According to the California Supreme Court, Dynamex Applies Retroactively

When the Ninth Circuit asked the question, “Does your independent contractor ABC test in Dynamex Operations West, Inc. v. Superior Court (Dynamex) apply retroactively?” in Vazquez v. Jan-Pro Franchising International (Vazquez), the California Supreme Court’s answer was “Yes.” 

The Court’s Conclusions in the 2018 Dynamex Case:

In 2018, in relation to the Dynamex case, the Court concluded that under California wage orders, workers are presumed to be employees entitled to the protections afforded by wage orders, and that an employer can avoid this presumption for independent contractors if they are able to establish certain standards. 

Standards Required to Classify a Worker as an Independent Contractor: 

In order to avoid the presumption of employee status and wage order protections, employers must establish that the worker is an independent contractor if: 

1. The worker is free from the employer’s control and direction when it comes to completing their work (both under the employment contract and in fact), 

2. the worker performs a job that is outside the employer/company usual course of business, and 

3. the worker is usually engaged in a trade that is independently established and the same type of work they perform for the employer. 

The “ABC Test” detailed above was codified into California state law by Assembly Bill 5, known as AB 5. 

Before the ABC Test California Employers Used the Borello Test: 

Prior to Dynamex and the ABC Test, California courts and employers used a different, multifactor test referred to as the Borello Test (S.G. Borello & Sons, Inc. v. Department of Industrial Relations). The Borello test focused on how much control an employer had over a worker based on multiple factors. The more control the test indicated an employer held over a worker, the less likely the worker would be classified as an independent contractor. 

The ABC Test is More Stringent than the Previously Used Borello Test: 

The ABC Test provides a stricter set of standards allowing a California worker to be appropriately classified as an independent contractor. Since the standards set by the new test are more strict, many California employers argue they shouldn’t be held to the newer standard in misclassification lawsuits predating the Dynamex opinion that set the standard. However, the California Supreme Court disagreed with the Vazquez case. The court concluded that there was no reason to depart from the generally accepted rule that judicial decisions are considered retroactive. 

If you need to discuss misclassification or if you need to file a California misclassification 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.

Rideshare App Drivers File Suit to Overturn California Prop 22 Measure

Some drivers for rideshare app drivers and delivery services filed a lawsuit to overturn a California Proposition 22, a ballot initiative making rideshare app drivers independent contractors rather than employees. The employee classification determines worker eligibility for benefits, and job protections applicable to common issues like overtime pay, minimum wage, etc. 

Rideshare App Drivers Wish to Overturn California Prop 22 Ballot Measure

The drivers filed the lawsuit with the California Supreme Court claiming that the ballot measure is unconstitutional since it limits the Legislature’s power to grant workers the right to organize and exclude drivers from workers’ compensation eligibility. 

The Ballot Measure: California Prop 22

Voters approved the ballot measure in November 2020 (with almost 60% of the vote). California Prop 22 received heavy financial support from major rideshare app companies like Uber and Lyft, amounting up to $200 million. Drivers opposing the proposition were joined by labor unions that spent approximately $20 million to challenge the proposition. 

California’s Prop 22: Challenged in Court

The proposition is the most expensive one in California history. Once Prop. 22 was certified, opposing groups could challenge it in court. Prop. 22 supporters insist voters spoke clearly when they passed the ballot measure in a landslide. The fate of Prop. 22 will be left to the state Supreme Court. 

If you have questions about California labor law violations or how employment law protects you against labor law violations, 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.

Vazquez v. Jan-Pro Franchising International: 2021 Sees Several Key Cases Heading to the California Supreme Court

While activity in the California courts was slow in 2020, there are several potentially significant cases on the horizon for 2021. The California Supreme Court has several pending cases that could make waves throughout the state of California, including NVazquez v. Jan-Pro Franchising International. 

Vazquez v. Jan-Pro Franchising International: Scheduled to Appear before California Supreme Court in 2021

Case Info: Vazquez v. Jan-Pro Franchising International, Inc. (No. 17-16096 (9th Cir. 2019)). 

According to lawsuit documents, the Defendant in the case, Jan-Pro Franchising International, Inc. or Jan-Pro, licenses a system for marketing cleaning services to “regional master franchisees.” The corporation operates in multiple countries, including the USA. Regional master franchisees purchase a franchise that comes with exclusive operating rights in the designated “region.” Jan-Pro regional master franchisees are franchisors to “unit franchisees.” Jan-Pro has no contract in place with unit franchisees. Jan-Pro’s contracts are with master franchisors. Contracts with unit franchisees are between the unit franchisee and the master franchisor. Unit franchisees hire their own employees, and act according to their own devices. The Plaintiffs in this case, Vazquez, are former unit franchisees. Vazquez alleged that Jan-Pro’s three-tier business model was designed to misclassify janitors as independent contractors.

The Plaintiff, Vazquez, Claims Jan-Pro Violated California Labor Law: 

The Plaintiff in the case, Vazquez, claims Jan-Pro violated employment law. The Plaintiff alleges that Jan Pro’s sophisticated three-tier franchising model was designed to misclassify workers. The district court dismissed the putative class of plaintiffs’ suit against the international business. The Ninth Circuit court vacated the district court’s dismissal, holding that Dynamex Ops. W. Inc. v. Superior Court 416 P.3d 1 (Cal. 2018), which resulted in the adoption of the now standard ABC test to determine classification of California employees per California wage order laws, applied retroactively. The Ninth Circuit court remanded the case to district court for consideration on the merits in light of Dynamex. Two additional orders were published in connection to the original order from the Ninth Circuit Court. The panel certified to the California Supreme Court the issue of retroactive application of Dynamex Operations West Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018). 

What Question Does the California Supreme Court Need to Decide? 

The question the California Supreme Court will need to decide when hearing Vazquez v. Jan-Pro Franchising International, Inc. is whether Dynamex v. Superior Court, the case that set forth the ABC test for classification of independent contractors, is applicable retroactively. 

The California Supreme Court’s Decision on Vazquez v. Jan-Pro Franchising International, Inc.: 

If the California Supreme Court finds that Dynamex is found to apply retroactively, it’s possible that California misclassification claims could be reopened all the way back to before the 2018 Dyamex resolution. 

If you have questions about California labor law violations or how employment law protects you against labor law violations, 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.

Will California Successfully Force Uber and Lyft to Reclassify Drivers as Employers?

In recent news, California seeks to force Uber and Lyft to reclassify its drivers as employees – with a deadline only weeks out! Attorney General Xavier Becerra plans to file court documents that could make it happen. His office plans to seek a preliminary injunction against both massive rideshare companies. If the court agrees, both would be required to grant their drivers’ employment status while the lawsuit is still pending.

Should Rideshare Companies Own Up to Their Responsibilities?

Becerra feels it is time for the two rideshare companies to own up to their responsibilities and take care of the people who make them such a success – their drivers. By misclassifying drivers or other workers as consultants or independent contractors, employers like Uber and Lyft effectively pass responsibility for certain business costs on to their workers. In this scenario, workers or taxpayers end up footing the bill for employer obligations like paying a legal wage, paying overtime, offering sick leave, unemployment insurance, etc.

Do Rideshare Companies Intentionally Misclassify Drivers as Independent Contractors?

Last month, the group sued Uber and Lyft under the state’s gig work law, AB-5 accusing them of miscategorizing drivers as independent contractors. Earlier this month, the state regulator ruled that Uber and Lyft drivers are employees under California law. Regardless, both rideshare conglomerates continuously defended their position that a mandatory reclassification of drivers would negatively impact their business models, cause a price increase, and leave drivers out of work.

Rideshare Companies Insist Drivers Want to be Independent Contractors

According to Uber and Lyft, most rideshare drivers want to be independent contractors. The companies have already made significant changes to their rideshare apps to retain their current business model under California law. Matthew Wing, an Uber spokesperson, even went so far as to call out California’s elected officials for focusing on “shutting down an entire industry” instead of trying to create work for the more than 3 million Californians currently without a job.                                            

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.

Does California Labor Law Apply to App Drivers or Not?

Last year, California approved the strictest labor law in the country regarding when workers can be classified as independent contractors. Lawmakers intended to push businesses to add more freelancers and independent contractors to their payroll so they would have access to employee protections, benefits, minimum wage, etc. While the new law was praised by labor groups, it set off a string of lawsuits filed by drivers, independent contractors and freelance writers who claimed the new law left them out of work. 

Gig Economy Titans Mount Massive Resistance to New Law: 

In response to the new law, titans in the gig industry like Uber and Lyft have mounted massive resistance. Uber, Lyft, and DoorDash are backing a ballot initiative set to go before voters in November. It’s a multimillion-dollar shot attempting to exclude the companies from the new law, so they won’t be required to give more benefits and wage protections to drivers/contractors. The three gig economy giants all committed to spend at least $30 million to promote the measure – hoping they can get California voters to exempt app-based drivers from the restrictions of the new law. It’s one of California’s most expensive ballot fights. The measure became eligible for the ballot after 623,000 signatures were collected. It’s possible that a success in California could serve as a national precedent. 

Gig Economy Giants Proposing a New Law: 

The massive gig economy giants want the keep the power to hire workers as independent contractors, and they’re proposing a new law that would give drivers who work more than 25 hours a week health coverage and benefits if they are injured while they’re on the job. Based on the new law included in the ballot measure, drivers would be able to work across any app and earn a base of 120% of the minimum wage (and more based on how many miles they drive).  

California Sued Uber and Lyft for Allegedly Misclassifying Drivers

At the beginning of May 2020, the state of California sued Uber and Lyft for allegedly misclassifying drivers as contractors. The Protect App-Based Drivers & Services coalition leading the ballot initiative claims to represent 60,000 drivers and claims that the lawsuit would lead to unnecessary job losses during the Covid-19 pandemic-induced recession. 

If you need to discuss misclassification or if you need to file a misclassification 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.

How is California’s Labor Bill AB5 Affecting the Covid-19 Crisis?

In the current landscape, many of California’s independent contractors and freelancers claim Labor Bill AB5 adds fuel to the fire during the Covid-19 crisis as it further restricts work opportunities.

Unprecedented Unemployment During Covid-19 Has Many Looking at AB5:

The COVID-19 crisis has resulted in unprecedented levels of unemployment across California. With more workers being laid off every day, thousands are starting to look at California Labor Bill AB5 and claim it is making the economic outlook worse.

How Does California Labor Bill AB5 Affect California Amid Covid-19 Crisis?

Legislators, business owners, and many economists are starting to claim that the 2019 bill impedes the state economy and places a burden on the health care system at a point when it is already strained by the novel coronavirus and resulting Covid-19 crisis. According to local media, many hospitals rely on independent contractors to provide health services (particularly in rural areas). With thousands of California workers facing Covid-19 pandemic inspired unemployment, AB5 leaves them in a tight spot, where it’s close to impossible to take on temp jobs from home.

Will the Governor Suspend AB5 Amid Rising Unemployment Due to Covid-19?

Republican candidate for the 50th Congressional District, Darrell Issa, asked Governor Newsom to suspend AB5, insisting that independent contractors and freelancers should be allowed to work. Over 17,000 have joined the Freelancers Against AB5 Facebook, claiming the new law strips them of their freedom, flexibility, and livelihood. As other politicians join the fray calling for the bill to be repealed, the governor has so far not relented. In response to the governor’s response, petitioners are circulating. One such petition, called Freedom to Work, calls upon citizens to “Repeal AB5 Now” and “join the fight!”

California Labor Bill AB5 Was Designed to Address Rampant Workplace Violations in the Gig Economy:

Legislators designed AB5 to protect more than one million gig economy freelancers by making them eligible for benefits. Under AB5, employers are required to meet strict requirements to classify workers as independent contractors (who do not qualify for employment benefits like health insurance, and unemployment). Even before the coronavirus made itself known, AB5 was inspiring widespread layoffs as companies couldn’t meet the increase in labor costs. When coronavirus arrived on the scene, thousands of California’s freelance workers were already out of work.

California Workforce Calling for Flexible Employment Amid Covid-19 Crisis: 

Lorena Gonzalez, the bill’s author, created the law to push employers to recognize their independent contractors as employees, which would make them eligible for employee benefits. Still, many independent contractors believe the bill backfired and that it takes their rights away. Many Californians are calling for change, insisting that right now, it’s more important than ever to have access to flexible employment. Consumers need to be connected by the services many of these independent contractors provide during the crisis, from online tutors to food delivery drivers and even online health professionals. Activists seeking a repeal of AB5 insist that if the goal is minimizing economic damage, AB5 makes no sense, and is hurting the state’s response to the virus.

If you need to talk to someone about employment law violations related to AB5 or Covid-19, 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.

Kim. V. Reins International California, Inc. Decision & Settling PAGA Claims

What does the California Supreme Court decision in Kim v. Reins International California, Inc. (Case No. S246911) indicate about settling PAGA claims? The critical decision was given on March 12, 2020, but before discussing the decision and what it says about settling PAGA claims, consider the details of the case. 

In Kim v. Reins International California, Inc.:

The Plaintiff in the case, Justin Kim, settled his individual claims against his employer and then attempted to move forward with his PAGA (Private Attorneys General Act) against his employer (Reins). Reins employed Kim as a training manager classified as exempt. Kim filed suit against Reins in a putative class action alleging that Reins, the employer, misclassified training managers. Kim alleged multiple employment law violations including:

• Failure to pay wages and overtime

• Failure to provide meal and rest breaks

• Failure to provide accurate wage statements

• Waiting time penalties

• Unfair competition

• Civil penalties under the PAGA 

Reins Immediate Response to Allegations of Employment Law Violations:

Reins moved to compel arbitration of the individual claims and dismissed the class claims. Their action was based on an arbitration agreement and class action waiver that Kim signed at the time of hiring. The trial court ordered arbitration of all claims, except for the PAGA claim. The court also ordered the injunctive relief portion of the unfair competition claim and stayed the PAGA litigation until individual claims litigation was finished. When individual claims were settled, Reins moved for summary adjudication in the PAGA action based on the settlement agreement that resolved Kim’s individual claims, which meant Kim was no longer an “aggrieved employee” under the PAGA.

Does Settling Individual Claims Mean Kim is No Longer an Aggrieved Employee?

The trial court agreed that Kim was longer an “aggrieved employee” eligible under the PAGA, ruling that Kim’s decision to settle his individual claims with the employer precluded him from continuing forward with PAGA claims. (Under the PAGA statute, an individual must be an “aggrieved employee” to qualify.) Kim took the issue to the appeals court, where they agreed with the previous ruling of the trial court found that by accepting the settlement and dismissing his individual claims, Kim acknowledged he no longer maintained Labor-Code-based claims against the company.

The Supreme Court’s Decision & PAGA Claims:

But the California Supreme Court ruled that Kim, a PAGA plaintiff, can continue litigation of a PAGA action after settling individual claims. The case and the Supreme Court’s decision have some employers worried about how future allegations may be handled.

If you need to talk to someone about employment law violations 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.