California Minimum Wage Hike: Is it Set in Stone?

April 7, 2016 by

California Minimum WageCalifornia minimum wage changes. By the year 2022, some California employers will be required to pay their workers a minimum wage of $15 per hour. Governor Jerry Brown announced on March 28, 2016 that he had reached a deal with the state legislature that will gradually increase the state’s minimum wage.

California Minimum Wage – The Specifics

Pursuant to the deal, California’s minimum wage will rise from its current rate of $10 per hour to $10.50 per hour on January 1, 2017, but only for companies with 26 or more employees. It will then climb to $11 per hour for the year of 2018, then to $12 per hour for 2019, then to $13 per hour for 2020, $14 per hour for 2021, and $15 per hour for 2022.

The minimum wage will remain at $10 per hour for companies with 25 or fewer employees until January 1, 2018. The minimum wage for those companies will climb to $11 per hour for the year of 2019, then to $12 per hour for 2020, $13 per hour for 2021, $14 per hour for 2022, and $15 per hour for 2023.

Is This California Minimum Wage Schedule Certain?

The increases are not guaranteed to take place at these times. As part of the deal, there will be two ways that the increases can be delayed.

The first way is related to the economy. At any point, the governor can “pause” an increase if the state’s economy is bad enough. This can occur if seasonally adjusted statewide job growth has been negative over the past three months, or over the past six months – and if retail sales receipts for the prior 12 months have been negative.

The second way is related to the state’s budget. The governor will be able to pause the increase if at any point in time, the current budget year, or the year after that, or the year after that, is forecasted to be in deficit when the next scheduled increase is taken into account. This is referred to as a “budget off-ramp,” and there is a specification that it may only be used twice.

The deal will also introduce sick leave for in-home supportive services workers. In July 2018, in-home supportive services workers will be guaranteed one sick day. A second sick day will be added in the first July following the implementation of a $13 per hour minimum wage for businesses with 26 or more employees. A third sick day will be added after the minimum wage rises to $15 per hour. [Read more…]

Filed Under: Wage and Hour Law Tagged With: , , , , , , , , ,

California “Gig Economy” Bill Introduced

March 30, 2016 by

Gig EconomyA “Gig Economy” is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. Legislation proposed by California Assembly Member Loretta Gonzalez (D – San Diego) would make it easier for some workers currently classified as independent contractors to be regarded as employees. The bill, known as the California 1099 Self-Organizing Act, would create a rebuttable presumption that a worker is an employee if the worker performs services that require a license under the Contractors’ State License Law (or if the worker performs the services for someone who is required to obtain such a license.)

If the bill is passed, the burden of proof will be shifted, so that workers participating in the “gig economy” (that is, who work through hosting platforms such as Uber or Lyft) will be regarded as employees unless their employers are able to prove that the workers are actually independent contractors. It does not, however, grant the workers official employee status, or lay out any rights that the workers must receive.

How the Gig Economy Burden Can Be Overcome

The bill specifies how an employer would go about demonstrating that a worker is an independent contractor. To overcome the presumption that a worker is an employee, the employer would have to show that the following factors have all been met:

  • That the worker has the right to control the performance of the contract, and discretion as to how the contract is performed, and that the primary factor being bargained for is the result of the work (rather than the means by which the work is done),
  • That the worker is “customarily engaged in an independently established business,” and
  • That the worker is genuinely an independent contractor, and that the employer is not just trying to avoid giving the worker employee status.

If you are wondering how an employer could meet the third requirement, and show that the worker is genuinely an independent contractor, the proposed bill includes a list of factors that could be seen as evidence of independent contractor status. This list includes the following factors:

  • Whether the worker has control over when and where the work is performed
  • Whether the worker holds a license pursuant to California’s Business and Professions Code
  • Whether the worker has a substantial investment in the business other than personal services
  • Whether the worker is held out as being in business for himself or herself.

Before introducing the legislation, Gonzalez stated in an editorial in the Sacramento Bee that the legislation is intended to give workers in the gig economy the right to collectively bargain, and the right to form associations. The editorial includes an estimate that 2 million Californians are part of the gig economy. [Read more…]

Filed Under: Employment Law Tagged With: , , , , , ,

Disability Discrimination Clarified By CA Appeals Court

March 28, 2016 by

Disability DiscriminationWallace v. County of Stanislaus: A California appeals court clarifies what counts as disability discrimination. Dennis Wallace filed a complaint against Stanislaus County, California after he was fired from his job with the sheriff’s department after suffering a knee injury. He alleged that he was fired due to a disability, even though he could have performed his job with proper accommodations – and thus the county violated the California Fair Employment and Housing Act (FEHA).

At trial, the jury found that the county treated Wallace as a person with a disability, and that Wallace was capable of performing his job with or without the proper accommodations. But despite these findings, the jury sided with the county, and Wallace’s complaint of disability discrimination was dismissed.

Why? Because the judge had instructed the jury that Wallace had a burden to demonstrate that the county regarded or treated him “as having a disability in order to discriminate.” In other words, the jury was told that Wallace needed to show that the county was motivated by ill will toward Wallace and used disability as an excuse to fire him. The jury found that this burden had not been met, and so the disability discrimination claim was resolved in favor of the county.

Wallace appealed, arguing that the jury instructions were incorrect, and that FEHA prohibits disability discrimination even when an employer has no animus against the employee. The Court of Appeal for the Fifth Appellate District of California agreed and remanded the case to the trial court for further proceedings.

The Court’s Reasoning

The Supreme Court set a well-known standard for employment discrimination cases in McDonnell Douglas Corp. v. Green. Under McDonnell Douglas, there is a three stage test for complaints.

  • First, the burden is on the plaintiff to make a prima facie showing that employment discrimination took place.
  • If the plaintiff meets this burden, then the burden shifts to the employer, who must provide a legitimate reason for taking the negative employment action in question (such as a firing),
  • If the employer meets this burden, then the burden shifts back to the plaintiff, who can prove that discrimination took place by providing evidence that the employer had a discriminatory motive. This often involves demonstrating that the reason given by the employer was just a pretext for discrimination.

In Wallace, the appeals court clarified that the McDonnell Douglas test is only to be used if the plaintiff has no direct evidence of discrimination. In Wallace, there was direct evidence of discrimination, being as the employer acknowledged that Wallace’s disability was the reason he was fired.

The court held that when there is direct evidence of discrimination based on disability, the focus should not be on the employer’s motivations. Rather, the focus should be on whether the employee was able to perform essential job functions, whether a reasonable accommodation would allow the employee to perform these functions, and whether the accommodation would impose too much of a hardship on the employer. Thus, the court held that the instruction given to the jury was in error. [Read more…]

Filed Under: Disability Discrimination, Employment Discrimination Tagged With: , , , , , , , ,

Fair Labor Standards Act and “Fair Notice”

March 11, 2016 by

Fair Labor Standards ActOnce an employee has made a complaint under the Fair Labor Standards Act (FLSA), she is protected from retaliatory acts such as being fired for making the complaint. What if the employee never filed a formal complaint, and instead she simply alerted management to a potential Fair Labor Standards Act violation? And what if the employee was a manager? If a manager voices concerns that her company is not complying with the Fair Labor Standards Act, would it be clear that she was actually making a complaint under the FLSA, or would it appear that she was just doing her job?

The Fair Labor Standards Act Case

The Ninth Circuit Court of Appeals addressed this scenario in the case of Rosenfield v. GlobalTranz Enterprises, Inc. The plaintiff, Alla Rosenfield, was hired by the defendant, a transportation management services company, to serve as their Manager of Human Resources. She was later promoted to the position of Director of Human Resources and Corporate Training.

Rosenfield made numerous complaints to her superiors that the organization was violating the FLSA. Her boss, who saw himself as the only employee at GlobalTranz in charge of FLSA compliance, agreed to look into her concerns. Rosenfield later concluded that he had not corrected the violations and complained to him again.

Shortly afterward, he fired her. Rosenfield then filed a wrongful termination complaint, which included an allegation that her firing was retaliation in violation of the FLSA. At trial, the defendant filed a motion for summary judgment. The court granted the motion, holding that Rosenfield’s complaints to management did not actually constitute an FLSA complaint. Rosenfield appealed.

Fair Labor Standards Act and “Fair Notice”

The U.S. Supreme Court has held that an employer must be given “fair notice” that an employee is making a complaint. Under this precedent, a complaint must be “sufficiently clear and detailed” that a reasonable employer would recognize it as an assertion of the rights protected by the FLSA.

Several federal courts have adopted a separate standard for complaints from managers when determining if complaints are sufficiently clear and detailed. The rationale behind this distinction is that when an entry-level employee points out a violation of the FLSA, the most obvious explanation is that the employee is asserting his or her rights – whereas a manager who does the same thing may be pointing out the violation as part of his or her job duties.

The Ruling

The Ninth Circuit sided with the plaintiff. Its decision overturned the summary judgment ruling, and remanded the case for further proceedings. The Court determined that because informing management of FLSA violations was not part of Rosenfield’s job portfolio, it should have been reasonably clear to her superiors that when she notified them about FLSA violations, she was not simply doing her job.

In the ruling, the Court rejected the idea that all managers should be held to a different standard than non-managerial employees. Rather, the Court held that complaints should be resolved on a case-by-case basis, in which an employee’s managerial status is one factor. [Read more…]

Filed Under: Termination of Employment Tagged With:

Yahoo Accused of WARN Act Violations

March 6, 2016 by

WARN Act, Layoff ViolationsThe WARN Act, Worker Adjustment and Retraining Notification, is a California and federal law requiring employers to give employees notice before layoffs and plant closings. WARN Act laws,  can carry harsh penalties for employers who violate them, which could be very bad news for Yahoo!, Inc.

Gregory Anderson, who previously worked as an editor at Yahoo’s headquarters in Sunnyvale, California, has filed a wrongful termination suit. Anderson alleges that Yahoo violated both the federal WARN Act and the California WARN Act by reducing its workforce by around 600 employees without declaring a reduction in force or providing the employees notice under the WARN Acts.

What are the Requirements of the WARN Act?

California’s WARN Act has a broader scope than the federal WARN Act. The federal law applies only to employers with 100 or more full-time employees, while California’s law applies to employers with 75 or more or part-time employees. In both cases, the employees must have been employed for at least six of the previous 12 months.

If an employer covered by California’s WARN Act lays off 50 or more employees during a 30-day period, the employer is required to give the affected employees notice 60 days before the layoffs take place. Federal law requires this only if the number of employees affected constitutes at least 33% of the full-time employees at a single place of employment. (However, if 500 or more employees are laid off, the federal law requires notice regardless of whether the employees meet the 33% requirement.) California’s law, unlike the federal law, applies also to employees who must be relocated.

Both laws hold employers liable for back pay and benefits for each day that they failed to provide an employee with proper notice. California’s law also allows for a civil penalty of $500 for each day.

Anderson’s WARN Act Lawsuit

Anderson alleges that Yahoo used a Quarterly Performance Review (QRP) Process to sidestep the requirements of the WARN Acts. According to his complaint, Yahoo manipulated the results of the employees’ reviews and used their low scores as a pretext for terminating them, rather than laying off the employees and providing them with proper notice. Anderson is seeking back pay and benefits for the 60 days that he was not given notice, and $500 for each of the 60 days. He is also seeking attorney’s fees and damages related to other causes of action.

Another allegation in Anderson’s complaint is that Yahoo discriminated against him on the basis of his gender. According to Anderson, the company has a pattern of promoting women while “terminating, demoting or laying off men because of their gender.” Anderson also alleges that he was fired in violation of public policy, because he was terminated after complaining to Yahoo management about the legality of the QPR system. [Read more…]

Filed Under: California Employment Law Tagged With: , , , , , , ,

New California Law is Good News for Worker Cooperatives

February 28, 2016 by

Worker CooperativesIf you have ever looked into worker cooperatives, a bill recently passed into law in California may be of special interest to you. Assembly Bill 816 has amended the law formerly known as the Consumer Cooperative Corporation Law and renamed it the Cooperative Corporation Law. The new Consumer Cooperative Corporation law establishes how corporations can be designated as cooperatives and lays out regulations for the operation of cooperatives.

Under the law, a corporation may be designated as a cooperative corporation in its articles of incorporation, and cooperative corporations may be designated as worker cooperatives. In addition, there is an option to designate worker cooperatives as capital account cooperatives or as collective board worker cooperatives.

Worker Cooperatives

The term “worker cooperative,” in the context of this law, refers to a corporation that includes “a class of worker-members who are natural persons whose patronage consists of labor contributed to or other work performed for the corporation.” A majority of the corporation’s workers must be worker-members or candidates.

The term “capital account cooperative,” in the context of the law, refers to a worker cooperative which allows a percentage of its earnings and losses to an unallocated capital account. Earnings in the account may be used for corporate purposes.

The term “collective board worker cooperative,” in the context of the law, refers to a worker cooperative in which all of the members are worker-members, and all of the worker-members are members of the board.

The provisions of the law include the following:

  • Cooperative corporations are permitted to issue memberships with differing rights and privileges, so long as they are issued in accordance with the corporation’s articles and/or bylaws.
  • Expulsions, suspensions, and terminations of members can only take place after 15 days prior notice is given, and they must be done in good faith, in a fair and reasonable manner. In addition, if members who are expelled, suspended or terminated want to submit a challenge, they must do so within a year of the decision.
  • Worker cooperatives are permitted to create indivisible reserve accounts, and payments from these accounts do not have to be made to members.
  • Corporations can be designated as worker cooperatives in their articles of incorporation, by including the sentence, “This corporation is a worker cooperative corporation organized under the Cooperative Corporation Law.”

The law is intended to promote workers cooperatives, and create more visibility for them. The law states that the purposes of a workers cooperative are to create sustainable jobs, and to improve quality of life for worker-members. Assemblymember Rob Bonta of Oakland, who introduced the bill, stated in a press release that worker-owned small businesses are “an effective way to rebuild the local economy and address economic inequality.” [Read more…]

Filed Under: Blog, California Employment Law Tagged With:

Employee or Independent Contractor – Lyft Driver Dispute

February 17, 2016 by

employee or independent contractorAm I an employee or independent contractor? Ridesharing company Lyft has reached a settlement agreement with California drivers who filed a lawsuit regarding their classification as independent contractors, rather than employees. The settlement requires Lyft to pay the drivers $12.25 million, but does not require the company to reclassify them as employees.

The case was filed in 2013 in the U.S. District Court for Northern California by a Lyft driver named Patrick Cotter, who claimed a variety of allegations related to wages and expenses. One of their complaints was that, because Lyft classifies its drivers as independent contractors, the drivers were required to pay for expenses such as gas and auto insurance. Cotter initially filed the lawsuit on behalf of himself and Lyft drivers nationwide, but amended the complaint to include only California drivers after the Court ruled that drivers outside of California did not have a cause of action.

The Settlement

After participating in mediation sessions, the parties agreed to a settlement. The settlement includes a $12.25 million payout which (if approved by the court) will be divided among the class of plaintiffs. The settlement also contains the following provisions:

  • Lyft will only “deactivate” drivers for specific reasons, rather than being able to deactivate them at will.
  • Before drivers are deactivated, Lyft will allow the drivers to address the concerns about their performance.
  • If a driver decides to go to arbitration to challenge his or her deactivation, or to address a compensation issue, Lyft will pay his or her arbitration expenses. (Lyft uses an arbitration clause in its contracts, but these clauses did not keep this case out of court.)
  • Lyft will create an option referred to in the settlement as “favorite driver,” which allows passengers to choose drivers who will receive unspecified benefits.
  • Lyft drivers will be given access to information about potential passengers via their smartphones, before deciding whether or not to accept the passengers’ ride requests.

The settlement does not, however, establish the drivers as employees. It contains language asserting that Lyft denies that any member of the settlement class is an employee, that Lyft denies any wrongdoing, and that Lyft denies that any of the plaintiffs’ claims are valid.

The settlement has no bearing on a similar lawsuit filed against Uber by its drivers, which is on course to head to federal court in June.

Employee or Independent Contractor – The Legal Landscape

Employment lawyers, business owners, and employees around the country were watching this lawsuit, hoping that a ruling might provide some guidance on how courts will handle similar cases. The issues brought up in this case regarding the line between employees and independent contractors are relevant not only to transportation companies, but to participants in the “on-demand” economy at large. [Read more…]

Filed Under: California Labor Law Tagged With: , , ,

Employment Lawsuit VS FEHA 1 Year Statute of Limitations

February 12, 2016 by

Employment LawsuitCan I file an employment lawsuit even after the one year Fair Employment and housing act one year statute of limitations? Let’s say you are an employee working for a business in California, and you develop a physical disability. Your employment is terminated shortly thereafter. 15 months go by, and then you decide you want to file a wrongful firing claim.

You plan on arguing that your termination amounted to illegal discrimination based on your disability and that your employer’s action violated California’s Fair Employment and Housing Act (FEHA). As it happens, however, FEHA has a one year limitations period, and your firing took place over a year ago. Can you still file a valid claim?

If you guessed that filing a valid claim would be impossible, a California Court of Appeal would beg to differ. In the case of Prue v. Brady Company/San Diego Inc., it ruled that a plaintiff’s lawsuit could proceed, despite the expiration of FEHA’s statute of limitations, because it was a common law tort claim alleging violation of the public policy laid out in FEHA.

The Facts of the Employment Lawsuit Case

Adam Prue worked for Brady Company/San Diego Inc., and was injured on the job. His employer was informed about the nature of his injuries, and he was later terminated. He filed a claim over a year later, arguing that his termination was a violation of California public policy. Prue alleged that his manager told him that the hernia he suffered was the reason for his firing.

At trial, Brady Company filed a motion for summary judgment. The motion argued that Prue’s claim was barred by a one-year statute of limitations, which had expired. The trial court granted the motion, and dismissed Prue’s case.

On appeal, the Court of Appeal reversed the trial court’s decision, and allowed Prue’s claim to proceed. The Court held that Prue was permitted to a file his claim, because he was not actually filing a claim under FEHA, but rather a common law tort claim arguing that his termination violated California public policy, with FEHA being the statute that set forth the fundamental public policy in question.

The ruling stated that the relevant statute of limitations was the two-year statute of limitations under section 335 of the California Code of Civil Procedure. Prue’s claim was filed in April 2013, less than two years after his termination in July 2011, so the Court concluded that his filing was timely. [Read more…]

Filed Under: wrongful termination Tagged With: , , , , , ,

How Easily Can a Forum Selection Clause Be Overturned?

January 28, 2016 by

forum selection clauseRequesting that new employees sign an employment agreement with a forum selection clause (which determines which state will have jurisdiction over legal disputes) is a common practice for businesses that operate in multiple states. Even if these clauses are mandatory, however, they can still be overturned by the courts. The case of Verdugo v. Alliantgroup stands out as one of California’s most important wage and hour rulings of 2015, as it gave guidance on an important issue – which side has the burden of proof when the validity of a mandatory forum selection clause is questioned.

The Forum Selection Clause Case

When Rachel Verdugo was hired in 2007 to work in Irvine, California for a tax consulting services company named Alliantgroup, she signed an employment agreement with a choice-of-law clause. This clause stated that the employment agreement would be governed in all respects by the laws of Texas – which is where Alliantgroup is headquartered. The agreement also stated that subject matter jurisdiction and personal jurisdiction would be limited to Texas, and that Harris County, Texas, would be the only accepted venue for legal disputes.

Verdugo nonetheless filed a class action complaint in California against Alliantgroup in 2013. She alleged that she and similarly situated employees of Alliantgroup had been subjected to a variety of wage and hour violations, including failure to pay overtime wages and vacation pay, failure to provide required meal breaks, and unfair and unlawful business practices.

When Alliantgroup moved to dismiss the complaint based on the employment agreement’s forum selection clause, the trial court granted the motion. However, a California Court of Appeal reversed the decision, and held that the forum selection clause was unenforceable.

Where the Burden Lies

Verdugo argued that litigating the case in Texas would violate her rights as a California worker – rights that cannot be waived. The Court held that because the plaintiff was making this argument, the burden was therefore on the defendant to prove that her rights would not be diminished if the case was litigated in Texas. The Court went on to determine that Alliantgroup failed to meet this burden.

The ruling points out that six of Verdugo’s claims were based on her statutory rights under the California Labor Code. The Court held that because California’s legislature has stated that these statutory rights cannot be set aside, a requirement that Verdugo’s case be litigated according to Texas law would be amount to a waiver of her unwaiveable rights. The Court cited case law in determining that in these types of situations, the burden is placed on the defendant.

Having held that Alliantgroup had the burden to prove that Verdugo’s rights would not be diminished, the Court determined that Alliantgroup had not met that burden. Alliantgroup argued that it was probable that a Texas court would apply California law, but the Court held that this “speculation” was not enough to satisfy the burden of proof. [Read more…]

Filed Under: Blog, California Employment Law, California Labor Law Tagged With: , ,

$1.8 M Settlement for Allegations of “Steering”

January 20, 2016 by

steering, lawsuitA “steering” allegations settlement has been reached between G&K Services, a company that manufactures branded uniforms and facility products, and the U.S. Department of Labor regarding allegations of gender discrimination. The settlement involves G&K paying over $1.8 million to affected employees at nine locations – including a facility in Sacramento.

A compliance review by the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) found that female employees of G&K were allegedly steered into duties that paid less than the duties that were predominantly assigned to male employees. The term “steering” refers to the practice of directing employees toward less desirable jobs based on their membership in a protected class. (When employers are accused of paying workers lower salaries based on factors such as race or gender, they may be found to have engaged in discriminatory practices even if the workers had substantially different job duties – if the employees with lower paying positions were steered toward them based on protected characteristics.)

According to an OFCCP press release, G&K’s hiring practices involved discrimination based on race as well as gender, with the result that 456 African-American job applicants and 111 Caucasian applicants were denied equal opportunity. The OFCCP also determined that G&K’s practice of steering male applicants toward certain positions resulted in a lower hiring rate for male applicants – with 2,327 male applicants affected.

The Steering Allegations Agreement

G&K denied any wrongdoing, but as part of a conciliation agreement will pay $1,813,555 to employees from the affected classes. G&K also agreed to allow 58 female employees the opportunity to assume positions with higher salaries, and to offer 78 positions to rejected applicants.

G&K also agreed to perform “a detailed assessment of its hiring, placement and compensation practices,” and to look into whether documents such as job postings are discriminatory. The settlement also requires G&K to conduct adverse impact and compensation analyses at the nine facilities in which the OFCCP determined that discriminatory practices were taking place – and to share the results of these analyses with the agency.

This is not the first time in recent years that G&K has been found by the OFCCP to have taken part in steering. In 2013, G&K reached a settlement after being accused of steering female employees into lower paying positions at a facility in Santa Fe Springs, California. In that case, the OFCCP determined that female employees were assigned to “light duty” jobs with lower salaries, while only considering male employees for heavy duty work. The OFCCP also determined that male employees were denied opportunities as a result of only being considered for heavy duty positions. [Read more…]

Filed Under: Blog, California Employment Law, Employment Discrimination Tagged With: , , ,
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