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Archive for the ‘Employment Law Blog – CA’ Category

Dear California Legislature the Constitution Prohibits Ex Post Facto Laws

Posted on: June 10th, 2019

By: David Molinari

If you have practiced law in the State of California for an appreciable period of time you become numb to warnings from out-of-state clients and counsel bemoaning enactments by the state’s legislature that will doom business and cause exodus of industries from the state. We are a resilient people, capable of prospering despite the “well-intentioned” actions of the state’s governing bodies.  However, did the State Assembly really intend to draft a bill that violates California Constitution Article 1, Section 9 prohibiting ex post facto laws with California Assembly Bill 5, adding Labor Code 2750.3?

Assembly Bill 5 seeks to codify the recent California Supreme Court decision of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018.). In the Dynamex case, the State Supreme Court virtually eliminated the status of independent contractor. The California Supreme Court adopted an “ABC” test for determining whether workers are employees under California Wage Order laws. The test requires the hiring entity establish three elements to disprove employment status: (A) That the worker is free from control of the hiring entity in connection with work performance-both under the contract and in fact; (B) That the worker performs work outside the hiring entity’s usual business; and (C) That the worker is customarily engaged in an independent business of the same nature as the work performed.

Under Assembly Bill 5, the legislature seized on the ability to expand the categories of individuals eligible to receive benefits by creating a legislative instrument that would result in additional monies being deposited into the state via continuously appropriated funding from an expanded pool of employers. The Bill seeks to codify the Dynamex decision. But the legislature simply adopted the Supreme Court’s opinion which includes retroactive application. The legislative findings clearly show a financial purpose behind codifying Dynamex: The loss to the state of revenues from companies that use “misclassified” workers to avoid payment of payroll taxes, premiums for workers’ compensation, Social Security, unemployment and disability insurances. The Assembly clearly did not overlook or ignore retroactive application of Dynamex may subject this new pool of employers to criminal penalties they currently are not exposed to suffering. The Assembly in its findings concluded: Assembly Bill 5 “Would expand the definition of a crime.”

The Supreme Court held applying Dynamex retroactively was consistent with due process because the Court was “merely extending” principles previously stated in S.G. Borello & Sons, Inc v. Department of Industrial Relations, 48 Cal.3rd 341 (1989) and represented “no greater surprise than tort decisions that routinely apply retroactively.” The holding has been cited for authority for retroactive application by the 9th Circuit in Vasquez v. Jan-Pro Franchising as well as the State Courts of Appeal including the 4th District, Division 1 in Garcia v. Border Transportation Group, LLC, 28 Cal. App. 5th 558.

Codification of Dynamex threatens to create an ex post facto law that expands exposure to criminal penalties. Thus, it would seem to be in violation of California Constitution, Article 1, Section 9 that the legislature shall not pass ex post facto laws.  For example, the new pool of employers will be immediately subject to prosecution under California Labor Code Section 3700.5. Labor Code Section 3700.5 makes it a crime, punishable by imprisonment in the county jail for up to one year, or by a fine of not less than $10,000.00 or both, for any entity that fails to secure workers’ compensation insurance. A second or subsequent conviction is punishable by imprisonment for up to a year and a fine of not less than $50,000.00.

Article 1, Section 9 has been applied to past employment-related legislation; but only with respect to the Article’s prohibition against laws impairing the obligation of contract. The language of Article 1, Section 9 appears unambiguous and absolute. However, prior challenges have run into judicial interpretation that the Article may not be read literally and the prohibitions of Article 1, Section 9 may not be absolute; at least with respect to the impairment of contracts. The clause “is not to be read with literal exactness like a mathematical formula.” Torrance v. Workers’ Compensation Appeals Board, 32 Cal.3rd 371 (1982).

The guidelines for determining the constitutionality of a statute imposing an ex post facto criminal penalty applies a presumption against retrospective application unless the legislature expresses such specific intent. The legislature’s findings expressly stated Assembly Bill 5 “would expand the definition of a crime.” Is that enough of a legislative expression of intent even though the State Supreme Court only referenced civil “tort decisions” to justify retroactive application? Maybe we shouldn’t be numb to those warnings any longer.

For more information, please contact David Molinari at [email protected].

Are You Prepared To Grant Intermittent Family Medical Leave?

Posted on: May 14th, 2019

By: David Daniels

One of the biggest employer complaints about the Family and Medical Leave Act (FMLA) is the productivity problems caused by employees’ use—and abuse—of FMLA intermittent leave.

The problem: Employees with chronic health problems often take FMLA leave in short increments of an hour or less.

The Department of Labor (DOL) took a big step to help minimize workplace disruptions due to unscheduled FMLA absences in its revised regulations, which took effect in 2009. The DOL says that, in most cases now, employees who take FMLA intermittent leave must follow their employers’ call-in procedures for reporting an absence, unless there are unusual circumstances.

Tracking Intermittent FMLA Leave

Even though managing FMLA intermittent leave can be vexing, the law does give employers some tools to combat leave abuse.

As with leave taken in one block, employees requesting FMLA intermittent leave must provide his or her employer with notice. Employees must give at least 30 days’ notice when their need for FMLA leave is foreseeable. When it’s not, they must notify you “as soon as practicable.”

A. Certify and schedule the leave.

Don’t accept FMLA requests at face value. The law gives employers the right to demand certification from the employee’s doctor of his or her need for leave. An employer can request new medical certification from the employee at the start of each FMLA year. The law also entitles an employer to ask for a second or third opinion, if necessary, before granting leave.

When employees have chronic conditions and their certifications call for FMLA intermittent leave, an employer should attempt to work out leave schedules as far in advance as possible. It’s legal to try to schedule FMLA-related absences, but an employer can’t deny them.

It’s important to immediately nail down the expected frequency and duration of FMLA intermittent leave. An employer can insist on a medical provider’s estimate of how often the employee will need time off. An employer also can wait until the provider gives an estimate to approve intermittent leave.

B. Intermittent Leave Tips.

  • Ask about the specific condition. Medical certification must relate only to the serious health condition that is causing the leave. An employer can’t ask about the employee’s general health or other conditions.
  • Allow 15 days to respond. After an employer requests certification, the employer should give employees at least 15 calendar days to submit the paperwork. If the employee’s medical certification is incomplete or insufficient, specify in writing what information is lacking and allow the employee seven days to cure the deficiency.
  • If an employer doubts the need for leave, it should investigate the certification. Under the updated FMLA regulations, the employer can contact the employee’s physician directly to clarify the medical certification. The employer’s contact person can be a health care provider, a human resources professional, a leave administrator (including third-party administrators) or a management official, but not the employee’s direct supervisor.
  • If an employer is still not convinced, it can require (and pay for) a second opinion. The employer should use an independent doctor who it selects, not a doctor who works for the employer. If the two opinions conflict, an employer can pay for a third and final, binding medical opinion.

Employees who take FMLA intermittent leave can wreak havoc with work schedules. Because their conditions can flare up at any time, their absences are by nature unpredictable. But there are ways you can legally curtail intermittent leave.

C. Use the Calendar-year Method.

Employees who take FMLA intermittent leave can wreak havoc with work schedules. Because their conditions can flare up at any time, their absences are by nature unpredictable. But there are ways you can legally curtail intermittent leave.

One way is to use the calendar-year method to set FMLA leave eligibility.

Here’s how it works. Sometime during the calendar year, an employee submits medical documentation showing she will need intermittent leave for a chronic condition. If she is eligible for leave at that time, she can take up to 12 weeks of intermittent leave until the end of the calendar year.

Then the process starts again.

If, on Jan. 1, she hasn’t worked 1,250 hours in the preceding 12 months, she’s no longer eligible—and won’t be eligible again until she hits 1,250 hours.

Final tip:  Employees who are approved for FMLA intermittent leave can take that time off as needed. But that doesn’t mean an employer isn’t entitled to some supporting documentation for each absence. An employer can ask for proof that the absence was for the chronic condition—but a simple doctor’s note to that effect should suffice. No new formal certification is required.

Wait until the end of your FMLA leave year to get the new intermittent-leave certification.

This is only a short primer on FMLA leave laws which can be a trap for the unwary employer. David Daniels the managing partner of the FMG Sacramento office. Please feel free to contact him at (916) 765-2570 ([email protected]) should you wish to further discuss the FMLA or any other areas of employment law at your convenience.

Employers May Need to Submit EEO-1 Pay Data As Early As May 31, 2019, Although the EEOC is Advocating for a Later Deadline of September 30, 2019

Posted on: April 15th, 2019

By: Paige Pembrook

Last month, the U.S. District Court for the District of Columbia reinstated the Equal Employment Opportunity Commission (EEOC) rule requiring employers to report pay information by race, ethnicity and sex with their EEO-1 Report. However, employers still wait for an answer on when they will have to actually file the pay data. If employee advocacy groups have their way, it could be as soon as May 31, 2019. However, the EEOC is pushing for later deadline of September 30, 2019.

The EEO-1 Report is mandatory for businesses with at least 100 employees and federal contractors with at least 50 employees and a federal government contract of $50,000. Such employers must report the number of employees who work for the business by job category, race, sex, and ethnicity on the EEO-1 Report.

In 2016, the EEOC adopted additional EEO-1 pay data collection requirements commanding employers to report employee wages and hours worked by race, ethnicity and sex. In 2017, the Office of Management and Budget (OMB) stayed the pay data requirements. Employee advocacy groups sued to challenge the stay on the basis that the OMB provided inadequate reasoning to support its decision.

On March 4, 2019, the U.S. District Court Judge agreed with the employee advocates and ordered, “the previous approval of the revised EEO-1 form shall be in effect,” including the pay data collection requirements. (National Women’s Law Center v. Office of Management and Budget, No. 17-cv-2458). The Judge also ordered the EEOC to describe when and how it will comply with the order lifting the stay on the EEO-1 pay data collection.

Employers must be aware that the ruling could take immediate effect and require employers to submit pay data as early as May 31, 2019, along with the other 2018 EEO-1 information. However, the EEOC is pushing for a later deadline of September 30, 2019, to allow employers more time to collect the required data.

On April 3, 2019, the EEOC filed court documents proposing that employers be required to submit pay data to the agency by September 30, 2019. The EEOC’s filing also proposed that employers only be required to submit pay data for 2018, rather than 2017 and 2018, and describes the EEOC’s plan to use a data and analytics contractor to develop a new reporting program to collect the data.

On April 8, 2019, the employee advocacy groups told the judge that they want the EEOC to collect employers’ pay data by the same May 31, 2019, deadline that employers must submit other EEO-1 information or show why that is impossible.

After a hearing on April 16, 2019, the Judge will have the final say on the deadline. FMG will continue to watch the EEO-1 Report developments and provide updates to keep employers informed. In the meanwhile, employers should prepare to collect and report the required pay data as soon as possible.

If you have any questions or would like more information, please contact Paige Pembrook at [email protected].

Jeff Bezos Just Challenged Amazon’s Retail Rivals To Match Its $15 Minimum Wage – Is Bezos’ Challenge Checkmate or Checkout For the Push To Increase Minimum Wage?

Posted on: April 15th, 2019

By: Brad Adler and Matthew Jones

Five months ago, in November, 2018, Amazon raised its minimum wage to $15/hour. Now, Amazon’s leader is challenging his competitors in the retail sector to do the same.  In a letter to shareholders that was submitted to the SEC on April 11, 2019, Jeff Bezos stated “Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage… Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.”

Bezos’ aggressive challenge comes in the midst of an undercurrent of momentum for an increase in both federal and state minimum wage laws. That momentum seems to be leading to some changes at the state level. For instance, on January 1, 2019, California’s minimum wage was increased to $12/hour for companies with 26 or more employees. Likewise, Maine increased its minimum wage from $10,00 to $11.00 in 2019 and Massachusetts raised its minimum wage rate from $11.00 to $12.00.

So what effect, if any, will Bezos’ challenge and the state movements have on the federal minimum wage? Currently, the federal minimum wage is $7.25/hour, which is significantly lower than the minimum wage rate in many states (including Arizona, Arkansas, Colorado, Connecticut, Florida, Illinois, Maryland, New York and New Jersey). Just recently, the House Education and Labor Committee passed the “Raise the Wage Act,” which proposes to increase the federal minimum wage to $15/hour over the next six years. Most commentators believe that the likelihood that this bill will become law is very low, but it nevertheless is a reminder to all of the stakeholders, including employers, that the issue of minimum wage isn’t going away anytime soon.

Of course, not everyone takes kindly to the billionaire’s $15/hour challenge. In response to the challenge, Walmart’s executive vice president of corporate affairs Dan Bartless tweeted out: “Hey retail competitors out there (you know who you are) how about paying your taxes?”

If you have any questions or would like more information, please contact Brad Adler at [email protected] or Matthew Jones at [email protected].

Navigating the Employee v. Independent Contractor Landscape in a Post-Dynamex World

Posted on: March 25th, 2019

By: Ariel Brotman

In a post-Dynamex world, hiring entities are finding it increasingly difficult to determine whether or not to classify a worker as an independent contractor or an employee.

On April 30, 2018, the California Supreme Court issued its decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. The Court established an ABC test requiring all parts to be met in order to classify a worker as an independent contractor. A hiring entity must prove: “(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact and (B) that the worker performs work that is outside the usual course of the hiring entity’s business and (C) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.” (Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903, 957.) 

The applicability of this seemingly strict ABC test was clarified in Garcia v. Border Tranportation LLC (2018) 28 Cal.App.5th 558. On October 22, 2018, the Court of Appeal released its opinion on Garcia v. Border Transportation Group, LLC. In Border Transportation, Plaintiff Garcia, a taxi driver, filed a complaint against Border Transportation Group, LLC for wrongful termination, overtime, waiting time penalties, unfair competition and various wage order claims based on his alleged misclassification as an independent contractor. Border Transportation filed a motion for summary judgment arguing that under the Borello test, which largely focuses on control, Garcia was properly classified as an independent contractor. The trial court agreed with Border Transportation. Garcia appealed the ruling granting the motion for summary judgment, and while the appeal was pending, the California Supreme Court released its opinion on Dynamex Operations West, Inc. v. Superior Court.

The Court of Appeal ultimately decided that in determining a worker’s status as an independent contractor, Dynamex only applies to wage order claims. As to all non-wage order claims, Borello remains the proper standard.  (Garcia v. Border Transportation LLC (2018) 28 Cal.App.5th 558, 570-71). Therefore, summary adjudication should not have been granted as to Garcia’s wage order claims but was proper as to his non-wage order claims.

Overall, although the Supreme Court has not ruled at this time, the Court of Appeal in Garcia v. Border Transportation LLC has provided an important exception to the strict Dynamex ABC test as it pertains to non-wage order claims. We will be paying close attention to further developments in the interpretation of this important exception.

If you have any questions or would like more information, please contact Ariel Brotman at [email protected].