In January 2021 The Light Digital – a San Francisco Bay Area-based digital agency interviewed labor lawyer Jay G. Putnam on what business owners can expect going into the new year. The interview below is lightly edited for clarity.
Mike Wolpert: Welcome to another episode of Business in the Know — and good news today for small business owners entrepreneurs like myself. If you’re the guy focused on running your business and in the background there are some questions about the law. Let’s find out. My co-host today, Paul Benton, is welcoming a legal beagle to the show who has a long excellent track record working on behalf of business. Paul, would you tell us a little more?
Paul Benton: Thanks, Mike. I’m delighted to welcome onto our show today Jay Putnam who has been practicing labor law for 40 years. He’s based in Petaluma, California. Interesting statistic: in the 40 years of practice, all of Jay’s clients who are employers who have followed his advice have not been sued. That’s a heck of a statistic.
I got to know Jay over the years because I would truck up to Petaluma eagerly every month to listen to the law seminars that he gives. If you were wanting to go to law school but didn’t get your chance, go up to see Jay in one of his seminars that he gives. Jay also maintains an exceedingly valuable law blog educating small business every month.
Jay, you are going to talk to us today about two or three things that every business owner must know about labor law going into the new year. The first one, the anti-sexual harassment requirement deadline is coming up. If you don’t have your people trained by the 1st of January, is there a consequence? Tell us about that.
Jay Putnam: First of all, thanks for inviting me to be here this morning, Paul and Mike, I’m pleased to be here. Yes, with respect to the harassment training requirements, there is a requirement that employers trained supervisors to provide supervisory employees with two hours of training before January 1st. Employers are also required to provide one hour of training every year for non-supervisory employees and that deadline is approaching.
In terms of the sanctions that are available, in the event that employers fail to comply with those requirements, there are administrative sanctions that are available that are imposed by various governmental agencies in the event that the employer fails to comply with that requirement, but really that’s the tip of the iceberg in terms of my concern.
I represent employers in labor law issues and so I’m always concerned with the prospect of litigation not coming from administrative agencies so much because administrative agencies do not have the power to award punitive damages or other business solvency threatening sanctions. That comes from the civil litigation system and the plaintiff’s lawyers. In event that employers failed to provide the training that’s required by law, in the event that there’s a harassment complaint, the plaintiff’s lawyers initiate a lawsuit or other claim against the employer as a result of that failure. The plaintiff’s lawyers will be able to convey, communicate to a jury that the employer has failed to get out of the batter’s box in terms of its obligations to provide a harassment-free workplace.
That’s where the liability exposure comes in because juries are comprised of employees not employers or business owners, and as Paul will attest, a major component of my seminars through the years has to do with the extreme vulnerability that employers face if they’re forced to attempt to defend themselves in the presence or to the satisfaction of a jury of employees or the reason that the employees are far more sympathetic, generally speaking, to the plaintiff doing the suing than they are to the employer.
That presents a huge obstacle that gives me a good opportunity to segue into my comments generally today. Namely, historically, I encourage employers, my clients, to view the situation as an obstacle field. Employers are trying to get orders, get the orders filled, and on a good day, get paid for complying with the contract. But with the passage of each piece of workplace legislation that presents an additional obstacle in the path of the employer satisfying that requirement.
When the employers violate those statutes, lawsuits result. If the employer does not have a mandatory binding arbitration policy, that lawsuit will go before a jury, a jury of employees. Employers lose statistically 70% of these lawsuits — and that’s not the worst part of the story. Really, the worst part of the story is that the cost of defending these lawsuits through a jury trial frequently exceeds $ 1 million. As a result, many employers are unable to defend themselves and are forced to settle on terms that the plaintiff dictates.
That’s the biggest part of the problem and one that many employers are oblivious of. A mandatory properly drafted arbitration policy distributed to the workforce alleviates or eliminates those problems altogether because the mandatory arbitration policy will provide for a neutral arbitrator to decide these cases which the arbitrator does not share the bias. The jury of employers does so the employer stands a much better chance of winning, but perhaps as importantly or more importantly, the cost of arbitration is estimated to be one-tenth of what it costs in defense costs to get through a jury trial win, lose or draw. Of course, as I just mentioned, employers overwhelmingly lose these cases.
Paul: Jay, arbitration was in then it was out. Now, it’s back in. Tell us about what happened to the arbitration legality. At one point this year, employers faced liability for insisting on arbitration, now not the case.
Jay: On January 1st, 2020, AB51 was enacted, took effect. This basically radically limited the ability of employers to administer unilaterally a workplace arbitration policy. That case was subject to a petition for an injunction. I believe that was initiated by the California Chamber of Commerce. That injunction was granted a permanent preliminary injunction, rather was granted in February, I believe it was 2020, and that remains in place which means in effect that the new statute cannot be enforced until the injunction is released and that’s the state of affairs as we speak.
Employers, many of whom removed their arbitration policies in response to the law if they had one, if they were being advised by my office, I advise them immediately to immediately get that arbitration policy back in and effect. It’s properly distributed to employers because arbitration policies are now enforceable. That, I want to emphasize before I leave today, is perhaps the most potent protection available to employers under California law today. Mandatory arbitration policies.
Now, before I leave the subject, I want to emphasize I have a newsletter that just went out. It’s on my website. In this, I refer to the perfect storm created by the phalanx of new statutes that take effect on January the 1st. We’re in the middle of a pandemic, several new statutes radically expand California leave of absence rights.
As the pandemic spikes in California in particular, employers can expect an avalanche of new leave requests. These new laws to take effect on January the 1st radically expand the rights of employees to demand and receive those paid, those leaves of absence, many of them paid. Employers better understand what they’re doing with respect to the new leave rights before they deny an employee’s request for a leave of absence on the part of the employer, on the part of the employee rather or any family members that are complaining of any health-related conditions.
Paul: Wow, there’s always something coming out of Sacramento. It’s really hard to keep up. Jay, it’s great to have someone like you at the table to keep us sane. Mike?
Mike: I appreciate you joining us and look forward to you coming back because when it comes to legal stuff, it’s always good to find a lawyer instead of making up your own rules. Thanks for your help with that. Until next time everybody, thanks for watching another episode of Business in the Know and we’ll see you again. Until then, keep meeting people, making friends, and let’s all try to make a little bit of money.