Will the Promo Industry See Changes Due to California’s New Gig Worker Law?

California’s new “gig worker” law, Assembly Bill 5, requires California companies to classify independent contractors as employees if the work they perform is a regular part of the company’s business (effective January 1, 2020). The law was designed to offer independent contractors with a more stable work environment with access to workers’ compensation, minimum wage and overtime protections, unemployment and health insurance, paid sick days, etc.

Backlash from the “Gig Worker” Law, Assembly Bill 5:

The law was originally designed in response to perceived problems with how drivers were classified by Uber and Lyft, but is not limited to these companies or even the gig economy industry as a whole. While the law was authored as a solution to an evident problem, there is backlash from both workers and employers in different industries. Postmates and Uber fought back against AB5 by filing a lawsuit alleging that the new legislation violated the constitutional rights of individuals and exhibits unfair discrimination against tech platforms and workers using them to make a living.

Some Jobs and Business Types Are Exempt from California’s “Gig Worker” Law:

There are various professions and types of business that are exempt from Assembly Bill 5. Exempted professionals and businesses number more than 50, but include doctors, lawyers, insurance agents, dentists, hair stylists, accountants, real estate agents and other creative professionals.

In addition to the lawsuit filed by Postmates and Uber, lawsuits were filed on behalf of freelance writers and freelance photographers in federal court in Los Angeles. The suits representing writers and photographers allege that AB5 restricts free speech and the media. Independent truck drivers based out of California were the first to succeed in challenging AB5 - they received a temporary injunction.

Will the Promo Industry Be Affected by Assembly Bill AB5? 

It is not yet clear whether or not Assembly Bill 5 will affect the promotional products industry; it is not specified in the legislation. According to the legislation, some marketing professionals and direct sales salespeople are exempt depending on how they are compensated for their work. Many California businesses are insisting that the law will damage their business. The law is currently limiting sales reps in their ability to secure national accounts with headquarters in California; accounts are on hold as they check with their legal departments and watch for news updates to determine how the new freelancer law will affect their standard practice.                                                

If you need to talk to someone about misclassification or if you need to file a misclassification lawsuit, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Uber and Postmates Attempt to Block California’s New Freelancer Law

Postmates, popular app-driven delivery start-up, and Uber, the famous app-driven ride-hailing company, seek an injunction against California’s new freelancer law, effective January 1, 2020. The two companies filed a lawsuit in California federal court hoping to prevent the landmark freelancer law set to go into effect for 2020.

Why Did Uber and Postmates Attempt to Block California’s New Freelancer Law?

The attempt to block Assembly Bill 5 accentuates the fact that the stakes are high for gig companies in California. The new law threatens gig economy business because it requires companies to classify workers as employees rather than independent contractors when certain conditions exist.

When Does Assembly Bill 5 Require Employers to Classify Workers as Employees?

The new “freelancer law” poses a significant threat to California businesses that operate using freelancers rather than employees. Companies are required to classify workers as employees under the following conditions:

• If a company controls how the worker performs their work or

• if the work performed by a worker is a regular part of the company’s business.

How Does the New Law Affect California Businesses?

Experts expect the new law to cause drastic changes at Uber, Postmates, and other similarly structured businesses as they will need to classify their California drivers as employees. This change would add an estimated 20-30% additional labor costs (or more) for Uber and its primary competitor, Lyft. This type of restructuring could end up costing them hundreds of millions of dollars through increased expenses to comply with California’s new freelancer law.

When California workers are classified as employees by their employer, they are entitled to protections under FLSA and California labor law. The protections provided by labor law protect against wage and hour violations, overtime violations, etc. Classification as an employee also means workers are eligible for unemployment insurance and workers’ compensation with the employer required to pay half of the employee’s Medicare and Social Security payroll taxes.

If you have questions about California labor law violations or how California’s new freelancer law may change your workplace, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

California Workers File a Class Action Lawsuit Against Cannabis Companies

Casey Denning and Natalia Cole filed a California lawsuit suing Cannabis harvesting company Loud Buddha LLC and Pura Cali Management Corp, a cultivation contractor associated with Loud Buddha. The companies allegedly violated provisions of the FLSA (Fair Labor Standards Act) and California labor law. According to the lawsuit, the companies forced workers to work long hours in an oppressive workplace with no overtime pay or meal breaks. They also allegedly failed to provide accurate wage statements. The plaintiffs filed on their own behalf as well as others in similarly situated positions with the cannabis companies.

According to Plaintiffs: Workers’ Duties Were Dangerous & Included:

• Cultivating marijuana plants

• Harvesting marijuana plants

• Bucking marijuana plants (removing buds and stems)

• Hanging marijuana plants

• Placing marijuana plants in large commercial freezers to be transported

According to the lawsuit, over 50 workers completed these job duties to total multiple tons of cannabis each year from the Pura Cali marijuana farm.

The Complaint Against Loud Buddha & Pura Cali: What Were the Alleged Violations?

1. Employees forced to work 12-hour days every day of the week.

2. Workers were expected to stay on the job site in a remote location, sleeping on cots. Workers were threatened with discipline if they failed to comply.

3. Employers failed to keep track of workers’ time accurately.

4. Employers failed to provide required meal breaks and rest breaks.

5. Workers were not reimbursed for work expenses (i.e., meals, travel, etc.)

6. Employers allegedly failed to provide overtime pay, paying workers $15/hour in cash.

7. Time records kept by the employer were allegedly unreliable and inaccurate – depriving workers of earned wages and failing to comply with FLSA record-keeping requirements.

Workers employed by the cannabis company are often referred to as “trimmigrants.” The trimmigrants are typically young and often undocumented seasonal workers. The abusive, arguably dangerous conditions endured by the trimmigrants working in Northern California’s Emerald Triangle have been going on for years. The chronicles of their situation include tales of murder, sexual assault, and disappearances.

If you have questions about how to identify employment law violations or if you need to file a California class-action lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Ex-Dancer Sues Strip Club for Misclassification

The misclassification controversy is not exclusive to the gig economy. As the gig economy’s problems seem to escalate, problems are growing in other industries as well. In Daytona Beach, a former dancer at Grandview Live is suing the strip club claiming they owe her back wages because they misclassified her as an independent contractor when she was allegedly an employee.

Brittany Hall, former dancer at Grandview Live in Daytona Beach, claims that due to the club’s misclassification, she allegedly earned less than minimum wage and was not paid overtime. Hall, like the other exotic dancers at the club, was paid strictly in tips from customers. She worked at the strip club for over two years without overtime and receiving less than minimum wage, which attorneys for the plaintiff claim is fairly standard in the industry.

Hall claims Grandview Live owes her money because they violated wage and hour law by paying her less than minimum wage and failed to pay her overtime hours she was due. Hall also alleges that the club took tips from her in addition to their other employment law violations.

California legislature recently passed Assembly Bill 5 which will require companies to treat their workers as employees if they meet certain standards. The bill is set to go into effect January 1, 2020 and will have a massive impact on gig economy companies like Uber and Lyft and DoorDash. But it will also benefit workers like Brittany Hall, working in industries that have been around since before smartphones and apps were introduced.

Sometimes employers misclassify workers unintentionally. In some cases, it is an honest mistake. Other employers actively and purposefully misclassify their employees in order to maximize profits and minimize costs. Employers have major incentives to shift workers off their payrolls due to taxes, unemployment insurance, workers compensation premiums, etc.

If you are misclassified or if you are not being paid overtime wages for all your hours worked, please do not delay. Get in touch with one of the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik DeBlouw LLP so we can help.

California’s Expanded Definition of “Employee”

As of September 18, 2019, AB-5 codified the California Supreme Court’s Dynamex v. Superior Court decision in which the California Supreme Court adopted the “ABC” test for use when determining coverage under the Industrial Welfare Commission (“IWC”) Wage Orders. Under the new California law, the application of the ABC test is expanded to the entire California Labor Code. It takes effect in 2020.

According to the ABC test, the law assumes that any individual who is performing a service for someone else is an employee. The hiring individual or the one receiving the benefit of the service must prove that the worker is an independent contractor if they want to rebut the basic assumption of employment. To be successful, the “hiring” entity would need to meet each one of three different ABC test requirements:

1.    The “worker” must have freedom in connection to the performance of their job duties; the hirer must not maintain control/direction of the worker while they are on the job.

2.    The worker must perform work that falls outside of the hirer’s usual or typical business.

3.    The worker must be shown to be engaged in independent and established trade or business of the same nature as the work they are performing for the hirer.

Determining if a worker is an employee or an independent contractor carries great significance. If the worker is classified as an employee the employer bears responsibility for paying numerous taxes, providing worker’s compensation insurance, and complying with the various state and federal statutes governing employment issues like overtime pay, minimum wage, working conditions, etc. When an employee is misclassified on the job, the hirer can be sued for unpaid wages and overtime, etc.  

The second part of the ABC test is particularly troublesome for employers in the gig economy. It can be taken as a direct challenge to the fundamental business model on which the gig economy thrives. Companies will need to look to the court to determine what is and is not “outside” their usual course of business. Some companies may be able to persuade the judge to make a favorable distinction, but many fear the effect of the new law. Some companies are actively lobbying California legislators for statutory exemptions under AB-5. Occupational and industry exemptions will remain subject to traditional common law definitions of employment.

If you need more information about misclassification in the workplace and what it means to be denied an overtime wage, please get in touch with the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik DeBlouw LLP at one of their law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside and Chicago.

Defining the Employment Status of a College Football Player

In recent news, the question was asked, “Is a college football player an employee of the NCAA?” The 9th U.S. Circuit Court of Appeals recent affirmed dismissal of a college football player’s lawsuit for failure to state a legal claim clearly indicates they feel the answer is no. The ruling means that the National Collegiate Athletic Association (NCAA) and the Pac-12 Conference are not legally required to pay a college football player minimum wage and overtime in accordance with federal or California wage laws.

The NCAA, a not-for-profit educational organization, and the Pac-12 Conference were listed as defendants in a proposed class action lawsuit filed by a college football player. The plaintiff claimed they acted as joint employers because they prescribed terms and conditions under which student athletes perform. The appeals court ruled that the football players were not employees under the FLSA due to economic realities in the relationship between the entities listed as defendants and the players. The found that the defendants in the case were regulatory bodies rather than employees and in so doing, upheld a district court’s ruling on the case.

The appeals court stated that the district court was accurate in their dismissal of the college football player’s California overtime claims based on the state’s decision to exclude student athletes from receiving workers compensation benefits combined with the state appellate court’s interpretations of the related legislation.

When considering the district court’s dismissal of the football player’s suit, the 9th Circuit used the “economic realities” test under FLSA. The test considers certain variables:

The plaintiff’s expectation of compensation

The alleged employer’s power to hire and/or fire

Any evidence that action was taken to evade the law

The court found that limitations on scholarships did not establish an expectation of compensation, the players were not able to show that either regulatory entity held the power to fire or hire a player, and that the NCAA rules did not show a clear intent to evade wage and hour law. They also found that the revenue generated by the relationship between the NCAA and their student athletes did not create an employment relationship.

If you have questions about the Fair Labor Standards Act, unpaid overtime or wage and hour law, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik and DeBlouw LLP today.

Property Appraisers Group Denied Certification of Class in Misclassification Suit Against Major Insurers

California’s 2nd District Court of Appeal affirmed a trial court ruling denying certification of class for plaintiffs in a misclassification lawsuit against major insurers: Allstate, Farmers, North American Compass Insurance Service Group, CIS Group, Advanced Field Services, and Capital Personnel Services. The ruling was a significant win for insurers and service companies as the legal team was attempting to bind a group of 1,550 California property appraisers together to sue for alleged misclassification (McLeery et al. v. Allstate).

The representative plaintiffs in the suit alleged that the two insurance providers and the various service companies intentionally insulated themselves from labor laws by contracting services for property appraisal upon policy creation or renewal rather than hiring appraisers as employees. The time frame cited for the allegations is 2005-2008.

The litigation has been ongoing for years, and legal counsel for the defendants does not predict an end to the proceedings anytime soon. The plaintiffs in the case may appeal the California Supreme Court decision or continue forward with separate lawsuits naming the plaintiffs individually. 

A second lawsuit (Lunde v. Farmers Group) was filed by a different group of 106 appraisers in Los Angeles County Superior Court in 2014 and has been stayed pending the outcome in the McLeery case.

The most recent ruling marks the second tie the appellate court stepped in to answer a procedural question for the McLeery suit. Initially, the plaintiff’s plan to assess damages classwide through statistical analyses of results from an anonymous, double-blind survey sampling class members, but the 2nd Circuit reversed the decision and ordered the trial court to conduct the evaluations according to the proposed plan.

A survey expert, Krosnick, was hired by the plaintiffs to design a method of determining liability and damages. The study consisted of 45-minute interviews with proposed class members. The defendant’s experts questioned the scientific validity of the survey claiming that it invited “significant error” by asking participants to provide precise recall of events up to 10 years in the past. The court found that the survey results failed to specify why workers skipped meal or rest breaks (the nature of their work or their preference), whether inspections were performed by Allstate or Farmers, and failed to address work-practice variations amongst inspectors. The 2nd District upheld the trial court’s decision not to certify class due to the proposed anonymous survey. The courts agreed that the plaintiffs’ case relied on showing that insurance carriers and service companies conspired together to violate labor laws, but the survey failed to do so. The case seems to lack a fair, manageable method of establishing liability.

If you have questions about filing a class action lawsuit or if you have experienced labor law violations on the job, the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP can help. Get in touch with the employment law office nearest you: San Diego, San Francisco, Sacramento, Santa Clara, Los Angeles, Riverside, Orange or Chicago.