Employment Law Archives

General Background

The classification of an individual performing services for an operating company has long been an area of ambiguity and contention. Oftentimes, an employer may want to classify a new hire as an independent contractor. Oftentimes, an employee may want to be classified as an independent contractor. The critical hot buttons at issue with the classification are tax withholdings, tax deductions, eligibility for overtime, meal breaks, rest breaks and qualification for benefits.

The 9th Circuit’s Dynamex Decision: What You Need To Know

1. Dynamex DOES apply retroactively under California law. The Appellate Court affirmed the the California Supreme Court’s interpretation that Dynamex does apply retroactively, quoting it “is basic in our legal tradition” that “judicial decisions are given retroactive effect.” Ok, that resolves California law. But what about retroactive application under federal law? 2. Dynamex also DOES apply retroactively under Federal law. The defendant-appellee argued that retroactive application was a violation of Due Process. Here, the Court distinguished between retroactive application in a civil context versus a criminal context. As this was a civil matter, the Court referenced the analysis of a legislative act, quoting “adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality” and are evaluated under a rational basis test. Here, we have a judicial rule (i.e. Dynamex) and not a legislative act. Therefore, the court reasoned, “[e]ven more deference is owed to judicial common-law developments, which by their nature must operate retroactively on the parties in the case.” 3. Where can an Employer Win on Summary Judgment (or where might there be no employer-employee relationship)? As we advise our client employers, Prong B of the ABC test provides the clearest opportunity. The example used is where a retail store hires a plumber to repair a bathroom leak, then in that situation the hiring entity (retail store) is not engaged in the same usual course of business as the putative employee (plumber). See our earlier articles regarding Dynamex for a review of the ABC test. 9th Circuit in a New York State of Mind: The 9th Circuit is frequently portrayed as populated by jurists from the West Coast or Pacific Northwest. However, this 9th Circuit decision was authored by the Honorable Frederic Block, Unted States District Judge for the Eastern District of New York, sitting by designation. ALG in the Courtroom: The Honorable William Alsup, District Judge was the Presiding Judge on the Appeal Panel. We recently appeared before Judge Alsup in a client matter. How Do You Manage the Risk?: Business and life is about risks, mitigating risks and managing risks. Litigation arising from misclassification is one of those risks. The first approach a company (or contractor) can take is to set up the work relationship as an employer-employee relationship. The second approach would be to set up the relationship as an independent contractor relationship after running through the test with your legal counsel, and with full appreciation of the risks of misclassification in financial terms. The third approach is to search for insurance to cover this risk. At the present time, we are not aware of any, but new products are being created all the time, so we recommend that employers revisit this issue with their insurance brokers periodically.

About Adishian Law Group, P.C.

Adishian Law Group (https://adishianlaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. As of December 2018, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries in over 590 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

The California Supreme Court recently ruled against Starbucks regarding its practice of not paying employees for alleged “de minimis” work performed after clocking out. Starbucks had a practice of having their employees perform certain administrative and clean up duties after “clocking out” for the day. The effect was that the employees were not paid for this time. Allegedly, Starbucks thought it was okay because this was not a lot of money at issue (i.e. “de minimis“). Quoting from the opinion, “The de minimis doctrine is an application of the maxim de minimis non curat lex, which means ‘[t]he law does not concern itself with trifles.'” Here, though, the California Supreme Court did not view this as a trifle.

The California Supreme Court held that:

(1) California statutes and wage orders have not incorporated the Federal “de minimis doctrine” and
(2) California’s general background de minimis principle is not applicable here

Quoting Justice Liu:

“What Starbucks calls de minimis is not de minimis at all to many ordinary people who work for hourly wages.”

Applying the Starbucks Decision:

Our view is that in this context, “de minimis” is probably dead, so reliance on that concept for justifying post-closing, or pre-opening work “off-the-clock” is misplaced. Perhaps it was not previously, but things change. As Justice Liu wrote in his concluding paragraph of his opinion “The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off-the clock without compensation.”

How Do You Manage the Risk?:

Business and life is about risks, mitigating risks and managing risks. Litigation from arising from failing to fully pay employees is one of those risks, and it is significant. The first approach a company can take is to have employees perform all duties on the clock, and document that requirement in your policies and procedures. If you need an up to date California employer handbook, we can do that for you.

The second approach would be to test the boundaries of the word “routinely” and permit off the clock once in while, after running through the test with your legal counsel, and with full appreciation of the risks. We don’t advise this approach, but merely recognize that some could read the opinion that way.

About Adishian Law Group, P.C.

Adishian Law Group (https://adishianlaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. As of December 2016, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries in over 520 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

It’s as Easy as A-B-C, right?

Independent Contractors are always a point of tension. Recently, the California Supreme Court adopted the “ABC” Test to determine distinguish between employees and independent contractors. The classification of an individual performing services for an operating company has long been an area of ambiguity and contention. Oftentimes, an employer may want to classify new hires as independent contractors. Oftentimes, employees may want to be classified as independent contractors. The critical hot buttons at issue with the classification are tax withholdings, tax deductions, eligibility for overtime, meal breaks, rest breaks and qualification for benefits.

The ABCs of the Dynamex Decision:

The California Supreme Court adopted the ABC test to determine whether an employee is an independent contractor. As the Court wrote: “Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes:

(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 such work and in fact;
(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 the work performed for the hiring”

Applying the ABC Test:

The burden of proof is on the employer (i.e. the “hiring entity”). That means, if the classification is challenged, then the courts will start with the presumption that the individual at issue is an employee, and the employer will have to prove that the relationship passes the ABC test. Prongs “A” and “C” of the test can usually be satisfied with some planning and controls. However, we believe that “B” will prove to be very challenging for many companies or independent contractors.

How Do You Manage the Risk?:

Business and life is about risks, mitigating risks and managing risks. Litigation arising from misclassification is one of those risks. The first approach a company (or contractor) can take is to set up the work relationship as an employer-employee relationship. The second approach would be to set up the relationship as an independent contractor relationship after running through the test with your legal counsel, and with full appreciation of the risks of misclassification in financial terms. The third approach is to search for insurance to cover this risk. At the present time, we are not aware of any, but new products are being created all the time, so we recommend that employers revisit this issue with their insurance brokers periodically.

About Adishian Law Group, P.C.

Adishian Law Group (https://adishianlaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. As of December 2016, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries in over 520 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

Employment practices liability insurance (EPLI) is practically a necessity for a business of any size in California. Employment practices liability insurance can reduce the risks associated with employee lawsuits in California. It is important to understand your employment practices liability insurance policy thoroughly before buying it.

Where the law is not clear, or you are in an area with a lot of litigation, that often translates into financial risk in the form of litigation costs. One way to mitigate the risk is to obtain insurance.

For medium to larger employers, a good employment practices liability insurance (“EPLI”) should be considered with the advice of your insurance agent and legal counsel. There are a lot of provisions to reviews, some of the critical ones are:

Choice of counsel: This is very important. Do you get to pick or the insurance company?
Deductible/Retention: How much is it?
Duty to Defend: What triggers the insurance company’s obligation to defend the claim?
Costs of Defense: Is it total cost, or just a fixed dollar sum?
Liability Coverage: What is covered? What is not covered (exclusions)? What is the cap?

California employers should review their EPLI coverage on a regular basis with an experienced employment lawyer and insurance agent on a recurring basis.

About Adishian Law Group, P.C.

About Adishian Law Group, P.C. Adishian Law Group (https://adishianlaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. As of December 2016, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries in over 520 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

FOR IMMEDIATE RELEASE

Female Former Director of Client Solutions Sues Digilant: Suit Highlights Disability Discrimination, Failure to Provide Accommodation, Failure to Engage in an Interactive Process, Failure to Prevent Discrimination, Retaliation, Wrongful Discharge in Violation of Public Policy and Unfair Competition.

EL SEGUNDO, CA (August 20, 2017) — Samira Judeh filed suit this month in San Francisco Superior Court against Digilant, Inc. (Digilant), a marketing technology company that assists in programmatic media buying. The suit accuses Digilant and its employees of disability discrimination, failure to provide accommodation, failure to engage in an interactive process, failure to prevent discrimination, retaliation, wrongful discharge in violation of public policy and unfair competition.

According to the Complaint, soon after learning that Samira would have to be out of the office for doctor’s appointments on a recurring basis, “Chris Cooper, Digilant’s Vice President of Sales at Digilant began harassing Samira. He was demanding, belligerent and made sarcastic comments to Samira.” Samira informed the Chief Operating Officer that Cooper was “harassing her.”. Nothing was done. Soon thereafter, Samira heard Cooper tell Digilant’s Director of Sales Accounts, “I don’t give a shit what she has going on medically. She’ s a bitch!”

In early May, Samira informed Digilant’s Chief Operating Officer him that she had “been diagnosed with a medical condition and that she would need to go to more doctor’s appointments.” Approximately three weeks later, Digilant terminated her, allegedly for the reason that there was a reduction in work force.

The lawsuit seeks damages for lost wages (front and back pay), benefits and career opportunities, special damages, punitive damages, interest and attorneys’ fees and costs. Digilant has since removed the case to the United States Federal District Court, Northern District of California. Click here for a copy of the Complaint.

“We’re eager to commence discovery to determine what actions, if any, Digilant took once it was on notice of Samira’s medical condition to engage in a good faith interactive process with her or to provide an accommodation. We also interested to learn what steps the Company took to prevent discrimination against Samira and whether or not the Company retaliated against Samira.” says Chris Adishian.

About Adishian Law Group, P.C.

Law Group (https://adishianlaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. As of December 2016, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries in over 520 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

California leave laws are complex. California leave laws are inter-related. California leaves laws are always changing. We receive calls all the time from our clients and potential clients asking what is the correct way to handle an employee who has requested leave or is out on leave.

This is one of the most complicated areas of California Labor Law. Employers are obligated to provide an ever-changing array of leaves to employees who qualify. Some leaves come with job protection and some do not. On the employee side, it is important to understand your evolving rights as well. Many employees do not understand what leaves are legally available to them.

Disability claims appear to be on the rise. In disability cases, Employers also have an obligation to make a reasonable accommodation and engage in a good faith interactive process provided that they are on notice of the disability. However, the employer is not obligated to suffer a “hardship” as a result of the proposed accommodation — and leave itself is a form of accommodation. But how much leave is enough before you can terminate an employee? The law is not clear.

A common scenario we see is where our corporate clients find themselves in an apparent never ending “limbo” where an employee has exhausted all legally required leave, but the employee has not returned to work, and is requesting additional leave. If they fire the employee, they could face a “retaliation” lawsuit even where they provided legally required leave. One mediator (a retired Judge) summed it up humorously as: “Welcome to California, home of beautiful weather and [##%!] legislation.”

The best an employer can do here is to either (1) allow the employee to remain on leave, and consult with an attorney before terminating or (2) obtain a written note from the employee’s health care provider that he or she is not able to return to work and will not be able to do so in the future.

About Adishian Law Group, P.C.

Adishian Law Group (https://adishianlaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. As of November 2015, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 9 foreign countries in over 480 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this article, contact Chris Adishian:

In this latest installment, we revisit the topic of California non-competition agreements (also referred to as California non-compete agreements). This time the focus is on California Business and Professions Code 16600.

In the recent case of Golden v. Cal. Emergency Physicians (9th Cir. 12-16514 4/8/15), the 9th Circuit revisited California’s stark prohibition against non-competition agreements (aka non-compete agreements). In this case, the Court held that the district court “abused its discretion” in holding that California Business and Professions Code 16600 (prohibiting non-compete agreements) did not apply to a no-employment provision contained in the drafted settlement agreement.

In summary, Dr. Golden apparently filed a discrimination lawsuit against Cal. Emergency Physicians (CEP), and the parties ultimately drafted a settlement agreement. In such agreements, there is typically a routine no “re-employment” clause. Many employers obviously want closure, and want certainty that once they settle a claim with the employee, the employee is not going to re-apply for a job next week.

The particular clause at issue provided as follows: “that…Golden shall not be entitled to work or be reinstated at any CEP-contracted facility or at any facility owned or managed by CEP.” It went on to state “if CEP contracts to provide services to, or acquires rights in, a facility that is an emergency room…at which Golden is employed or rendering services, CEP has the right to AND WILL terminate Golden from any work in the emergency room without any liability whatsoever.”

In reaching its decision, the Court reasoned: “The courts of California have not clearly indicated the boundaries of section 16600’s stark prohibition but have nevertheless intimated that they extend to a considerable breadth. At the very least, we have no reason to believe that the State has drawn section 16600 simply to prohibit “covenants not to complete” and not also other contractual restraints on professional practice.”

While the big picture seems to be an affirmation of California clearly stated policy of “open competition and employee mobility”, the court left it to the district court to determine whether this language is in effect a “restraint of a substantial character to Dr. Golden’s medical practice.” In dissent, Judge Kozinski seemed to believe that it was impossible to determine at this point in time whether the provision was in fact a restraint on Dr. Golden’s ability to practice his profession, and that if it did work to that effect in the future, Dr. Golden could argue that the provision was void.

The case is not finished yet, however one implication is that a no re-employment provision drafted into a settlement agreement could perhaps be considered to be a violation of BPC 16600. Depending on other terms of the contract (i.e. whether or not there is a severability clause), either the entire agreement or just the restriction could be voided. If the settlement agreement is voided, then the employer will have paid the money and have no settlement. Of course, this would probably sort itself out, but it will cost (a) time and (b) money. Not a good square to land on. Alternatively, just that clause may be voided, in which case the employer will have paid the money and then the employee could re-apply, and claim retaliation if he or she is not hired. Again, not a place where an employer wants to be after settling a litigation.

Non-compete agreements remain a battleground issue in California, even with the strong language of BPC 16600 and accompanying California Supreme Court decisions, so we’re sure there will be more to follow on this topic…

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of December 2014, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 8 States outside of California and 9 foreign countries — in over 380 legal matters.

For more information about this topic or to speak with Chris Adishian:

Today the Division of Labor Standards Enforcement (“DLSE”) published a template that employers can use in order to comply with the new notice requirements set forth in Labor Code section 2810.5. A Word version can be downloaded here and a PDF version can be downloaded here. www.dir.ca.gov/DLSE

All California employers are required to provide a notice to all employees hired beginning on January 1, 2012 that complies with the requirements of section 2810.5. The new law required the Labor Commissioner to publish a template for employers to use in order to comply with the new law. For more information regarding the notice, and the new law, see my previous post.

I’ve only had a chance to do a quick review of the template, but one area of new information that the DLSE is apparently requiring on the notice is whether the “employment agreement” is oral or written in the wage information section of the template. The new Labor Code section 2810.5 did not require this to be on the notice to the employee, but the law does provide that there may be “[o]ther information added by the Labor Commissioner as material and necessary.” I am wondering if the fact that all employers are required to provide this information on the form necessary means that the “employment agreement” is therefore always going to be written.