Promising news for companies in the transportation industry

Companies in the transportation industry with operations in California have some positive news to celebrate. On May 3, 2019, in Anthony Ayala v. U.S. Xpress Enterprises, Inc., et al., the Central District of California granted partial summary judgment and dismissed a truck driver’s meal and rest period claims, finding that they were preempted by the December 2018 ruling of the Federal Motor Carrier Safety Administration (FMCSA).

In its December ruling, the FMCSA stated that California cannot enforce its meal and rest period laws with regard to interstate motor carriers because those laws do not provide any additional safety benefits above those already provided by the meal period rules contained in the federal hours of service rules. It also found that the California meal and rest period rules unduly burden interstate commerce. Continue Reading

EEOC updates its guidance on employers’ duty to report EEO-1 pay data by September 30, 2019

The EEO-1 Report is a compliance survey mandated by federal law. Generally, employers with 100 or more employees and federal government prime contractors and first-tier subcontractors with 50 or more employees and federal contracts worth at least $50,000 are required to submit EEO-1 Reports to the U.S. Equal Employment Opportunity Commission (EEOC) annually.

A brief history on the expansion of the EEO-1 data reporting requirements

Historically, the EEO-1 Report has required employers to disclose certain demographic data on their workforce population based on job category, gender, race and ethnicity.

In 2016, the Obama Administration announced a plan to expand the EEO-1 data reporting requirements such that employers would be required to report two sets of data: “Component 1” data and “Component 2” data. Component 1 data includes the customary gender, race and ethnicity data historically required in the EEO-1 Report. Component 2 data, which was not previously required in the EEO-1 Report, includes an aggregate of all employees’ W-2 earnings and hours worked based on job category, salary range, gender, race and ethnicity.

The new pay data reporting requirements were scheduled for implementation during the 2017 EEO-1 reporting cycle, for which the filing deadline was March 31, 2018. However, in August 2017, the Trump Administration indefinitely froze the revised EEO-1 Report to reevaluate the need and purpose of the new reporting requirements.

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Dynamex in retrograde – misclassification test and its retroactive reach may open the flood gates for misclassification cases in California

In April 2018, the California Supreme Court turned worker classification on its head when it decided Dynamex Operations West Inc v. Superior Court (Dynamex). In Dynamex, the court adopted a three-factor “ABC” test for analyzing misclassification claims under the California Wage Orders. Under the ABC test, for an employer to show that workers were properly classified as independent contractors, they must demonstrate that: the worker (A) was not under the company’s direct control and direction; (B) performed work that was outside the usual course of the hiring entity’s business; and (C) was customarily engaged in an independent business. Because of, in particular, the second element of the test, this standard makes it very difficult for businesses to prove that workers are independent contractors.

Since last year’s ruling in Dymanex, there has been much speculation about the application of the decision, specifically whether it applies retroactively and the scope of any application of the “ABC” test.

To the shock of employers, on May 2, 2019, a unanimous three-judge panel of the Ninth Circuit of the United States Court of Appeals (the Panel), in Vasquez v. Jan-Pro Franchising International, Inc. (Jan-Pro), held that the Dynamex rule should be applied retroactively.

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Class arbitration requires contractual clarity

In 2010, the United States Supreme Court struck a blow to class action plaintiffs subject to Federal Arbitration Act (FAA)-covered arbitration agreements when it concluded that a court may not compel class arbitration when the agreement is silent regarding the availability of such proceedings. Stolt-Nielsen SA v. AnimalFeeds Int’l, 559 U.S. 662 (2010). “[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Id. at 684.

On April 24, 2019, the Court went one step further, holding that “[l]ike silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement” consented to class arbitration. Lamps Plus, Inc. v. Varela, Case No. 17-988 (Apr. 24, 2019) (Lamps Plus). The Court reversed the Ninth Circuit decision, which found that contractual ambiguity coupled with state contract law requiring courts to construe ambiguities against the drafter created a contractual basis for class arbitration. See Varela v. Lamps Plus, Inc., 701 Fed. Appx. 670, 673 (9th Cir. 2017). The Court held that the FAA preempted the state contract law doctrine as applied by the Ninth Circuit because it “manufactured [class arbitration] by state law rather than consen[t].” When an arbitration agreement is ambiguous regarding class proceedings, the Court will “not seek to resolve the ambiguity by asking who drafted the agreement.” Rather, the FAA provides the default rule that class arbitration is not available when the contract is ambiguous.

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9th Circuit to consider whether the FAAAA preempts California’s ABC test for independent contractor truck drivers

California companies have been required to reconsider their use of independent contractors since the state’s Supreme Court outlined the new ABC test in Dynamex Operations West, Inc. v. Superior Court. Unlike the prior Borello test, which involved the balancing of numerous factors, the ABC test requires that a company establish all of the following: (A) the worker is free from the control and direction of the company; (B) the work is outside the company’s usual course of business; and (C) the worker is customarily engaged in an independent established business in the same line of work.

In the transportation industry, however, the ABC test may be preempted by the Federal Aviation Administration Authorization Act (the FAAAA). The FAAAA preempts all state laws that “relate[] to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” The United States Supreme Court has held that preemption may occur “even if a state law’s effect on rates, routes, or services is only indirect” and applies “at least where state laws have a significant impact related to Congress’ deregulatory and pre-emption-related objectives.”

Because the ABC test is new, there is no binding authority in California on the question of whether it is preempted by the FAAAA. Given this fact, Western States Trucking Association filed a lawsuit against the Acting Director of the California Department of Industrial Relations (Andre Schoorl) and the California Attorney General (Xavier Becerra) seeking a finding that the FAAAA preempts the ABC test.

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Attention employers: Westchester’s earned sick leave law is now in effect

Effective April 10, 2019, certain employers must comply with Westchester County’s Earned Sick Leave Law (WESLL). Westchester County’s Human Rights Commission recently released additional guidance about the new law, which can be found here.

Eligibility, accrual and carryover

Generally, under the law, full- and part-time Westchester County employees who work 80 hours or more during a calendar year are eligible to use sick leave for the care and treatment of themselves or a family member. The law requires employers with five or more employees to allow eligible employees to accrue one hour of paid sick leave per every 30 hours worked, with a cap of 40 hours of leave per calendar year. Employers with one to four employees must provide the same benefits, but the leave may be unpaid. WESLL leave begins accruing on the later of July 10, 2019, or the first date of employment.

Employers have the option of applying the WESLL or, alternatively, the employer can front-load sick and personal time equal to 40 hours or more, at the beginning of a calendar year. In addition, employees are permitted to carry over a maximum of 40 hours of unused sick leave at the end of the year.

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California Court of Appeal cracks down on non-compliant requests for trial courts to retain jurisdiction to enforce settlement agreements

On March 29, 2019, a California Court of Appeal held that a trial court did not retain jurisdiction under Code of Civil Procedure section 664.6 to enforce a settlement agreement after dismissal of the underlying lawsuit because the parties did not comply with the strict requirements of section 664.6. At first blush, the decision in Mesa RHF Partners, L.P. v. City of Los Angeles (Mesa) may not seem significant; however, the court’s holding now requires litigants and their counsel to consider modifying the procedures they typically use to settle and dismiss cases, at least to the extent they want the trial court to retain jurisdiction to later enforce their settlement agreements if that becomes necessary.

Section 664.6 allows for parties to file a stipulation to allow a trial court to retain jurisdiction over a dismissed case to enforce a settlement agreement “in a writing signed by the parties.” In Mesa, the parties resolved a dispute and indicated in their settlement agreement that “[t]he Court shall retain jurisdiction pursuant to [section 664.6] to enforce the terms of the Settlement Agreement.” As is often done, counsel for the plaintiffs then signed and filed a request for dismissal on a printed court form. Counsel even went so far as to insert language on the form that stated the trial court would retain jurisdiction to enforce the settlement under section 664.6.

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New York City Council gives the green light to a ban on marijuana testing for job applicants

On April 9, 2019, New York City Council passed a bill amending the New York City Human Rights Law (NYCHRL), to bar NYC employers from testing prospective employees for marijuana use. The Bill comes in the wake of the City’s efforts to reduce the legal consequences of marijuana use, including reducing arrests and prosecutions for low-level marijuana-related crimes.

The text of the Bill declares it to be “an unlawful discriminatory practice for an employer … to require a prospective employee to submit to testing for the presence of any tetrahydrocannabinols or marijuana in such prospective employee’s system as a condition of employment.” However, the Bill excludes the following jobs from the ban:

  • Police officers
  • Peace officers
  • Positions with a law enforcement or investigative function at the New York City Department of Investigations
  • Workers on construction sites
  • Positions requiring a commercial driver’s license
  • Positions requiring the supervision or care of children, medical patients, or vulnerable persons
  • Positions with the potential to significantly impact the health or safety of employees or members of the public

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New York provides employees with additional hour of paid time off to vote

Though the business community might not have had a vote in it, New York legislators have amended the State’s election laws to provide employees with an additional hour of paid time off to vote on election days.

Until recently, New York law required employers to provide workers with up to two hours of paid time off to vote. A convoluted scheme, however – hinging, in large part, on the employee’s specific election day work schedule – governed whether and to what extent employees were entitled to take such time off. Under the new, more streamlined law, employees may take up to three hours of paid time off to vote – a one-hour bump – regardless of their work schedule (although the employer may designate that the time be taken at the beginning or end of a shift).

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Are non-NYC employees subject to the City’s new sexual harassment prevention training law?

By now, our readers are aware that New York State and City law require annual workplace sexual harassment prevention training. The State law requiring such training took effect last October, and mandates that employers complete the initial training by October 9, 2019. The separate City law became effective just a few weeks ago, on April 1. It requires that covered employers – meaning businesses with 15 or more employees in NYC – comply with the City-specific training requirements by year-end.

In conjunction with the rollout of the City law, the NYC Commission on Human Rights (NYCCHR), the agency tasked with administering the law, issued a series of FAQs to help employers navigate their new training-related obligations. The FAQs – which are not binding law, but do suggest how the NYCCHR will interpret and enforce the law – provide valuable insight. Consistent with the NYC Human Rights Law’s (NYCHRL) definition of “employee,” for instance, the FAQs note that “[a]n employer is required to train independent contractors who have performed work in the furtherance of the business for more than 90 days and more than 80 hours in a calendar year.” As the NYCCHR explains, “independent contractors – regardless of the number of days or hours they work – are considered employees for the purposes of determining whether an employer is obligated to provide the annual sexual harassment training.”

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