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California Law Update

California Law Update

We continue to monitor California court decisions, as well as 9th Circuit federal decisions and Supreme Court decisions impacting workers in California.  Here’s a sampling of what has been decided recently.

UNITED STATES SUPREME COURT UPHOLDS CLASS ACTION ARBITRATION AGREEMENTS

In Epic Systems Corporation v. Lewis (“Epic Systems”), issued in June, the Supreme Court overruled a decision in which the NLRB had invalidated what are known as “class action waivers” in employment based arbitration agreements. Under a “class action waiver,” an employee gives away her/his right to participate in all class action claims against their employer. These “class action waiver” agreements also require that the employee bring all claims against the employer individually and that those claims must be decided only through arbitration.  The Labor Board had initially held such a waiver violates the employee’s federal right to join with other employees in class or “concerted” activity and is, therefore, illegal and unenforceable.

Unfortunately, but as expected, the Epic Systems decision held that another law – the Federal Arbitration Act – overrules the National Labor Relations Act in this circumstance and made the class action wavier language fully enforceable.  This means that employees who may want to join together in a wage and hour class action suit against their employer, and who have signed an arbitration agreement with their employer, may now be forced to file individual arbitration claims instead.

Epic Systems is a loss and affront to workers and Unions.  We have absolutely no idea as to whether the sweeping language used by the Supreme Court in Epic Systems will now mean that arbitration clauses in union contracts can be used to defeat class action lawsuits.  Also, and again reflecting upon the very broad terminology used by the Supreme Court, we are unsure whether class action waivers will become a mandatory subject of bargaining that Unions can be forced to bargain over. 

At this point, it would appear that Epic Systems can only be undone by an act of Congress.  We are certainly not optimistic about that possibility.

EMPLOYEE CLASSIFICATION- LINTON

An important Court of Appeals case has recently been decided.  This case addresses the longstanding question of how to determine whether a worker is an “employee” or an “independent contractor” under California law.  

Over the past 25 years, California law has gradually enabled more and more workers to achieve the benefits of being classified as an employee in industries where employers have, often deliberately, misclassified these employees as independent contractors.  While misclassification is particularly widespread in the transportation industry, employees in all industries may be affected by misclassification.

Since 1989, California courts have held that worker’s compensation, unemployment, and state disability benefits are available to misclassified workers, and that minimum wage laws apply to them as well.

In Linton v. DeSoto Cab Company, Inc., 15 Cal.App.5th 1208 (2017), California courts once again pushed the envelope in favor of stronger wage and hour protections for California workers.  In Linton, a taxicab driver brought a wage and hour claim against his employer.  The trial court held that the driver was an independent contractor and dismissed his claims on that basis.  The Court of Appeals overturned the trial court’s decision, holding that it had applied “independent contractor” test too rigidly.  Applying the correct legal standard, the Court of Appeal found that the driver was an employee and, therefore was entitled to unpaid wages and penalties, together with interest.  The Court also held that the employer, by way of a gate fee, had been taking an unlawful kickback from wages.  Finally, the Court reaffirmed that employers bear the burden of proof in disputes over whether a worker is an independent contractor rather than an employee.  

The Linton case is a significant victory for workers on many fronts.  It makes it more difficult for employers to misclassify workers as independent contractors and eliminate their legal protections.  In addition, the Linton case may make it easier for employees to unionize and obtain other protections under the NLRA.

If you believe any of the workers you are organizing are being misclassified as independent contractors and are not receiving the State benefits to which they are entitled, we would be happy to speak with them and provide our legal opinion.    

Employee Classification – Dynamex

From 1947 until 2018 litigation involving the misclassification of workers under California Industrial Wage Commission matters required workers to prove they were employees. Since this was quite onerous for most workers in 2004 our Partner Lewis N. Levy and Mark Pope of Pope, Berger, Williams & Reynolds in San Diego believed the facts here presented an excellent test case to demonstrate how unfair this was to workers. As a result, Lewis and Mark initiated litigation on behalf of the Dynamex drivers to change the law.

After the California Supreme Court decision in Dynamex Operations West v. Superior Court (Lee), California employers now bear the burden of proof when they allege independent contractor status. As most of our readers know, employees are eligible to receive overtime, minimum wage, sick leave, Worker’s Compensation protections, and other benefits.

After Dynamex, a two-step test will be applied to determine independent contractor or employee status. Initially, the employer must prove that the woker provides the tools/equipment to perform the job and has substantial discretion to decide how to perform and complete the job duties. Next, the employer must prove that the work performed was not central or related to the employer’s core business. Only if both elements of the test are met, will the individual be classified as an independent contractor. Otherwise, the worker will be classified as an employee with all rights and protections under California law.

If you believe that you or your coworkers have been misclassified by your employer, please contact our office to discuss your rights.

MINIMUM WAGE INCREASE

As of January 1, 2018, California’s State minimum wage has once again increased.  Employers with 26 or more employees must pay at least $11.00 per hour.  Employers with 25 employees or less must pay at least $10.50 per hour.  

In Los Angeles City and County, the minimum wage will increase even more in 2018.  Currently, Los Angeles employers with 26 or more employees must pay at least $12.00 per hour.  Employers with 25 or fewer employees must pay at least $10.50 per hour.  Effective July 1, 2018, the minimum wage will increase to $13.25 and $12.00, respectively.  The minimum wage in Los Angeles will increase steadily each year until it reaches $15.00 per hour in 2020. 

CALIFORNIA COURT MAKES CLEAR THAT A WORKERS’ COMPENSATION RELEASE DOES NOT APPLY TO ANY OTHER LEGAL CLAIMS

In the recent case of Camacho v. Target Corporation (“Camacho”), the California Court of Appeals dealt with the question of whether or not a general release given by an employee to his/her employer in a workers’ compensation case also operates to waive that employee’s other legal claims against the employer.  Under California law, a workers’ compensation claim may only be settled through a document known as a “Compromise and Release” which must then be approved by a workers’ compensation judge. The Compromise and Release forms have standard language which, in essence, states that by settling a workers’ compensation case, the employee is waiving all other claims against the employer. 

For many years, this language had always been understood to apply only to workers’ compensation claims and not any other legal claim the worker may have against the employer.  In Camacho, the employee signed a compromise & release to settle a workers compensation claim.  The employee later brought a lawsuit against the employer – for a claim not related to the workers’ compensation case - and the employer defended that lawsuit by claiming the employee had released all of his claims through the settlement in the workers compensation case.

Fortunately, the court, in Camacho, disagreed. Reading the compromise and release, the court said that the document clearly applied only to workers’ compensation claims and to no other potential legal claim held by the employee against the employer.  

If you are an injured worker who has a pending workers compensation case, Camacho applies to you.  If you also have non-work-related injury claims against your employer, your counsel should be aware of this case. 



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