Labor & Employment Law Blog

On May 29, Assembly Bill (AB) 5 passed the California State Assembly, moving Californians one step closer to full implementation of a new test for independent contractor classification. AB5, which was introduced by Assemblywoman Lorena Gonzalez of San Diego, seeks to codify the California Supreme Court’s April 2018 Dynamex decision, which established the “ABC test” to determine classification of workers as employees or independent contractors.

Since its introduction in December 2018, AB5 has undergone several revisions.  Most significantly, the bill would confirm that the ABC test will be used in making worker classification decisions under California’s Wage Orders, Labor Code, and Unemployment Insurance Code.  Also important is a set of carve-outs that appeared in the most recent iteration of the bill: the ABC test would not apply to doctors, dentists, lawyers, architects, accountants, engineers, insurance agents, investment advisers, direct sellers, real estate agents, hairstylists and barbers renting booths at salons, some marketers, and human resources professionals. 

The California Chamber of Commerce and the “I’m Independent” Coalition are seeking to make additional exemptions to AB5, including carve-outs for short-term projects, business-to-business contracts, and others.

AB5 will now move to the Senate, where it will be heard in Senate Labor Committee in late June 2019.

Guidance for Employers

Though AB5 has not yet been passed into law, California businesses using independent contractors should consult with employment counsel concerning classification of contractors under the Dynamex ABC test.  The authors of this article welcome any questions on the legislation or the ABC test, and are following developments in the law closely. 

For more information and updates about Dynamex and its implications, employers can read our prior Alert on Dynamex here and register for the Firm’s complimentary webinar on this topic here.

In Melendez v. San Francisco Baseball Associates LLC (2019) S245607, the California Supreme Court recently held that a security guard’s state law claim for unpaid wages and “waiting time” penalties could proceed over his employer’s objections that they had to be resolved under his union’s agreement.  Because the employee’s claim was founded on a right existing in state law, and not the agreement, he was permitted to proceed with his claim in court even though the agreement was relevant to the claim and would have to be “consulted” and determining it.

George Melendez worked as a security guard at AT&T Park in San Francisco, and filed a lawsuit when he was not paid his final wages immediately after the end of each San Francisco Giant’s home stand, concert, or other event at the stadium that he worked at.  He primarily claimed that the Giants’ failure to pay him wages due at the time of termination entitled him to “waiting time” penalties of up to 30 days’ additional pay after the completion of each assignment.  He principally relied on a 2006 Supreme Court Case, Smith v. Superior Court (2006) 39 Cal.4th 77, which held that a hair dresser who was hired to work for only a single day was required to be paid at the end of that job. 

The Giants argued that there were numerous provisions in its collective bargaining agreement with the Service Employees International Union, Melendez’s collective bargaining representative, which showed that security guards were employed on a continuous year-round basis and were not terminated after single job assignments. These included provisions that classified employees based on the number of hours worked per year, provided for probationary period of 500 hours of work, and required drug screening for new hires. Because of these provisions, the Giants argued that Melendez’s claim was preempted by Section 301 of the Labor Management Relations Act,  because it required “interpretation and application” of the union agreement.

Relying on past cases, including the Ninth Circuit Court of Appeal’s 2000 decision in Balcorta v. Twentieth Century-Fox Film Corp. (9th Cir. 2000) 208 F.3d 1102, the Supreme Court rejected the Giants’ federal preemption defense.  The Court stated that not every claim that requires resort to the language in a labor-management agreement is necessarily preempted, and that this is particularly the case when the meaning of the contract is not in dispute.  The case at hand did not involve a dispute over the terms of the agreement that required a court to interpret them, and preemption could not be found based only on the fact that interpretation of the contract terms was required to determine the validity of the employer’s defense. Instead, because the legal character of the claim relied on a state law right that was not substantially dependent on the contract’s terms, the employee was permitted to proceed in court with his unpaid wages and waiting time penalty claim.

The Melendez case confirms the important principle that unless a claim under a statutory law is expressly made the subject of an agreement to arbitrate under a union agreement, or is clearly and unmistakably provided for in the arbitration clause of the agreement, such a claim may proceed even though the employer’s factual and legal defenses to the claim are based on the provisions of the agreement.

Clients with questions regarding this case or arbitration and grievance procedures in collective bargaining agreements may contact the author or their usual labor law counsel at Atkinson, Andelson, Loya, Ruud & Romo.

On January 1, 2018, the California Legislature enacted the New Parent Leave Act (“NPLA”). The NPLA expanded baby-bonding benefits to employees of smaller employers (20-49 employees), a benefit that had been previously available only to employees of larger employers (50 or more employees) under the California Family Rights Act (“CFRA”).

New Posting Requirement

Along with this expansion comes a new poster that discusses the NPLA, CFRA, and Pregnancy Disability Leave:

www.dfeh.ca.gov/wp-content/uploads/sites/32/2017/06/CFRA_PregnancyLeave_English.pdf 

All employers with 20 or more employees must display the poster.  The Department of Fair Employment and Housing (“DFEH”) requires that the posters be placed where they can be easily seen by employees and applicants for employment.

In addition, if 10% or more of the employer’s workforce at any given location speaks a language other than English, the employer is required to post the notice in such other languages.  The DFEH published several translated versions of the poster at its website:

www.dfeh.ca.gov/resources/posters-and-brochures-and-fact-sheets/poster-and-brochure-tab-list/?target=posters

An employer must also incorporate a description of the NPLA in the next version of its employee handbook.

As an alternative to displaying multiple government-issued posters, some employers prefer to purchase and display an “all-in-one” poster from various sources.  Employers should review the posters to ensure they are up to date.

Medical Certification Form

The DFEH also recently updated the form that addresses the certification of a health care provider for leaves under the CFRA and the Family and Medical Leave Act (“FMLA”):

www.dfeh.ca.gov/wp-content/uploads/sites/32/2017/12/CFRA-Certification-Health-Care-Provider_ENG.pdf

Please contact the authors or your usual employment law counsel at AALRR if you have any questions regarding the DFEH, NPLA, CFRA, or other posting requirements.

In two decisions issued within the last month, the California appellate courts broadened the circumstances under which agreements to arbitrate civil claims can be enforced. One court held that an employee effectively entered into an agreement by continuing to work for the company around the same time a claim was filed, while another held that an arbitration agreement applied to a claim even after a lawsuit was filed. The two cases clarified the availability of arbitration agreements to insulate employers from the prospect of jury trials in both such situations.

On April 10, 2019, the U.S. Equal Employment Opportunity Commission (EEOC) released a detailed breakdown of workplace discrimination charges the agency received in fiscal year 2018, which ended on September 30, 2018.  The enforcement and litigation statistics are available on the EEOC website.

Representative claims brought under the California Private Attorney General Act of 2004 (“PAGA”), Labor Code § 2699 et seq., will remain before the court for the foreseeable future. In a recent case, Correia v. NB Baker Electric, Inc., the California Court of Appeal again confirmed that employers cannot compel employees to arbitrate their PAGA claims, no matter the existence of an arbitration agreement, without some evidence that the State of California consented to the employee’s waiver of the right to bring the PAGA claim in court.

On Thursday March 7, 2019, the U.S. Department of Labor (“DOL”) published its new overtime pay regulation, which raises the minimum salary threshold to $35,308 per year for an employee to qualify for the Fair Labor Standards Act’s (“FLSA”) “executive, administrative, or professional” exemption from federal overtime and minimum wage laws (commonly referred to as the “white collar exemption”).  The FLSA exempts from both minimum wage and overtime requirements “any employee employed in a bona fide executive, administrative, or professional capacity.”  29 U.S.C. § 213(a)(1).  When enacting the FLSA, Congress did not define the terms “bona fide executive, administrative, or professional capacity” and instead delegated the power to define and delimit these terms to the Secretary of Labor through regulations, which the Secretary of Labor delegated to the DOL.

As the #MeToo Movement placed a glaring spotlight on sexual harassment in the workplace, outgoing California Governor Jerry Brown signed several bills aimed at curbing sexual harassment last year, including SB 1343.

In a case of first impression, the California Supreme Court recently decided that an employee cannot sue a payroll company for failing to include the legally required information on the employee’s earnings statements.  The Court held that because a payroll company’s obligations are solely to the employer, an employee cannot claim that they are a third‑party beneficiary of the employer’s contract for payroll services, and cannot maintain a claim for breach of that contract against the payroll provider. (Goonewardene v. ADP, No. S238941, February 7, 2019)