Dynamex applies retroactively

Watch the video: https://youtu.be/W0Qovx09zaU

Four reasons why the California Supreme Court is applying Dynamex retroactively.

Uber & Lyft drivers are employees - video

[Watch the video]

Uber and Lyft have been preliminarily enjoined from classifying their drivers as independent contractors rather than employees and the California Court of Appeal has affirmed that injunction. The People v. Uber (Cal Ct App 10/22/2020) [PDF].

The California legislature adopted Assembly Bill 5, which adopts the ABC test for determining who’s an employee and who's an independent contractor, and that statute allows the Attorney General to bring a law suit to enjoin violations.

Assembly Bill 5 presumes that workers are employees unless the company can prove A, B, and C, and this case actually involves only the B part which is whether the drivers perform duties that are outside the normal course of business of Uber and Lyft.

Of course Uber and Lyft are saying well look … we're technology platforms, and all we're doing is lining up drivers with passengers. We're not in the transportation business.

And the court took a lot of evidence and they decided that yeah, Uber and Lyft are actually in the transportation business. So their drivers are performing the work of a transportation company.

The Court of Appeal took a look at that preliminary injunction and said Uber and Lyft are very likely to lose on the merits, and it'll be a substantial hardship if the Attorney General can't get this injunction, and when they balance the harms from the standpoint of the defendants and the standpoint of the plaintiffs, it all shook out so that the Attorney General is going to keep that injunction.

Now, what's happened is that the court has put a stay on that injunction until after the November 3d election, and on that election day we have Proposition 22, which would remove Assembly Bill 5 and substitute a whole new classification of workers just for these gig employers. So we'll wait and see what happens on November 3d. Otherwise, Uber and Lyft are going to have to classify their drivers as employees.

Pacific Coast Labor & Employment Law Conference postponed

Pacific Coast Labor & Employment Law Conference has been postponed until September 16 & 17.  See announcement at https://pacificlaborlaw.com/

Prior salary and the Equal Pay Act

[Video] If starting salary is based on prior salary, that's not a defense to an Equal Pay Act suit. So says the 9th Circuit in an en banc (11 judges) decision: Rizo v. Yovino (9th Cir 02/27/2020) [PDF].

Setting initial wages based on prior wages is always problematic because it tends to perpetuate the discrimination that might have been practiced by previous employers to the disadvantage of women and racial minorities.

Now, we've got a 9th Circuit case saying that an employer cannot ever use prior wages to justify a pay differential between men and women which otherwise would violate the Equal Pay Act.

A woman was paid less than men who were doing the same job and the employer said Look, the Equal Pay Act has a defense. It's called any other factor other than sex, and we put her on the pay schedule based on her prior salary, and that is an other factor other than sex.

And the 9th Circuit says No. The other factor has to be job related, and prior salary is not job related.

My issue with this case, which we’ll see discussed in the Supreme Court, is that the statute says ANY other factor other than sex, and the statute does not say anything at all about that other factor having to be job related.

Pacific Coast Labor & Employment Law Conference

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Post-shift personal search is compensable time

[Video] Post-shift personal search is compensable time

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Employer must REQUIRE 30 minute meal break

[Video] An administrative rule in Oregon says certain employers "shall provide" a 30 minute meal break for employees working between six and eight hours.

The Oregon Court of Appeals says this means that if employees work a portion of that 30 minutes, then they are entitled to be paid for the entire 30 minutes. Maza v. Waterford Operations (Oregon Ct App 11/14/2019) [PDF]

Here is what the administrative rule says:

“(1) The purpose of this rule is to prescribe minimum meal periods and rest periods for the preservation of the health of employees.

“(2)(a) Except as otherwise provided in this rule, every employer shall provide to each employee, for each work period of not less than six or more than eight hours, a meal period of not less than 30 continuous minutes during which the employee is relieved of all duties.

“(b) Except as otherwise provided in this rule, if an employee is not relieved of all duties for 30 continuous minutes during the meal period, the employer must pay the employee for the entire 30-minute meal period.”

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Dynamex applies retroactively

Gonzales v. San Gabriel Transit (Cal Ct App 10/08/2019) [PDF] has held that Dynamex Operations West, Inc v. Superior Court (Calif Supreme Ct 04/30/2018) [PDF] applies retroactively to cases that were pending when Dynamex was decided. (Dynamex held that the “ABC test” is to be used to decide whether a worker is an employee or an independent contractor under California wage orders.)

The analysis took one paragraph:

“In any event, there is no reason to conclude that Dynamex departs from the usual rule of retroactive application. Judicial decisions in civil litigation almost uniformly are given retroactive effect and applied to pending litigation. (See e.g., Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, 967; Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 978; Grobeson v. City of Los Angeles (2010) 190 Cal.App.4th 778, 796; Rose v. Hudson (2007) 153 Cal.App.4th 641, 646.) A rare exception is employed in extraordinary circumstances dictated by considerations of fairness and public policy, such as when a decision articulates a new standard or rule of law. (See Rose v. Hudson, supra, 153 Cal.App.4th at p. 653, Hoschler v. Sacramento City Unified School Dist. (2007) 149 Cal.App.4th 258, 271.) The instant litigation presents no extraordinary circumstance. Dynamex did not establish a new standard. Rather, its expressly articulated purpose was to streamline the existing complex, multifactor wage order analysis: “In our view, this interpretation of the suffer or permit to work standard is faithful to its history and to the fundamental purpose of the wage orders and will provide greater clarity and consistency, and less opportunity for manipulation, than a test or standard that invariably requires the consideration and weighing of a significant number of disparate factors on a case-by-case basis.” (Dynamex, supra, 4 Cal.5th at p. 964.)”

Meanwhile, the 9th Circuit has certified this question to the California Supreme Court in Vazquez v. Jan-Pro Franchising (9th Cir 09/24/2019) [PDF].

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Uber drivers get partial win in opposing FAA arbitration.

An important development: Singh v. Uber (3rd Cir 09/11/2019) [PDF]

Singh brought a putative class action in state court alleging that Uber misclassified its drivers as independent contractors as opposed to employees. Uber removed the case to federal court and moved to compel arbitration. Singh opposed the motion, arguing that the court did not have the authority to compel arbitration under the Federal Arbitration Act (FAA). The trial court ordered arbitration. The 3rd Circuit remanded.

FAA Section 1 provides that the FAA does not apply to

“contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) held that ''contracts of employment" includes any contract for the performance of work by workers, so the issue in this case becomes whether Singh was "engaged in … interstate commerce."

The 3rd Circuit rejected Uber's argument that the Section 1 exclusion applies only to workers who transport goods, and not to those who transport passengers, saying "§ 1 is not limited to transportation workers who transport goods, but may also apply to those who transport passengers, so long as they are engaged in interstate commerce or in work so closely related thereto as to be in practical effect part of it."

The 3rd Circuit remanded for the trial court to allow discovery on the issue of whether the class of transportation workers to which Singh belongs are engaged in interstate commerce or sufficiently related work.

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More on California meal and rest breaks

It looks like the California meal and rest break saga has no end. Case in point: Cole v. CRST Van Expedited (9th Cir 08/01/2019) [PDF].

The 9th Circuit has certified the following questions to the California Supreme Court:

(1) Does the absence of a formal policy regarding meal and rest breaks violate California law?

(2) Does an employer's failure to keep records for meal and rest breaks taken by its employees create a rebuttable presumption that the meal and rest breaks were not provided?

Cole, a truck driver, brought class action claims on behalf of himself and other truck drivers alleging the employer failed to give them rest and meal breaks. The district court ruled in favor of the employer.

Cole maintains that the district court erroneously concluded that the employer complied with California law simply because it did not prevent its employees from taking breaks. Cole asserts that California law mandates that the employer affirmatively provide breaks by adopting a policy authorizing them. Cole emphasizes that the employer did not have such a policy, did not record meal breaks on its payroll statements, and did not pay its drivers for rest breaks.

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COTW #35 - Is Dynamex retroactive?

Vazquez v. Jan-Pro Franchising (9th Cir 07/22/2019) [PDF] is our Case-of-the Week.

Two months ago, the 9th Circuit shook things up by ruling that California’s Dynamex case applies retroactively.

Remember: Dynamex v. Superior Court (California 04/30/2018) [PDF] held that the “ABC” test applies to the issue of whether workers are employees rather than contractors under California Wag Orders.

Now the 9th Circuit has withdrawn its retroactivity opinion, and will certify the question of retroactivity to the California Supreme Court.

This is the right thing to do. It’s an important question of state law that ought to be decided by the state court.

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ABC Test vs. franchise arrangements

A Ninth Circuit case has applied the California Dynamex case retroactively. Vazquez v. Jan-Pro Franchising (9th Cir 05/02/2019) [PDF].

Jan-Pro - an international janitorial firm - had franchisors called Master Franchisors. And then under them were Unit Franchisees who were the only people actually doing janitorial work.

And those franchisees sued Jan-Pro seeking to be classified as employees rather than independent contractors.

So the question under the California Dynamex case is

• whether these workers were free from control,

• whether their work was outside Jan-Pro’s customary business, and

• whether these workers themselves customarily had an established business.

I don't think Jan-Pro can win this case. But we'll see. And I think this is the end of these complex franchising arrangements in California.

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Cosmetology student was not an employee when working at the school's training salon

Patrick Velarde sued The Salon Professional Academy of Buffalo and its owners (Academy) for wages he claimed were owed under the Fair Labor Standards Act (FLSA) and New York Labor Law §§ 190, 650 et seq. for work he performed during his cosmetology vocational training at the Academy. The district court held Velarde was not an employee of the Academy and granted it judgment on the pleadings. The 2nd Circuit affirmed. Velarde v. GW GJ Inc (2nd Cir 02/05/2019) [PDF].

Velarde enrolled with the Academy, a for-profit cosmetology training school, for a 1,000 hour course of study designed to satisfy the coursework requirement for state licensure. Part of his coursework included working under supervision in the Academy salon. The Academy charged customers reduced rates for services performed by students. Velarde and the other students were not paid for their work but received modest tips from customers. After graduation, Velarde became a licensed cosmetologist and sued the Academy for unpaid minimum wage and overtime on the theory he was an employee when he worked at the Academy salon.

In affirming the dismissal of Velarde's lawsuit, the 2nd Circuit held the "primary beneficiary test" announced in Glatt v. Fox Searchlight Pictures, Inc. (2015) for determining when interns are employees in the commercial setting applied to determine whether a trainee in the for-profit vocational training context is an employee. The court concluded the applicable Glatt factors demonstrated Velarde was the primary beneficiary of the relationship given that the 1,000 hours of instruction from the Academy satisfied the coursework requirement for state licensure. The court concluded the fact the Academy charged customers for student work was immaterial because it was entitled to generate a profit on its operations.

This decision is in accord with decisions of the 6th, 7th, and 10th Circuits addressing the same issue.

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Is Uber next? US Supreme Court case could be a game changer.

Is Uber next? US Supreme Court case could be a game changer.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

New Prime v. Oliveira (US Supreme Ct 01/15/2019) [PDF] held that an interstate truck driver does not have to arbitrate his wage and hour claim – even though he signed an arbitration agreement.

This could have a big effect on lawsuits between Uber and their drivers. It probably turns on whether the drivers are IN interstate commerce.

Some pundits were surprised that the Court would issue a "pro-worker," "anti-arbitration" decision, failing to understand that the Justices all do their best to be faithful to the words Congress puts into its statutes.

Dominic Oliveira is an interstate truck driver whose contract with New Prime designates him as an independent contractor. The contract contains a mandatory arbitration provision and contains a "delegation clause," giving the arbitrator authority to decide threshold questions of arbitrability. Oliveira filed a class action claiming that New Prime failed to pay statutory minimum wage. The trial court denied New Prime's motion to compel arbitration; the 1st Circuit affirmed. The US Supreme Court affirmed unanimously. New Prime v. Oliveira (US Supreme Ct 01/15/2019) http://case.lawmemo.com/us/Oliveira.pdf

The Federal Arbitration Act (FAA) directs courts to compel arbitration, but §1 says that "nothing" in the Act "shall apply" to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."

The Supreme Court held that the trial court – not the arbitrator – must first decide whether FAA §1 excludes Oliveira. This is because the contract's delegation clause (which is merely a specialized type of arbitration agreement) can be enforced only if the FAA applies in the first place.

The Supreme Court also held that FAA §1 excludes Oliveira. The FAA's term "contract of employment" refers to any agreement to perform work. At the time of the FAA's adoption in 1925, the phrase "contract of employment" was not a term of art, and dictionaries tended to treat "employment" more or less as a synonym for "work." Contemporaneous legal authorities provide no evidence that a "contract of employment" necessarily signaled a formal employer-employee relationship.

Is a taxi driver an employee or an independent contractor? How about both?

Is a taxi driver an employee or an independent contractor? How about both?

Part of a series - Employment Law Case of the Week - by Ross Runkel.