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
The NLRB Restores the “Substantial Direct and Immediate Control” Standard for Joint Employment
On February 26, 2020, the National Labor Relations Board unveiled the final version of its rule for determining joint-employer status under the National Labor Relations Act. The Final Rule, which can be found here and which will take effect on April 27, 2020, will return to the “substantial direct and immediate control” standard. READ MORE
Coming to a Ballot Near You: Protect App-Based Drivers & Services Act
This November, Californians may get the chance to vote on a ballot measure that would address some of the fallout from the new independent contractor law known as AB 5. The proposed ballot measure is called the “Protect App-Based Drivers & Services Act.” The ballot measure would allow Californians to vote to protect their right to work as independent contractors with rideshare and delivery network companies throughout the state. READ MORE
New Year’s Resolutions: Cases To Watch For California Employers in 2020
With the new year comes the likelihood that the U.S. Supreme Court, the California Supreme Court, and the Ninth Circuit will issue a number of significant decisions spanning a range of topics in the employment arena. In addition to the new California laws that have recently come into effect, covered here, California employers should watch these three litigation areas as well: READ MORE
Crowdworkers Are Not Employees Under German Employment Law
In one of its latest rulings, the Regional Labor Court of Munich concluded that crowdworkers or microtaskers are not employees under German employment law. However, the Court has allowed an appeal to the Federal Labor Court. READ MORE
New California Employment Laws for 2020
2020 is upon us, and with it, a slew of new employment laws that are now in effect. Read on for a description of 13 key employment laws every employer operating in California should know about going into 2020. For more information on these laws and advice regarding best practices, check out our California Employment Law Update Seminars taking place at our San Francisco office on January 9, 2020 and Silicon Valley office on January 22, 2020. READ MORE
The Year of Dynamex: Navigating California’s Assembly Bill 5
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.
New EU Directive on Transparent and Predictable Working Conditions Will Give Gig Workers More Rights
On June 13, 2019, the Council of the European Union (EU) adopted the European Parliaments proposal for a Transparent and Predictable Working Conditions Directive – a direct follow-up to the proclamation of the European Pillar of Social Rights. The new law introduces new minimum rights, as well as new rules on the information to be provided to workers about their working conditions. READ MORE
AB 5 and AB 71: CA Legislature Dukes It Out Over Dynamex and Borello
The battle between Dynamex and Borello continues. Two competing bills – Assembly Bill 5 (“AB 5”) and Assembly Bill 71 (“AB 71”) – each seek to codify the respective worker classification tests. On May 29, 2019, the California State Assembly overwhelmingly passed AB 5, a bill seeking to codify Dynamex Operations West, Inc. v. Superior Court of Los Angeles, which adopted the three-factor “ABC” test to determine a worker’s classification for wage order claims. Now the bill is headed to the state Senate. Meanwhile, AB 71, a bill seeking to codify S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations, has thus far not enjoyed the same success. READ MORE
Ninth Circuit “Cleans House” in Vazquez v. Jan-Pro Decision by Holding ABC Test Applies Retroactively and Opining on Its Effect on Franchisors
On May 2, 2019, the Ninth Circuit in Vazquez v. Jan-Pro Franchising Int’l, Inc. held that the California Supreme Court’s 2018 decision in Dynamex Operations West v. Superior Court applied retroactively. Dynamex adopted the “ABC” test for independent contractor classification for claims arising under California’s Wage Orders. For those claims, an employer must show that all three prongs of the ABC test are met to justify independent contractor status. For information on Dynamex’s adoption of the ABC test, read our prior coverage here. READ MORE