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

In a recent decision issued on March 21, 2019, an administrative law judge (ALJ) held that confidentiality clauses in arbitration agreements violate the National Labor Relations Act (the Act). Specifically, the ALJ held that such provisions run afoul of section 8(a)(1) of the Act, and unlawfully require a waiver of employees’ rights under section 7 of the Act to discuss and publicly disclose their terms and conditions of employment. Many may view rulings like this as yet another attack on otherwise lawful arbitration agreements.

In the matter before the ALJ, an employer had lawfully required its employees to enter into an arbitration agreement as a condition of continued employment. The arbitration agreement included a confidentiality clause. The confidentiality clause provided, in part: “The parties shall maintain the confidential nature of the arbitration proceeding and the award, including all disclosures in discovery, submissions to the arbitrator, the hearing, and the contents of the arbitrator’s award[.]”

Although the confidentiality clause, as written, appeared to impose a duty of secrecy rather than a prohibition on disclosure, the ALJ instructed that employees would nonetheless reasonably understand the clause’s message to be one prohibiting them from discussing or disclosing information pertaining to the arbitration or arbitral award. Further still, the clause would reasonably cause employees to believe that they could be disciplined if they were to disclose the information.Continue Reading Tell everybody: Confidentiality clauses may violate employees’ section 7 rights