Employment Law

Say It Again: No Common Question Binds a Class Subject to Thousands of Individualized Pay Decisions

Echoing an increasingly familiar refrain, another district court has declined to certify a class of women bringing pay equity claims on the basis that they did not present a common question capable of producing a common answer to “the crucial question why was I disfavored.” Relying largely upon Wal-Mart Stores, Inc. v. Dukes, the court found certification inappropriate because the putative class members were subject to countless independent decisions involving the judgment and discretion of individual managers. The case also serves as another reminder that courts (including California state courts) will not accept an overly simplistic analysis comparing broad job categories or titles, but will continue to look at actual business practices and job responsibilities to ensure comparators are “similarly situated” so a meaningful pay comparison can be made. READ MORE

To-Do’s for Employers in Germany: No More Automatic Forfeiture of Vacation Entitlements

Introduction

The German Federal Vacation Act (Bundesurlaubsgesetz) provides that vacation has to be approved and taken in the current calendar year. The employee is meant to actually take the vacation and enjoy a rest. READ MORE

(Tip) Credit Where (Tip) Credit Is Due: DOL Reverses Course on Treatment of Tipped Employees

On November 8, 2018, the Department of Labor published an Opinion Letter (FLSA2018-27) reissuing its January 16, 2009 guidance (Opinion Letter FLSA2009-23) and reversing the agency’s Obama-era position on the 20% tip credit rule. The letter marks another significant shift in Department of Labor policy, and among the first major changes in federal tip credit policy over the last decade. READ MORE

Frankfurt’s Brexit Pitch – Banks in Germany Will Soon be Able to Fire Top Bankers More Easily

 

Undoubtedly driven by an interest in drawing UK-based banks to Frankfurt and becoming an EU hub for US banks post-Brexit, the German government recently picked up a proposal to relax dismissal protection for high-earning bankers. So it may very well soon be easier for banks in Frankfurt to part with their top employees. READ MORE

Does Title VII Protect Gay & Transgender Employees? The Supreme Court May Soon Decide.

As early as November 30, 2018, the U.S. Supreme Court will decide whether to hear three high profile employment cases that question whether Title VII’s ban on sex discrimination protects gay and transgender employees.  These cases have significant implications on the proper scope of Title VII and the rights of the LGBT community in the workplace.

Under Title VII, an employer has engaged in “‘impermissible consideration of … sex … in employment practices’ when ‘sex … was a motivating factor for any employment practice,’ irrespective of whether the employer was also motivated by ‘other factors’.”

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Tenth Circuit Holds that Failure-To-Accommodate Claims Require Adverse Employment Action

On October 11, the Tenth Circuit held that a failure-to-accommodate claim under the Americans with Disabilities Act (“ADA”) requires a showing of an adverse employment action, cementing a circuit split and making the issue ripe for U.S. Supreme Court review. READ MORE

California Court of Appeals Casts Doubt on Continued Validity of Employee Non-Solicitation Provisions

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.

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NY Harassment Update: NYS Releases Sexual Harassment Prevention Training Videos and NYC Releases Sexual Harassment Prevention FAQs

Late last month, the New York State Department of Labor released model sexual harassment prevention training videos that employers can use to train their employees, available here. While a welcome development, the videos alone do not fully comply with the State’s requirement that sexual harassment prevention training be “interactive” – employers must ensure that employees have the ability to ask questions and receive answers to their questions. The New York City Commission on Human Rights has also provided some new and welcome guidance to employers, releasing FAQs regarding NYC’s new sexual harassment prevention laws, available here. The FAQs primarily address which employers must conduct sexual harassment prevention training and how to calculate an employer’s number of employees for purposes of determining whether the employer is subject to the training requirements. READ MORE

California Appellate Court Rejects ABC Test for Non-Wage-Order Claims

Some positive news for those employers that retain independent contractors. On October 22, 2018, the California Court of Appeal for the Fourth Appellate District, held that the Dynamex “ABC” test (which we previously discussed here) to determine whether an independent contractor is an employee, only applies to wage order claims. But the case is a mixed bag and is a reminder that post-Dynamex, hiring parties bear a heavier burden to overcome the presumption that all workers are employees.

The case is Jesus Cuitlahuac Garcia v. Border Transportation Group, LLC, et al., involving plaintiff Jesus Garcia (“Garcia”), a taxi driver, who brought a wage and hour lawsuit against Border Transportation Group (“BTG”), with whom he drove taxi for several years. The trial court granted summary judgment for BTG, applying the decades-old multifactor S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989) test and finding Garcia was an independent contractor, not an employee entitled to wage order protection. The trial court’s reasoning included that Garcia controlled the means and manner of his work and “could and did market his business in his own name.”

Garcia appealed, during which time the California Supreme Court decided Dynamex, adopting the “ABC” test to determine whether a worker is an employee. Under this test, a hired individual is presumed an employee and the burden lays entirely on the hiring party to rebut that presumption by showing:

  • that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
  • that the worker performs work that is outside the usual course of the hiring entity’s business;
  • that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Turning first to Garcia’s wage order claims, the court focused on the “C” prong and found that BTG failed to carry its burden to show Garcia actually “provided services for other entities ‘independently’ of his relationship with BTG.” The court rejected BTGs reliance on Sebago v. Bos. Cab Dispatch, Inc., which focused the inquiry on whether the worker is permitted to establish an independent business operation. The court noted that Dynamex requires an “existing, not potential showing of independent business operation.” The court reversed summary judgment on the wage order claims.

But in positive news for hiring parties, turning next to Garcia’s non-wage-order claims, the court held the ABC test did not apply, and upheld summary adjudication as to those claims.[1] The court explained that the Supreme Court did not reject the more flexible, multifactor Borello test in all instances, and that Borello applies when a cause of action is predicated solely on the Labor Code, while the ABC test is properly limited to wage-order claims. The court reasoned that the Supreme Court “recognized that different standards could apply to different statutory claims…” and emphasized that “primacy of statutory purpose” should resolve “the employee or independent contractor question.” The court found “no reason to apply the ABC test categorically to every working relationship, particularly when Borello…remains the standard for worker’s compensation.” And because the parties did not identify a “a basis to apply Dynamex to [the] non-wage-order claims,” the court concluded that Borello “furnished the proper standard as to those claims” without analyzing their primary statutory purposes.

Orrick will continue to track interpretations of the Dynamex case as they are published. For the latest employment law updates, subscribe to the Orrick Employment Law and Litigation Blog.

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[1] Garcia’s non-wage-order claims included wrongful termination in violation of public policy, failure to pay overtime, and waiting time penalties.

9th Circuit: Employers Must Foot the Bill for Post-Offer Follow-up Medical Exams

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.

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