The California Assembly has passed a bill that would require workers to be classified as employees if the employer exerts control over how the workers perform their tasks or if their work is part of the employer’s regular business.

Assembly Bill 5 (AB 5) passed by a vote of 61-16 in the Assembly. Governor Gavin Newsom has stated his support of the bill and is expected to sign it into law. Then the new law will go into effect on January 1, 2020.

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The California worker classification bill, Assembly Bill 5 (AB 5), advanced closer to passage just prior to the Labor Day weekend.

Please recall, AB 5, which is Assembly member Lorena Gonzalez’s proposed legislation regarding worker classification (discussed below and in a prior article by Jackson Lewis here), was referred to the Senate Appropriations Committee suspense file on August 12, 2019.  On Friday, August 30, the Appropriations Committee passed AB 5 and returned the bill to the Senate floor in a 5-2 vote. The Legislature has only until September 13, 2019 to pass the bill before the 2019 legislative session concludes.

If passed, AB 5 would codify the California Supreme Court’s Dynamex decision, wherein the court elected to abandon the longstanding multi-factor Borello test and adopt the “ABC Test” in determining whether an individual is an employee or independent contractor under the Wage Orders.

The ABC test elements are as follows:

(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) That 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.

Jackson Lewis will keep you apprised of developments on this front. Please do not hesitate to contact us should you have any questions.

On August 30, 2019, Governor Gavin Newsom signed Senate Bill (SB) 778, which amends Section 12950.1 of the California Government Code. SB 778 extends California employers’ obligation from January 1, 2020 to January 1, 2021, to comply with sexual harassment trainings as outlined under California Government Code section 12950.1.

Please recall, per Govt. Code section 12950.1, an employer with 5 or more employees must provide at least 2 hours of interactive training regarding sexual harassment to all supervisory employees and at least 1 hour of interactive training regarding sexual harassment to all nonsupervisory employees within 6 months of their assumption of a position. The deadline initially imposed was January 1, 2020. Please find a Jackson Lewis article discussing these obligations here.

SB 778 amends Govt. Code section 12950.1 to instead require that an employer with 5 or more employees provide the sexual harassment training by January 1, 2021, and once every 2 years thereafter. This bill further clarifies that an employer who has provided sexual harassment training in 2019, is compliant with the training requirements and is not required to provide it again until 2 years thereafter. Accordingly, as the training deadline extends to January 1, 2021, employers who trained in 2018 will now have the opportunity to train again in 2020, instead of 2019. This extension addresses employers’ confusion with the compliance training deadlines.

SB 778 took effect immediately on the Governor’s signing as an urgency statute.

By way of background, in Palacio v. Jan & Gail’s Care Homes, Inc. (2015) 242 Cal.App.4th 1133, the Fifth District Court of Appeal considered the interplay between subdivisions 11(A) and 11(E) of Wage Order No. 5.

Subdivision 11(A) allows employers and employees to agree that meal periods will be on duty and to revoke these voluntary agreements at any time and states:

No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day’s work the meal period may be waived by mutual consent of the employer and employee. Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an “on duty” meal period and counted as time worked. An “on duty” meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time.

Subdivision 11(E), in contrast to subdivision 11(A), enables employers to require employees to work on-duty meal periods, provided certain conditions are met and states:

Employees with direct responsibility for children who are under 18 years of age or who are not emancipated from the foster care system and who, in either case, are receiving 24-hour residential care, and employees of 24-hour residential care facilities for the elderly, blind or developmentally disabled individuals may be required to work on-duty meal periods without penalty when necessary to meet regulatory or approved program standards and one of the following two conditions is met:

(1)(a) The residential care employees eats with residents during residents’ meals and the employer provides the same meal at no charge to the employee; or

(b) The employee is in sole charge of the resident(s) and, on the day shift, the employer provides a meal at no charge to the employee.

(2) An employee, except for the night shift, may exercise the right to have an off-duty meal period upon 30 days’ notice to the employer for each instance where an off-duty meal is desired, provided that, there shall be no more than one off-duty meal period every two weeks.

The Palacio employer required its employees to work on-duty meal periods under subdivision 11(E) and to sign agreements waiving their right to off-duty meal periods. Palacio held that the employer “was not obligated to comply with subdivision 11(A) by including a provision in the agreements giving the employees the right to revoke them. A similar opinion letter by the Division of Labor Standards Enforcement (“DLSE”) stated similarly that the right-to-revoke language is not required because, “if a care home meets the requirements of [subdivision] 11(E), it does not also need to comply with [subdivision] 11(A).”

In L’Chaim House, Inc. et al. v. Division of Labor Standards Enforcement (2019) 38 Cal. App. 5th 141, the DLSE cited L’Chaim for wage and hour violations due to allegations that L’Chaim was requiring employees to work “on-duty” meal periods that were not at least 30 minutes long. Relying on the language of subdivisions 11(A) and 11(E) of Wage Order No. 5 and considering the holding in Palacio, L’Chaim argued that it was not required to do so since it fell under the exception in subdivision 11 (E). However, the California Court of Appeal held that L’Chaim was fundamentally misreading subdivision 11 of Wage Order No. 5. The Court held that “an employee subject to subdivision 11(E) of Wage Order No. 5 is still entitled to a 30-minute meal period even though that meal period may be on duty instead of off duty.” The Court explained an on-duty meal period as follows: “[A]n on-duty meal period is not the functional equivalent of no meal period at all. On-duty meal periods are an intermediate category requiring more of employees than off-duty meal periods but less of employees than their normal work.”

The Court found that, even if employees were not entitled to an uninterrupted meal period, they must at least be afforded 30 minutes of “limited duty enabling them to eat their meal in relative peace.”

Thus, where Wage Order No. 5 is at issue and no waiver is in place, subdivision 11(E) allows for on-duty meal periods, but requires such on-duty meal periods be at least 30 minutes in length.

The California Supreme Court recently held that the tort claim of conversion is not an appropriate vehicle for plaintiffs seeking recovery of unpaid wages. In Voris v. Lampert (Cal. 2019) Case No. S241812, the plaintiff brought suit against three start-up ventures and two individual defendants to recover wages which had been promised to the plaintiff but never paid. The operative complaint raised twenty-four causes of action including: breach of oral contract, quantum meruit, fraud, failure to pay wages in violation of the Labor Code, conversion, breach of the implied covenant of good faith, and breach of fiduciary duty. Although the plaintiff prevailed, his efforts to collect on his judgment were ostensibly frustrated due to the lack of funds and assets of the corporate defendants.

The plaintiff then focused upon the one remaining individual defendant in an attempt to hold him personally liable for the unpaid wages. While several of the plaintiff’s claims against the individual defendant were dismissed on demurrer and pursuant to a motion for summary judgment, the plaintiff focused on a potential claim against the individual defendant for wage conversion, which would have allowed him to both hold the individual defendant personally liable and recover punitive damages. In a series of two appeals to the California Court of Appeals, the appellate court, in a split decision, did not permit the plaintiff’s wage conversion claim against the individual defendant to proceed. The California Supreme Court granted review to address this disagreement and affirmed.

The California Supreme Court reasoned that “the conversion claim [plaintiff] asks us to recognize neither fits well with the traditional understanding of the tort, nor is well suited to address the particular problem he alleges.” Id. at 31. The Court further recognized the problem that allowing the plaintiff’s claim to proceed would cause: “A conversion claim for unpaid wages would reach well beyond those individual corporate officers who withhold wages to punish disfavored employees or who deliberately run down corporate coffers to evade wage judgments. As the Court of Appeal in this case observed, to recognize such a claim would authorize plaintiffs to append conversion claims to every garden-variety suit involving wage nonpayment or underpayment. The effect would be to transform a category of contract claims into torts, and to pile additional measures of tort damages on top of statutory recovery, even in cases of good-faith mistake. In light of the extensive remedies that already exist to combat wage nonpayment in California, we decline to take that step.” Id.

The California Supreme Court’s well-reasoned approach and refusal to permit the conversion claim for unpaid wages to go forward is a win for employers. This decision eliminates an additional avenue of relief for plaintiffs, provides additional protection to both corporate officers and other entities, and prevents plaintiffs from seeking punitive damages when asserting conversion claims.

It is back to school time for school children, which means that parents are more likely to request time off to attend to child care or other school activities. And in California—parents have leave entitlements which employers should be mindful of.

California Labor Code section 230.8 provides such time off for certain employees to participate in these activities. Employers who employ 25 or more individuals in one location are required to provide this leave to their employees.

Under the California Labor Code, a “parent” can be a parent, guardian, stepparent, foster parent, grandparent or person who stands in loco parentis to the child. Parents are entitled to job-protected leave for up to 40 hours each year for the following reasons:

  • To find, enroll, or re-enroll their child in a school or with a licensed child care provider, or participate in activities of the school or licensed child care provider of their child.
  • To address a child care provider or school emergency.

Enrollment and Activities

For absences due to enrollment, reenrollment and activities of a school or licensed child care provider, a parent must provide reasonable notice to their employer. Employers are permitted to limit the time an employee can take for enrollment, reenrollment, and activities to eight (8) hours in any calendar month.

Child Care or School Emergencies

A child care provider or school emergency means that a child is unable to remain in school or with their child care provider because:

  • The school or child care provider has requested the child be picked up, or has an attendance policy that prohibits the child from attending or requires the child to be picked up;
  • Behavior or discipline problems;
  • Closure or unexpected unavailability of the school or child care provider, excluding planned holidays; or
  • A natural disaster.

Employees must still provide notice to their employers if their absence is due to a child care or school emergency, as soon as possible.

Documentation and Time Off for a School Related Absence

Employers may request that an employee provide documentation from the child’s school or child care provider to show the date and time that the employee was engaged in qualified school or child care activities. Written verification provided by the school or child care provider will be deemed sufficient under the Labor Code.

There is no requirement to provide specific paid time off for leave of this type. However, if absent for school activities related leave, employees shall use vacation or paid time off provided by their employer, if applicable.

Finally, if a child is suspended, a parent must be permitted to take leave to appear at their child’s school upon request from a teacher. All employers, regardless of size, must provide school appearance leave to their employees.

As Bay Area employers are well aware, San Francisco has several local employment-related ordinances that provide additional benefits to individuals performing work within the geographical boundaries of the City. One such benefit is paid parental leave.

Currently, employers who have 20 or more employees (located anywhere) are required to provide eligible San Francisco employees with up to 6 weeks of supplemental compensation when an employee takes time off to bond with a new child and the employee receives Paid Family Leave benefits from the State of California. Effective July 1, 2020, this requirement will increase to 8 weeks of supplemental compensation when the State of California Paid Family Leave (PFL) program expands from 6 weeks of benefits to 8 weeks of benefits.   You can read more about the changes coming to the PFL program here.

Employers should review their parental leave policies to ensure that they provide for sufficient supplemental compensation to comply with the requirements of the San Francisco Paid Parental Leave Ordinance. For any questions regarding this issue, and other employer issues, please contact Jackson Lewis P.C.’s San Francisco office or the JL attorney you normally work with.

The California Consumer Privacy Act (CCPA), considered the most expansive U.S. privacy laws to date, is set to take effect January 1, 2020. In short, the CCPA places limitations on the collection and sale of a consumer’s personal information and provides consumers certain rights with respect to their personal information. Wondering whether they will have to comply, many organizations are asking if the law will apply to them, hoping that being too small, being located outside of California, or “only having employee information,” among other things, might cause them not to have to gear up for CCPA.

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Under current California law, an employer with an establishment in California must report a serious work-related injury, illness or death that occurs at the employer’s place of employment or in connection with their employment to the Division of Occupational Safety and Health by telephone or email within 8 hours after the employer knows or with diligent inquiry would have known of the death or serious injury or illness.

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In Brinker Rest. Corp. v. Superior Court (53 Cal. 4th 1004), the California Supreme Court explained that an employer must relieve the employee of all duty for the designated meal period, but need not ensure that the employee does not work. In other words, no policing of meal breaks by the employer is required; and employees can break themselves. Now, the Ninth Circuit is asking the California Supreme Court if employers must go further in spelling out formal policies on meal and rest breaks to comply with California law.

In Cole v. CRST Van Expedited, Inc. fka CRST, Inc. (9th Cir. 2019) Case No. 0:17-cv-55606, a truck driver filed a putative class action lawsuit against his employer alleging drivers were not provided with requisite meal and rest breaks or compensation in lieu thereof. The employer presented testimony that the drivers were expected to run their own trips and take breaks when needed and that California meal and rest break policies were posted on bulletin boards at the employer’s terminal. Relying on Brinker, the court granted summary judgment in favor of the employer. The district court also granted the employer’s motion to decertify the meal and rest break classes. On appeal, the employee claimed the district court erred because California law requires that employers affirmatively provide breaks by adopting a policy authorizing them. The plaintiff’s employer had no policy, nor did it record meal breaks on its payroll statements or pay for rest breaks.

By order filed August 1, 2019, the Ninth Circuit requested that the California Supreme Court resolve two certified questions: (1) Does the absence of a formal policy regarding meal and rest breaks violate California law? and (2) Does an employer’s failure to keep records of meal and rest breaks taken by its employees create a rebuttable presumption that the meal and rest breaks were not provided? The Ninth Circuit observed that the answers to these questions are dispositive of this case, and are not answered by clear California precedent.

Whether and how the California Supreme Court answers these questions likely will impact an employer’s willingness to formally codify meal and rest breaks into their own written policies, may cause employers to exert more control over employees’ meal and rest breaks, and may even begin eating away at the Brinker decision.