May 2018 Archives

California Supreme Court adopts ABC Test and makes it more difficult to classify workers as Independent Contractors

By: Kyle D. Kring

On April 30, 2018, the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court, made it much more difficult for businesses to properly and legally classify workers as independent contractors as opposed to employees. In a significant and long-awaited ruling, contained in an 82-page opinion, California's highest court clarified the test to determine whether a worker is an employee or an independent contractor for purposes of claims under the California Industrial Wage Orders which regulate the wages, hours, and working conditions (such as required meal and rest breaks) of California workers. Industry experts have estimated that classifying workers as employees, instead of as independent contractors, can increase costs by 20-30 percent. The greatest impact of this new test will be on those companies that hire "independent" contractors to perform work that would generally be considered a core part of the company's business.

The Supreme Court adopted a simpler to apply, but more difficult to establish "ABC Test" to determine whether an individual is an employee or independent contractor. The ABC Test is currently used in Massachusetts and New Jersey. The Court essentially scrapped the existing test for determining employee status, which was used to assess the amount of control the employer had over the worker. That test looked at 10 factors that had varying degrees of importance.

U.S. Supreme Court Affirms Enforcement of Class Action Arbitration Waivers in Employment Agreements

By: Kyle D. Kring and Kerri N. Polizzi 

In a long-awaited decision in Epic Systems Corp. v. Lewis (2018) 584 U.S. ____, the United States Supreme Court held that employer's can enforce arbitration agreements requiring individual arbitration of employment claims. The Court determined that such agreements violate neither the National Labor Relations Act ("NRLA") nor the savings clause of the Federal Arbitration Act ("FAA").

Congress enacted the FAA to explicitly address and combat judicial hostility to arbitration. As such, the law provides that arbitration agreements "shall be valid, irrevocable, and enforceable."

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