$12M Lyft Settlement: Company Refuses to Classify Drivers as Employees

In late January 2016, Lyft, a ride-hailing service out of California, agreed to pay a $12.25 million settlement in order to provide extra job security to members of a proposed class including both current and former drivers. The drivers filed suit against Lyft in California federal court. One of the more interesting terms of the settlement agreement for many is Lyft’s insistence that drivers will still NOT be classified as employees.

The suit filed against Lyft is just one of several that popular “ride” services are dealing with in both state and federal courts. Another popular ride service that is handling similar suits is Uber Technologies Inc. The numerous suits in the last few years against these types of ride providing companies seek a clearer delineation between employees and independent contractors (which is the current classification of drivers at such companies). In the suit recently settled against Lyft out of California federal court, the company made a few additional concessions that were included in the proposed settlement:

• Lyft conceded the right to terminate drivers at will enabling drivers to “turn down” rides without fear that they will lose their ability to drive for the company.
• Lyft agreed to create a “favorite driver” option for riders to use to designate their favorite drivers – providing drivers with the opportunity for additional benefits.
• Lyft conceded paying costs to arbitrate driver grievances.
• Lyft conceded the implementation of a prearbitration process. 
• Lyft conceded the provision of drivers with additional “rider” info (passenger ratings, etc.)

Lyft representation announced that the company was pleased with the resolution of the matter and that opportunity the settlement terms presented to preserve the flexibility of the drivers that is necessary for them to control their own driving schedule on the platform while still providing consumers with affordable, safe transportation as originally intended. The company designed their platform as a symbiotic relationship between driver and rider. The driver controls when they drive, where they drive and how far they drive and consumers get home safely.

The original plaintiff, driver Patrick Cotter, filed suit against Lyft in September 2013. He alleged that the company’s classification of drivers as independent contractors was inappropriate as they were treated like employees. He also alleged that the company’s policy to “skim” 20% of drivers’ tips as an “administrative fee” was in violation of California labor law. He cited company required inspections of drivers’ vehicles (personal cars) and insurance policies, the company’s right to fire at will, mandatory policies and training, etc. as actions more suited to the role of an “employee” according to California labor law and that drivers were misclassified as independent contractors. The suit was originally proposed as a nationwide class action, but at a later date was limited to California drivers.

The counsel for the plaintiffs saw the terms of the proposed settlement as positive even if they did not attain all that they hoped for with the legal proceedings. Lyft did not agree to reclassify drivers as employees as other “sharing economy” services have recently (i.e. Shyp, Instacart, etc.), but they did agree to make changes that will provide significant benefits to their drivers.

If you would like additional information about misclassification of employees as independent contractors, we would love to discuss it with you. Contact one of the experienced southern California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik today. 

Desperate Housewives Star Files Retaliation Lawsuit

Many have heard of the popular TV series called the Desperate Housewives. Of those who watch the show, almost all should be familiar with Nicollette Sheridan. She has been called the most “risqué” of the women on the show. In most recent news, she may be better known for her recently filed lawsuit.

According to Sheridan, she got into a verbal argument on set with the writer/creator of the show, Marc Cherry. She claims that the argument ended when Cherry slapped her. According to Sheridan, this was battery. According to Cherry, this was stage direction.

Sheridan responded to the incident by complaining to the network as well as the show’s producer. The next year, her character, Edie Britt, was killed in the midst of the show. Sheridan saw this as retaliation for her complaints regarding the “battery” on set the previous year and filed a lawsuit claiming such. The lawsuit was twice dismissed by trial courts and revived twice by the court of appeal.

What secret, sordid detail led to such an intriguing on again, off again response from the courts? It’s not nearly as intriguing as one might expect from a plaintiff known for being “spicy.” In fact, it’s downright boring. The question that is causing the confusion is this: Did Sheridan have to file an administrative complaint with the Labor Commission before suing?

According to the court of appeals, she did not have to file such a complaint. Their decision was based on a brand-new labor code stating:

“A person is not required to exhaust administrative remedies…unless the section under which the action is brought expressly requires it.” The sections referenced in this case are not seen to “expressly require” it as they use the term “may” instead of “shall” in regards to filing a claim with the Labor Commission. The court of appeals does not feel that the word “may” indicates a mandatory requirement. This resulted in the reinstatement of her case allowing Sheridan the opportunity to seek resolution in court.

If you need to discuss on the job battery or if you have other questions regarding southern California employment law, please get in touch with the experienced attorneys at Blumenthal, Nordrehaug & Bhowmik.  

Can a California Employee be Terminated from Work for a DUI?

Consider this scenario: A California resident was driving under the influence on his own time and in his own vehicle. He was pulled over and subsequently charged with a DUI (driving under the influence). His employer responded to the charges by suspending driving privileges. When he could not get the charges dismissed, he was unable to find another position at the company that did not require him to drive a company vehicle. As a result, he was terminated from his employment. The employee was eventually convicted on the DUI charges, served 2 years of probation, and then the conviction was dismissed. The issue on appeal was applying Labor Code Section 432.7 to determine of the employer was in violation of labor law; wrongfully terminating the employee on the basis of criminal records information.

Labor Code Section 432.7:

·       Prohibits California employers from asking employees to disclose information regarding an arrest or detention that did not result in a conviction.

·       Prohibits California employers from basing employment or conditions of employment, job offers, promotions, etc. on a record of arrest or detention that did not result in a conviction.

In this particular scenario, the employer responded to the suit by filing a demurrer which requests a dismissal of a complaint due to it failing to state a valid cause of action. The argument presented was that the employee was convicted which precludes his Labor Code Section 432.7 violation and wrongful termination claims. The employee countered that his conviction occurred post-termination and that it was “likely” to be dismissed. He requested that the court delay proceedings in order to allow time for the resolution of his pending motion to expunge the conviction.

The trial court sustained the employer’s demurrer and dismissed the employee’s complaint. They found that the protection of Section 432.7 of the Labor Code was for situations in which the arrest/detention did not result in a conviction. Since this employee’s DUI charge did result in a conviction, the protections did not apply. They also found that the employer is not required to wait to see if an employee will successfully complete their probation and have their conviction expunged before taking adverse action in response to the employee’s arrest/conviction. On appeal, the court upheld the previous decision in favor of the employer stating that Labor Code Section 432.7 does not prevent an employer from questioning an employee about an arrest pending trial or from basing an employment decision on an arrest that results in a conviction. There are no limitations placed on the statute in regards to whether or not the conviction occurs before or after said employment decision.

If you need additional information regarding southern California labor law or if you have a question about wrongful termination, please get in touch with the experienced attorneys at Blumenthal, Nordrehaug & Bhowmik.  

Bikram Wrongful Termination Suit Filed

Former employees of Bikram Choudhury of Bikram Yoga appear to be making an orderly line when it comes to filing wrongful termination lawsuits. The latest in the line of filings includes allegations that a former teacher-training recruiter, Sharon Clerkin, was fired from her position with Bikram Yoga because she was pregnant and because she refused to play along with business practices described as “shady.”

Clerkin filed the suit in Los Angeles Superior Court including much of the following information. Sharon Clerkin began working with Bikram Yoga as a teacher. She moved from there to the Bikram industrial complex as a teacher-training recruiter/coordinator. This was her position with the company from 2010 until August of 2015 when she was fired. Her job included scouting for trainees and helping in their registration. During her time in the position, she increased registrants from 300 to 400. She claims her success in driving up the number of registrants stopped suddenly with the filing of a number of rape suits against Choudhury.

At this point, Clerkin was allegedly asked to misguide potential registrants regarding the fall 2014 training in Atlantic City: it was abruptly cancelled, then not cancelled, then pulled to a different venue, and then not as follows. According to the information Clerkin provided in the filing, she handled the teacher training session registration for the event originally planned for fall of 2014 in the Atlantic City hotel and the training was sold at $12,500 for a shared room or $16,600 for a single room. Six weeks prior to the start of the training event, Choudhury’s assistant, M. Shigenaga, advised Clerkin that the event was cancelled; in spite of the fact that 36 individuals had already paid their training fees. The next day, the plan changed – Choudhury decided to move the training even to California (in an unspecified venue). Clerkin allegedly received further instruction from Choudhury’s assistant to keep the venue/location change a secret in order to continue collecting registration fees from prospective students interested in the Atlantic City location training. In response to questions posed by Clerkin regarding potential reimbursement of registrants’ airplane tickets to the Atlantic City location, she was told to “mind her own business” according to the complaint filed. In response, Clerkin continued to process registrations, but did not take any payments. She did not feel comfortable doing so until a decision was made regarding the location of the training session.

In summer of 2015, Clerkin discovered she was pregnant. She took days off due to doctor’s orders. When she returned to work, she had been replaced. She was advised by Choudhury that she was a “failure” and that he should have fired her years ago. Clerkin’s husband was also fired from his position with Bikram Yoga. Choudhury allegedly even had his assistant call the police to escort the two off the Bikram Yoga premises.

If you have questions regarding treatment in the workplace or wrongful termination, please get in touch with the southern California employment attorneys at Blumenthal, Nordrehaug & Bhowmik.

Target’s $39M Settlement to Card Issuers’ Regarding Data Breach Claims

A class of banks that sued Target Corp. over the huge 2013 data breach has agreed on a settlement amount of $39 million. The settlement will resolve the long-running dispute. It also goes down in history as the first ever class-wide data breach pact reached on behalf of financial institutions. In the 2013 data breach, over 40 million payment cards that were used to make purchases at Target over the course of a specific three week period were compromised. This occurred during the 2013 holiday season.

The terms of the settlement obtained preliminary approval within two hours of the deal being disclosed. According to the terms of the settlement, Target will pay up to $20.25 million directly to class members. The additional $19.1 million will be paid to fund MasterCard’s Account Data Compromise Program in connection to the breach.

The settlement is applicable to all U.S. financial institutions that issued payment cards that have been identified as “at risk” due to the breach so long as they did not already release their claims against the retailer by signing onto deals with other card brands.

Attorneys for the plaintiff indicated that they felt the agreement was an important result not only because it provided compensation well beyond what the card brand networks offered, but because it will set a precedent that the financial institution behind the method of payment is not always the one to be held responsible for extensive costs in connection to merchant data breaches.

The consolidated class action complaint that resulted in the settlement was filed in August 2014 by Umpqua Bank, Mutual Bank, Village Bank, CSE Federal Credit Union, and First Federal Savings of Lorain. The complaint made allegations that Target was negligent in their responsibilities to protect financial institution data on behalf of their customers and that they violated the Minnesota Plastic Card Security Act.

If you have questions regarding the class action process or any other southern California employment law issue, please get in touch with the attorneys at Blumenthal, Nordrehaug & Bhowmik today. We can answer your questions and provide you with the legal counsel you need. 

Raiders Cheerleaders “Cheering” New California Labor Code Section 2754

The Oakland Raiders cheerleaders might be the group that is the most enthusiastically cheering for the new Labor Code Section 2754. The Raiderettes filed a class action case against the Raiders in 2014 in a fight to win status as employees that would grant them the protection of wage and hour laws. The plaintiffs in the case (cheerleaders/Raiderettes) alleged that, as independent contractors, they received contract pay of $125/game. This rate of pay was provided regardless of how many hours the cheerleaders worked and resulted in less than $5/hour. Minimum wage for California employees at the time of the suit was $8/hour and was since raised to $10/hour.

The Raiderettes are not the only of their kind to feel like they are not being treated fairly on the job. As other professional sports teams’ cheerleaders have filed similar suits, legislature is taking action to address the problem. As of January 1st and in accordance with new Labor Code Section 2754 added by AB 202, cheerleaders for professional sports teams in California will be deemed employees according to state law.

Some wonder if the new legislation could hint at a broader policy against misclassification as independent contractors. Legislative history clearly indicates the apparent concern for the issue of independent contractor classification noting that the Employment Development Department reports for 2012 alone indicated:

$36,348,078 in payroll assessments and

$9,131,000 in tax fraud assessments

(According to the June 24, 2015 Senate Floor Analyses)

The California Division of Fair Labor Standards also agrees that independent contractor classification is a rampant problem – even going so far as to report it as such on their website alongside their concern regarding the lack of a bright-line test.

In fact, the independent contractor classification problem is not one that is limited to California. According to the U.S. Department of Labor Administrator’s Interpretation from July 2015 noted that the misclassification of workers as independent contractors is more and more common in U.S. workplaces. It was also noted that when the economics realities test is combined with the expansive definition of “employ” according to the Fair Labor Standards Act most workers are actually employees – not independent contractors.

If you have questions about your own status as an independent contractor or need information on how to decide if you are actually a misclassified employee, please get in touch with the southern California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik. 

Wrongful Termination Lawsuit Filed by Sarkisian Against USC

Steve Sarkisian, former USC coach, filed a suit against USC alleging that the university wrongfully terminated him in October 2015. The complaint filed requests damages amounting to $12.6 million, but the plaintiff’s attorney indicated to popular media outlets that the former USC coach would be seeking substantially more than the original $12.6M. Sarkisian’s lawsuit alleges the university fired him without receiving accommodations ashe sought treatment for a “disability.”

Sarkisian’s claim is based on the classification of alcoholism as a disability. The former USC coach was on a flight taking him to enter an alcohol rehabilitation treatment center on October 12th when he received an email from the USC Athletic Director, Pat Haden. In the email, Sarkisian was advised that he was fired.

Sarkisian feels that the university failed to support him as the Head Coach when he was most in need of their help. The lawsuit states that instead of honoring the contract in place with Sarkisian and accommodating his disability, the university “kicked him to the curb.” The suit also defines Sarkisian as a “person with a disability” (at times) according to federal law due to his alcoholism in addition to the stress associated with the job of USC Head Coach that contributed to his dependency upon alcohol.

Sarkisian’s interpretation of the situation was that California law required the USC make reasonable accommodations for his disability with time off allowing him to obtain the necessary assistance and the ability to return to his job after treatment was completed. USC did not feel obligated by the referenced California law or the commitment made to Sarkisian.

A newly sober Sarkisian is now ready to return to coaching, but the university has replaced him. Sarkisian feels that the university has effectively “taken away his team, his income and a job that he loved” in not accommodating his need for treatment and holding his job for him until he successfully completed treatment. In addition, Sarkisian’s suit claims that the university’s actions were in violation of the contract in place as they refused to pay him money that he feels is owed to him according to the terms set down.

USC’s response to the claims and allegations was simple. USC’s general counsel stated that the facts were “mischaracterized” by the former coach and that the university will be defending their actions. In fact, the statement from USC’s general counsel went so far as to state that a substantial amount of the information included in the lawsuit is untrue. According to the university’s counsel, the former head coach repeatedly denied that he had a problem with alcohol to university officials. He never asked for time off for rehabilitation and he even resisted efforts on the part of the university to assist him with the issue. At that point, the university made it clear that additional incidents would result in termination by providing Sarkisian this information in writing. When additional incidents occurred, they followed through with the stated consequence: termination.

If you have questions regarding what constitutes wrongful termination or if you feel that you have been wrongfully terminated, please get in touch to discuss your situation with one of the southern California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.