and you know, by just leaving turnover count for a lot of people that turnover is brutal. So I would really focus on ensuring you have a culture of inclusivity and just trust that they have some sort of trust in the company they work for.

Verma
And I would just acknowledge it’s hard. Right, I agree, completely agree. We were just talking about how important it is for an employer to put themselves in the perspective of the workforce, and try and create a culture of inclusivity and make sure people are heard. It does feel sometimes like post COVID post staffing shortages, post social unrest. Employers are coming from behind and in that state and they’re on their heels a little bit in addressing these things at the same time, we have a workforce out there. We have labor organizations and we have plaintiff’s lawyers that many are evolving toward a message of tear it all down, and so what I told the client yesterday was, you’ve got, you know, maybe a small business owner on their heels already and at that same time, some members of their workforce, some members of the plaintiffs’ bar and some labor organizations, have essentially been building up an arsenal, and so employers really need to really need to manage through their expectations when it comes to a lot of the things we were talking about.

Dillion
Wait, sorry so hard because so much of it is counterintuitive, so much of it is your gut says I don’t want people using marijuana. I don’t like it or I don’t want people fighting about politics in the break room. So it is so hard for employers. I mean, that’s, people ask me how to avoid wage and employment lawsuits in California and I say don’t have employees in California. I mean, I think there’s a great profit aspect here, but it is it’s really hard.

Schmidt
Well, an excellent discussion on all of these issues. Let’s take a few moments at the end. We’re now at our segment where we call the deeper dive. I’d like to hear a little bit about what life is like for you or has been outside of work and outside of your labor employment expertise and pursuits. So here’s the question. What book have you read or movie have you watched say in the last 10 years that has had a significant impact on you as a person? Not necessarily your profession, but just as a person.

Verma
So I am going to ruin it by bringing it a little bit back to my profession, but I guess that’s a trend, right? So anyone that knows me knows I’m obsessed with documentaries regarding, or sometimes fictionalized, regarding organizations that start out to do the right thing and then plainly do the wrong thing and there’s a lot of really smart people in the room, including lawyers. And they let it happen…

Schmidt
And you’re like, what were you doing?

Verma
…And I am in a situation where I am so an example is Theranos. I think I’ve watched and listened to everything about Theranos example is that we work even the fictional right and then most recently on Netflix there was this series called Bad Surgeon, which wasn’t really about that, but it was ultimately. There was an aspect of a hospital in Stockholm that knew their doctor was doing something horrendous and they were at a place where they felt they needed to cover it up, which didn’t work and it seems to never work. But what I am always trying to figure out is, for the lawyer in the room. At what moment could they have spoken up and changed it if I’m ever in a room like that where I know from a group think perspective, this is all going south. How do I change the psychology of the room? And so I don’t have it figured out yet, but that’s what I like to focus on.

Schmidt
Well, so many times the people in the room are focused on what’s the expedient thing to do. What’s the minimalist thing to do, and there needs to be some that raises their hand, say, wait a second, what’s the right thing to do? Because many times there’s moral clarity. The temptation is overwhelming though, to not follow that person.

Verma
What I’m interested in is all of the instances that I mentioned. All of the people in the room truly believe that whatever decision they were going to make, they were making for some greater cause, like you fill in the blank right?

Schmidt
Okay.

Verma
Yeah, what, how do you reign that in right, I think that’s what I enjoy about those documentaries.

Schmidt
So not quite as heavy. Perhaps. Maybe for you, Heather.

Dillion
Legally Blonde.

Schmidt
Opposite end of discussion.

Dillion
Absolutely joking. But I don’t watch heavy stuff at night. I am wiped and I’m usually reading some sort of fiction book. Right now I’m reading a book about dragons. It’s completely out of my normal, which are these like very soft, nice female stories, with a strong female character in them, but I actually, every January I do read a self-help book if you will and I read Atomic Habits last year, and I did really like it. I’m the mom of two young kids. My husband’s an attorney, I’m an attorney, and I felt like everything was just out of my control and I did really like a lot of the messages in Atomic Habits, and that’s been the one I’ve recommended to others.

Schmidt
Well, very good. I enjoy travel with my wife, our, my wife and I are empty nesters now, and so my reading habits usually correspond to whatever part of the country or world we’re going to be visiting. So we visited France recently, and I did a deep dive into all things French. Including everything from the French Revolution to D-Day and I kind of rediscovered Ernest Hemingway and his Movable Feast, which I listened to on audio, was just fantastic. I’ve really enjoyed hearing his amazing writing and ability and talking about this. It was written at the end of his life a couple of years before he died, but it’s a retrospective back to very early in his life. I think in the late 1920s, about life in Paris back in that era. So it’s a very sentimental retrospective, when he was, you know, just really at the end of his life, reflecting on all of these things, I found it very, very interesting and sort of pregaming the trip.

Dillion
When you said France, I thought you were going to go cheese and the revolution.

Schmidt
I can eat the cheese while I listen to the Moveable Feast. Well, thanks again for being here. I’m appreciative of all your thoughts and your insights. I want to also thank our listeners for tuning in. I’m indebted to the extraordinary team at Dorsey for making this podcast and episode possible for more resources on this and other litigation risk, go to litigationrisk.com where more information can be found, including a book on managing litigation risk written by yours truly. Until next time my friends, this is yet a reminder that there are a lot of sharks swimming out there in the murky waters, so swim safely.

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