2020 Chipotle Case Could Have Fundamentally Changed How FLSA Cases are Litigated

One of the most significant cases in class and collective litigation in 2020 was Chipotle Mexican Grill v. Scott. 

Details on the Case: Chipotle Mexican Grill v. Scott

Case No.: 17-2208, 2nd Circuit

The U.S. Supreme Court weighed in on a critical issue connected to collective action under the FLSA in 2020. The court was asked to consider what it means for a putative class of workers to be “similarly situated” for purposes of being considered a collective under FLSA. 

Who is “Similarly Situated” for FLSA Collective Actions? 

During Chipotle Mexican Grill v. Scott, parties involved claimed there was an “intractable conflict” among the federal courts on the issue of determining who is “similarly situated” for FLSA collective actions. This question and the resulting litigation could have had ground-shifting implications. However, after the parties involved signaled their intent to settle on December 31, 2020, the court did not take up the case even though it could have fundamentally reshaped how FLSA cases, in general, are handled and litigated. Even though this particular case wasn’t litigated, 2020 saw a steady shift in the courts on the issue of defining “similarly situated” for FLSA collective actions. 

The Plaintiffs: Chipotle Mexican Grill v. Scott

In Chipotle Mexican Grill v. Scott, seven named plaintiffs represented six putative classes (under Federal Rule of Civil Proc. 23(b)(3)). The plaintiffs also filed suit on their own behalf and on behalf of 516 additional individuals that opted in on a conditionally certified collective action under the FLSA (Fair Labor Standards Act). The plaintiffs alleged that the company misclassified workers as exempt in violation of state labor laws. Collective plaintiffs alleged that the company misclassified them as exempt in violation of the FLSA. 

The “Similarly Situated” Issue: Chipotle Mexican Grill v. Scott

After the district court denied class certification, the Second Circuit affirmed the order denying class certification based on a lack of predominance and superiority. According to the record, the court could not find that the district court’s conclusion was outside the range of permissible decisions. However, the court did vacate the district’s court order to decertify the collective action based on a legal error. The Second Circuit Court found that the district court improperly analogized the standard for maintaining a collective action (under the FLSA to Rule 23 procedure). As the district court’s decision was based on the inaccurate analogy when they determined that the named plaintiffs and opt-in plaintiffs were not “similarly situated,” the 2nd Circuit Court vacated the order. The improper application of the “sliding scale” analogy to Rule 23 in this case improperly conflated section 216(b) with Rule 23 and the latter rule’s stricter requirements.

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 various law firm offices in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

The “Gig” Driver Misclassification Issue Outlasted the Pandemic of 2020

The outcome of some recent California lawsuits could alter how California handles issues of classification for employees and independent contractors in the gig economy. 

Details About Referenced Cases: 

People of the State of California v. Uber Technologies, Inc., et al

Filed: 10/22/2020 in the Court of Appeal of the State of California First Appellate District Division Four

A160701, A160706 (City and County of San Francisco Sup. Ct. No. CGC-20-584402)

Dynamex Operations West, Inc. v. Superior Court of Los Angeles County

Court: Los Angeles County Superior Court

Case No: BC332016

Rideshare Company Drivers: Employees or Independent Contractors

The California Court of Appeals upheld a trial court ruling that major rideshare companies Uber and Lyft both classify their California drivers as employees rather than independent contractors (People of the State of California v. Uber Technologies, Inc., et al.) The suit started over claims that both companies were violating California state law AB-5, which requires employers classify their workers as employees unless they can prove that the worker is "free from the control and direction of the hiring entity in connection with the performance of the work." The trial court ruled in favor of the state. 

Distinguishing Between Employees and Independent Contractors: 

Courts attempting to differentiate between employees and independent contractors using similar wording usually focus their determinations on the level of independence or control the worker retains compared to the employer. However, determining how much control the employer retains over their worker while performing their work is not the only factor. The issue often hinges on the individual's work itself - and whether or not it falls "outside" the hiring entity's usual course of business. 

Are Drivers Performing Work Outside Uber & Lyft's Usual Course of Business? 

The trial court ruled in favor of California, granting a preliminary injunction prohibiting the two major rideshare companies from classifying their drivers as independent. They found that their drivers were not performing work outside the company's "usual course" of business. Uber and Lyft appealed the trial court's decision. However, Justice Jon Streeter of the Court of Appeals upheld the lower court's decision. He stated that the drivers' misclassification would cause significant irreparable harm noting the lack of wage protections, rest periods, meal breaks, overtime pay, health insurance, etc.

Prop 22 Opposes General Push of California Case Law Toward Greater Classification as Employees:

While California case law's general direction reflects a push toward a greater classification of California workers as employees, Proposition 22 presented a challenge when California voters adopted it in the November 2020 election. This proposition counteracted AB-5. The proposition was backed by the rideshare companies and organizations supporting the classification of gig-economy workers as independent contractors instead of employees. The California Supreme Court's decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles resulted in a "presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission." AB-5 took this presumption and codified the decision of the court. Proposition 22 presented a different definition in opposition to the presumption created by the court's findings in Dynamex Operations West, Inc. v. Superior Court of Los Angeles and the subsequent AB-5. According to Proposition 22, drivers are only considered "engaged" after picking up a passenger, delivery, etc. The definition created by Proposition 22 removes a significant amount of time previously considered to be engaged in work such as when the driver is marked as "available" for a pickup. As such, drivers cannot receive payment for this time or mileage, and they cannot accrue any other type of benefits. 

In our increasingly technology-driven society, the debates for handling gig-economy workers will continue. In addition to rideshare drivers for companies like Uber and Lyft, the issue directly affects many other workers connected to different industries like Grub Hub, and Uber Eats delivery drivers, etc. The debates defining when an individual is "engaged" in work will significantly narrow the definition of when a worker should be classified as an independent contractor.

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 various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Covid-19 Pandemic Violations Posted a Significant Challenge for California Employers in 2020

Many agree that the pandemic and related issues were the most significant challenge California employers faced in 2020. As we approach the end of the first quarter of 2021, Covid-19 related litigation continues to evolve along with California workplace standards. While hundreds of Covid-19 related employment complaints were filed in 2020, only a small percentage were collective actions or class actions, but this could change in 2021. 

Covid-19 Pandemic Could Cause Increase in Wage and Hour Collective Actions in 2021:

Many expect a significant increase in the number of wage and hour collective and class actions in 2021 as the nation adjusts to the pandemic's fallout and the lingering effects on the public and the economy. One of the main factors for the change is the drastic increase in telecommuting during 2020. By the end of 2020, there were twice as many employees telecommuting as employees working on site. While restrictions may lessen, this scenario is not expected to revert to "normal," at least not immediately. An increase in telecommuting workers naturally leads to an increase in "off-the-clock" claims by nonexempt employees and class action wage and hour lawsuits claiming unpaid business expenses due to home office costs. 

At-Risk Areas for California Employers: 

Many California employers are at risk of employment law violations due to timekeeping practices and policies that are not appropriate for a virtual workplace. Many California employers who abruptly transferred in-office employees to telecommuting status during the pandemic never addressed issues of non-compliance related to employee hour tracking, rules and policies regarding off-the-clock work, and compliant practices for business expense reimbursement. Without adjusting these practices and policies, California employers will have difficulty not violating employment law. 

California Employers at Risk for Wage and Hour Class Actions: 

In addition to concerns regarding updated policies and procedures to address a telecommuting workforce, specific industries and types of employers find themselves more at risk for wage and hour class actions filed by on-site employees. Many on-site, essential workers subject to waiting in line for new, mandatory temperature scans may have legitimate overtime or off-the-clock claims. On-site, exempt management employees are stepping in to perform an unusual amount of nonexempt work to decrease payroll costs and cover for employees out due to sickness, etc., due to the pandemic. Many may claim the situation makes them nonexempt employees. 

2021 will see the number of other pandemic-related class action lawsuits increase, as well: discrimination cases connected to which employees are selected to return after extended furloughs, claims in connection with employers requiring COVID-19 vaccinations, etc. 

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 various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Jimmy John's Agrees to Pay $1.8M to Resolve Overtime Pay Dispute

In recent news, Jimmy John’s agreed to pay $1.8 million to settle wage and hour claims. Employees brought form wage and hour claims against Jimmy Johns under the Fair Labor Standards Act. 

Details About the Case: Jimmy John’s Overtime Litig., N.D. Ill., 2/15/21

Case Numbers: 14-CV-5509, 15-CV-1681 & 15-CV-6010 

Court: Northern District of Illinois Eastern Division

The Plaintiffs in the Wage and Hour Claims Case: 

Sixty-six assistant managers from various Jimmy John’s corporate-owned locations that opted into the FLSA collective will receive a settlement check from a $272,500 fund. Additionally, more than 500 Jimmy John’s managers at different independent Jimmy John’s franchisees will receive gift cards totaling $300. The Jimmy John’s gift cards are transferable and can be resold for cash. Two plaintiffs initially filed the suit in July 2014, alleging assistant store managers were misclassified, leaving them exempt from overtime pay. In 2015, the lawsuit became a collective action after numerous other suits were filed. Plaintiffs involved in the case were employed at various Jimmy Johns franchises nationwide, and all allege they were cheated out of overtime pay due to misclassification. 

Seeking a Settlement to Resolve Misclassification, Wage and Hour, and Overtime Pay Claims: 

The plaintiffs’ counsel submitted a motion o Feb. 15th to Judge Charles P. Kocoras of the U.S. District Court for the Northern District of Illinois seeking $1.1 million in attorneys’ fees, $250,000 in litigation costs, and $2,500 service award for each named plaintiff in the case. The settlement proposal was intended to resolve three consolidated collective actions alleging FLSA violations stemming from the alleged misclassification. 

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 various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

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.

Will the CRST Trainee Wage Lawsuit Be Resolved with $12.5M Settlement?

The five-year old wage lawsuit against CRST may soon be resolved. A proposed $12.5 settlement could resolve the trainee wage claims. However, a former CRST driver involved in a separate lawsuit wants the federal court to oppose the settlement. 

All the Details on the Case: Montoya v. CRST Expedited, Inc. 

Case Number: 16-10095-PBS

Court: District Court District of Massachusetts

Date Filed: January 2016

The Plaintiff in the Case: Juan Carlos Montoya

Defendant: CRST Expedited, Inc.

Allegations Made by the Plaintiff:

The Plaintiff, Juan Carlos Montoya, filed the lawsuit in January 2016, alleging that CRST Expedited, Inc. and CRST International, Inc. underpaid their long-haul truck drivers, misled long-haul trucker drivers about the costs of driver training, and assessed excessive fees to recoup costs in violation of FLSA (Fair Labor Standards Act), and state law. The Plaintiff also sought class certification for a collective action. 

Alleged Unpaid Training Leads to Wage and Hour Lawsuit:

According to court documents, drivers in the CRST training program were not compensated for hours worked while training. The court documents described the training program as being conducted in four phases: Driver training school (minimum of one week), Orientation (3.5 days), Training with assigned “lead” driver (28 days), and continuation training (6 months or more). 

Preliminary Settlement Agreement: Montoya v. CRST Expedited, Inc.

Juan Carlos Montoya reached a preliminary settlement agreement on December 15, 2020. If granted approval, the preliminary settlement agreement would be on behalf of a class of thousands of other former CRST driver trainees. The preliminary settlement agreement with the mega carrier totals $12.5 million, and the case is being heard by Massachusetts federal court. 

Wage and Hour & Off the Clock Work Claims:  

The Plaintiff’s complaint claims that trainees were not paid for mandatory training in Phases 1 or 2, but rather trainees in the program accumulate “debt” owed to the company to reimburse the company for training costs like advances for tuition, lodging, drug tests, etc. According to the complaint, trainees in the last two phases of CRST’s long-haul driver training program are paid a rate per mile for any on-duty drive time, but they are not paid for any time spent loading or unloading, or any time the truck is not in transit. When considering the off the clock work, payment during the last two phases of training, is less than minimum wage. 

Former California CRST Driver Opposes Settlement: 

Only one day after the preliminary settlement agreement was filed, a former CRST driver involved in a California lawsuit filed an objection to the settlement (Markson v. CRST). Plaintiffs in the separate lawsuit oppose the preliminary settlement arguing that the agreement is too broad because the settlement agreement terms require plaintiffs in the Montoya case not bring any further action against CRST. This claim could disqualify class members in the Marson case with overlapping claims. 

If you need help with employment law violations in the workplace, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP today. 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.

Did California Farm Retaliate Against Cannabis Workers that Voiced Virus Concerns?

Three sisters (Rachel, Alejandra, and Andrea Montelongo) allege that Valley Harvest LLC and Nug Farms, fired them because they raised concerns about working conditions at the cannabis farm. 

All the Details on the Case: Montelongo et al. v. Valley Harvest LLC et al.

Case Number: 5:21-cv-00235

Court: U.S. District Court for the Northern District of California

Date Filed: Jan. 11, 2021

The Plaintiffs in the Case: Rachel Montelongo, Alejandra Montelongo, and Andrea Montelongo

Defendant: Valley Harvest LLC

The Plaintiffs in the Case: The Three Montelongo Sisters

The Plaintiffs in the case, the Montelongo sisters, are former marijuana farm workers who allege their former employer fired them for voicing complaints about working conditions during the coronavirus pandemic. 

Background of the Case: Montelongo et al. v. Valley Harvest LLC et al

The sisters claim they voiced their concerns to a company executive during their short time on working on the farm. According to court documents, Rachel Montelongo needed to leave work one day citing mental health reasons, and her two sisters accompanied her. One day later, the three women were fired. Based on the sisters’ claims that the complaints they made to the Nug Farms executive concerned violations of health and safety laws, minimum wage laws, family rights protections, and disability accommodations, responding by firing the workers who complained violates employment law. 

The Montelongo Sisters Work History at Nug Farms: 

Valley Harvest LLC, farm labor contractor, hired the Montelongo sisters, and they started work at Nug Farms in June 2020. During their time employed on the cannabis farm, the sisters raised concerns to a company executive about the lack of compensation for time spent waiting in line for mandatory temperature checks before shifts started, and a lack of social distancing in the workplace. According to the complaint, dozens of people were required to work in cramped conditions at Nug Farms. The plaintiffs also allege that they were not provided with appropriate personal protective equipment when instructed to directly handle bleach on the job. According to the complaint, later that month Rachel Montelongo left work to obtain treatment for her postpartum depression. Her sisters left work with her. The next day, human resources called to advise one of the sisters that all three of the Montelongo sisters were fired. The company claimed that Andrea and Rachel were fired for working too slowly and tardiness. The company claimed Alejandra was fired for overwatering certain plants. 

Additional Claims Made by the Plaintiffs in Montelongo et al. v. Valley Harvest LLC et al.

In the lawsuit, the Plaintiffs also brought employment discrimination claims under the Americans with Disabilities Act, multiple retaliation claims, as well as Califonia labor law violations. The Plaintiffs seek damages to compensate lost wages (both back pay and front pay), and additional lost benefits. 

If you have questions regarding employment law and how it protects California employees from workplace retaliation, 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.