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

On March 27, 2019, the U.S. House of Representatives voted to pass the Paycheck Fairness Act, an act designed to amend and strengthen the existing federal Equal Pay Act (“EPA”), 29 U.S.C. § 206(d). The Paycheck Fairness Act, which passed the House by a vote of 242-187 on a largely party-line basis, is sponsored by Representative Rosa DeLauro (D-CT), and would make sweeping changes to existing law.
Continue Reading Equal Pay Act Amendment Passes House of Representatives

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, the California Court of Appeal, Second District issued a 2-1 decision in Ward v. Tilly’s, Inc. in which it held employees must be given “reporting time pay” under Wage Order No. 7-2001 when an employer requires its employees to call in two hours before a potential shift to learn whether the employee is needed for work and the employee is told not to come into work that day.  This decision strays from most employers’ general understanding that “reporting time pay” covers only the situation where the employee physically comes into work but is sent home early (usually for lack of work).  Nevertheless, as the only published California appellate decision addressing this specific issue, California employers are bound by Ward and should revise their reporting policies accordingly to avoid liability.
Continue Reading Ward v. Tilly’s, Inc.: California Employers Should Dial Back On-Call Shift Policies

On January 15, 2019, the Supreme Court issued its decision in New Prime Inc. v. Oliveira, where it decided independent contractor truck drivers cannot be forced into arbitration.  The Court’s decision is based on Federal Arbitration Act § 1, which excepts from coverage disputes involving “contracts of employment” with “workers engaged in foreign or interstate commerce.” 
Continue Reading SCOTUS Holds Independent Contractor Truck Drivers Exempt from Arbitration Under FAA

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 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

In Jesus Cuitlahuac Garcia v. Border Transportation Group, LLC, et al, the California Court of Appeal, Fourth Appellate District has held that the ABC test set forth in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) applies only to causes of action brought under wage orders.

Plaintiff Garcia was a taxicab driver for several years with Border Transportation Group (“BTG”). In 2015, a year after ceasing work for BTG, he sued BTG and two individual defendants for various wage and hour violations.
Continue Reading California Court of Appeal Affirms That Dynamex’s ABC Independent Contract Test Is Limited To Claims Arising Under Wage Orders

As detailed previously here, the New Jersey Paid Sick Leave Act (the “Act”), goes into effect October 29, 2018. In general, the Act allows New Jersey employees to accrue one (1) hour of sick leave time per thirty (30) hours worked, and allows New Jersey employees to use earned sick leave time for: (i) diagnosis, care, treatment of, or recovery from the employee’s mental or physical illness, injury or other adverse health condition, or for the employee’s preventive medical care; (ii) time to aid or care for a family member in one of the situations described in (i); (iii) time needed due to an employee’s or family member’s status as a victim of domestic or sexual violence; (iv) closure of the workplace, school, or childcare facility issued by a public health authority due to a public health emergency; and (v) a school-related conference or meeting. A detailed summary of the Act’s other requirements can be found here.
Continue Reading New Jersey Department of Labor and Workforce Development Issues Proposed Regulations For the New Jersey Sick Leave Act

On July 26, 2018, the California Supreme Court issued its long awaited decision in Troester v. Starbucks Corporation (S234969) on whether California wage and hour law recognizes the de minimis doctrine established by the United States Supreme Court in Anderson v. Mt. Clemens Pottery Co. 328 U.S. 680 (1946) for wage claims arising under federal law.  Under the federal de minimis rule, small amounts of otherwise compensable work time are not actionable when tracking and paying for it is impractical.  Anderson held: “When the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded.  Split-second absurdities are not justified by the actualities of working conditions or by the policy of the Fair Labor Standards Act.  It is only when an employee is required to give up a substantial measure of his time and effort that compensable working time is involved.”  Id. at 692.  In deciding whether compensable work time is de minimis, federal courts consider “(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.” See e.g. Lindow v. U.S. 738 F.2d 1057, 1063 (9th Cir. 1984); Kellar v. Summit Seating Inc., 664 F.3d 169, 176 (7th Cir. 2011); Kosakow v. New Rochelle Radiology Assocs., P.C. 274 F.3d 706, 719 (2d Cir. 2001).  Ten minutes or less is generally considered de minimis under federal law.  See Lindow, 738 F.2d at 1062.  The issue before the California Supreme Court in Troester (certified from the Ninth Circuit) was whether California wage and hour law recognizes the same or a similar rule.  Even though de minimis worktime is (by definition) small and insignificant, whether or not a de minimus exception to the requirement to pay for all time worked applies has major implications because relatively small amounts of unpaid wages have the potential to trigger substantial penalties and liability for plaintiffs’ attorneys’ fees in California.
Continue Reading California Supreme Court Issues Narrow Holding In De Minimis Case, Leaving Many Issues Unresolved