Employee or Independent Contractor – Lyft Driver Dispute

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…]

How Easily Can a Forum Selection Clause Be Overturned?

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…]

Wal-Mart Violating Minimum Wage Laws Per CA Court

violating minimum wage lawsHas Wal-Mart been violating minimum wage laws? Wal-Mart’s trucking system has gotten a great deal of attention recently, as a Wal-Mart driver has been charged with manslaughter for his role in the auto accident that left comedian Tracy Morgan severely injured. However, California employers would be well advised to take note of a different court case involving Wal-Mart and trucking – Ridgeway v. Wal-Mart Stores, Inc. – which has set some important precedents regarding minimum wage standards.

The case involves a group of Wal-Mart truck drivers who sued their employer, on the grounds that they were not paid minimum wage for all of the hours that they worked. They alleged that Wal-Mart should have paid them at least minimum wage for the time they spent on mandatory layovers, and on activities such as fueling, making inspections, and finishing their paperwork. Wal-Mart argued that the drivers were not entitled to minimum wage for time spent on layovers, and that the aforementioned activities were subsumed within other activities for which the drivers were paid at least minimum wage.

When the plaintiffs filed a motion for summary judgment on whether Wal-Mart’s payment policies were in compliance with California law, the U.S. District Court for the Northern District of California granted their motion. The Court’s order included the following findings:

  • The Court rejected Wal-Mart’s claim that activities like fueling, making inspections, and finishing paperwork could be subsumed into other activities. The order states that employers are not allowed to “build in” time spent on non-driving activities into a piece-rate compensation system, but instead must pay employees such as the plaintiffs at least minimum wage for all hours worked.
  • The Court held that Wal-Mart was required to pay the drivers the minimum wage for time spent on layovers. Wal-Mart, which paid the drivers $42 total for 10-hour layovers, argued that the drivers were not subject to their control during their layovers, but the Court rejected this argument. According to the order, the drivers were subject to their employer’s control during layovers because Wal-Mart prohibited the employees from spending the layovers at home, and set limitations on where the layovers could take place.
  • Wal-Mart pointed out that general transportation managers provided discretionary payments to drivers at times. The plaintiffs argued that while the payments may be relevant to the amount of damages, they were not relevant to the motion for summary judgment. The Court agreed with the plaintiffs and stated that the discretionary nature of the payments demonstrated that they were not indicative of Wal-Mart’s standard pay policy.

Could Your Business Be Violating Minimum Wage Laws?

If you run a business in Sonoma County, Mendocino County or Lake County California with a piece-rate compensation system, it may be time for you to take a close look at whether your policies comply with the law. If you work as a truck driver in California and you have not been paid minimum wage for all of your work hours, you may wish to look into whether you have a case against your employer. [Read more…]

New California Legislation Affects Employee Parental Activity Leave

parental leave activityNew California legislation affects employee parental activity leave. One of the many bills signed into law by Governor Jerry Brown on October 11, 2015 was Senate Bill 579. This bill amended Section 230.8 of the California Labor Code, which allows employees to take leave from work each year to participate in activities related to their children’s schooling or day care. The section, as revised, now applies to foster parents and stepparents, and it allows employees to take leave for a wider range of activities.

The Specifics of the Parental Activity Leave Bill

The basic provisions of Section 230.8 include:

  • Requiring California employers with 25 or more employees at a particular location to allow any employee who is a parent (or a guardian or grandparent with custody of a child) to take up to 40 hours of leave per year in order to participate in activities at their children’s schools and/or day care facilities.
  • An employee may not take off more than eight hours in a calendar month for these school or daycare activities, and the employee must provide his or her employer with reasonable notice.
  • An employee who decides to take leave for these activities must make use of any vacation time, compensatory time off, or personal leave to which he or she is entitled. In addition, if the employee is entitled to time off without pay, then he or she may make use of it for these activities.
  • The employee must provide the employer with written documentation from the school or daycare facility if the employer requests it.

SB 579 has amended the section in a number of ways relating to parental activity, including the following:

  • The term “parent” can now apply not only to a parent or a grandparent, but also to a stepparent, a foster parent, or someone who stands in loco parentis to a child. (“In loco parentis” refers to someone legally standing in the place of a parent.)
  • The term “licensed child daycare facility” has been replaced with the term “licensed child care provider.”
  • The time off may be used to find a school or child care facility, or to enroll or reenroll one’s child in a school or child care facility.
  • The time off may also be used to address an emergency related to a school or a child care provider. The statute explains that the term “emergency” refers to when the child of the employee is unable to remain at his or her school or child care facility. (The possible reasons for this include closure of the facility, behavioral problems, natural disasters, and a request from the school or child care provider that the child be removed.)

[Read more…]

SB 358: Equal Pay for Substantially Similar Work

equal payThe concept of paying men and women equal pay for equal work should be familiar to California employers but under new legislation, wage equality requirements no longer apply only to employees with identical job descriptions. Employers are now required to pay male and female employees equal wages for doing “substantially similar” work.

The legislation in question, California Senate Bill 358, was signed into law on October 6, 2015 by Governor Jerry Brown at the Rosie the Riveter National Historical Park in Richmond. The new legislation amends Section 1197.5 of the California Labor Code.

What Does the equal pay Bill Say?

SB 358 states that an employer may not pay any of its employees at lower wage rates than employees of the opposite sex for work that is substantially similar, when viewed “as a composite of skill, effort, and responsibility and performed under similar working conditions,” unless the employer can demonstrate that:

  • The wage differential is based upon one or more of the following factors: a seniority system, a merit system, a system that measures earnings by quantity or quality of production, and/or a bona fide factor other than sex (such as education, training or experience.)
  • Each factor is relied upon reasonably, and
  • The factor or factors relied upon account for the entire wage differential.

The legislation clarifies that if an employer cites a “bona fide factor other than sex,” it must not be based on, or derived from, a sex-based differential in compensation. In addition, the factor must be related to the job in question, and it must be consistent with a business necessity.

Other aspects of the legislation include:

  • The Division of Labor Standards Enforcement, which is in charge of administering and enforcing the legislation, may supervise the wages that are due to employees when a violation takes place.
  • Employers must maintain records of the wages and wage rates, job classifications, and other terms of employment of their employees. The records must be maintained for at least three years.
  • When an employee files a complaint with the Division of Labor Standards Enforcement, the name of the employee will be kept confidential until the Division establishes the validity of the complaint. (There is an exception to this, however, if abridging the employee’s confidentiality prevents the Division from investigating the complaint.) If the employee withdraws the complaint before his or her confidentiality is abridged, then the Division will maintain the employee’s confidentiality.

Your Equal Pay Responsibilities Under the New Law

If you run a business in Sonoma County, Mendocino County or Lake County California, and you have not monitored whether there is a gender gap in your employee’s wages, it is time to start. Consulting an attorney to ensure your wages meet the standards of this legislation may be far less expensive than dealing with a gender discrimination lawsuit. [Read more…]

How to File a California Fair Employment and Housing Act Discrimination Claim

 fair employment and housing act discriminationHow can I file a California Fair Employment and Housing Act Discrimination Claim? If you work in the state of California and you believe that you have been the victim of employment discrimination, you do not have the immediate option of filing a lawsuit against your employer. You must first pursue a claim on the state level by filing a claim with the California Department of Fair Employment and Housing, also known as the DFEH, or the federal level by filing a claim with the Equal Employment Opportunity Commission, also known as the EEOC.

If you choose to file a complaint with the DFEH regarding a matter that falls under the jurisdiction of the EEOC, then your complaint will also be filed with the EEOC automatically.

Filing a Discrimination Claim with the DFEH

If you choose to pursue a claim on the state level, alleging a violation of California’s Fair Employment and Housing Act (FEHA), you should be aware of the steps involved in the complaint process.

The Interview

When you contact the DFEH, they will schedule a time to interview you about your case. The DFEH provides a written questionnaire and they ask that complainants fill it out and send it in prior to their interviews.

Filing the Complaint

After the interview is complete the consultant who conducted the interview will draft a formal complaint that may or may not be accepted for investigation. The respondent (that is, the employer you have filed a complaint against) will be required to answer the complaint.

The respondent will be given the opportunity to resolve the complaint voluntarily, and the DFEH will attempt to facilitate a voluntary settlement. If a respondent makes an offer that the DFEH feels is reasonable and the complainant rejects it, the DFEH may choose to take no further action on their complaint.

The Investigation

If your complaint has been accepted for investigation, the DFEH is required to perform the investigation in a standard, timely manner. If the investigation does not show that the respondent violated the law, then the case will be closed. If the investigation shows that the respondent violated the law, then the DFEH may issue an accusation of discrimination.

Conciliation

If the investigation shows that there was a legal violation, there will be formal conciliation conferences. At a conciliation conference, the DFEH will present its conclusion that the respondent violated the law and there will be an attempt to reach a settlement between the parties. If there is no settlement, then the complaint may reach the litigation stage.

Litigation

The DFEH may choose to prosecute the respondent. If this occurs, the respondent may choose to either have the case publicly litigated before the Fair Employment and Housing Commission or moved to civil court.

Remedies

When a complainant is successful in litigation, there are a wide array of remedies available to him or her, including back pay, emotional distress damages, and reinstatement to his or her job. [Read more…]

Personal Cell Phone Reimbursement for Work Use?

Personal cell phone reimbursement for work use? A California court has weighed in on the issue of whether employers must reimburse employees for personal cell phone reimbursementwork calls made on their personal cell phones. In the case of Colin Cochran v. Schwan’s Home Service, Inc., a state appellate court ruled that employers must compensate their employees for work-related phone calls.

The case involved a customer service manager who filed a putative class action suit against his employer, Schwan’s Home Service, Inc., on behalf of 1,500 of his fellow employees. He alleged that Home Service’s failure to reimburse the employees for the cost of their business calls violated Section 2802 of the California Labor Code. Section 2802 states that an employer must indemnify an employee for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.”

The Trial Court’s Verdict on Cell Phone Reimbursement

When the case was first heard by a trial court, issues were raised regarding how damages would be tabulated. Would it matter if an employee had an unlimited data plan, and so the work calls didn’t actually add to the employee’s cell phone bill? And if an employee had an unlimited data plan, would it matter if the employee purchased that plan because of his or her work calls?

An expert witness submitted a brief on behalf of Cochran, and asserted that a survey could be used to determine the extent of Home Service’s liability. The witness submitted a draft survey with 22 questions regarding cell phone-related finances that could be distributed to each employee. The witness proposed that the answers to these surveys could be used to tabulate statistics that would indicate Home Service’s total damages.

The trial court refused to certify the employees as a class, holding that statistics from a survey could not be used to prove liability. The court also held that Home Service would be entitled to ask the employees about whether they had purchased their cell phone plans due to their work cell phone usage – and that these individual inquiries, asked of 1,500 employees, would “overwhelm the liability determination.”

The Appellate Court’s Ruling on Cell Phone Reimbursement

The Court of Appeal for the State of California, Second Appellate District, Division Two, reversed the trial court’s ruling and ordered the trial court to reconsider Cochran’s motion for class certification. The court held that an employer must always reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone.

The ruling states that even if an employee does not incur an extra expense due to the cell phone usage, the employer still has the obligation to provide compensation for that usage, by paying a reasonable percentage of the employee’s cell phone bill. The court held that this is a necessary requirement because “otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee.” [Read more…]

The Public Policy Exception for At-Will Employment

at will employmentIf you ask an employer what “at-will employment” means, there’s a good chance they’ll tell you that it means an employer can fire the employee for any reason they want – or for no reason at all.

This is a very common definition of at-will employment, but it isn’t quite accurate. An employer can fire an at-will employee for almost any reason – but there are exceptions.

The best known of these exceptions is that certain forms of discrimination can be illegal grounds for firing an employee. (In California, these forms include discrimination based on race, national origin, gender, religion, age, sexual orientation, pregnancy status, marital status, genetic information, and disability).

There are other reasons for firing an employee that are prohibited by statute. These reasons include firing an employee for filing a claim for workers’ compensation, or for taking leave that is guaranteed to them under federal or state law, or for engaging in protected union activity.

Another exception is that it is illegal to fire an employee for a reason that is in opposition to public policy. This means that an employee cannot be fired for:

  • refusing to violate a statute;
  • performing a statutory obligation;
  • exercising a statutory right or privilege;
  • reporting a violation of a statute of public importance.

If an employee files a claim against an employer for wrongful termination in violation of public policy, he or she will have to demonstrate that:

  • He or she was an employee of the employer;
  • That he or she was discharged by his or her employer;
  • That the alleged violation of public policy was a motivating reason for the discharge;
  • That the discharged caused the employee harm.

Yau vs. Santa Margarita Ford

A good example of these circumstances can be found in the case of Yau vs. Santa Margarita Ford, Inc. It involved an employee of an auto dealership, who became aware that some of his coworkers were submitting fictitious warranty repair claims. He chose to notify the owner of the dealership about what was happening, and his coworkers responded to the accusation by falsely accusing him of being the mastermind of the scheme. He was later told that he was being fired for alleged warranty fraud, and then was promptly led out of his office by sheriff’s deputies.

The employee filed a complaint against his employer for wrongful termination. He argued that the motivation for his firing contravened public policy set forth in several different laws (such as laws prohibiting criminal conspiracy, theft, fraud and deceit). A California Court of Appeal held that these statutes were statutes of public importance, and that his allegations were properly tethered to the statutes.

Have Your Rights Been Violated?

If you’ve been fired from a job in Sonoma County, Mendocino County or Lake County California and believe that the reason for your firing was in opposition to public policy, don’t let anyone tell you that your employer had the right to fire you “for any reason they wanted.” You may very well have a case against your employer, even if you were an at-will employee.

It may be well worth your time to contact an attorney. Our experienced Beck Law P.C. labor and employment law attorneys in Santa Rosa can evaluate your individual situation, and help you decide how to proceed. Contact our office today for a consultation.

Awarding Court Costs and Labor Attorney Fees in Employment Discrimination Cases

labor attorney feesClients involved in employment discrimination cases will often ask, “If I win, will the other side have to pay my labor attorney fees, or my court costs?” The answer often depends on whether the client is the employer or the employee.

Federal Labor Cases

In federal actions involving Title VII of the Civil Rights Act of 1964, there is an “asymmetrical rule.” If the plaintiff wins, he or she will automatically receive compensation from the other party for his or her attorney’s fees. But a winning defendant does not automatically receive compensation for attorney’s fees. A winning defendant will only receive such compensation if the court finds that the plaintiff’s claim was “frivolous, unreasonable or groundless, or that the plaintiff continued to litigate after it clearly became so.”

If you’re an employer, you may be thinking that seems awfully unfair. Why is this the rule? The precedent is the result of a Supreme Court decision, Christiansburg vs. Equal Employment Opportunity Commission. The ruling held that “Assessing attorney’s fees against plaintiffs simply because they do not finally prevail would substantially add to the risks inhering in most litigation and would undercut the efforts of Congress to promote the vigorous enforcement of the provisions of Title VII.” The Court was concerned that victims of discrimination would be reluctant to come forward if they knew that they would be liable for potentially huge legal fees if they lost.

California Employment Cases

Of course, not all employment discrimination claims involve Title VII. California has its own standards on court cost issues for cases involving the California Fair Employment and Housing Act (FEHA). Unfortunately, these standards have not always been clear.

Section 1032 of the California Code of Civil Procedure states, “Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” However, Government Code Section 12695 states that in FEHA cases, “the court, in its discretion, may award to the prevailing party…reasonable attorney’s fees and costs, including expert witness fees.”

On May 5, 2015, the Supreme Court of California cleared up any confusion as to whether Sect. 12695 is an exception to Sect. 1032. In the case of Williams vs. Chino Valley Independent Fire District, the Court held that Sect. 12695 is an exception – and thus a prevailing defendant in a FEHA case should not automatically be awarded courts costs (or attorney’s fees).

The ruling states that the standard used by the U.S. Supreme Court in Christiansburg should apply to FEHA parties. In the words of the court:

“A prevailing plaintiff should ordinarily receive his or her costs and attorney fees unless special circumstances would render such an award unjust. A prevailing defendant, however, should not be awarded fees and costs unless the court finds that the action was objectively without foundation when brought, or the plaintiff continues to litigate after it clearly became so.”

Concerned About Labor And Employment Cases Costs and Fees?

If you have any questions about the ruling, or about the prospect of paying your opposing parties’ court costs or attorney’s fees, you may wish to contact the Santa Rosa employment and labor law attorneys at Beck Law P.C. You can call or email us today to schedule a consultation.

Is It Discriminatory to Fire an Employee for Substance Abuse?

fire and employee for substance abuseIs it discriminatory to fire an employee for substance abuse? Most employers and employees would probably agree that it’s reasonable to fire an employee for getting drunk on the job. But what about firing an employee because you learned that she belongs to Alcoholics Anonymous?

Under both the Americans With Disabilities Act (ADA), and California’s Fair Employment and Housing Act (FEHA), the latter would be considered a form of employment discrimination. It is discriminatory to fire an employee (or subject an employee to any adverse employment action) because of the employee’s alcoholism and/or drug addiction. However – and this is a very important “however” – these statutes only apply if the employee is in recovery. They do not apply if the employee is currently abusing drugs and/or alcohol.

Past Substance Abuse vs. Current Substance Abuse

Generally speaking, these statutes prohibit employment discrimination that is based on an employee’s past substance abuse. This may sound simple and straightforward – but like so many aspects of the law, it can get rather complicated.

For example, can an employee be fired for legally using medical marijuana? What if an employee fails an employer’s drug test, and then applies for a position later? What if an employer finds out that an employee used drugs a few weeks ago – does that count as current substance abuse? Or could the employee argue that he’s now in recovery, and he was fired for his past substance abuse? These are the kinds of issues that federal courts, and California courts, have been trying to resolve for years.

Medical Marijuana: While California allows the use of medical marijuana, the language of the FEHA makes it clear that it does not prohibit employers from discriminating on the basis of medical marijuana use. The ADA does not protect the use of medical marijuana, either.

Discrimination Based on Previous Failure of an Employer’s Drug Test: The Court of Appeals for the Ninth Circuit (which includes California) ruled on this issue in the case of Lopez vs. Pacific Maritime Association. The case involved a man who applied for a job in 1997, and was given a drug test. He failed the test, and wasn’t hired. In 2004, after becoming sober, the man applied for a job with the same employer, and was rejected because of the drug test he failed in 1997. The employer had a “one strike” rule, meaning that it refused to hire anyone who had ever failed a company drug test.

The Court ruled that the employer was within its rights to reject the applicant. The ruling held that the discrimination was based on his failure of the drug test, not his drug addiction itself.

How recent “current” drug use can be: The Equal Employment Opportunity Commission has clarified that the ADA has no specific rule regarding how much time must elapse before an employee’s substance abuse can be considered “past” substance abuse. These matters must be decided on a case by case basis. However, substance abuse that has taken place less than a month ago is generally considered to be current.

Ensuring Compliance

If you are an employer, and you ask your employees if they have ever been treated for substance abuse, you may be violating both state and federal law. If you have any concerns that you may not be in full compliance with the ADA and the FEHA, you may wish to speak to an attorney. The employment and labor law attorneys at Beck Law P.C., in Santa Rosa, will be able to answer your questions. You can call or email our office today.

Disclaimer

The information on this website should not be considered to be legal advice, nor construed to be the formation of any manner of attorney client relationship. Prior to taking any form of legal action, please consult with an attorney experienced in the appropriate area of law germane to your situation. Case results and testimonials presented on www.californialaborandemploymentlaw.net or any of its related websites are germane to the facts present for each individual case and is not a promise of similar outcomes for any other cases. This website is not intended to solicit clients for matters outside of the State of California.