On January 1, 2021, various new and amended employment laws will go into effect in California. Below is a summary of some of these laws that employers should make themselves aware of heading into the new year.  All laws discussed in this post go into effect on January 1, 2021, unless otherwise noted.
Continue Reading New Employment Laws to Look Out for in 2021

In Alfredo Sanchez v. Miguel Martinez, the Court of Appeal, Third Appellate District, held that although an employee who is not authorized and permitted to take a paid 10-minute rest break in compliance with California law may assert a claim for either unpaid wages or seek one additional hour of pay (i.e., a rest break premium) under Labor Code Section 226.7, the employee cannot recover damages under both theories.  All California employers will find this case instructive, as it may also provide a basis to argue against similar “double recovery” and/or “stacking” of penalties predicated on other Labor Code violations.

Continue Reading Employees Cannot Obtain “Double Recovery” of Unpaid Wages and Premiums for Non-Compliant Rest Breaks

As we have previously reported, California law utilizes the “ABC” test to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission.
Continue Reading Expanding Independent Contractors in California: New Law Awaits Governor’s Signature

On April 1, 2020, the California Court of Appeal issued the first published decision addressing unlimited vacation policies under California law.  “Unlimited” vacation policies in which employees have no minimum and no maximum vacation and do not accrue any vacation time have become increasingly popular in recent years.  However, without guidance from the courts, employers that have implemented these policies have faced legal uncertainty.  In McPherson v. EF Intercultural Foundation, Inc., the court held that the employer’s purported “unlimited” paid time off policy violated Labor Code Section 227.3 based on the particular facts of that case.  Since the court limited its ruling based on the facts in McPherson, it left open many questions regarding the lawfulness of unlimited vacation policies generally.  Fortunately, the court also provided example features of an unlimited vacation policy that it suggested might not violate Section 227.3.  Nevertheless, this newly published decision may have opened a door for more litigation and we recommend employers review their flexible/unlimited time off policies.
Continue Reading California Court of Appeal Addresses Unlimited Vacation Policies for the First Time in McPherson v. EF Intercultural Foundation, Inc.

Effective February 10, 2020, the top ten members of an out-of-state limited liability company (“LLC”) can be held personally liable for violations of New York’s wage and hour laws. The bill, signed on December 12 by Governor Andrew Cuomo, amends New York’s LLC Law which previously only extended individual liability for unpaid wages to owners of domestic LLCs (text available here).
Continue Reading New York Targets Members of Out-of-State LLCs in New Wage Theft Bill

On December 12, 2019, for the first time in 60 years, the U.S. Department of Labor (DOL) announced a final rule clarifying the types of benefits that must be included in determining an employee’s “regular rate of pay” when calculating overtime wages. This new rule becomes effective January 15, 2020.
Continue Reading Department of Labor Issues Final Rule on Calculating the Regular Rate of Pay Under the Fair Labor Standards Act

As peer-to-peer payment applications proliferate and on-demand technologies reach new facets of people’s lives, it is only natural that these programs now offer services geared particularly for employees. On-demand, daily pay apps, also known as “instant pay” or “earned wage access” are the outgrowth of two fundamental truths: (1) millions of Americans live paycheck to paycheck; and (2) employees perform their actual work and earn their actual wages up to two weeks before they receive their paychecks.

Instant pay apps offer to bridge the gap between when one’s expenses come due and one’s paycheck issues, by allowing employees to withdraw the wages they have already earned for work performed in a pay period, before the regular pay date. Hailed as a panacea by employees, who otherwise would be vulnerable to predatory payday loans, these instant pay apps unsurprisingly implicate multiple California wage and hour laws that an employer must comply with. As a result, employers considering rolling out these programs must carefully balance their potential legal risk against the benefit these apps offer employees, and should understand the potential protections available to an employer.
Continue Reading Pay Day, Every Day? Instant Pay Apps and Their Wage and Hour Implications

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?

On December 6, 2019, the Second Circuit issued a decision that will have a strong impact on the settlement of wage and hour actions under the Fair Labor Standards Act (FLSA). In Yu v. Hasaki Restaurant, Inc., the U.S. Court of Appeals for the Second Circuit reversed a district court ruling and held that FLSA settlements pursuant to a Rule 68 offer of judgment do not require court approval. This decision departs from the conventional view that settlements of FLSA claims generally require formal approval from a court or the Department of Labor (DOL) in order to be enforceable.
Continue Reading Second Circuit Holds That FLSA Settlements Pursuant To An Offer of Judgment Do Not Need Court Approval

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