Settlement with California’s Employment Development Department Requires Immediate Payments to Hundreds of Thousands of Unemployed Californians

EDD agrees to sweeping changes in how it handles continuing unemployment insurance claims

July 23, 2021 – In a groundbreaking settlement negotiated by Altshuler Berzon LLP on behalf of the Center for Workers’ Rights, California’s Employment Development Department has agreed to make significant changes in how it processes unemployment insurance claims and to immediately pay millions of dollars in conditional UI benefits to unemployed Californians, many of whom have been waiting months to receive those benefits. The affected claimants were previously approved to receive unemployment benefits, but had their payments suspended without explanation while EDD has been working through its huge backlog of eligibility determinations.

EDD’s announcement follows months of negotiations, which culminated in the filing of a class action complaint for injunctive relief and a settlement that now awaits court approval – although EDD agreed to begin implementation immediately, without waiting for further court order. The complaint alleges that EDD’s prolonged delays in providing payment to unemployment insurance claimants in continuing claims status violate the Social Security Act, which requires state unemployment insurance programs to maintain “methods of administration … reasonably calculated to insure full payment of unemployment compensation when due.” The settlement requires EDD to provide conditional payment to unemployment insurance claimants in continuing claims status when EDD has failed to make a determination regarding the claimant’s eligibility by the end of the week following the week that EDD first became aware of the eligibility issue.  The settlement also requires EDD to notify those claimants that the payments they are receiving are conditional pending the result of EDD’s investigation and to inform those claimants of the basis for EDD’s eligibility concerns and how the claimant can respond to those concerns.  More information about the agreement is available here and here. The complaint, entitled Center for Workers’ Rights v. EDD et al., is pending in Alameda County Superior Court and can be read here.

Altshuler Berzon LLP attorneys Michael Rubin and Amanda Lynch represent the Center for Workers’ Rights in this case, assisted by summer associate Nina Oishi. The complaint, entitled Center for Workers’ Rights v. EDD et al., is pending in Alameda County Superior Court.

Federal District Court Issues Preliminary Injunction in Unemployment Insurance Class Action Against Bank of America

San Francisco – June 1, 2021  Judge Vince Chhabria (N.D. Cal.) today issued a groundbreaking preliminary injunction order in nine consolidated class action cases against Bank of America, in which Altshuler Berzon LLP serves as interim lead co-counsel.

In Yick v. Bank of America, N.A., plaintiffs contend that the Bank violated the rights of hundreds of thousands of Californians whose unemployment insurance benefits were paid through Bank-issued debit cards.  Although state and federal law require the Bank promptly to investigate cardholder claims of unauthorized transactions on their accounts and to provisionally credit those stolen funds to the cardholders if the investigations cannot be completed within 10 business days, plaintiffs contend that the Bank denied cardholders’ claims and froze their accounts without the required investigation, based solely on the Bank’s use of a flawed and highly unreliable initial “Claim Fraud Filter” that erroneously identified tens of thousands of legitimate UI cardholders as criminals using stolen identities.  Legitimate cardholders who were erroneously flagged by the Bank’s “Claim Fraud Filter” were promptly cut off from access to their past, present, and future UI benefits, and plaintiffs contend that the Bank made it nearly impossible for those cardholders to regain access to their benefits accounts.

The Court’s preliminary injunction prohibits the Bank from continuing to deny unauthorized transaction claims or to freeze cardholder accounts based on the results of the Bank’s Claim Fraud Filter, and further prohibits the Banks from in any way using the results of the Claim Fraud Filter in investigating unauthorized transaction claims or deciding whether to issue claimants provisional or permanent credit.  The order also requires the Bank to reopen all claims that the Bank previously denied based on the results of the Claim Fraud Filter, to give those individuals a prompt opportunity to authenticate their identities, and to issue provisional credit pending investigation to anyone who authenticates their identity if the Bank does not complete its investigation within 10 business days.  In addition, the order requires the Bank to expand its customer service hours and establish dedicated toll-free hotlines to assist class members with their unauthorized transaction claims and with unblocking their accounts.

Additional background on the case can be found here. News reports on this historic injunction may be found here and here.

Altshuler Berzon LLP attorneys Michael Rubin, Stacey Leyton, Connie Chan, Matthew Murray, and James Baltzer are co-counsel in this case, along with attorneys from Cotchett, Pitre & McCarthy LLP and others.

Ninth Circuit Reverses Preliminary Injunction Preventing State from Enforcing Assembly Bill 5’s Worker Misclassification Test Against Trucking Companies

On April 28, 2021, the Ninth Circuit issued its decision in California Trucking Association v. Bonta, which reversed a preliminary injunction preventing the State of California from enforcing Assembly Bill 5’s “ABC” test against trucking companies.  Under that test, a worker is presumed to be an employee unless the employer can establish all three of the following requirements: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business.

The plaintiff trucking company association had argued that the B-prong of that test was preempted by the Federal Aviation Administration Authorization Act (“FAAAA”), a federal statute that deregulated the trucking industry.  A district court had agreed with the trucking association that the law was likely preempted and so enjoined it, but the Ninth Circuit reversed on appeal, holding that Congress did not intend for the FAAAA to preempt “laws of general applicability that affect a motor carrier’s relationship with its workforce.”  Under the decision, the State is permitted to use the “ABC” test, in its entirety, to combat misclassification in the trucking industry.

Altshuler Berzon LLP represents the International Brotherhood of Teamsters, which intervened in the case to defend the law alongside the state.  A news report on the decision can be found here.  A copy of the decision can be found here.

Ninth Circuit Reverses NLRB Decision Denying Protection to Worker Sexual Harassment Protests

On April 28, 2021, the United States Court of Appeals for the Ninth Circuit issued its decision in SEIU Local 87 v. NLRB (Preferred Building Services), reversing a decision by the National Labor Relations Board that had upheld the firings of workers who had protested sexual harassment and other intolerable working conditions outside an office tower.

The underlying unfair labor practice charge arose when janitorial services workers at an office building in downtown San Francisco decided to stage picket-line protests outside the building in which they worked, in response to their supervisor’s harassment and wage-and-hour violations.  In response to the protests, several workers were fired, and the janitorial services contractor terminated its contract to service the building.  The NLRB’s General Counsel alleged that the workers’ termination in response to the protests violated the National Labor Relations Act’s prohibition on retaliating against workers for engaging in protected, concerted activity.  After a multi-day hearing, an NLRB Administrative Law Judge agreed.  The NLRB, however, reversed the ALJ’s decision, concluding that the workers’ protests were unprotected because they impermissibly targeted neutral “secondary” parties –specifically, the building manager and tenants of the building where they worked.  The Ninth Circuit reversed, concluding that the NLRB had erred in concluding that the workers’ protests had a “secondary” object.

Altshuler Berzon LLP represents SEIU Local 87, which filed the unfair labor practice charge with the NLRB and the Ninth Circuit petition for review.  A news report about the decision is available here.  A copy of the decision is available here.