North Beach Strip Clubs Facing Unexpected Consequences from New Rules

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Dancers employed at Penthouse Club received their first employee paychecks in November 2018. When they were handed their checks, many of the 30 dancers at the popular North Beach strip club felt a surge of panic and shock. Some decided immediately that they were finished with their job.

Dancers in establishments like the Penthouse Club in North Beach were traditionally engaged as independent contractors. They were accustomed to leaving the club each night with cash (often hundreds of dollars) after they completed a shift. When clubs started enforcing the California Supreme Court ruling from April 2018 that set new standards for employee classification, everything changed. The gig economy was shaken to its core, but the new standards also affected some unexpected areas where workers were traditionally not classified as employees: hair salons, adult entertainment industry businesses, etc.

When the changes swept through local clubs in San Francisco, it resulted in a mass exodus of employees who were not happy with the effects of their new employee status. One single mother who has worked as a dancer at the Penthouse Club described her problem with the change by citing that the entire point of that type of work was being able to go in for a shift, earn quick cash without documentation and keeping all of it. She was one of the dancers who cut ties with the club after they adopted the new standards.

Club owners respond to employee complaints by stating that the new changes are actually costing them as well. As a result of lawsuits and ongoing demands by dancers who sued for employment violations, clubs have been compelled by Court order to eliminate the independent contractor option – dancers will be required to be club employees paid hourly wages and commissions on dance sales. It’s estimated that 200 dancers quit in response to the change. Club management indicated that it dramatically affected overall business and business profitability costing the clubs several million annually with matching payroll taxes, unemployment compensation, workman’s compensation, Health San Francisco costs, Affordable Care Insurance costs, sick leave pay, etc.

The changes were brought about after a California Supreme Court decision on a case brought by two Dynamex drivers. The ruling on the case stated that workers may now be considered employees if they complete job duties during the usual course of the company’s business. This would apply to dancers working at a strip club so club owners who want to play it safe should be paying minimum wage and comply with wage and hour law.

The changes left many dancers scrambling to make ends meet and seeking other employment as the new pay structure offered minimum wage plus commission on dance sales, but the commission pay structure was also altered leaving many of them with significantly less take home pay.

If you need to find out how to seek justice for wage and hour violations or if you are misclassified in the workplace, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Ruling Could Turn California Gig Economy Giants’ Contractors Into Employees

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Uber and Lyft and other similarly situated gig-economy companies are lobbying for Californian democrats to override a recent court ruling that could require them to reclassify their independent contractors into employees. The April ruling was handed down by the California Supreme Court. The far-reaching ruling could make it significantly harder for companies across the industry to claim their workforces are not eligible employees under state wage laws.

Hoping to blunt the ruling’s impact, businesses are urging California political leaders to take action in their favor through legislation or executive action by the governor. Either move would make noise across the national debate regarding rights and roles of workers in today’s gig economy. The businesses affected by the ruling insist that it is stifling innovation and threatening the livelihoods of California workers. They seek a balance between the need for flexible, scalable work arrangements and the rights of California workers and that the definition and implication of said definition should not be simply left to the courts or determined based on old models.

In addition to many popular gig-economy businesses, the California Chamber of Commerce has been quite outspoken in opposing the new requirements indicating that the business model of today’s gig-economy companies does not lend itself to the strict structure of a traditional employer-employee relationship. The chamber argues that forcing this on the companies leaves them in an impossible position and prevents them from continuing forward with their business model. The chamber is attempting to get a legislative fix before the session closes at month’s end. Without this type of fix, they feel entire sectors of California’s economy would be left in jeopardy. As is – without a legislative fix of some sort – the on-demand economy may no longer be a viable business model, which could be devastating as people depend on it.

The California Labor Federation reiterates their support of the ruling and insists they will resist efforts to suspend or reverse. Their stance is based on record highs of income inequality and the millions of working families struggling to make ends meet in what has become an unfair economy. They feel protecting California’s workers should be the top priority of California’s leaders rather than protecting big corporations.

If you have questions about minimum wage, overtime pay, or other employee rights provided by federal and California laws, please get in touch with one of the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Another Driver Wage and Hour Lawsuit Coming at GrubHub

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GrubHub is generating headlines again as they face another proposed collective and class action alleging they misclassified delivery drivers as independent contractors in order to get around the legal requirements to pay minimum wage and overtime pay. A pair of workers have filed suit against the company in Illinois federal court. The company, which takes orders for food from customers through a mobile app or online and then has delivery drivers obtain and deliver the items, has dealt with similar accusations in the past.

The two plaintiffs who filed suit, Carmen Wallace and Broderick Bryant, made allegations that the GrubHub Inc. and GrubHub Holdings Inc. violated the Fair Labor Standards Act as well as both Illinois and California labor law when they classify drivers as independent contractors. The plaintiffs claim that the GrubHub delivery service exerts a substantial amount of control over the work performed by their drivers and relies on the completion of their job duties to run the overall business.

According to the complaint, the GrubHub delivery drivers are currently classified as independent contractors but should actually be classified as employees according to standards set down by law as the company directs the drivers’ work in detail, they instruct drivers on where to report for their work shifts, they tell drivers how to dress and where to go to pick up or wait for orders scheduled for delivery.

Virtually identical claims are being made in another Illinois federal court case called Souran v. GrubHub Holdings Inc.

Numerous drivers for the company tried to opt in to the Souran case after the deadline, but GrubHub would not agree to add them so they filed a new case for late-submitted opt-ins. The Souran group was granted conditional certification as a collective action in February 2017, but was stayed by the Seventh Circuit until the U.S. Supreme Court produced a ruling on another case, Epic Systems Corp. v. Lewis et al. The high court ruling came down in May ruling employment agreements barring workers from bringing class actions permissible. As GrubHub drivers sign this type of agreement when they start work with the company, the Seventh Circuit sent Souran back to district court for additional proceedings in accordance with the ruling of the high court.

Raef Lawson also has a similar suit pending against GrubHub before the Ninth Circuit. Lawson is urging the appeals court to revive his action. It was dismissed in February after the lower court found he was an independent contractor in spite of his claims that he should be classified as an employee.

The action filed by Wallace and Bryant raises most of the same claims. The plaintiffs note a number of different work conditions that are indicative of employee status: drivers work scheduled shifts, drivers must remain available to accept assignments during shifts, drivers are subject to termination if they don’t listen to the company’s dispatchers who are advising them where to go and when to be there, etc.

If you have concerns regarding misclassification in the workplace or if you aren’t being paid overtime you are due, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Coding School Agrees to $1M Settlement After Alleged Labor Law Violations

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A coding school, General Assembly Space, Inc., recently agreed to pay over a thousand of their current and past instructors $1 million in order to settle allegations that the school misclassified them as independent contractors rather than employees. As a result of the misclassification, the instructors were not paid minimum wage and overtime wages according to their complaint filed in California federal court.

The motion for preliminary settlement approval the plaintiffs’ counsel stated that they planned to request 1/3 of the settlement amount – approximately $333,333 for attorneys’ fees and another $15,000 for expenses in addition to regular fees. Plaintiffs’ counsel felt this amount was fair as it would allow each class member to receive around $28.35 for every qualifying week they completed on the job.

If the settlement deal is approved it would provide resolution for the 10-count complaint that was filed by John Marin, lead plaintiff in the case. The suit was filed in July 2017 against General Assembly Space, Inc., a New York based online school.

The lead plaintiff in the case, Marin, began working for the school as a lead instructor, full-time in June 2016. He taught three consecutive 3-month immersive data science courses in Lost Angeles, California.

According to Marin, he consistently worked 70-80 hour work weeks and was not given the meal and rest breaks required by law. He also claims he was not paid overtime for his hours over the standard 40 hour work week or given accurate/itemized wage statements. After he completed the instruction of the third consecutive course, he was terminated abruptly. The company then replaced Marin with an employee who was classified as exempt from overtime. Marin was denied unemployment benefits by the company, but California’s Employment Development Department later reversed this denial.

The original complaint asserted claims under the FLSA (Fair Labor Standards Act) in addition to claims under California state labor law and the state’s Unfair Competition Law. He also made claims under the Private Attorneys General Act (allowing workers to sue in order to recover civil penalties on their own behalf and on behalf of other employees in their situation), and the state of California for labor code violations.

Marin later amended his complaint to add another former instructor, Keyan Bagheri, as a lead plaintiff. The district court cut the claims brought under FLSA and soon after, the two parties entered mediation. The parties notified the court that they had reached a settlement agreement in May.

If you have questions about overtime pay or if you are not receiving your meal or rest breaks in accordance with California state labor law and/or the Fair Labor Standards Act, please get in touch with the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Wage & Hour Settlement In Case of Nurses Classified as Exempt

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A settlement was proposed to settle a wage and hour class action lawsuit alleging that nurses and other medical personnel were misclassified as exempt by Health Resource Solutions Inc. The plaintiff group included both registered nurses and clinicians. The proposed settlement was for $738,000 to close out the overtime class action lawsuit.

The case was founded on the allegations that 79 workers were wrongfully classified as exempt from overtime. Both parties involved in the case agreed on the settlement amount. The plaintiffs noted that estimate distribution amounts to claimants should represent close to 90% of maximum individual claims for overtime wages (exclusive of liquidated/other damages under FLSA and IMWL). April 19th was set as the final approval hearing for the settlement.

The company, Health Resource Solutions, will retain $162,000 of the original proposed settlement amount of $900,000. The amount of the proposed settlement was reduced after a smaller number of plaintiffs became claimants (only 79 of the expected 175 that was originally estimated). The unclaimed settlement funds totaling $162,126.77 will be kept by Health Resource Solutions.

Plaintiffs’ counsel requested that the judge approve legal fees to be taken out of the settlement fund totaling $300,000. The fee was 1/3 of the original settlement amount but will be 41% of the final settlement fund if the request is approved. Attorneys argued that their actions resolved the case prior to incurring the expense of lengthy class action litigation, trial costs, and likely appeals to the court’s decisions.

Monique B. originally filed the complaint in 2016 alleging that the company, HRS or Health Resource Solutions, wrongfully classified their employees – leaving them exempt from overtime they legally deserved. This was done in violation of both the Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Law (IMWL). In order for an employee to be legally classified as exempt they must meet very specific requirements.

If you have questions about overtime violations or other violations of California labor law, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Misclassification Lawsuit Filed Against Axelhire by Delivery Driver

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A new delivery driver misclassification lawsuit was filed against Axelhire Inc., a California based company providing same-day delivery services to ecommerce businesses and brick and mortar retail locations. The suit was filed by a group of employees that allege the company intentionally misclassified them as contract workers in order to save money by avoiding the payment of work-related expenses. This California delivery driver misclassification lawsuit was filed by three lead plaintiffs in California: James K., Krisia B. and Shemicka J.

The three plaintiffs filed the suit on behalf of themselves and other employees in similar situations. The three plaintiffs named above conjointly filed the delivery driver misclassification lawsuit with each claiming that they bore a number of different work-related expenses that should have been covered by the company.

According to the California misclassification lawsuit, class members previously worked or currently work for Axelhire Inc. during certain time periods:

·      James was a delivery driver for Axelhire from April 2017 to current in Los Angeles.

·      Krisia was a delivery driver for Axelhire from March 2017 to December 2017 in Los Angeles.

·      Shemicka was a delivery driver for Axelhire from October 2015 to November 2016 in the San Francisco Bay Area.

The plaintiffs allege that they were not reimbursed for work-related expenses (i.e. fuel, mileage, vehicle maintenance, missing compensation, missing overtime, etc.) Each of the three original plaintiffs were allegedly never paid a regular hourly wage or overtime wages. They were also allegedly not offered the chance to take required meal and rest period breaks.

If you are not paid for your overtime hours in accordance with California state and federal labor law, please get in touch with the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Grub-Hub Drivers Officially Ruled Contractors and The Gig-Economy is Taking Notice

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A recent ruling declared Grub-Hub drivers independent contractors officially and the gig-economy is taking notice. The ruling has the potential to affect Uber litigation as it is also hinging on employment status questions. The significant court decision was handed down by a federal judge asked to rule whether drivers for GrubHub Inc. are actually independent contractors or employees. Since Uber Technologies Inc. has a similar business model that depends on pairing customers with products/services through a smart phone app, it’s not surprising that employment law litigation facing both parties includes similar issues.

The first of its kind ruling was delivered by U.S. Magistrate Judge Jacqueline Scott Corley in San Francisco. According to the ruling, a gig-economy driver does not qualify for employee protections under California law. Her ruling was based on her interpretation of California law on the matter. She did note that the law, as it stands, is an all-or-nothing proposition and the advent of the gig economy’s low wage workforce engaging in low skill, high flexibility, episodic jobs may mean the legislature will need to readdress the issue. 

The GrubHub suit was filed by Raif Lawson. Lawson worked as a food-delivery driver for less than six months while he pursued an acting/writing career. He claimed GrubHub violated California labor laws by not reimbursing him for expenses, failing to pay minimum wage and failing to pay overtime pay for hours worked in excess of either per day or 40/week.

Determining whether Lawson was an independent contractor or an employee hinged on pinning down how much control GrubHub exerts over their drivers’ work lives. GrubHub argued that Lawson held the reins as he decided when, where and how frequently he performed deliveries. Lawson’s attorney contended that GrubHub exerted control over drivers by expecting them to be available to accept assignments during shifts they sign up for and to remain in prescribed geographical regions.

GrubHub is happy with the ruling, as are many other gig-economy front runners facing similar litigation and questions of misclassification. They feel the ruling validates the freedom that GrubHub drivers enjoy. They also stated that the would make sure drivers would retain the advantage of flexibility that made working with GrubHub advantageous.

If you have questions about misclassification in the work place or if you need the help of an experienced California employment lawyer, get in touch with Blumenthal Nordrehaug Bhowmik De Blouw LLP.