Publications Archives

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.

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.

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.

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.