On May 19, 2020, the Occupational Safety and Health Administration (OSHA) issued new enforcement guidance on employers’ recording obligations. The guidance clarifies when employers must record cases of COVID-19 as an occupational respiratory illness on the OSHA log. Effective Tuesday May 26, 2020, this new guidance supersedes the previous guidance from April 10, 2020. READ MORE
Posts by: Michael Weil
“Unlimited” vacation policies have become incredibly popular throughout California, particularly in the tech industry, as a means of offering greater flexibility to employees. Under typical unlimited vacation policies, employees can take as much vacation as they like, subject to their manager’s approval. Because employees do not accrue vacation under these policies, there is presumably no obligation for an employer to pay employees for any unused vacation upon their departure from the company, as required by Labor Code section 227.3. READ MORE
California maintains its own “mini” WARN Act, Labor Code section 1400, et seq., which requires employers with 75 or more employees to give 60 days’ notice prior to mass layoffs, substantial relocations, or termination of operations at a covered establishment. Unlike the federal WARN Act, California’s statute also applies to furloughs as few as three weeks, according to a 2017 Court of Appeal decision in Int’l. Bhd. of Boilermakers, etc. v. NASSCO Holdings Inc., 17 Cal. App. 5th 1105, 226 (2017). Also, unlike the federal WARN Act, California does not have an unforeseeable business circumstances or natural disaster exception to the 60-days’ notice requirement. READ MORE
Several groups have launched legal attacks on California’s new independent contractor misclassification law AB 5 since it went into effect on January 1, 2020. While some groups had early success, United States District Court Judge Dolly Gee denied a request by Uber and Postmates to preliminarily enjoin enforcement of AB 5 against them while their constitutional challenge to the law plays out, in Olson, et al. v. State of California, et al. READ MORE
On September 18, 2019, California Governor Gavin Newsom signed into law Assembly Bill 5 (A.B. 5). A.B. 5 relates to whether workers are employees or independent contractors. With this bill the California Legislature codified the ABC test set forth by the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018) and expanded its applicability. It expands the ABC test for independent contractor vs. employee classification to the California Labor Code and the California Unemployment Insurance Code.
A.B. 5 adds section 2750.3 and amends section 3351 to the California Labor Code and amends sections 605.5 and 621 to the California Unemployment Insurance Code.
Dynamex and the ABC test
For the last 30 years, California courts have addressed independent contractor v. employee classification using the test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989). Under the Borello test, determining whether a worker was an employee or an independent contractor hinged on a number of factors and primarily focused on the alleged employer’s control over the manner and means by which the work is performed. On April 30, 2018, the California Supreme Court decided Dynamex, announcing a significant departure from the Borello test. The Dynamex decision adopted the so-called 3-part “ABC” test for determining whether an individual is considered an independent contractor or an employee under the wage orders, which govern many aspects of wages and working conditions in covered industries. Under the new 3-part ABC test, a worker is properly considered an independent contractor to whom a wage order does not apply only where the hirer establishes:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business.
For more background information on the Dynamex decision, please see our May 9, 2018 blog post.
A.B. 5 codifies and expands the Dynamex 3-part ABC test, making it apply not only to claims arising out of the wage orders, but also apply to the California Labor Code and Unemployment Insurance Code. The new law also includes a provision that empowers the California Attorney General and city attorneys of cities with populations greater than 750,000 to seek injunctive relief to prevent the continued misclassification of employees as independent contractors. See California Labor Code section 2750.3(j).
In passing the bill, the legislature stated that it intended “to ensure workers who are currently exploited by being misclassified as independent contractors instead of recognized as employees have the basic rights and protections they deserve under the law, including a minimum wage, workers’ compensation if they are injured on the job, unemployment insurance, paid sick leave, and paid family leave.” The legislature further stated that “by codifying the California Supreme Court’s landmark, unanimous Dynamex decision, this act restores these important protections to potentially several million workers who have been denied these basic workplace rights that all employees are entitled to under the law.”
A.B. 5 includes carveout exemptions from the ABC test for various occupations and business relationships (such as lawyers, veterinarians, commercial fishermen, investment advisors, licensed private investigators and specified professional services providers) if the hiring entity can prove the specific requirements for exemption are met. See Cal. Lab. Code section 2750.3 (b)-(h). If the exemption applies, the Borello test governs the worker classification issue.
The application of the ABC test to the California Labor Code and Unemployment Insurance Code takes effect on January 1, 2020, with the applicability to workers’ compensation going into effect on July 1, 2020.
Under A.B. 5, the number of individuals who are considered employees in California for purposes of the wage orders, California Labor Code, and Unemployment Insurance Code will almost certainly increase. Now is the time to review your company’s practices related to independent contractors and talk to counsel for advice. We will continue to monitor any developments and are here to help.
Last week, the Court of Appeal for California’s Fourth Appellate District ruled that an agreement prohibiting former staffing company recruiters from soliciting their former employer’s employees is unenforceable under California Business & Professions Code section 16600. The court reasoned that the employee non-solicitation provision was too onerous on the recruiters’ ability to practice their profession i.e., recruiting employees. In rendering the decision, the court called into question long-standing precedent that upheld employee non-solicitation provisions, which are routinely included by California employers in employment and confidentiality agreements with their employees.
The Ninth Circuit recently sided with the Equal Employment Opportunity Commission (“EEOC”), holding that employers can’t require applicants to pay for follow-up post-offer medical exams. Specifically, in EEOC v. BNSF Railway Company, No. 16-35457 (9th Cir. Aug. 29, 2018), the court affirmed that BNSF Railway Company (“BNSF”) violated the Americans with Disabilities Act (“ADA”) by conditioning the plaintiff’s job offer on his getting an MRI at his own expense.
In a break from federal law, the California Supreme Court clarified in Alvarado v. Dart Container Corp. the proper formula for calculating flat-rate bonuses into overtime pay under California law. The Court adopted the Plaintiff’s position and held that, for purposes of calculating the per-hour value of a flat rate bonus, the divisor should be the number of nonovertime hours the employee worked in the pay period rather than all hours worked during the pay period. READ MORE
We have previously written about how Dodd-Frank retaliation cases are a mixed bag for employers and about the Supreme Court’s expansion of Sarbanes-Oxley (“SOX”) Whistleblower protections. A new decision from the Wisconsin District Court is another mixed win for employers who want to enforce arbitration agreements in Dodd-Frank and SOX retaliation cases. In a case of first impression in the Seventh Circuit, Wussow v. Bruker Corporation., No. 16-cv-444-wmc, 2017 WL 2805016 (W.D. Wis. June 25, 2017), the district court held that while arbitration of SOX whistleblower retaliation claims cannot be compelled, a similar cause of action for whistleblower retaliation under Dodd-Frank can be. READ MORE
Several recent cases are poised to set a major tonal shift in the realm of LGBT employee rights following the Supreme Court’s 2015 landmark decision in Obergefell v. Hodges. As part of its ongoing coverage of LGBT employment issues, Orrick offers its insights and predictions as courts continue to contemplate where sexual identity fits within this changing landscape of protected statuses. READ MORE