Did You Know California has a State Mandated Retirement Plan?

By Yana S. Johnson on February 19, 2019

Frequently Asked Questions About CalSavers

Question:

What is CalSavers?

Answer:

CalSavers is a new California law designed to encourage employees to save for retirement. CalSavers was originally called California Secure Choice and was approved by the State Legislature in 2016.

CalSavers provides employees with a retirement savings program without the administrative complexity, fees, or fiduciary liability of existing options for employers. Most employers with at least five employees, that do not already offer an employer-sponsored retirement plan, will be required to begin offering a retirement plan or provide their employees access to CalSavers. Please find the full article in our Benefits Law Advisor blog here.

Teamsters Challenges Federal Agency Decision on California Break Rules on Interstate Truck Drivers

By Jonathan A. Siegel and JaVon A. Payton on February 1, 2019

The International Brotherhood of Teamsters, Local 2785 has filed a petition for review to the Ninth Circuit Court of Appeals on the Federal Motor Carrier Safety Administration’s (FMCSA) determination that California’s meal and rest break rules are preempted as applied to drivers of commercial motor vehicles (CMVs) subject to the FMCSA’s hours-of-service (HOS) regulations. This primarily involves interstate truck drivers and some intrastate drivers who meet certain criteria under the HOS regulations who drive CMVs. The Teamsters are seeking to reverse the Agency’s administrative determination.

On September 24, 2018, the American Trucking Associations (ATA) petitioned the FMCSA to preempt California law requiring employers to provide their drivers meal and rest breaks who operate CMVs subject to the FMCSA’s HOS regulations.

On December 21, 2018, the FMCSA reversed an FMCSA determination from December 2008 where it previously found California’s meal and rest periods were not preempted by federal law. The FMCSA then granted ATA’s petition and held the meal and rest break rules are preempted under 49 U.S.C. 31141 as applied to CMV drivers covered by the FMCSA’s HOS regulations. Docket No. FMCSA-2018-0304.

FMCSA held that federal law provides for preemption of California laws regarding CMV safety that are additional to or more stringent than federal regulations if they: (1) have no safety benefit; (2) are incompatible with federal regulations; or (3) would cause an unreasonable burden on interstate commerce. The FMCSA determined that the meal and rest break rules are laws on CMV safety, they are more stringent than the Agency’s HOS regulations, have no safety benefits that extend beyond those already provided, and are incompatible with the HOS regulations. They cause an unreasonable burden on interstate commerce, the Agency concluded.

The Teamsters responded by filing a petition for review of the FMCSA’s Determination of Preemption. In light of these recent developments, California employers with drivers covered by FMCSA may consider proceeding cautiously until the matter is clarified through the current litigation. If you have any questions, please feel free to contact Jackson Lewis.

Do I Have to Grant Leave for Employee Requests to Attend Their Children’s School Activities? Maybe in California

By Susan E. Groff and Ariel Beverly on January 28, 2019

School children are back at school following winter break, and that may mean employee requests for time off for parent-teacher conferences, school assemblies, and more. While less known, California law has a collection of statutes affording parents protected time off. One of those protections is California Labor Code section 230.8, which provides parents, and other parental figures, with protected time off to attend to child related activities.

To read the full article, please see our Disability, Leave & Health Management Blog here.

Independent Contractor Test the Subject of Two California Assembly Bills

By Ellen M. Tipping on January 25, 2019

In 2018, the California Supreme Court issued an opinion (Dynamex Operations West, Inc. v. Superior Court of Los Angeles County) establishing a new standard (“ABC test”) for determining whether an individual is an independent contractor or employee in the context of claims brought under the State’s Industrial Welfare Commission’s wage orders. The result is a broader definition of who qualifies as an employee for the purpose of a claim brought under a wage order.

Under the ABC test, a worker can be classified as an independent contractor only if all three of the following factors are met:

That “the worker is free from control and direction” of the employer as it relates to performance of the work; and
That the work is performed “outside the usual course of the hiring entity’s business”; and
That the worker engages “in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”

However, the Court stated the new standard does not automatically apply to determine employment status under other statutes, and it may better effect the purpose of other statutes to utilize the long-standing test in S. G. Borello & Sons, Inc. v. Dept. of Industrial Relations.

Two assembly bills introduced on December 3, 2018, propose legislation related to the Dynamex decision.

California Assembly Bill 5 would add a new section to the Labor Code, proposed § 2750.3, to codify the test in Dynamex. It is unclear whether would broaden the Dynamex test beyond claims brought under the wage orders.

California Assembly Bill 71 would amend existing Labor Code §2750.5, which pertains to workers performing services for which a state contractor’s license is required, or performing services for a person who is required to obtain a state contractor’s license. This bill seeks to add a section ensuring that, in this setting, independent contractor status is determined under the Borello standard. Factors to be considered include:

Whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired, which is the principal factor.
Whether the one performing services is engaged in a distinct occupation or business.
The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision.
The skill required in the particular occupation.
Whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work.
The length of time for which the services are to be performed.
The method of payment, whether by the time or by the job.
The right to discharge at will, without cause.
Whether or not the work is part of the regular business of the principal.
Whether or not the parties believe they are creating the relationship of employer-employee.

If you have questions about the independent contractor analysis, Jackson Lewis attorneys are ready to assist.

California Enforces Arbitration Agreement with Staffing Agency in Favor of Worksite Employer

By Erin W. Kendrella on January 17, 2019

An employer successfully compelled arbitration under an arbitration agreement that the plaintiff-workers had with their staffing agency, even though the staffing agency was not a defendant in the lawsuit.

The plaintiffs sued the primary employer, but not the staffing agency with whom they had entered into an arbitration agreement. On January 3, 2019, a California appeals court ruled in an unpublished opinion that a “worksite employer” could compel enforcement of an arbitration agreement between plaintiffs and a staffing agency, even though the staffing agency was not named as a defendant in the lawsuit and the worksite employer was not a signatory to the arbitration agreement.

In this case, two workers had sued the worksite employer claiming they were not properly paid wages, given meal and rest breaks, provided wage statements, or timely paid after termination. The court ruled that because the worksite employer and the staffing agency were co-employers of the plaintiffs, and both were responsible for complying with state labor laws, the worksite employer could enforce the arbitration agreement. The court said it was “inconsequential” that the plaintiffs had not named the staffing agency. Plaintiffs could not avoid arbitration by only suing the worksite employer, which was not a party to the agreement.

Even though this case is unpublished and is not available for citation purposes, it reinforces the argument that arbitration agreements may be enforced through third party agreements (e.g., joint employers or agent relationships), even when the party is not a defendant or signatory to the agreement. Employers that are sued and use staffing agencies, will want to consider whether arbitration agreements with the staffing agency exist to compel arbitration.

California State Disability Insurance (SDI) Increases

By Cepideh Roufougar on January 2, 2019

It’s a new year, and California SDI benefits will be increasing. The SDI withholding rate continues to be 1.0% of wages. But, the taxable wage limit will increase from $114,967 to $118,371.

For new SDI claims (whether for short-term disability benefits or paid family leave benefits) the maximum weekly benefit will increase from $1,216 to $1,252 a week. Please find the rest of this article on our Disability, Leave & Health Management blog here.

Employer Successfully Defends Rounding Policy by Showing It Did Not Disfavor Employees

By Dylan B. Carp on December 14, 2018

A California appellate court held an employer’s use of a rounding policy for its non-exempt employees complied with California law because it did not disfavor employees. (Donohue v. AMN Services, LLC (Dec. 10, 2018) Case No. D071865.)

AMN employed Donohue as a nurse recruiter who was non-exempt from California’s overtime requirements. AMN tracked recruiters’ time with a computer-based timekeeping system, in which recruiters would punch in for the day, punch out when they took a meal break, punch back in when they returned from their meal break, and punch out at the end of the day. AMN rounded recruiters’ punch times to the nearest 10-minute increment. For example, all punch times between 7:55 a.m. and 8:04 a.m. would record as 8:00 a.m., and all punch times between 8:05 a.m. and 8:14 a.m. would record as 8:10 a.m. Donohue brought a class action lawsuit alleging AMN’s rounding policy violated various California wage and hour laws. The trial court granted summary judgment for AMN, and the court of appeal affirmed.

The court noted that California law permits employers to use a rounding policy if it is “fair and neutral on its face and it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” Under this standard, “an employer’s rounding policy is fair and neutral if on average, it favors neither overpayment nor underpayment; but such a policy is unacceptable if it systematically undercompensates employees because it encompasses only rounding down.”

The court held AMN satisfied this standard as a matter of law based on expert testimony from a labor economist. The economist analyzed 311 recruiters’ time records and determined that AMN’s policy resulted in a net surplus of 1,929 work hours in paid time for the recruiters, including a net surplus of 9.82 hours for the representative plaintiff herself. The court rejected the plaintiff’s attempt to raise a triable issue based on expert testimony from a statistics professor. Although the statistics professor found that the rounding policy resulted in AMN failing to pay certain employees for 2,631 hours worked, the court held his testimony was flawed because it focused solely on employees who happened to have a late or short meal period. Because AMN’s rounding policy on the whole was neutral as to all class members, the policy was lawful.

Jackson Lewis wage and hour specialists are available to assist employers with designing and implementing rounding policies to ensure compliance with state and federal law.

California Supreme Court Rebuffs Plaintiffs’ Attempt to Undo Their Agreements Waiving Second Meal Period

By Dylan B. Carp on December 12, 2018

The California Supreme Court has upheld the ability of California health care workers who work more than twelve hours a day voluntarily to waive their second meal period, rebuffing plaintiffs’ argument that their voluntary waivers were unenforceable. (Gerard v. Orange Coast Memorial Medical Center (Dec. 10, 2018) Case No. S241655.)

The Labor Code generally provides that employees who work more than five hours in one day must be provided with a 30-minute meal period, and that employees who work more than 10 hours must be provided with an additional 30-minute meal period. The Labor Code provides further that an employee who works no more than six hours may waive the meal period (to permit him to earn more or work a shorter shift), and an employee who works no more than 12 hours may waive the second meal period if he has taken the first. A wage order of the Industrial Welfare Commission (“IWC”), however, permits health care employees to waive the second meal period even if they have worked more than 12 hours. Consistent with the wage order, the plaintiffs in Gerard had worked more than 12 hours and had voluntarily waived their second meal period. However, they nonetheless sued for penalties and other remedies, contending that the wage order violated the Labor Code and their waivers were therefore unenforceable.

In a unanimous opinion, the Supreme Court rejected the plaintiffs’ contention, concluding that the Legislature had authorized the IWC to depart from the 12-hour maximum for waiving the second meal period. The Supreme Court relied in part on a fairly technical analysis of various versions of key Labor Code provisions. However, the Supreme Court also noted that, after the court of appeal had initially held in favor of the plaintiffs, both employers and employee unions had successfully supported legislation purporting to reverse the decision. For example, the Supreme Court noted that the United Nurses Association of California had urged the Legislature, “UNAC members have for years enjoyed the flexibility of alternate work schedules, which allows for greater staffing flexibility and better patient care. Patient outcomes are dramatically improved in environments where the nurses and other health care professionals can place priority on the needs of their patients without interruption by an arbitrary meal period when the shift runs long. (RNs are generally able to eat during work time in break rooms.)… [defeating the bill] will result in a severe disruption of the lives of our members, many of whom have built a schedule of work, child care, and other obligations around the ability to waive a second meal period.”

Accordingly, Gerard may indicate a broader willingness by the Supreme Court to view employee choice, in addition to mandatory commands and prohibitions, as conducive to the public interest in the field of workplace regulation.

Lawsuit Filed Against California’s Attorney General Alleging the Private Attorneys General Act (“PAGA”) is Unconstitutional

By Jaclyn P. Floryan on December 3, 2018

On November 28, 2018, the California Business & Industrial Alliance (an association that represents the interests of small and mid-sized businesses in California and which was formed for the specific purpose of accomplishing the appeal or reform of the Private Attorneys General Act (“PAGA”)) filed a lawsuit against Xavier Becerra in his official capacity as the Attorney General for the State of California for injunctive and declaratory relief in the Orange County Superior Court.

The Complaint alleges that PAGA is unconstitutional and requests that the state of California enforce its own laws – “rather than transferring the state’s powers to private attorneys who operate for their own personal gain.” The Complaint further asserts that PAGA has “become a tool or extortion and abuse by the Plaintiffs’ Bar, who exploit the special standing of their PAGA plaintiff clients to avoid arbitration, threaten business-crushing lawsuits, and extract billions of dollars in settlements, their one-third of which comes right off the top.”

The Complaint asserts nine causes of action for: (1) the violation of California’s Separation of Powers Doctrine; (2) the violation of the United States Constitution’s Fourteenth Amendment Procedural Due Process Protections; (3) the violation of the United States Constitution’s Fourteenth Amendment Substantive Due Process Protections; (4) the violation of California’s Constitutional Procedural Due Process Protections; (5) the violation of California’s Constitutional Substantive Due Process Protections; (6) the violation of the United States Constitution’s Eighth Amendment Excessive Fines and Unusual Punishment Protections; (7) the violation of California’s Constitution’s Excessive Fines and Unusual Punishment Protections; (8) the violation of the United States Constitution’s Fourteenth Amendment Equal Protection of the Laws Guarantee; and (9) the violation of California’s Constitution’s Equal Protection Clause. The Complaint seeks a temporary restraining order and preliminary and permanent injunctions enjoining the Attorney General from implementing or enforcing PAGA. The Complaint also requests that the court issue a judgment declaring that PAGA is unconstitutional and unenforceable.

This will be a closely watched case by employers as well as employment attorneys on both the defense and plaintiff’s side as the outcome of this case will have a lasting impact on how representative actions are being litigated and the penalties that are being awarded for PAGA causes of action through either judgments or settlements.