“#UsToo”: Congress Bans Forced Arbitration of Sexual Harassment and Assault Claims

**NEW – Feb. 25, 2022** You can hear a 13-minute Employment Law Alliance podcast about this new legislation, featuring Hirschfeld Kraemer’s Dan Handman, by clicking HERE.

What Happened

In a bipartisan testament to the sustained momentum of the #MeToo movement, on February 10, 2022, the U.S. Senate joined with the House of Representatives’ earlier passage of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the Act). Recognizing the continued outcry for more transparency related to workplace sexual misconduct, the House Committee on the Judiciary declared the Act’s purpose is to “allow[] survivors to bring their stories out of the shadows and pursue justice in our courts”, and “use their voice however they see fit.”

What It Means

Now awaiting President Biden’s expected signature, the Act will amend the Federal Arbitration Act (FAA) in three meaningful ways:

Invalidates employment pre-dispute agreements and class action waivers that require claims related to sexual assault or sexual harassment to be arbitrated on an individual basis;
Ensures that the employee who signs an arbitration agreement has complete autonomy in deciding whether to arbitrate sexual harassment or sexual assault claims or choose to pursue such claims, either individually or on a collective basis, in court; and
Provides that regardless of the contractual terms of the arbitration agreement, the enforceability of the agreement must be decided by a court, not an arbitrator.

Impact On California Employers

California employers have faced a conundrum since the passage of AB51, which effectively banned imposition on employees and applicants of mandatory arbitration agreements covering all types of employment disputes as well as class action and jury waivers. Although many questioned whether AB51 would survive legal challenge based on the preemptive scope of the FAA, the Ninth Circuit has upheld the key portions of the law. Even though the scope of FAA preemption is pending before the U.S. Supreme Court in Viking River Cruises v. Moriana, and could permit enforcement of mandatory arbitration and class action waivers relating to wage and hour claims such as California’s infamous PAGA claims, the Act has now clarified for all employers that mandatory arbitration agreements and class action waivers covering sexual assault and sexual harassment claims are invalid.

What Remains

Covering claims alleging nonconsensual sexual contact and a broad range of actions constituting hostile environment sexual harassment, the Act applies to federal Title VII claims, state, and tribunal law claims. The Act does not, however, address arbitration of other forms of discrimination; accordingly, questions remain whether an employee alleging a sexual harassment claim along with other employment claims that potentially stem from the same parties or incident will be allowed to litigate the entire dispute in court. The Act also leaves in place existing law regarding the enforceability of class action waivers and mandatory arbitration of wage and hour claims as we await the Supreme Court’s decision in Viking River Cruises.

What You Should Do

With increased transparency comes increasing challenges to the perceptions and reputations of your organizations. While some employees will still opt for the privacy of arbitration, plaintiffs’ lawyers will be aggressively pushing their clients to elect a public forum and a jury. While the #MeToo movement has motivated employers to become more attuned to their anti-harassment policies and training, the passage of the Act should inspire you to take a further look at your anti-harassment/anti-discrimination and diversity, equity, and inclusion policies and training programs to ensure they are effective in educating your workforce while meeting the challenges of increased public scrutiny.

For more information, please reach out to any of the following Hirschfeld Kraemer lawyers:
Anna Pham – apham@hkemploymentlaw.com, or (415) 835-9012
Glen Kraemer – gkraemer@hkemploymentlaw.com, or (310) 255-1800
Keith Grossman – kgrossman@hkemploymentlaw.com, or (310) 255-1821

International Student-Athletes and NCAA NIL Rules, Explained

OVERVIEW
As we blogged previously, now that the NCAA allows student-athletes to benefit financially from their name, image, and likeness (NIL), new issues are emerging for campuses and their student-athletes, and particularly visa issues for international student-athletes. I recommend that each NCAA college develop a policy for NIL and student-athletes, in consultation with the diverse stakeholders involved on campus, including those responsible for athletics, international student visa compliance, and campus exclusivity contracts.

COMPANIES SHOULD CONFIRM EACH INTERNATIONAL STUDENT-ATHLETE’S VISA CATEGORY
There are different visa categories with different rules. Most international student-athletes are in F-1 international student status, sponsored by their college or university. That means the school is responsible for the student-athlete’s immigration compliance and has discretion to cancel the international student’s F-1 visa status if the student-athlete does anything that violates F-1 rules. Working outside of permitted parameters is a status violation that requires the school’s Designated School Officials (DSOs) to terminate the student’s F-1 visa status. The school’s DSOs have significant discretion in determining whether a student in F-1 visa status violated status by working without proper authorization.

Many visa categories do not offer work authorization, so only passive income is allowed. Some international students on campus are in other visa status categories, typically as dependents of parents or guardians living in the U.S. with work visas. Examples include children of diplomats, professionals, or business executives. Some international students are in the U.S. with their own work visas or as spouses of individuals with work visas. As a general rule, international students in visa status categories other than F-1 have no work authorization at all, so they have to restrict any NIL activities to passive income that doesn’t qualify as work (the only exception is that some spouses may be eligible for work authorization, depending on their visa status category). Their college or university has no responsibility or role in their immigration compliance.

Be sure to confirm an international student-athlete’s visa category at the outset. So for NIL deals, the first crucial point is to verify the specific visa status category of an international student-athlete. For individuals who are not in F-1 student status and don’t have work authorization as a spouse in their visa category, maintaining compliance by limiting activities to only passive income is a matter between the student, the company, and government (Internal Revenue Service and Social Security Administration). Accountants can help these international student-athletes maintain compliance. They may obtain an Individual Taxpayer Identification Number, form a corporation or limited liability corporation (LLC), file LLC or corporate tax returns, and benefit from passive income from NIL activities.

Don’t assume! International student-athletes may have other scenarios, subject to different rules. Student-athletes also may be permanent residents with green cards, Deferred Action for Childhood Arrivals (DACA) beneficiaries, or undocumented. Lawful permanent residents with green cards are U.S. nationals and have unrestricted work authorization. Applicants for lawful permanent resident status who don’t have green cards yet may have work authorization, depending on the progress of their permanent residency applications. Individuals with DACA protection have unrestricted work authorization. Undocumented individuals have no work authorization. So again, it’s important to confirm the status of each international student-athlete before negotiating NIL arrangements with them.

SPECIAL RULES FOR INTERNATIONAL STUDENT-ATHLETES IN F-1 STATUS SPONSORED BY THEIR SCHOOLS
Schools enforce F-1 student visa employment rules, as required by the U.S. Department of Homeland Security (DHS). Schools may be authorized by DHS to sponsor international students in F-1 visa status, which affords college and university students some limited work authorization. But international students in F-1 status are subject to discretionary compliance decisions of their school, and of Immigration and Customs Enforcement (ICE), the division of DHS which regulates the Student and Exchange Visitor program (SEVP). ICE delegates authority to F-1 sponsoring schools to monitor and enforce F-1 visa compliance and requires schools to enforce the rules strictly or lose the right to sponsor F-1 visas for international students.

F-1 students have limited work authorization, on and off campus, and violating the employment rules can have devastating consequences. F-1 international students are allowed to work on campus, but there are restrictions as to the hours per week; they may work off-campus, but only for optional practical training in their field or curricular practical training as part of their education. All off-campus work requires specific authorization by a Designated School Official (DSO) at their school, and also may require specific approval of the U.S. Citizenship and Immigration Services (USCIS). Any work on campus beyond permitted parameters and any off-campus employment without the required DSO and/or USCIS approval is a violation of status requiring the DSO to terminate the international student’s F-1 visa status, often with drastic consequences for the international student. Determining what activities qualify as “work” is important; volunteering in work that usually is paid is prohibited under both immigration laws and employment laws.

The schools decide whether an F-1 student violated status by working outside approved parameters, and the DSOs have to be very strict about this. For F-1 international students, the school’s DSOs have discretion to decide if the student violated status through employment. If a DSO decides the F- international student violated status, the DSO is required by law to terminate the student’s F-1 visa status. DSOs tend to take a conservative approach to immigration compliance for international students and they are required to take their responsibilities for ICE very seriously, to protect their school’s F-1 international student program. So it’s vital for F-1 international students to work closely with their school’s DSOs, to avoid any employment that a DSO would view as unauthorized. Without a campus policy, DSOs have to follow DHS guidance about what type of NIL activities DHS believes is allowed.

NIL ACTIVITIES ON CAMPUS – WHAT ABOUT EXCLUSIVITY CONTRACTS?
Campuses enter into exclusivity contracts with vendors, so campus policy should clarify whether NIL activities on campus for other brands or companies violate these agreements. In addition to questions about work authorization, NIL activities on campus may implicate campus exclusivity contracts. Colleges and universities may have exclusivity contracts with major brands such as Adidas, Nike, Under Armour, Coca Cola, Pepsi, Dr. Pepper, Snapple, or Starbucks that yield financial benefits for the institution. Student-athletes may not consider their school’s exclusivity contracts when planning their NIL activities. International student-athletes may prefer to engage in NIL work on-campus to comply with F-1 visa rules, without considering whether the products or services conflict with campus exclusivity contracts. A screening and approval policy for NIL activities on campus could avoid issues with respect to the institution’s exclusivity contracts.

INSTITUTIONS SHOULD ADOPT POLICIES REGARDING NIL
Campus policies on NIL are crucial for campus constituencies, companies engaging with student-athletes, and particularly international student-athletes. All NCAA institutions should adopt NIL policies, in consultation with the diverse stakeholders on campus who have roles and responsibilities with regard to compliance and international students. This includes athletics (coaches and compliance), risk management, enrollment management, international office (or wherever DSOs work), academic and administrative leadership, and the business office. Questions to be considered include what types of NIL activities will be allowed on campus and the appropriate contact for student-athletes to seek approval for NIL activities, whether domestic students or international student athletes. For example, F-1 international students may want to engage in NIL activities on campus where they are allowed to work, but their NIL activity could violate exclusivity contracts on campus or could exceed their allowable hours to work on campus. Schools may want to prohibit NIL activities on campus, but this would restrict NIL opportunities for F-1 international students in particular. A policy could meet institutional objectives with equal application to all student-athletes, regardless of citizenship, or could address international student-athletes separately. A policy could allow exceptions, but it should specify which institutional authority is authorized to consider and approve exceptions.

COMPANIES SHOULD CONFIRM INSTITUTIONAL POLICIES
Companies engaging with student-athletes in NIL activities want them to benefit, and these efforts could backfire if the student-athlete violates their visa status, campus exclusivity contracts, or campus rules regulating commercial activities on campus. So companies should confirm in advance both the immigration status of international student-athletes and any applicable campus policies. Schools should commit their campus policy to writing, and make the policy available to student-athletes so they can share with interested companies up front. Most importantly, the campus policy should identify who on campus is the appropriate contact for student-athletes and companies to rely on for confirmation of campus policy, and to review any special circumstances that may not be expressly addressed in the policy. This could be a contact in athletics, or the international office, or the business office, whoever is informed about the institutional policy and considerations that led to the policy.

For more information, please reach out to Leigh Cole, lcole@hkemploymentlaw.com, immigration counsel for Hirschfeld Kraemer LLP.

California Reinstates Indoor Masking For All During the Holidays

Citing a spike in new COVID cases following the Thanksgiving holiday, the California Department of Public Health (CDPH) has issued an indoor mask mandate that will remain in place through January 15, 2022.

Starting December 15, 2021, all persons, regardless of vaccination status, must wear a mask in all indoor public settings.

California employers located in counties that do not currently have a mask mandate should immediately review their policies and practices to ensure all employees are masking up indoors, even if vaccinated.

For more information, please reach out to Michelle Freeman in Hirschfeld Kraemer’s San Francisco office, mfreeman@hkemploymentlaw.com, (415) 835-9003.

OSHA Orders Employers to Adopt Mandatory COVID-19 Vaccination or Testing Policies

On November 4, 2021, the federal Occupational Safety and Health Administration (OSHA) issued a new Emergency Temporary Standard (ETS), requiring employers with over 100 employees to implement a mandatory COVID vaccination policy, or alternatively a policy requiring employees either to be vaccinated or be tested weekly and be masked in the workplace.

Employers must comply by December 5, 2021. We summarize the ETS requirements below.

Who Is Covered
The ETS applies to all private employers with 100 or more employees, regardless of whether the employees are full- or part-time, temporary, or seasonal, unionized, or non-unionized. Employees employed by a staffing agency do not count toward the 100 employee threshold. However, staffing agencies are themselves covered when they have over 100 employees, regardless of location.

Excluded from ETS coverage are:

federal contractor workplaces covered by Executive Order 14042;
health care workplaces covered by the Healthcare ETS (29 C.F.R. § 1910.502); and
public employers in states without OSHA-approved State Plans.

Although all employees are counted for purposes of ETS coverage, not all employees are required to comply with a covered employer’s written policy. The ETS does not apply to:

Employees who do not report to a workplace where other individuals (such as coworkers or customers) are present;
Employees who work from home; or
Employees who work exclusively outdoors.

Vaccination Policy Requirement
No later than December 5, 2021, covered employers are required to develop and implement a mandatory COVID-19 vaccination policy. Under such a policy, employees must be fully vaccinated no later than January 4, 2022, meaning that at least two weeks have passed since the employee received the second dose of a two-dose vaccine (Moderna or Pfizer) or a dose of a single-dose vaccine (Johnson & Johnson). Prior infection does not count as being fully vaccinated. In addition, employers must make reasonable accommodations for employees who cannot obtain the vaccine due to medical reasons or sincerely held religious beliefs.

Employers may, as an alternative to a mandatory vaccination policy, choose to implement and enforce a policy allowing employees to choose to either get vaccinated or to submit to weekly testing and wear face covering while at work. For employers adopting such an “employee choice” policy, employees who are not fully vaccinated (including who have not completed the vaccination process at least two weeks earlier) will need to start undergoing testing (and masking) as of January 4, 2022.

Documentation and Recordkeeping
Employers are required to determine the vaccination status of employees and to obtain appropriate proof as to employee’s vaccination status. Permissible forms of proof of vaccination are:

A record of immunization from a health care provider or pharmacy;
A copy of the U.S. COVID-19 Vaccination Record Card;
A copy of medical records documenting the vaccination;
A copy of immunization records from a public health, state, or tribal immunization information system; or
A copy of any other official documentation that contains the type of vaccine administered, date(s) of administration, and the name of the health care professional(s) or clinic site(s) administering the vaccine(s).

Employees who are not able to provide one of these forms of proof of vaccination may submit a sworn, written statement attesting to their vaccination status. Employers must keep a roster of each employee’s vaccination status, and as with all medical information, the information must be kept confidential and separate from an employee’s personnel file.

Vaccination Paid Leave
As part of its policy, employers must provide employees reasonable time, including up to four hours of paid time, to receive each dose of vaccination. This time is in addition to any paid sick or other leave available to the employer. In addition, employees must be permitted to use sick leave, paid time off, or other qualifying leave to recover from reactions associated with obtaining the vaccine. To the extent an employee does not have available sick leave or time off to recover from their vaccination, the employer must provide up to two days of paid leave for this purpose.

Removing Employees Infected with COVID-19
To prevent the spread of COVID-19, employers must remove from the workplace any employee who either tests positive for COVID-19 or is diagnosed as having COVID-19 by a licensed healthcare provider, regardless of vaccination status. Employees are required to report such test results or diagnoses to the employer. Employees may return to the workplace if they have tested negative for COVID-19, are informed by a licensed healthcare provider that they may return to work, or meet the CDC’s criteria for release for isolation.

Notices to Employees
Employers must provide employees with the written policy required by the ETS in a language and at a literacy level that employees can understand. Employers must also provide employees with copies of two OSHA publications, “Key Things to Know About COVID-19 Vaccines” (click here), and a notice about the penalties for falsifying records, available here.

Federal Preemption and Legal Challenges
The ETS preempts state laws that ban or limit an employer’s ability to require vaccination, face covering, or testing. Although effective as of November 4, 2021, the ETS is a proposed rule under Section 6(b) of the OSH Act. Thus, the ETS could change in the future.

On November 6, 2021, the Fifth Circuit Court of Appeals temporarily stayed the ETS in the face of legal challenges to its constitutionality. The stay is pending further briefing and is not a decision one way or the other as to the legality of the ETS. Employers should begin preparing to comply with the ETS, as we anticipate it will become effective in some fashion.

For more information, please reach out to Felicia Reid, freid@hkemploymentlaw.com, (415) 835-9024, or Jesse Sutz, jsutz@hkemploymentlaw.com, (415) 835-9017.

9th Circuit Reinstates California Law That Employers Can’t Mandate Employment Arbitrations

On October 10, 2019, Governor Newsom signed into law AB 51, prohibiting employers from requiring, as a condition of employment, continued employment, or the receipt of any employment-related benefit, that any applicant for employment or employee waive “any right, forum, or procedure” for a violation of California’s Fair Employment and Housing Act or the Labor Code. Civil sanctions and criminal penalties could be imposed for violations of the law, including as a misdemeanor punishable by imprisonment and/or a fine.

In effect, the new law was designed to prevent employers from requiring employees to arbitrate most employment-related claims instead of being able to bring such claims in court.

On January 31, 2020, in response to a challenge to the law brought by certain business groups and the U.S. Chamber of Commerce, U.S. District Court Judge Kimberly J. Mueller issued a preliminary injunction against enforcement of the new law on the grounds that it was likely preempted by the Federal Arbitration Act (FAA).

On September 15, 2021, in Chamber of Commerce of the United States of America, et al. v. Rob Bonta, in his official capacity as Attorney General of the State of California, et al. (case number 20-15291) a divided three-judge panel of the Ninth Circuit Court of Appeals largely lifted the injunction, finding that most provisions of the California law were not preempted by the FAA or inconsistent with U.S. Supreme Court precedent. In so concluding, the panel found that Congress, in adopting the FAA, and the U.S. Supreme Court, in construing the FAA, were focused on voluntary and consensual executed written agreements to arbitrate and did not intend to preempt state laws requiring that arbitration agreements be voluntary. Writing for the court, Judge Lucero states: “We are asked by plaintiffs to hold that the FAA requires parties to arbitrate when but one party desires to do so. Our research leads to nothing in the statutory text of the FAA or Supreme Court precedent that authorizes or justifies such a departure from established jurisprudence, and we decline to so rule.”

The panel agreed with the district court that the civil and criminal penalties associated with AB 51 for the act of executing an arbitration agreement conflicted with the FAA and thus were preempted to the extent they applied to executed arbitration agreements covered by the FAA.

The dissenting judge was of the view that AB 51 was an impermissible attempt to evade the FAA and recent Supreme Court decisions favoring the enforcement of arbitration agreements.

Given that some other courts of appeal have invalidated various state laws that worked to either prevent the formation of arbitration agreements or to block enforcement of them, as well as the fact that the U.S. Supreme Court in recent years has been active in construing the scope of the FAA, it would not be surprising if the U.S. Supreme Court took up this case.

For more information, please contact William Ross at wross@hkemploymentlaw.com, or (310) 255-1828.

White House Mandates Vaccines for Millions of Americans

On Thursday, September 9, 2021, President Joseph R. Biden, Jr. signed two Executive Orders mandating COVID-19 vaccines for federal employees and for employees of federal contractors, and also signaled that the Department of Labor (DOL) would be issuing an Emergency Rule requiring vaccines for employers with 100 or more employees.

These sweeping mandates should have a dramatic effect on vaccine-resistant employees and on employers frustrated with them.

As to employees of the federal government, President Biden ordered them to be vaccinated, “subject to such exceptions as required by law,” which, generally speaking, involves religious or health-based exemptions. The second Executive Order specifically extended the mandate to employees of federal contractors, who now must comply with the Safer Federal Workforce Task Force.

Certain government contracts – especially, grants or contracts with certain “Indian Tribes” – are exempted from the Order. This second Executive Order does not automatically apply to existing federal contracts, but rather to “new contracts; new contract-like instruments; new solicitations for contracts or contract-like instruments; extensions or renewals of existing contracts or contract-like instruments; and exercises on existing contracts or contract-like instruments” entered into, or extended on or after October 15, 2021.

President Biden also announced that the Department of Labor would imminently issue an Emergency Rule mandating vaccines for employees of employers with over 100 employees.

More information on the contours of that Emergency Rule should be forthcoming soon. We will keep you informed, once we know more.

For more, please reach out to Dan Handman in the Los Angeles office of Hirschfeld Kraemer LLP, dhandman@hkemploymentlaw.com, (310) 255-1820.

International Student-Athlete Visas Potentially At Risk Due To New NCAA NIL Rules

OVERVIEW
Opportunities for student-athletes to benefit from use of their name, image, and likeness (NIL) have opened up under new NCAA rules adopted in the face of pressure from state laws challenging NCAA’s former prohibition on student-athletes profiting from their own NIL. As of July 1, 2021, student-athletes who are U.S. citizens or lawful permanent residents may profit from their NIL, subject to NCAA rules and applicable state laws.

But international student-athletes, meaning those who are not U.S. citizens or lawful permanent residents, face different considerations. Their immigration status and ability to remain in the U.S. short-term or long-term may be affected by how they try to benefit from use of their NIL. U.S. colleges and universities have a strong interest in protecting the immigration status and thus the ongoing enrollment and program participation of their international student-athletes.

We recommend that college and universities educate their international student-athletes about their rights and risks around NIL and how their situation differs from their U.S. peers, to avoid drastic consequences of even the most innocent missteps.

F-1 STUDENT VISAS AND PASSIVE INCOME vs. WORK FOR PAY
Many student-athletes are in F-1 international student status, sponsored by their school. F-1 sponsoring schools are certified by the U.S. Department of Homeland Security (DHS) to issue F-1 student visa documentation and manage student visa records in the Student and Exchange Visitor Information System (SEVIS) database maintained by DHS to track student visa holders.

Certified F-1 sponsoring schools have an express duty to educate and inform their F-1 students about F-1 compliance rules, including the scope of permissible employment and the approvals needed to authorize permissible types of employment. International student-athletes in F-1 international student visa status are not allowed to work for pay outside of certain approved types of employment, either on campus (for the school or a service provider for the campus community), or for training in their field of endeavor and authorized by their school’s Designated School Official (DSO) for their F-1 program.

Passive income is permitted for international students in F-1 status and does not violate their F-1 visa status. Applicable state laws are important indicators of the rules, but international student-athletes are subject to the umbrella of U.S. immigration law and interpretation of “work” versus “passive income” by the DHS, which won’t necessarily agree with state labor and employment regulators.

To avoid a status violation, F-1 international students need to understand what seems to be passive income and what seems to be work for pay. For example, appearing in a scripted advertisement probably is work for pay, whereas use of competition film or photos in subsequent advertising probably is passive income. So that means appearing in a scripted advertisement filmed on campus is not permissible “on campus employment” for F-1 international students, unless the school is creating the advertisement on campus for its own promotional efforts.

DRASTIC CONSEQUENCES FOR F-1 VISA VIOLATIONS
Each school certified by DHS to sponsor F-1 international students must appoint one or more DSOs on campus who have delegated authority from DHS to monitor the F-1 status of the international students on its campus. If a DSO becomes aware that an F-1 student worked for pay – or “volunteered” to work without pay – outside authorized parameters for F-1 status, the consequences can be drastic. DSOs dread that one of their F-1 students could show up at their home off campus as a commercial delivery person, giving the DSO actual knowledge that the F-1 student is engaging in unauthorized employment.

If an F-1 student violates status by engaging in any amount of unlawful employment, the DSO is required by law to terminate the student’s SEVIS record with the Student and Exchange Visitor Program, U.S. Immigration and Customs Enforcement (SEVP – ICE – DHS), which terminates the student’s F-1 visa status. The student then has to either apply to U.S. Citizenship and Immigration Services (USCIS – DHS) for reinstatement to F-1 status, or depart the U.S. and return based on a new F-1 SEVIS record from their school. If they depart the U.S., it’s likely they will need to obtain a new F-1 visa stamp at a U.S. consular post (the State Department), and then they will need to request return admission to the U.S. in F-1 status. When a student arrives at a U.S. port of entry and requests admission in F-1 status, U.S. Customs and Border Protection (CBP – DHS) checks their SEVIS record to make sure they still are authorized for F-1 status by their school and SEVP (ICE – DHS). CBP will know from SEVIS if a student recently was terminated in SEVIS for a status violation such as unlawful employment and now is returning on a new SEVIS record, and CBP has the opportunity to question the student about the circumstances.

USCIS, the State Department, and CBP – DHS at U.S. ports of entry, each has discretion to deny reinstatement or return to F-1 student status every time they are asked to approve an application, issue a visa stamp, or admit a traveler to the U.S.

INTERNATIONAL STUDENTS IN OTHER VISA CATEGORIES ARE ALSO AT RISK
The same situation applies to international students who are in other types of status categories that don’t allow employment, such as dependents of international personnel working in the U.S. These students may not be identified or tracked by a college or university because they aren’t sponsored by the school for F-1 student visas, but similar to F-1 students, they aren’t allowed to engage in employment. It can be even harder for student-athletes in other status categories to rectify their immigration status after even an innocent status violation, because the school doesn’t manage their immigration status and there’s no “reinstatement” process for other visa categories.

TAKEAWAY: EDUCATE INTERNATIONAL STUDENT-ATHLETES ABOUT NIL RISKS
Violations of immigration status by international student-athletes have the potential to interrupt their program of study and force them to depart the U.S., and as a result miss athletic competitions and lose NCAA eligibility. So it’s important for schools to help their international student-athletes avoid status violations, including engaging in unauthorized work for pay. We recommend that F-1 sponsoring schools distribute handouts or FAQs for their international student-athletes explaining the difference between passive income and work for pay with respect to NIL activities.

If you have questions or need help preparing handouts or FAQs, please contact attorneys Leigh Cole or Adam Maldonado at Hirschfeld Kraemer LLP.

Bay Area Reinstates Indoor Masking For All, Even If Vaccinated

Several Bay Area counties, including San Francisco, Alameda, Contra Costa, Marin, San Mateo, Santa Clara, and Sonoma counties, as well as the city of Berkeley, have joined Los Angeles, Sacramento, and Yolo counties in requiring that all persons, regardless of vaccination status, wear a mask indoors.

These mandates follow recent guidance from the U.S. Centers for Disease Control recommending the same after an increase of COVID-19 cases related to the Delta variant.

The Bay Area mask mandates will take effect Tuesday, August 3, 2021, and remain in effect for the foreseeable future.

Employers located in the above counties and the City of Berkeley should immediately review their policies and practices to ensure all employees are masking up indoors, even if vaccinated, in light of these new mandates.

For more information on this topic, please reach out to Michelle Freeman, mfreeman@hkemploymentlaw.com (415) 835-9003

California Supreme Court: Premium Pay for Non-Compliant Meal/Rest Periods Must Be Paid at “Regular Rate of Pay” Used for Overtime, Not Base Hourly Rate—and Applies Retroactively

California employers are already well acquainted with the resource-intensive process of navigating and applying California law to maintain compliant payroll practices. This process became even more difficult due to the California Supreme Court’s recent decision in Ferra v. Loews Hollywood Hotel, LLC, which holds that premium pay for missed meal and rest breaks must be calculated at the same “regular rate of pay” used to calculate overtime payments.

Of equal concern, the Court held it was not making new law, but simply explaining what the law has always been: in other words, this requirement applies retroactively.

Background
Under California Labor Code section 226.7, non-exempt employees who do not receive a compliant meal or rest period are entitled to receive premium pay of “one additional hour of pay at the employee’s regular rate of compensation for each day that the meal or rest or recovery period is not provided.” A common understanding among employers was that a “premium” was the equivalent of one hour’s pay at the employee’s base hourly rate. While plaintiffs’ attorneys frequently argued that the term “regular rate of compensation” (as used in section 226.7) must be interpreted the same as “regular rate of pay” under section 510(a) for overtime payments, there was no bright line case law. Until now.

Notably, the trial court ruled, and the Court of Appeals agreed, that the “regular rate of compensation” meant an employee’s base hourly rate and was not synonymous with “regular rate of pay” as used for overtime purposes. In reversing the lower court, the California Supreme Court leaned heavily on the legislative history of both Labor Code sections 226.7 and 510 as well as section 7(a) of the federal Fair Labor Standards Act and the California Industrial Welfare Commission’s tracking of the FLSA’s “regular rate” language in California wage orders.

Against this historical background, the California Supreme Court rejected Loews’ interpretation that the term “regular rate of pay” was an established term of art specific to California overtime law — instead finding that because sections 226.7 and 510 were enacted contemporaneously, the terms should be given consistent meaning:

“In sum, we hold that the term ‘regular rate of compensation’ in section 2267(c) has the same meaning as ‘regular rate of pay’ in section 510(a) and encompasses not only hourly wages but all nondiscretionary payments for work performed by the employee. This interpretation of section 226.7(c) comports with the remedial purpose of the Labor Code and wage orders and with our general guidance that the state’s labor laws are to be liberally construed in favor of worker protection.”

The Calculation
For California employers, the Ferra decision means that premium pay for non-compliant meal and rest periods cannot be paid at an employee’s base hourly rate. The calculation for premium pay must be determined by dividing total workweek compensation, including non-discretionary bonuses/payments and commissions, among other potential non-hourly compensation, by total hours worked in that workweek, dividing by two, and then adding that quotient to the base hourly rate.

Moreover, because the Court rejected Loews’ argument that the decision should only apply prospectively, employers could be liable for a failure to pay such premiums at the “regular rate” going back four years (the effective statute of limitations).

Next Steps
In consultation with legal counsel, employers should promptly review their premium pay practices for non-exempt California employees going back four years to ensure compliance with this clarification of existing law.

For more information, please reach out to:
Kirstin Muller – kmuller@hkemploymentlaw.com or (310) 255-1811
Monte Grix – mgrix@hkemploymentlaw.com or (415) 835-9016
Margeaux Pelusi – mpelusi@hkemploymentlaw.com or (415) 835-9051

At the Buzzer: Hours Before State Laws Take Effect, NCAA Clears Way for College Athletes to Immediately Cash-In on “Name-Image-Likeness” Rights

Overlapping but fundamentally different legal developments in the last few weeks have transformed how the National Collegiate Athletic Association (NCAA) defines and applies “amateurism” – the core concept by which the NCAA’s more than 1000 member institutions and conferences collectively relate to college athletes, define and limit their rights, and seek to differentiate college athletics from professional sports. This post offers a brief roadmap through these momentous changes.

Most immediately, on June 30, 2021, the NCAA’s Board of Governors ended the NCAA’s long prohibition against collegiate athletes financially profiting from their Name-Image-Likeness (NIL) assets while competing in college athletics. For the first time in the NCAA’s 115-year history, athletes now may secure endorsement deals, receive compensation for postings and content related to their social media accounts, sell autographs, appear on trading cards, accept video game deals, and otherwise profit from their NIL rights – either in accord with applicable state laws or, in states without such laws, through policies which their institutions must develop. Following its initial press release announcing the interim NIL policy change, the NCAA has compiled a suite of educational materials further explaining the immediate impacts and reach of its NIL decision.

The NCAA policy was approved just before conflicting laws and executive actions – all of which would have overridden the NCAA’s prior NIL prohibitions in many respects – took effect on July 1, 2021, in approximately a dozen states, with many other new state provisions set to follow, including California. Applicable across all three NCAA Divisions, the change is an interim approach to what otherwise would have been the chaos of inconsistent state laws across the country. It followed year-long efforts to secure at least temporary uniform federal legislation, and will remain in effect until superseded by federal law – which may still be forthcoming over the next year – or by a permanent NCAA policy whose details accommodate the varying state approaches. (What we think is the best overall summary of this history, as well as of possible federal issues, can be found here).

The NIL change came hard on the heels of the U.S. Supreme Court’s unanimous June 21, 2021, decision in NCAA v. Alston, upholding a ruling by the United States Court of Appeals for the Ninth Circuit that another category of NCAA restrictions for college athletes – on so-called “education-related benefits,” such as enhanced tutoring services or scholarships for graduate school – were subject to scrutiny under the Sherman Act, failed that scrutiny, and thus violated federal antitrust law.

Separately, either the new NIL structure or the Alston decision – one a policy change following state and threatened federal legislation, the other the result of landmark litigation – would have been a paradigm shift in college sports. Taken together, the two developments will fundamentally alter how college athletes will share in the billions of dollars of annual college athletic revenues, the structure of institutional and conference finances, and potentially the meaning of gender equity in college sports – and thus, many observers believe, will reshape the underlying structure of college athletics.

With so much change to consider, institutions need to be clear about what they need to do now, in responding to the NIL change pending further Congressional or NCAA action, and what was and was not decided by the Supreme Court in Alston.

Payments to Athletes from Schools

Alston addressed direct payments from schools to athletes of benefits with an educational nexus, such as post-graduate education funding, internships, or computers and other school-related supplies. The Supreme Court prohibited regulation of this area at the national level, but left open the possibility of different rules issued by different conferences. As conferences across all three NCAA Divisions work through this area, schools will need to participate fully in their conferences’ efforts, and be especially attentive to whether state laws that primarily address NIL issues also address these kinds of education-related “benefits.”

What Alston didn’t address was the application of separate NCAA “amateurism” rules that prohibit what is commonly referred to as “pay-for-play” – direct compensation for athletic activity, unrelated to educational benefits – and attendant possible issues such as athlete participation in rule-making (as through collective bargaining), or tax consequences of actual “pay” above full athletic scholarships.

Although these pay-for-play prohibitions were upheld by the 9th Circuit, neither party appealed the issue to the Supreme Court; it thus was neither before the Court, nor addressed by it. Pending new litigation, those rules remain in effect: NCAA member institutions still may not compensate student-athletes for athletic participation or achievement or provide a student-athlete with compensation contingent on future enrollment. And while some of the new state laws may address pay-for-play issues in ways that differ from the NCAA rules, the NCAA’s new NIL policy does not change those rules.

Name-Image-Likeness Arrangements

What schools do need to do now – and have already begun to do, especially in states whose laws took effect on July 1, 2021 – is implement the new NCAA NIL policy, with particular focus on the details of applicable state laws. There are many areas of uncertainty – these are the issues we think are key:

– Overall Effect on College Athletes: College athletes now may benefit from NIL opportunities, no matter where their school is located or whether there is an applicable state law, and institutions may help them arrange such opportunities. But the NCAA’s existing non-NIL rules still apply, especially those which prohibit “pay-for-play,” improper recruiting inducements, and improper involvement by institutional “boosters”.

– Applicable State Laws or Executive Orders: The interim NCAA policy requires institutions to allow athletes to engage in NIL-related activity “consistent with the law of the state” in which the institution is located: if an institution’s state does not yet have an applicable law, the institution must permit NIL activities consistent with the NCAA’s policy. The policy does not address applicability of a law in the state of the athlete’s residence – with or without a law in the state where the athlete’s institution is located – but institutions should consider what such laws might provide.

– Multiple or Divergent State Restrictions: The interim policy doesn’t have uniform guidelines as to what NIL activities are permitted, and state NIL laws differ significantly as to whether, e.g., student-athletes may use an institution’s name or logo, receive compensation for promoting alcohol, tobacco, or gambling, and in other areas. Florida, for example, requires student-athletes to take a five-hour workshop covering “financial literacy, life skills, and time management skills” before their first year in order to engage in NIL-conduct. In Arkansas, student-athletes are prohibited from negotiating or receiving NIL compensation prior to enrollment. And in Alabama, student-athletes may only receive NIL compensation “commensurate with the market value” of their NIL.

– Agents and Other Advisors for Athletes: The policy permits “use of a [third-party] professional services provider for NIL activities”, including an agent, attorney, or brand management company – a significant change from current limits on an athlete’s general engagement of such personnel or companies.

– Reporting Requirements: The interim NCAA policy indicates that student-athletes “should report” NIL-related activities “consistent with state law and/or institutional requirements.” The policy appears not to have created a stand-alone mandatory reporting requirement for athletes when there no state law obligations, but not to prohibit institutions from requiring such reporting. Given that many states do impose such requirements (e.g., Pennsylvania mandates that NIL-related arrangements be reported “within seven days of execution”), institutional and conference reporting and record-retention procedures will need to meet a variety of obligations.

– Impact on International Students: Because the interim NIL policy will apply equally to international athletes, institutions will need to consider what are currently open questions surrounding immigration, visa, and tax implications for international students who engage in NIL-related activity.

The combination of state NIL legislation and the resulting NCAA interim NIL policy change has brought cheers from current and future student-athletes – and considerable uncertainty to administrators and university counsel, who now must quickly develop a playbook to implement, administer, and enforce new templates in a constantly changing environment. And though higher education confronts many other “post-pandemic” challenges, the NIL area is certain to be among the most publicly visible, and potentially among the most controversial.

For more information or for questions about how to navigate these and related legal issues, please reach out to Adam Maldonado, at amaldonado@hkemploymentlaw.com or (415) 835-9075.