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?

To close out the 2019 legislative season, Governor Gavin Newsom signed dozens of bills into law, which will have lasting impacts for California employers. In addition to the summaries and clarifications from prior blog posts, below is an overview of key new employment laws.
Continue Reading 2020 Vision: California’s New Employment Laws

On September 5, 2019, the Washington Supreme Court issued a huge win for all non-agricultural employers who pay commission or piece-rate pay to their employees in Washington state. In a 6-3 decision, the Washington Supreme Court held in Sampson v. Knight Transportation (No. 96264-2) that a non-agricultural piece-rate employer complies with the Washington Minimum Wage Act when an employee’s total earnings in given workweek divided by the employee’s total hours worked in the same workweek exceeds the applicable minimum wage rate. While this conclusion may seem obvious, the Washington Supreme Court in 2018 rejected the same workweek averaging method for agricultural workers. Carranza v. Dovex Fruit Co., 190 Wn. 2d 612 (2018) held that the Washington Minimum Wage Act (“MWA”) requires agricultural workers earning piece-rate pay to be separately compensated on an hourly basis for all “activities outside of piece-rate [] work.” The question in Sampson was whether the holding in Carranza should be extended to non-agricultural piece-rate employers. Relying on a regulation promulgated over 40 years ago by the Washington Department of Labor & Industries (“DLI”), the Washington Supreme Court held that Carranza’s separate compensation rule is confined to the narrow context of agricultural employment.
Continue Reading Peace for Piece-Rate Employers in Washington

Many California employees received a raise on January 1, 2019 when the state increased the minimum wage to $12 per hour for large employers (26 employees or more) and $11 per hour for small employers (25 employees or fewer). Effective July 1, 2019, several counties and municipalities in California are adding to these minimum wage increases. The amount of the increase varies by city and county, and some local governments make a distinction between large and small employers. Hotel workers in places like Long Beach, the County and City of Los Angeles, and Oakland are entitled to wages significantly higher than the minimum wage for other types of employees. The following chart summarizes these changes.
Continue Reading July 1, 2019 Minimum Wage Increases in California Counties and Municipalities

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

On February 4, 2019, New Jersey Governor Phil Murphy signed into law legislation, available here, which gradually raises the minimum wage in New Jersey to $15 per hour by the year 2024 for many workers in New Jersey. Under this law, for employers with more than six employees, the current New Jersey statewide minimum wage of $8.85 will incrementally rise to $15 per hour as follows:

Date of Increase Minimum Wage Amount
July 1, 2019 $10 per hour
January 1, 2020 $11 per hour
January 1, 2021 $12 per hour
January 1, 2022 $13 per hour
January 1, 2023 $14 per hour
January 1, 2024 $15 per hour


Continue Reading New Jersey Minimum Wage Set to Increase to $15 Per Hour by 2024

After two years, California courts are finally putting California’s “A Fair Day’s Pay Act” (the “Act”) to the test. While intended to help employees collect judgments against employers that are judgment proof, the Act created potential personal liability for an employer’s owners, directors, officers, and managing agents. Indeed, the Act added Labor Code Section 558.1, which imposes personal liability for certain wage and hour violations. Specifically, Section 558.1 states that “[a]ny employer or person acting on behalf of an employer, who violates, or causes to be violated,” provisions regulating wages or hours, may be held personally liable “as the employer.” Section 558.1 expressly defines “employer or other person acting on behalf of an employer” to include a “natural person who is an owner, director, officer, or managing agent of the employer.” Accordingly, potentially any managing agent who “causes” a wage and hour Labor Code provision to be violated could be held personally liable. While the passing of Section 558.1 caused uproar over the imposition of personal liability for wage and hour violations, the California Court of Appeal recently clarified that even in the absence of this new section, the labor code imposes personal liability.
Continue Reading Managers Beware: Can you be held personally liable for wage and hour violations?

On June 19, 2018, District of Columbia residents voted to pass (by a 55.14% to 44.86% margin) Initiative 77, providing for a single minimum wage for all employees, including tipped workers.

The restaurant industry led the opposition to the Initiative noting that the additional labor costs of the minimum wage will need to be sourced by one of the following: (1) through job cuts; (2) by the employer’s overhead; or (3) by passing the costs to the consumer through an increase in the costs of goods and services, which can decrease business and/or decrease the likelihood of customers tipping.
Continue Reading Minimum Wage Inches Closer to Reality for Tipped Workers in the District of Columbia

On Tuesday, March 6, 2018, the U.S. Department of Labor (“DOL”) announced its launch of the Payroll Audit Independent Determination (PAID) Program (“PAID” or the “Program”) – aimed at increasing employers’ FLSA compliance and timely payment of back wages to employees. The Program, which will start with a six-month pilot period prior to evaluation and finalization, is explained in detail below.

What is the PAID Program’s Goal?

The Program’s goal is to increase compliance with the FLSA’s overtime and minimum wage requirements by providing employers the opportunity to self-audit and report inadvertent non-compliance without fear of litigation or penalties. The Program also hopes to expedite payment of back pay to affected employees and to cut down on litigation costs to employers, employees, and taxpayers.
Continue Reading Department of Labor Announces New Payroll Audit Pilot Program

Beginning January 1, 2018, the new California minimum wage rate for employers with 26 or more employees will be $11.00 per hour and the new California minimum wage rate for employers with 25 or fewer employees will be $10.50 per hour.

As we previously reported, effective January 1, 2017, the California state minimum wage began increasing yearly through January 1, 2022 for employers employing 26 or more employees. Effective January 1, 2018, the California state minimum wage will begin increasing yearly through January 1, 2023 for employers employing 25 or fewer employees.
Continue Reading New Year, New Minimum Wage Rates in California

As we previously reported here, the New York State Department of Labor (“NYSDOL”) issued final regulations in September 2016 imposing new notice and consent requirements on employers who pay wages via direct deposit and debit card.  The regulations, which were scheduled to take effect on March 7, 2017, have been invalidated and revoked by the New York State Industrial Board of Appeals (“IBA”) which recently issued a decision finding, among other things, that the NYSDOL’s regulations exceeded its rulemaking authority by imposing restrictions on financial institutions.
Continue Reading *UPDATE* New York State Department of Labor’s Direct Deposit and Debit Card Notice Regulations Held Invalid and Revoked