Publications Archives

Court of Appeal Rules That On-Call Workers Are Entitled to Reporting Time Pay

By: Kerri N. Polizzi

On February 4, 2019, a panel of the California Court of Appeal held in Ward v. Tilly's, Inc., that certain on-call scheduling practices require employees to "report to work" within the meaning of the Industrial Welfare Commission ("IWC") Wage Orders, triggering compensation requirements even when no work is actually performed.

The case concerned employees of Tilly's, Inc. ("Tilly's") who were assigned "on-call" shifts that required time to call in two hours before their scheduled start time to determine whether they were actually required to come in to work that day. If the worker was in fact called in to work, Tilly's paid them for the entire shift. If, however, the employee calling in was told not to come in for the shift, he or she was paid nothing.

Court of Appeal Upholds Dismissal of Nisei Farmers League Action

By: Kyle D. Kring

Nisei Farmers League v. California Labor and Workforce Development Agency is a piece-rate compensation case involving AB 1513 which we have been following and reporting on since it was originally filed.

Last Friday, the Court of Appeal upheld the dismissal of the Nisei Farmers League action challenging the constitutional validity of Labor Code section 226.2 (AB 1513) which went into effect on January 1, 2016 and requires separate payment for piece rate workers' rest breaks and non-productive time. The court concluded that Plaintiff, Nisei Farmers League failed to allege an adequate basis for finding the statute to be unconstitutional. As you may recall, Plaintiff Nisei Framers League had generally alleged that the statute was unconstitutionally vague as to the phrases "other nonproductive time" and "actual sums due." The legal standard the Plaintiff needed to prove was quite high. The court noted that "... a statute will be deemed to have a reasonable degree of certainty and thereby overcome a vagueness challenge 'if any reasonable and practical construction can be given its language of if its terms may be made reasonably certain by reference to its legislative history or purpose.'"

California Court of Appeals Finds "Hourly" Compensation Plan Not Subject to Piece Rate Laws

California's Fourth Appellate District, Division One (San Diego/Riverside), recently upheld a "production" payment plan that guarantees at least the minimum wage for all hours worked (including non-productive time and rest breaks) but provides that automotive technicians can be paid a higher "hourly rate" based on their production, very similar to the now common "Hourly plus Production Bonus" pay plans. In other words, the payment plan paid by the hour, but the hourly rate to be paid each pay period varied based directly on the individual employee's production. Very similar to an hourly plus production bonus plan, but where the effective bonus was divided by the hours worked and paid on an "hourly" basis.

New California Employment Laws in Response to #MeToo Movement.

By: Kyle D. Kring  

Last weekend, California Governor Jerry Brown signed many significant pieces of legislation related to the recent #MeToo movement. The majority of the laws will take effect on January 1, 2019 and will undoubtedly have a large impact on employees and employers alike. The #MeToo movement, which spread virally in the Fall of 2017, is aimed at combatting sexual harassment and sexual assault. Its effects have had an immense influence on the employment sector, leading to a push for increased employment legislation.

Employees and employers should be aware of the bills Governor Brown signed and those he vetoed, as they are sure to have a profound impact on the employment sector. The major bills are discussed below, with a brief summary of each.

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."

Impact of Recent California Supreme Court Case on Piece-Rate or Hourly-Plus-Production Pay

By: Kyle D. Kring and Kerri N. Polizzi

On March 5, 2018, the California Supreme Court issued its decision in Alvarado v. Dart Container Corp. of California, 2018 WL 1146645. The Court's discussion of the proper means of calculating an employee's "regular rate of pay" has raised questions among employers regarding the decision's effect on the regular rate of pay used in piece-rate or hourly-plus production bonus structures. This article provides a brief summary of the Alvarado case, discusses its limited holdings, and analyzes the impact, if any, it has on piece-rate or hourly-plus-production pay structures.

In short, the case has no present impact on either piece-rate or hourly-plus-production compensation structures. Instead, the Court went out of its way to exclude these non-hourly payments from its holding, which was limited to flat-sum bonuses alone.

Sessions Sues California Over State Laws Protecting Immigrant Workers (AB 450)

By: Kyle D. Kring

On March 6, 2018, the U.S. Department of Justice (DOJ) filed a complaint against the State of California over three state statutes it claims interfere with its ability to control immigration, thereby allowing California to be a "sanctuary state." The California statutes involved include: (1) Assembly Bill 450 "Immigrant Worker Protection Act," (2) Assembly Bill 103, and (3) Senate Bill 54. The complaint in The United States of America v. The State of California states that "[t]hese provisions are preempted by federal law and impermissibly discriminate against the United States, and therefore violate the Supremacy Clause of the United States Constitution."

McMillin Albany LLC v. Superior Court: California Supreme Court Holds SB 800 is the Exclusive Remedy for Construction Defect Claims in New Residential Construction

By: Kyle D. Kring

On January 18, 2018, the California Supreme Court issued an extremely important ruling for the residential construction industry in McMillin Albany LLC v. Superior Court, No. S229762 (Cal. Jan. 18, 2018). The state high court held that S.B. 800 (commonly known as the "Right to Repair Act") is the exclusive remedy not just for economic loss, but also for property damage, arising from construction defects in original construction, stand-alone homes. In so holding, the Court found that the Legislature clearly and unequivocally intended to reshape the rules governing construction defect actions when it enacted S.B. 800.

S.B. 800 requires parties to engage in an informal process that begins with written notice from the homeowner to the builder of the allegations that the construction falls shorts of the standards required by the Right to Repair Act. The builder then has a right to inspect, test, and cure the alleged defects or to pay the homeowner compensation in lieu of making repairs. If the homeowner goes outside of these procedures in bringing a civil action, the builder can move the court for a stay of that action until the homeowner has complied with these requirements. 

New 2018 U.S. Labor Department Guidelines for Unpaid Interns

By: Kyle D. Kring

The U.S. Labor Department's new guidelines for unpaid interns seek to make it easier for employers to use unpaid interns. The guidelines consist of a new "primary beneficiary test" using seven factors to determine whether the intern meets the standard for being unpaid. This standard is much more lenient for employers after the previous six factor test faced a great deal of criticism.

California employers should be aware of the new guidelines. California has yet to develop policy or case law of its own, making the FLSA guidelines applicable in California.

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