Game On, Sports Gambling

No, the U.S. Supreme Court didn’t just legalize sports betting this week.

But it did pave the way for your state to legalize it if it wants to.

Before Monday, a federal law from 1992 barred any state from doing that. The only exceptions were Nevada, Oregon, Delaware, and Montana because their laws were grandfathered in.

Then a few years ago, New Jersey wanted to legalize sports betting, so it passed a law and challenged the federal ban in court. And it won.

The Supreme Court said the federal ban violated a principle of dual sovereignty that underlies the Constitution. The idea is that Congress can regulate a lot of things, but it can’t order the states to pass certain laws or not pass others. It may regulate people’s conduct to the extent the Constitution permits, and if it does then federal law is supreme. But it can’t tell state legislatures which laws to write for themselves.

“Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. [This law] is not.”

Iran Sanctions Look to Snap Back

By now you’ve heard the news, and it’s pretty much what it sounds like.

Following a wind-down period of 90 or 180 days, the U.S. government will restore the economic sanctions that it lifted under the 2015 nuclear deal. These sanctions generally affect foreign businesses who do business with Iran. After the wind-down periods, they can no longer do so without risking civil or criminal penalties.

In the meantime, here are some answers from the Treasury Department. Can you transact new business during the wind-down periods? It doesn’t say outright that you can’t, but the government will hold that against you if you blow the deadline. What if you take steps to wind down now but are still owed money after the 90 or 180 days? In a nutshell, you may continue to collect on a contract as long as you entered into it before May 8.

The 90-day period ends August 6, after which the U.S. will restore sanctions on the following:

  1. Selling or providing U.S. dollars to the Iranian government.
  2. Trading with Iran in gold or precious metals.
  3. Trading with Iran, directly or indirectly, in coal, steel, graphite, aluminum, other metals, and software for related industrial processes.
  4. Significant transactions to buy or sell Iran’s currency or significant funds or accounts denominated in it.
  5. Buying, subscribing to, helping issue the Iranian government’s debt.
  6. Iran’s automotive sector.

The end of the 90-day period will also revoke permission for the U.S. itself to do business with Iran in two ways: by importing Iranian carpets and foodstuffs and by exporting commercial passenger aircraft and related parts and services on a select basis.

The 180-day period ends November 4, after which the U.S. will restore sanctions on the following:

  1. Iran’s ports as well as its shipping and shipbuilding sectors.
  2. Buying oil and related products from Iran.
  3. Transactions by foreign banks with the Central Bank of Iran and other Iranian financial institutions.
  4. Providing insurance, reinsurance, or other underwriting services.
  5. Iran’s energy sector.
  6. Specific people and entities that had been removed from the U.S. list of blocked persons and interests.

The end of the 180-day period will also revoke permission for American-owned businesses located abroad to do business with Iran.

Stay tuned for more developments as the dust settles.

Careful Whom You Call An Independent Contractor

We’re talking employment law again because the California Supreme Court issued a big decision this week.

The Court unanimously declared a new test for classifying workers as employees versus independent contractors under the state’s wage orders. Those are the laws and regulations that say you have to pay a minimum wage; you have to pay overtime; and you have to give meal and rest breaks, among other things, to your employees.

The Court replaced a test that weighed ten factors on a case-by-case basis. The most important factor was whether the business controlled how the work was done, but the test looked at nine others like the intent of the parties to the relationship. This test had been the law for thirty years until Monday. It still applies in contexts outside of wage orders.

The new test presumes that any worker is an employee unless the business meets each of the following three conditions:

  1. The worker is free from control or direction over how to do the work;
  2. The work is outside the company’s usual course of business; and
  3. The worker does that kind of work as an independent trade, occupation, or business.

That can make a big difference. Here’s more coverage from the L.A. Times.

The California Equal Pay Act

We talked about the federal Equal Pay Act last week, but California’s had its own law since 1949. You’ll find it in Labor Code section 1197.5.

Importantly, since 2017, California’s law covers not just sex but race and ethnicity. So if there’s a difference in pay between employees along those lines, an employer must explain it based on seniority, merit, productivity, or another “bona fide factor other than” sex, race, or ethnicity. Prior salary alone doesn’t count. Bona fide factors include training, education, experience, or others, but they must be job-related and consistent with business necessity. Even then, the employee can still win by pointing out an alternative that would serve the same business need but with equal pay.

Also, since 2016, the law compares pay when employees perform “substantially similar work,” not just “equal” work. It used to require equal pay for work that required “equal skill, effort, and responsibility.” Now it requires equal pay for “substantially similar work, when viewed as a composite of skill, effort, and responsibility.” The idea is that you can’t avoid the law by relying on fine distinctions, or even job titles, that don’t matter to the work. It also doesn’t matter where the employees work as long as they share similar working conditions. Finally, employees can ask about the pay of other employees. Employers don’t have to tell them, but they can’t punish them for talking about it among themselves or otherwise retaliate against them for relying on the law.

Employees who sue and win can recover double the difference in pay and their legal fees.

For more information, read these FAQs from the California Department of Industrial Relations, or give us a call.

You Can’t Rely on Prior Wages or Salary to Pay Women Less

One of the last cases of Judge Reinhardt’s life had to do with the Equal Pay Act of 1963.

He wrote the decision, which was published last week, and it begins with these words:

“The Equal Pay Act stands for a principle as simple as it is just: men and women should receive equal pay for equal work regardless of sex. The question before us is also simple: can an employer justify a wage differential between male and female employees by relying on prior salary? Based on the text, history, and purpose of the Equal Pay Act, the answer is clear: No.”

This decision means that employers can’t defend against claims of unequal pay under the EPA by pointing to an employee’s prior wages or salary. They can’t rely on prior pay either by itself or in combination with other factors to justify unequal pay. The decision applies to California and eight other states.

Under the Equal Pay Act, you can only pay men and women differently if it’s based on seniority, merit, productivity, or “any other factor other than sex.” This case had to do with that fourth, catch-all exception.

The Court ruled that prior salary doesn’t count because “any other factor” besides sex refers to legitimate job-related factors like hours, shifts, training, education, experience, ability, or past job performance. To rule otherwise would allow employers to defend a sex-based pay differential on the basis of the very pay differentials the EPA was designed to close.

“Rather than use a second-rate surrogate that likely masks continuing inequities, the employer must instead point directly to the underlying factors for which prior salary is a rough proxy, at best, if it is to prove its wage differential is justified under the catchall exception.”

He’s right, and it’s now the law in the Ninth Circuit.

The Truth About Facebook

Ask this expert on data science what Congress should have asked Mark Zuckerberg last week, and she’ll say, nothing.

If that surprises you, please understand that these hearings are not designed to deliver the truth. They’re designed to tell the public that, if there’s a problem, the government is doing something about it. So you’re not gonna get much straight talk. It’s not that no one cares. But the problem is bigger than Facebook or the United States, as we’ve explained before.

And people have a right to know.

Now, I’m no data scientist, but I spend a lot of time on these issues in my line of work, so here are some basic truths you should know if they haven’t sunk in yet. I give the same advice to clients whenever it comes up.

  1. You are not the customer. You are the product. Their business is to derive as much information about you as possible and sell it to others. Governments like this, too, because it’s a great way to study people, keep tabs on them, and even manipulate them. No one will stop doing this for the foreseeable future.
  2. You should assume that you create a permanent record of everything you do on your phone or the internet. You can’t avoid that by logging out of an app or even deleting it. The only way may be to give up electronic devices altogether and live off the grid. And good luck with that.
  3. Your friends and family don’t decide what you see when you log in. Facebook does. Or whichever other company does. Obviously, they want to show you what they think you want to see so you’ll spend more time on their platform. But they can also manipulate what you see—or even what you think you want to see.

Welcome to the 21st century. It’s no wonder Americans are throwing up their hands over privacy. But at least we can still debate and, hopefully, decide how we want to live in the United States. The same does not apply around the world.


The Microsoft-Ireland Case is Moot

We covered this before here and here.

But the high-profile case of United States v. Microsoft Corporation is now over. The question was whether the government could force Microsoft to turn over data that it stored on servers in other countries. The problem was that federal law didn’t allow the government to do that, or at least it wasn’t clear. So Microsoft challenged the government. It lost in the trial court, won on appeal, and landed before the U.S. Supreme Court last fall.

The Supreme Court heard the case in February, but in March, the new federal spending bill changed everything. It included a law called the CLOUD Act, which stands for Clarifying Lawful Overseas Use of Data.

Under the new law, companies like Microsoft must produce data in their possession, custody, or control even if it’s located outside the United States. They may object if they reasonably believe that a target is not from the U.S. and that, by producing the data, they will break the laws of a “qualifying foreign government.” That means a government with which the U.S. has agreed to grant reciprocal access to such data for use in criminal cases. But there are no agreements yet. To get there, a foreign government must, among other things, not target U.S. persons, and it must be committed to due process, data privacy, free speech, and other civil rights and liberties.

Within a week of the new law, the U.S. moved to dismiss the case as moot.

A few days later, Microsoft agreed. For the full text of the CLOUD Act, see here, and scroll all the way down to page 866. For the company’s detailed statement on the new law, see here.

And so the trilogy is complete.

Farewell to the Great Liberal Lion

Stephen Reinhardt, one of the most influential federal judges of the past half century, died suddenly yesterday. Here’s the news from the L.A. Times.

We called him the liberal lion if we liked him and other names if we didn’t. He didn’t care. Like the late, great Harry Pregerson, he cared about which outcome was right or just, and if you read enough of his writings, you knew it. Asked if it bothered him to see the Supreme Court reverse his rulings, he said no. “If they want to take away rights, that’s their privilege. But I’m not going to help them do it.”

His colleagues called him “deeply principled, fiercely passionate about the law and fearless in his decisions. He will be remembered as one of the giants of the federal bench.”

And you can read more tributes and remembrances herehere, and here.

According to the Times, his family has asked that, in lieu of flowers, donations in his memory be made to the American Civil Liberties Union.

A New Day in the City of Brotherly Love

If you haven’t heard, the new district attorney of Philadelphia is a lifelong defense lawyer who used to sue the government for violating people’s civil rights. He even ran on a campaign against overcriminalization. It’s a pretty amazing thing.

Now the city’s top prosecutor has put his money where his mouth was during the campaign. Among other things, he’s announced new policies to reduce incarceration and bring balance to sentencing. And they’re pretty amazing, too.

I’ve summarized the new policies below, but you can read them yourself here. Prosecutors can make exceptions to them if they get approval, but their message is clear: your job is to do justice overall, not file the most cases, charge the most aggressively, win the most convictions, or pin the longest sentences on people.

  1. Stop charging pot use or possession, period.
  2. Don’t charge sex workers with prostitution anymore unless they have more than two prior convictions. Even then, refer them for special rehabilitative programs.
  3. Charge shoplifting as an infraction unless it’s over $500 or the person won’t stop. Even infractions can carry a sentence of up to 90 days in jail. But always seek restitution in full.
  4. Divert minor cases when appropriate. Consider pretrial programs that hold people accountable but also help them return to society by avoiding a conviction.
  5. Offer lower sentences in general. This doesn’t apply to violent crimes, sex crimes, and other serious crimes.
  6. State your reasons for a sentence on the record, including the financial cost of incarceration to the taxpayer.
  7. Relax parole or probation for some people so we can better focus on and supervise the ones who really pose a threat.

The End of Absolute Immunity for Prosecutors

Another outstanding feature by The Marshall Project.

It’s written by a senior federal trial judge in New York. For 23 years, he’s sentenced the likes of murderers, rapists, gangsters, and fraudsters—some to prison for the rest of their lives. But he says it’s time to put an end to absolute immunity for prosecutors.

Absolute immunity is what it sounds like. It doesn’t just protect prosecutors who follow the rules but make mistakes. It protects those who knowingly and purposely break the rules.

Believe it or not, they can do all kinds of dirty deeds to convict you—even to frame you, on purpose—and you have no right to sue them for it. Crazy, huh? They can withhold evidence, put on false evidence, coerce witnesses to testify against you, or worse. No matter the facts, you have no civil rights or remedies against them as a matter of law.

But as the author notes, cops don’t have absolute immunity; they have a form of qualified immunity, so what’s the difference?

For an overwhelming majority of prosecutors, there would be no difference.

But truly bad actions should suffer civil and criminal consequences for their obstruction of justice. For more on why, see this blog post by the American Constitution Society.

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