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Posts Tagged ‘California Supreme Court’

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].

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].

Will California Change the Statute of Limitations for Presentation of Minors’ Claims under the Government Claims Act?

Posted on: October 2nd, 2017

By: Owen T. Rooney

In J.M. v. Huntington Beach Union High School District, 2017 Lexis 2017, the California Supreme Court ruled that a minor plaintiff was required to comply with the time requirements for petitioning a court for relief under the Government Claims Act after a late claim was denied when the public entity failed to act upon the application.

On October 31, 2011 plaintiff J.M. suffered a concussion during a high school football game.  Plaintiff did not file a claim with the District within the six months as required by Government Code section 911.2(a). Almost a year after his claim accrued, he presented the District with a late claim application which was timely pursuant to section 911.4.  The District did not take any action on the claim.  Under Government Code section 911.6, if the public entity does not take any action on a late claim application, it is deemed denied on the 45th day after it was presented. Therefore, by operation of law, the late claim application was deemed denied on December 8, 2012.

On October 28, 2013 plaintiff’s counsel petitioned the Superior Court for relief to present a Tort Claim. Under Government Code section 946.6 (b) a petition for relief from the claims requirement must be filed within six months after a late claim application is denied or it is deemed denied by operation of law. The petition for relief thus should have been filed no later than June 9, 2013. The trial court denied the petition for relief. The Court of Appeal affirmed.

The Supreme Court rejected plaintiff’s argument that under section 911.6 (b)(2) the District was required to grant his late claim application and that this section superseded the “deemed to have been denied” language of section 911.6(c).   The Supreme Court  was able to reconcile these two provisions. In doing so, the Supreme Court did not suggest that a public entity should routinely ignore late claim applications and instead rely on the “deemed denied” language as a default position.  A public entity may fail to refuse to act for a number of reasons including there may be uncertainty as to when the claim accrued or the applicant’s status as a minor, the public entity may not have been able to complete its investigation or the public entity may have simply failed to act on the claim due to inadvertence.

The six-month limitations period in section 946.6 is mandatory.  The Supreme Court held it was plaintiff’s responsibility to petition the court for relief when the District failed to respond to his claim notwithstanding that they were required to grant it.

This decision provides clarity to the statutory construction of Government Code section 946.6. In short, despite the requirement that the minor’s late claim application be granted, a denial due to the public entity’s  inaction nonetheless starts the forty-five day clock.

Three of the Justices suggested that the Legislature address the “anomaly” created by the fact that a public entity does not have an obligation to provide the claimant with written notice that the application has been denied or that the six months to petition the Superior Court has started to run when the public entity  denied an application.

It will be interesting to see if the Legislature, in fact, addresses this issue.

If you have any questions or would like more information, please contact Owen T. Rooney at [email protected].