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As reported here and here, California recently enacted new legislation – Assembly Bill 5 – that expanded the scope of an “employee” under state law.  Beginning January 1, 2020, the answer to whether a person providing services in California is an independent contractor (as opposed to an employee) under the California Labor Code, the Industrial Welfare Commission (“IWC”) Wage Orders, and the California Unemployment Insurance Code, will generally depend on whether they satisfy all three prongs of the so-called ABC Test:

  1. The worker must be free from the control and direction of the hirer in connection with the performance of the work.
  2. The worker must perform work outside the “usual course” of the hirer’s business.
  3. The worker must be customarily engaged in an independent established trade, occupation, or business of the same nature as the work performed.

There are a myriad of occupational and industry exemptions to the application of the ABC Test, many of which are highlighted here.

Having tightened independent contractor classification standards, the next big target for the state legislature may be joint employer liability.Continue Reading Back to the Joint Employer: Having Changed the Classification Test for Independent Contractors, Will the California Legislature Target the Joint Employer Test Next?

Ending a more than 15-year-long legal battle, the Fifth Circuit on May 24, 2019, unanimously affirmed the dismissal of a proposed class action against subsidiaries of UBS AG, alleging violations of U.S. securities laws for their role as a broker of Enron’s employee stock option plan and for failure to disclose material information about Enron’s “financial manipulations.” Lampkin et al. v. UBS PaineWebber Inc. et al., No. 17-20608 (5th Cir. May 24, 2019).
Continue Reading Fifth Circuit Affirms Enron Broker Not Liable to Employee Stock Option Holders for False or Withheld Information

In 2004, the DOL revamped its regulations regarding the Fair Labor Standards Act (FLSA) administrative exemption.  In 2006, the Bush DOL issued an opinion letter finding that mortgage loan officers qualified for the administrative exemption.  In 2010, the Obama DOL withdrew the 2006 opinion letter and issued an Administrator’s Interpretation finding that mortgage loan officers did not qualify for the administration exemption.  The Mortgage Bankers Association’s (MBA) challenged the 2010 interpretation arguing that it was invalid under Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (1997) because it significantly altered the DOL’s 2006 opinion letter and it was issued without employing the notice-and-comment procedures required by the Administrative Procedures Act (APA).  The district court rejected the argument, finding that the MBA had not demonstrated substantial and justifiable reliance on a well-established agency interpretation. The D.C. Circuit reversed, finding that reliance is but one factor courts must consider in assessing whether an agency interpretation qualifies as definitive. 
Continue Reading U.S. Supreme Court Holds Agency Interpretations Are Not Subject To Notice-and-Comment Rulemaking Requirement

On November 12, 2014, in Greg Landers v. Quality Communications Inc., the Ninth Circuit clarified a previously unsettled point of law by confirming that Fair Labor Standards Act (FLSA) pleadings must meet the specificity requirements established in the U.S. Supreme Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).  Affirming the dismissal of a proposed class action against cable services company Quality Communications Inc. for unpaid overtime wages, the three-judge panel ruled that the trial court had acted properly in dismissing the suit because, in light of Twombly and Iqbal, the plaintiff’s pleadings lacked sufficient specificity to state a claim under the FLSA.
Continue Reading Ninth Circuit Rules That Twombly Standard of Specificity Applies to FLSA Pleadings

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