Will They or Won’t They: A Look at Some Significant Proposed California Legislation Relating to Leaves, Disability, and Other Protected Time Off

With May 31st 2019, marking the deadline for bills to be passed by their California house of origin, the following are some key pieces of employment legislation that may find their way to Governor Gavin Newsom’s desk in October. Here is a round-up of potential 2020 legislation worth watching:

Please find the rest of this article on our Disability, Leave & Health Management Blog here.

Cal/OSHA Relaxes Proposed Wildfire Smoke Emergency Regulation

After receiving over 40 public comments and holding a public meeting on its proposed wildfire smoke emergency regulation, California’s Department of Industrial Relations, Division of Occupational Safety and Health (“DOSH”), has eased some requirements of the proposed rule. (If you would like more information on the proposed regulation, you can check out this previous OSHA Law Blog post). Yet, much of the rule has remained the same.

Please find the rest of this article on our OSHA Law Blog here.

Looking Back and Looking Forward: Retroactivity and Expansion of the California Independent Contractor Test

In April 2018, the California Supreme Court issued its ruling in Dynamex Operations West v. Superior Court (2018) 4 Cal. 5th 903, 916-17 and set forth the standards for determining independent contractor status for purposes of the California Industrial Welfare Commission Wage Orders. The Court presumed that a worker is an employee unless he or she meets the requirements of the “ABC Test.”

To satisfy the ABC Test and thus be legally considered an independent contractor, the worker must: (a) be “free from control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;” (b) perform work outside the “usual course of the hiring entity’s business;” and (c) be “customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.” Dynamex, 4 Cal. 5th at 916-17.

On May 2, 2019, the Ninth Circuit Court of Appeals issued a decision that took the Dynamex decision one step further. In Vazquez v. Jan-Pro Franchising Int’l, Inc., 2019 U.S. App. LEXIS 13237, the Ninth Circuit determined that Dynamex should apply retroactively. The Court in Dynamex had presumed that the ABC Test would apply retroactively, reasoning that it was merely clarifying the state of established California law and not creating new law.

Shortly thereafter, on May 3, 2019, the Division of Labor Standards Enforcement (“DLSE”) issued a letter opining the ABC Test applies to both the Wage Orders and any Labor Code provisions that enforce requirements set forth in the Wage Orders, including Labor Code    §§ 226 (itemized wage statements); 226.7 (meal and rest periods ); 510 (overtime); 512 (meal and rest periods); 1182.12 (minimum wage); 1194 (overtime); 1194.2 (liquidated damages); 1197 (minimum wage); and 2802 (reimbursement of expenses).

In light of Dynamex, Vazquez, and the May 3, 2019 DLSE opinion letter, claims brought regarding potential employee misclassifications (even if the claims pre-date Dynamex) could be reviewed under the ABC Test by California courts. If you have any questions regarding these developments, please contact Joelle A. Mervin, Hazel U. Poei, or the Jackson Lewis attorney with whom you regularly work.

Federal Law Preempts California’s Meal and Rest Break Laws for Commercial Drivers

Judge George H. Wu of the United States District Court for the Central District of California recently dismissed meal and rest break claims brought under the California Labor Code in a class action against motor carrier U.S. Xpress.

In Anthony Ayala v. U.S. Xpress Enterprises, Inc. et al, Judge Wu granted U.S. Xpress’ motion for partial summary judgment, stating that he did not possess the authority to review the merits of the case since the Federal Motor Carrier Safety Administration (“FMCSA”) determined that California’s meal and rest break rules are preempted by federal law.

By way of background, on December 28, 2018, the FMCSA published a Notice Granting Petition for Determination of Preemption in the Federal Register stating:

[T]he FMCSA concludes…(3) the MRB [California meal and rest break] [r]ules have no safety benefit; (4) the MRB Rules are incompatible with the FMCSA’s HOS [Hours of Service] Rules; and (5) enforcement of the MRB Rules would cause an unreasonable burden on interstate commerce. Accordingly, the FMCSA grants the petition for preemption…California may no longer enforce the MRB Rules with respect to drivers of property-carrying CMVs [commercial motor vehicles] subject to FMCSA’s HOS rules (emphasis supplied).

The Ayala case represents the first challenge to the FMCSA Preemption Determination before a California district court.

Currently, several petitions challenging the FMCSA’s preemption determination are working their way through the Ninth Circuit. These petitions are expected to briefed within the next few months. However, as of now, federal district courts are bound by the FMCSA order unless it is invalidated by the Ninth Circuit.

If you have any questions about this case or about compliance with California wage and hour laws, please contact Sehreen Ladak, Hazel U. Poei, or the Jackson Lewis attorney with whom you regularly work.

Employers, Politics, and Free Speech

With political campaigns well underway, the protection of “free speech” and concerns that regular political discourse could create potential liability are mounting.  Notably, within the last year, California’s Fair Employment and Housing Commission expanded upon a number of definitions and specific employment practices prohibited under the Fair Employment and Housing Act (“FEHA”). Not listed among them is any specifically identified protection applicable to political speech or beliefs. (See Government Code § 12940(a)[“It is an unlawful employment practice…[f]or an employer, because of the race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person…”] and definitions per Government Code § 12926).

California’s laws addressing political discourse to this end are vague. California Labor Code § 1101 prohibits employers from implementing “any rule, regulation, or policy” (1) “forbidding or preventing employees from engaging or participating in politics or from becoming candidates for public office” or (2) “controlling or directing, or tending to control or direct the political activities or affiliations of employees.” California Labor Code § 1102 provides “[n]o employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.” To this end, employers cannot enact policies limiting employees’ political activities or affiliations or in essence “force” employees to follow the employer’s political leanings.

On the contrary, political “beliefs” or “views” are not a specifically protected category under California’s discrimination laws. Nothing in either of the two Labor Code provisions above directly addresses discrimination or retaliation on the basis of expressed political views. Nor does the First Amendment serve to provide any further guidance. With limited exceptions, the U.S. Constitution’s guarantee of “freedom of speech” applies only to government action and not private employers/employees. The Civil Service Reform Act of 1978 prohibits political affiliation discrimination against federal employees only.

Based upon the narrow scope of protected categories and the vague and uncertain guidelines provided by the applicable California statutes, we would recommend California employers seek counsel in advance of crafting any such handbook policy. Please contact Shaina L. Kinsberg, Hazel U. Poei, or the Jackson Lewis attorney you regularly work with for further guidance.

Plaintiff Succeeds in Claiming Unpaid Reimbursements for More Than 20,000 Miles

After a one-day bench trial, a sales representative for a security company successfully established that his employer had failed to reimburse him for mileage expenses, using only his odometer reading as the basis to calculate the owed mileage. Plaintiff was a “High Volume Sales Representative,” meaning that he worked almost exclusively in the field making sales to new customers, canvassing neighborhoods, meeting with residential developers, and hosting promotion events.

The employer had a mileage reimbursement program that reimbursed employees for miles driven. Employees could receive either fixed monthly allowance or a per-mile reimbursement. Employees who wanted to be reimbursed on a per-mile basis had to enter every trip into an online system. Plaintiff testified the system would reject the entry if it did not recognize the address entered and that it would take him more than 20 hours to enter a month’s worth of trips.

At the beginning of his employment, Plaintiff’s manager told him his vehicle was too old to qualify for the employer’s mileage reimbursement program, so Plaintiff bought a new vehicle. During the bench trial, Plaintiff testified that he used the vehicle exclusively for work and used his wife’s vehicle for personal trips and errands. He testified that he noticed the mileage recorded on the program was inaccurate and that the process of entering every single trip was so laborious that he eventually opted to forgo the mile-based reimbursement and instead receive the fixed monthly allowance.

After ending his employment, Plaintiff sued for unpaid reimbursements under California Labor Code section 2802. The only records he had showing his alleged mileage was the reading on his odometer. The employer argued that Plaintiff could not meet his burden of proof with only an odometer reading, but the court disagreed. The employer had not required Plaintiff to maintain physical documentation of his mileage and Plaintiff had testified that he used the vehicle exclusively for work. The court did acknowledge that there was some discrepancy between the mileage Plaintiff had entered during the time period before he switched to taking the flat amounts, doubting that the more than 30,000 miles on his odometer was purely for work purposes. The court therefore applied a 20% reduction.

This case serves as a reminder that employers should evaluate their mileage reimbursement policies to not only ensure they are requiring employees to keep records of their mileage but also that they are providing employees with an effective, easy-to-use way to report those miles. Otherwise, employers may find themselves in a similar situation where it is difficult to refute the number of miles employees are claiming they have driven.

If you have any questions about this case, please contact Ashley Evans, Casey Curran, or Dale Kuykendall in Jackson Lewis’ Sacramento office, or the Jackson Lewis attorney with whom you regularly work.

Wage Statements May Contain Fictitious Business Names, California Court of Appeal Affirms

While best practices would be to use the employer’s registered name, a recent Court of Appeal opinion has upheld an employer’s use of its fictitious business name in its wage statements.

California Labor Code section 226 lists information that must be included in every employee’s wage statement. Pursuant to subsection (a)(8), one piece of information required is “the name and address of the legal entity that is the employer.” Employers can face substantial penalties if they do not provide accurate information.

In Savea v. YRC Inc., a plaintiff alleged is employer violated subsection (a)(8) by failing to include the company’s name as registered with California’s Secretary of State, as well as not including a “mail stop code” or the ZIP+4 code on employees’ wage statements. The employer’s name registered with the Secretary of State was “YRC Inc.” However, the wage statements listed the employer name as “YRC Freight,” which was the employer’s recorded fictitious business name. The employer moved to dismiss the plaintiff’s complaint on the grounds that its fictitious business name was used “to transact all regular business in California” and the listed address was the employer’s correct mailing address. The employer argued there was no authority or requirement to include a “mail stop code” or the ZIP+4 code in an employer’s address. The trial court agreed with the employer, and the plaintiff appealed the dismissal.

On the alleged improper employer name, the appellate court recognized the employer’s name on the wage statement matched the actual recorded fictitious business name at the time the employer issued the wage statements. The court noted that California’s Business and Professions Code permits companies to transact business and to initiate a lawsuit (or to be sued) under its fictitious business name. The court also said there was no confusion over the employer’s identity, the employee was not required to reference any other documents to determine the employer’s identity, and the fictitious business name was properly recorded at all relevant times.

On the alleged improper employer address, the appellate court noted the statute requires nothing more than the employer provide its “address.” The plaintiff was unable to dispute the employer provided the proper address. He also could not identify any authority for the proposition a mail stop code or a ZIP+4 code was required. The court also took notice that the agency tasked with enforcing California’s Labor Laws (the Division of Labor Standards Enforcement) had previously issued a wage statement template. In that template, the model address does not include a mail stop code or a ZIP+4 code. Thus, the court found the employer’s given address was proper.

In short, this case represents a small victory for employers. Historically, use of the employer’s registered name ensured compliance with the Labor Code 226(a)’s name requirement. This case supports the use of an employer’s fictitious business name as well.

If you have any questions about this case or wage statement compliance, please contact the Jackson Lewis attorney with whom you regularly work.

Car Wash Employees CLEAN Up with Help of California Department of Labor

The Labor Commissioner fined a Southern-California car wash for more than $2.36 million for alleged wage and hour violations. These fines included both civil penalties and wages owed to employees. This appears to be a continuation of the agency’s enforcement actions against commercial car washes from 2012 and 2015.

In addition to fining the company, the Labor Commissioner held both the company president and general manager jointly and separately liable (under Labor Code section 558.1) for these violations. (Individual liability means a manager or officer, or anyone else acting on behalf, of the company who violates or causes a violation of the Labor Code could be liable for paying out a lawsuit.)

The company’s activities affected at least 64 employees. This enforcement action was not triggered by employee complaints. Rather, the agency received information of potential violations from CLEAN, a non-profit corporation set up to assist employees of the car wash industry. The non-profit focuses its effort around targeting car washes in the Los Angeles area.

Employees of Centinela Car Wash Inc. and Playa Vista Car Wash recovered damages for violations of waiting time, split shifts, and overtime violations. The employees claimed their employer forced them to wait around the facility, without pay, before being told if they would be working that day. Further, employees claimed they worked more than eight hours without receiving overtime pay and alleged they failed to receive premium pay for split shifts. The employees also complained of improper recordkeeping practices.

The car wash also was fined for failing to register with the Labor Commissioner’s office as required under Labor Code Section 2054. In the past, failing to register had been only an initial trigger for an investigation.

If you have any questions about compliance with California wage and hour law, or other legal compliance issues, please contact the Jackson Lewis attorney(s) with whom you regularly work.

CAL/OSHA Proposes Emergency Regulation on Smoke-Protection after Destructive Wildfire Season

In the wake of the most destructive wildfire season in California history, California’s Department of Industrial Relations, Division of Occupational Safety and Health (“DOSH”), has issued a proposed emergency regulation intended to protect workers from wildfire smoke. On April 15th, 2019, DOSH released the proposed regulation and scheduled a hearing to discuss the regulation for May 8th, 2019 in Oakland. Please find the rest of this article on our OSHA Law Blog here.

Assembly Bill Codifying Dynamex Moves Forward, with Notable Exemptions

On March 26, 2019, proposed Assembly Bill 5, which would codify the California Supreme Court’s controversial Dynamex decision, was amended to exempt certain types of licensed workers. Just as noteworthy as the types of workers identified as exempt from the standard are the types of employees who were not identified. For example, the exemption does not appear to cover trucking companies and gig economy transportation companies. If there are specific statutory exclusions, it will be difficult for courts to find exclusions in the common law.

By way of background, on April 30, 2018, the California Supreme Court issued the Dynamex decision, an alarming decision for California employers utilizing independent contractors. In the opinion, the Court applied the “ABC Test” in determining whether an individual is an employee or independent contractor under the Wage Orders. Instead of the longstanding multi-factor Borello test, the Court found that the hiring entity has the burden to establish all of the following elements:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact

(B) The person performs work that is outside the usual course of the hiring entity’s business; and

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Part B of the test is particularly problematic for a number of industries, especially those with established business models reliant upon the use of contractors.

After the decision, courts grappled with how to apply the decision and the State Capitol was bombarded with lobbyists. Three relevant bills have been proposed. AB 71 seeks to codify the longstanding Borello standard, AB 233 seeks to exempt insurance salespeople and AB 5 seeks to codify Dynamex.

On March 26th, AB 5 was amended to provide that the Borello factor test (and not the ABC Test) would apply to:

  1. Persons or organizations licensed by the Department of Insurance;
  2. licensed physicians or surgeons;
  3. securities broker-dealers or investment advisers or their agents and representatives that are registered with the SEC or FINRA or licensed by the State; and
  4. direct salespeople under Unemployment Insurance Code § 650 (licensed salespeople whose compensation is directly tied to the sale, such as real estate salespeople).

On Wednesday, April 3, AB 5 will be before the Assembly Labor and Employment Committee and AB 233 will be before the Assembly Insurance Committee.

The Dynamex decision has sent shockwaves through business community in California; and the legislature appears to be attempting to provide some clarity. Regardless of the outcome, the resulting legislation will have a significant impact on how companies do business in California. In the meantime, tracking the progress of the legislation may help companies prepare accordingly.

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