EMPLOYMENT AND LABOR LAW: LEGAL UPDATE FOR CALIFORNIA EMPLOYERS

May 16th, 2019/By Admin/In Blog, SBSBLOG, Uncategorized

Topics for this Month include:

  • Dynamex is Retroactive per Ninth Circuit
  • Recent Rulings on Arbitration Agreements
  • Using Registered Fictitious Business Name on Paystubs Okay
  • EEO-1 Pay Data Reports due September 30
  • Update on Pending California Employment-Related Bills
  • And more . . .

Recent Case Law

Dynamex “ABC Test” is Retroactive

In interpreting California state law, the federal Ninth Circuit has concluded that the “ABC test” to determine whether a worker is an employee or an independent contractor applies retroactively in Vazquez v. Jan-Pro Franchising International, Inc.  In an appeal from the granting of summary judgment in favor of the employer, the Ninth Circuit reversed, holding

that the “ABC test” applies in evaluating whether franchisees are independent contractors or employees, and California state law requires the test to be applied retroactively. The court further held by applying this test retroactively does not violate the company’s due process rights, which are not as high for civil cases that are purely economic versus criminal cases. The case was remanded back to the district court to evaluate the facts under this new test.

Class Arbitration Not Available Unless Explicit in the Arbitration Agreement

The United States Supreme Court has held where an arbitration agreement does not explicitly state the parties agree class claims can be adjudicated in arbitration, then they cannot.  Lamps Plus v. Varela.  In this case, the arbitration agreement stated arbitrations would be governed by the American Arbitration Association rules.  Those rules include a process for class arbitration.  Despite this, the Court found the agreement was not clear whether the parties had agreed to class arbitration, and where a term in the contract is ambiguous, it cannot be enforced. The doctrine of “contra proferentem” (construing ambiguous terms against the drafter) could not trump the requirement of an affirmative contractual basis to arbitration on a class basis.

Delivery Driver Exempt from Federal Arbitration Act

In Nieto v. Fresno Beverage Co., Inc., the Fifth Appellate District held a delivery driver for a beverage company who never crossed state lines was still engaged in “interstate commerce” because he was part of the movement of the goods interstate, even though he was limited to driving within California.  As a result, the plaintiff qualified as an interstate transportation worker exempt from the Federal Arbitration Act and thus the arbitration agreement he signed was not enforceable under the FAA.

A Choice of Law Provision Does Not Preempt the FAA

In Bravo v. RADC Enterprises, Inc., an employee signed an agreement to arbitrate “all disputes,” which contained a choice of law provision stating California law governed the agreement.  The trial court refused to compel the employee’s wage claims to arbitration because, under California law, wage claims cannot be forced into arbitration.  The Second Appellate District disagreed, finding that the overall intent of the agreement was to arbitrate all claims, and the choice of law provision did not alter that overall intent of the contract.

Continuing Employment After Arbitration Agreement is Implemented Equates to Implied Consent

In Diaz v. Sohnen Enterprises, the employer announced to its employees that it was implementing an arbitration agreement, which included that continued employment was consideration for the agreement. Plaintiff Diaz continued to work for the company, but stated in writing that she was not agreeing to the arbitration agreement.  The Second Appellate District held Diaz’s desire to be excluded from the agreement did not matter, because she consented to the agreement by remaining employed.

Using a Fictitious Business Name on a Wage Statement is Permissible

In Savea v. YRC Inc., the First Appellate District held that an itemized wage statement that contained an employer’s fictious business name and did not include a mail stop or ZIP+4 code did not run afoul of the paycheck stub requirements in Labor Code section 226. Because the registered fictious name was the actual name the employer used, and was the same entity as its legal name, the statute does not require anything more.

Legislative/Regulatory Update

Proposed bills are now rolling through various legislative committees. Here are updates on what they have been doing to employment-related ones:

  • AB 5: Codify the “ABC” test from Dynamex Operations West Inc. v. Superior Court and apply it to all Labor Code provisions, but carve out exemptions for professions already exempt from IWC wage orders or the ruling in Dynamex. Passed Assembly Committee on Labor & Employment; pending before the Appropriations Committee.
  • AB 9: Increase time to file complaint with DFEH from one year to three years. Passed Assembly Committee on Labor & Employment; pending before the Appropriations Committee.
  • AB 51: Prohibit requiring arbitration agreements for FEHA claims as a condition of employment. Passed Assembly Committee on Labor & Employment and Judiciary Committee; pending before the Appropriations Committee.
  • AB 71: Overturn Dynamex and use a multi-factor test to determine independent contractor status. Pending before the Assembly Committee on Labor & Employment.
  • AB 160: Permit preferential treatment for veterans without running afoul of FEHA. Passed Assembly Committee on Labor & Employment; pending before the Appropriations Committee.
  • AB 170: Client employer (as defined in bill) to share responsibility and liability for harassment of workers provided by a labor contractor (as defined in bill). Passed Assembly; referred to Senate committees.
  • AB 171: Prohibit discrimination and retaliation against a victim of sexual harassment; rebuttable presumption of retaliation if adverse employment action occurs within 90 days of reporting (or employer knowing of) being a victim of domestic violence, sexual assault, sexual harassment or stalking. Passed Assembly Committee on Labor & Employment and Judiciary Committee; pending before the Appropriations Committee.
  • AB 177: Make Election Day a holiday. Passed Governmental Organization and Elections and Redistricting committees; pending before the Appropriations Committee.
  • AB 241, 242 & 243: Address implicit bias in the healing arts profession, judicial branch and law enforcement. Passed Assembly Business & Professions Committee; pending before the Appropriations Committee.
  • AB 333: Extend whistleblowing protections to independent contractors who contract with state and local government. Passed Assembly Committee on Labor & Employment; pending before the Appropriations Committee.
  • AB 372: Establishes “Infant at Work” pilot program for state agencies to allow new parents or caregivers to bring an infant up to 6 months in age into the workplace. Passed Assembly Public Employment & Retirement Committee; pending before the Appropriations Committee.
  • AB 403: Increase time to file retaliation claim with DLSE from 6 months to 3 years and provide attorneys’ fees to plaintiffs who prevail on Labor Code 1102.5 claim. Passed Assembly Committee on Labor & Employment and Judiciary Committee; pending before the Appropriations Committee.
  • AB 418: Creates a privilege for communications between union agents and represented employees. Passed Assembly; referred to Senate committees.
  • AB 443: Limits attorneys’ fees in PAGA claims over $50,000 to 25% of the gross judgment or settlement amount. Pending in Assembly Committee on Labor & Employment.
  • AB 555: Amend paid sick leave law to modify accrual calculation, expand reasons eligible for paid sick leave, modify CBA exemption, and preempt conflicting local ordinances. Passed Assembly Committee on Labor & Employment; pending before the Appropriations Committee.
  • AB 628: Protects taking time off from work to help a family member who is a victim of sexual harassment, and maintain confidentiality of such requests. Passed Assembly Committee on Labor & Employment and Judiciary Committee; pending before the Appropriations Committee.
  • AB 673: Permits employee to file lawsuit to recover civil penalties in the same amount recovered by the DLSE for a Labor Code violation. Passed Assembly Committee on Labor & Employment; pending before the Appropriations Committee.
  • AB 749: Prohibits settlement agreements from containing no re-hire clauses. Passed Assembly Judiciary Committee; pending before full Assembly.
  • AB 789: Provide cure period to remedy inaccurate itemized wage statements. Pending in Assembly Committee on Labor & Employment.
  • AB 882: Prohibits employers from discharging employees for testing positive for a drug being used as a medical-assisted treatment. Hearing in Assembly Committee on Labor & Employment postponed twice.
  • AB 1224: Bill amended to propose increase in paid family leave benefits from 6 weeks to 12 weeks in a 12-month period, but each event only qualifies for 6 weeks. Passed Assembly Committees on Labor & Employment and Insurance; pending before the Appropriations Committee
  • AB 1478: Allows employees to sue under PAGA for violations of Labor Code section 230. Passed Assembly Committee on Labor & Employment and Judiciary Committee; pending before the Appropriations Committee.
  • AB 1554: Requires employers to notify employees participating in a dependent care assistance program of any deadline to withdraw funds by the end of the plan year. Passed Assembly Committee on Labor & Employment and Appropriations Committee; pending before full Assembly.
  • SB 41: Prohibit calculation of damages based on or considering race, ethnicity, gender, religion or sexual orientation. Passed Senate Judiciary Committee; pending full Senate vote.
  • SB 142: Further increase requirements for lactation rooms. Passed Senate Judiciary and Housing Committees; pending before the Appropriations Committee.
  • SB 171: Require employers with 100+ employees to submit pay data to DFEH. Passed Senate Public Employment & Retirement and Judiciary Committees; pending before the Appropriations Committee.
  • SB 188: Expand definition of race in FEHA and Education Code to include traits historically associated with race, including hair texture and protective hairstyles. Passed Senate; referred to Assembly.
  • SB 238: Overturn Dynamex and instead use economic realities test. Failed to pass out of committee, but reconsideration has been granted.
  • SB 707: Requires employers to pay arbitration fees within 30 days or else waive arbitration. Passed Senate Judiciary Committee; pending before the Appropriations Committee.
  • SB 778: Fix last year’s law on sex harassment training to state anyone trained on or after January 1, 2018 does not have to be trained again until after December 31, 2020. Passed Senate Committees; pending full Senate vote.

EEO-1 Pay Data Reports Due by September 30, 2019

A federal district judge has lifted an injunction on pay data (hours worked and W-2 information) reporting requirements and is requiring employers to file their EEO-1 pay data reports by September 30, 2019.  The EEOC has said it will allow employers to begin filing their reports in mid-July. Demographic data is still due at the end of this month.

More DOL Opinion Letters

The Department of Labor issued four more opinion letters in the month of April.  Most recently, the DOL held an unnamed driving service provider is not the employer of drivers who use the company’s software to match up with individuals needing transportation. Other topics addressed include “8 and 80” overtime pay, and application of the teacher and agricultural exemptions.

For more information regarding these topics or the related practice area contact:
Sherry B. Shavit

[This article is for informational purposes only and does not constitute legal advice. Do not act or rely upon any of the resources and information contained herein without seeking appropriate professional assistance.]

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