California Developments

The TRO on AB 51 is Still in Effect Following Oral Argument – With Modifications and Supplemental Briefing On The Way

On Friday, January 10, 2020, Chief United States District Judge Kimberly Mueller of the Eastern District of California heard oral argument on plaintiffs’ motion for preliminary injunction.  As a result of clarifications made at the oral argument, the temporary restraining order (TRO) has been modified from its broad applicability to only enjoin defendants from enforcing AB 51 to the extent it applies to arbitration agreements covered by the FAA.  The revised TRO will remain in effect until January 31, 2020, at which point we might have a ruling on the preliminary injunction.  Judge Mueller concluded the oral argument by providing both parties the opportunity to submit supplemental briefing on two issues:  (1)  jurisdiction/standing; and (2)  severability.  As to the latter issue, Judge Mueller indicated she would accept specific proposals related to how the arbitration-related sections of the statute might be severed if she decided to grant the injunction on FAA preemption grounds. 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

Try To Restrain Yourself: California Is Temporarily Restrained From Enforcing Arbitration Ban

Remember California’s new ban on mandatory workplace arbitration agreements? The Eastern District of California has put it on ice, granting a temporary restraining order against the ban’s enforcement. As a refresher, and as we wrote about here, on October 10, 2019, California Governor Gavin Newsom signed into law California’s latest afront on workplace arbitration—AB 51. Under AB 51, employers may not, “as a condition of employment, continued employment, or the receipt of any employment-related benefit, require an applicant or employee to waive any right, forum, or procedure” for FEHA and Labor Code claims. Violations of the new statute carry hefty consequences, including criminal penalties. Many employers see arbitration agreements as necessary to manage employment disputes and an outright ban on this efficient process strongly affects their bottom line. The ban was scheduled to go into effect on January 1, 2020, but the TRO put enforcement on hold for now. READ MORE

An Ounce of Prevention Is Worth a Pound of Cure: California DFEH Clarifies Sexual Harassment Prevention Training Requirements

California’s Department of Fair Employment and Housing (“DFEH”) has updated its Employer FAQ guidance addressing the new sexual harassment prevention training requirements that were initially set to go into effect on January 1, 2020.  However, an amendment to the bill earlier this year moved the effective date to January 1, 2021.  As we reported when the initial bill was passed last year, the law expands harassment training requirements from employers with fifty or more employees to those with five or more employees, and from requiring training for supervisory employees only to requiring training for non-supervisory employees as well.  The training must be repeated once every two years. READ MORE

AB 9: A New 3 Year Statute of Limitations on FEHA Claims, What This Means for Employers and How To Prepare

Starting January 1, 2020, California employees will have three times as long to file charges alleging discrimination, harassment and retaliation. The new statute of limitations arises from AB 9, which increases the statute of limitations for filing a charge under the Fair Employment and Housing Act (“FEHA”) from 1 year to 3 years. AB 9 is certain to have a significant impact on employers in the years that follow, but employers can mitigate the potential burden of this statute by understanding the new law and how to prepare for it. Below is some background and helpful tips for employers. READ MORE

The Golden State Expands Lactation Accommodations For Working Mothers

Mother cares for child

California Governor Gavin Newsom recently signed into law SB 142, significantly expanding employers’ obligations to provide break time and lactation room accommodations for working mothers. Following in the footsteps of San Francisco’s Lactation in the Workplace Ordinance, SB 142 imposes a host of new requirements regarding lactation accommodation spaces, policies, and break time: READ MORE

Can’t We Just Agree?: California Codifies It’s Hostility Towards Arbitration With AB 51.

On October 10, 2019, California Governor Gavin Newsom signed into law Assembly Bill 51 (AB 51) prohibiting mandatory workplace arbitration agreements. AB 51 adds Section 12953 to the Government Code and Section 432.6 to the Labor Code. AB 51 applies to contracts entered into or modified after January 1, 2020. READ MORE

No Unpaid Wages Under PAGA

On September 12, 2019, the California Supreme Court issued its decision in ZB, N.A. v. Superior Court, which resolved a split of authority regarding whether an employer may compel arbitration of an employee’s Private Attorneys General Act (“PAGA”) claim seeking unpaid wages under Labor Code section 558. In reaching its conclusion, the Court first answered the “more fundamental question” of whether a plaintiff may seek unpaid wages under PAGA: to which the answer is no. Therefore, ZB’s motion to compel arbitration should have been denied. 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:

  1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work;
  2. The worker performs work that is outside the usual course of the hiring entity’s business; and
  3. 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

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.

Next Steps

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.

Ninth Circuit Withdraws Vasquez, Punts to California Supreme Court on Dynamex Retroactivity

On July 22, 2019, the Ninth Circuit withdrew its recent decision in Vazquez v. Jan-Pro Franchising International, Inc., and ordered that it would certify to the California Supreme Court the question of whether the worker classification test articulated in Dynamex Operations West v. Superior Court applies retroactively. READ MORE