Last year, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a landmark decision that dramatically increased the risk of misclassifying individuals as independent contractors. As previously reported, although Dynamex replaced the longstanding Borello standard with the “ABC” test, it also left two critical questions unaddressed. First, Dynamex did not address whether the ABC test applies retroactively. Second, Dynamex did not decide whether its scope was limited to coverage under the Industrial Wage Commission’s (“IWC”) Wage Orders or if its holding generally applied to the Labor Code as a whole. In the last five days, both questions have been answered.

On May 2, 2019, the Ninth Circuit found that Dynamex applies retroactively under California law in Vazquez v. Jan-Pro Franchising International, Inc., the most notable decision to date regarding Dynamex’s retroactivity. Shortly thereafter, on May 3, 2019, the Division of Labor Standards Enforcement (“DLSE”), California’s wage and hour enforcement agency, issued a letter opining the ABC test applies to both the IWC Wage Orders and any Labor Code provisions that enforce requirements set forth in the Wage Orders. Although neither the Ninth Circuit nor the DLSE can authoritatively interpret California law, these developments indicate that Dynamex’s scope—which governs hundreds of thousands of independent contractor relationships throughout the state—has continued to expand its already extensive reach.
Continue Reading The Future of Independent Contractors: Ninth Circuit Applies Dynamex Retroactively and the DLSE Issues Opinion Letter Expanding Its Scope

In a 2010 decision, Stolt-Nielsen S. A. v. Animalfeeds International Corp., the United States Supreme Court held that parties may not be compelled to submit to class arbitration under the Federal Arbitration Act (FAA) unless there is a contractual basis for concluding that they agreed to do so. The Court held that such an agreement could not be presumed from the fact that the arbitration agreement is “silent” on the issue of class arbitration or the mere fact that the parties agreed to arbitrate.
Continue Reading U.S. Supreme Court Upholds Individualized Arbitration Where Agreement Is Ambiguous on Issue of Class Arbitration

In the aftermath of the Illinois Supreme Court’s Rosenbach decision, Illinois employers have faced a wave of class action litigation filed under the Biometric Information Privacy Act (“BIPA”). Employers hoping for relief from the statute’s private right of action must wait for another day (or another session) as Senate Bill 2134 (“SB 2134”) did not report out of committee by the March 28, 2019 deadline.
Continue Reading The Potential For Stemming BIPA Suits Waits Another Day

Last week, the California State Supreme Court struck a decisive victory in favor of payroll companies, issuing a unanimous opinion that an employee is not a third-party beneficiary of the contract between her employer and its payroll service provider. The court held that an employee-plaintiff has no standing to sue her employer’s payroll company for an alleged failure to pay wages under California’s employee-friendly labor laws.
Continue Reading California Supreme Court Announces a Win for Payroll Outsourcing Industry

Albert Einstein believed “Everything should be made as simple as possible, but not simpler.” The Ninth Circuit seems to agree. In Gilberg v. Cal. Check Cashing Stores, LLC, No. 17-16263, 2019 WL 347027 (Ninth Cir. Jan. 29, 2019), the Ninth Circuit held a single form combining nearly identical federal and state disclosures violates both federal and state laws. Employers who conduct pre-employment background checks must now provide applicants with two separate standalone forms: (1) disclosure and consent under Fair Credit Reporting Act; and (2) disclosure and consent under California’s Investigative Consumer Reporting Agencies Act (or other applicable state law). This decision applies to employees providing services in the Ninth Circuit (California, Arizona, Hawaii, Alaska, Idaho, Montana, Nevada, Oregon and Washington).
Continue Reading Complicating Simplicity: Ninth Circuit Requires Separate Stand-Alone Documents for Employment Background Checks

The Illinois Supreme Court recently handed down its much-anticipated decision in Rosenbach v. Six Flags Entertainment Corporation et al., clarifying what makes someone “aggrieved” and able to bring a claim under the Illinois Biometric Information Privacy Act (“BIPA”). We have addressed this issue in prior blogs, including here and here. The Supreme Court has now held an individual need not allege some actual injury or adverse effect to be “aggrieved” and have statutory standing. An individual can state a BIPA claim simply by alleging an entity’s failure to follow the statute’s notice and consent requirements.
Continue Reading Actual Injury Unnecessary to Sue Under Illinois Biometric Law

On January 1, 2019, California’s Senate Bill No. 1431 went into effect, making a slight, but potentially significant amendment to Civil Code Section 1542. The prior version of the statute read: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” SB 1431 amended Section 1542 to now read: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” The amended version of the Code adds “releasing party” and “released party” alongside creditor and debtor, respectively, and also changes “must have materially affected” to “would have materially affected” the releasing party’s decision to settle.
Continue Reading California Legislature Amends Section 1542: Are Employer Settlement Agreements Now More Vulnerable to Attack?

On December 10, 2018, the California Supreme Court handed down its unanimous decision in Gerard, et al. v. Orange Coast Memorial Medical Center, affirming the Court of Appeal ruling that voluntary meal period waivers are permissible for healthcare employees who work long shifts, even if they work more than 12 hours. By allowing healthcare employees to waive one of their two meal periods, the Gerard decision preserves a choice for employees who work 12-hour shifts. They continue to have the flexibility to work shifts that span 12 ½ hours with one 30-minute meal period or shifts that span 13 hours and include two 30-minute meal periods.

Sheppard Mullin argued this case before the California Supreme Court and has represented Orange Coast Memorial Medical Center in the case since 2008.

Not only was this case hard fought throughout California courts for 10 years, but it also involved novel legislative action. Notably, it was the only wage-hour victory for an employer before the California Supreme Court in 2018.
Continue Reading California Supreme Court Confirms Validity Of Meal Period Waivers For Healthcare Employees

On November 20, 2018, the Illinois Supreme Court heard oral arguments in Rosenbach v. Six Flags Entertainment Corp. and Great America LLC to decide whether a technical violation of Illinois’ Biometric Information Privacy Act (BIPA), 740 ILCS 14 et seq., without some additional injury, is enough to give an individual standing to sue under the Act.

As explained in further detail here, BIPA establishes certain notice-and-consent requirements that private entities must follow if they are going to collect, store, and use biometric identifiers and information, such as fingerprints. BIPA also creates a private right of action for individuals who are “aggrieved” by a violation of the act. In recent years, there has been a huge upswing in the number of cases filed under BIPA. The main issue these cases encounter early on is whether a company’s mere technical violation of the notice-and-consent requirements is enough to make a plaintiff “aggrieved,” and therefore have standing to sue, or if additional injury is required.


Continue Reading The Fight Over Standing Under the Biometric Information Privacy Act Continues in Illinois High Court

In AHMC Healthcare, Inc. v. Superior Court, the California Court of Appeal, Second Appellate District, Division Four, extended a prior line of California cases holding that California law follows federal law with respect to evaluating the lawfulness of time clock rounding systems. You can read our prior article about See’s Candy Shops I here. Specifically, California follows 29 C.F.R. § 785.48, which permits employers to compute employee worktime by rounding “to the nearest 5 minutes, or the nearest one-tenth or quarter of an hour,” so long as the rounding system adopted by the employer “is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”
Continue Reading California Court Reaffirms And Extends Rounding Rules