On May 23, 2022, the California Supreme Court handed down its decision in Naranjo v. Spectrum Security Services. The decision discusses the penalties recoverable by employees for an employer’s alleged failure to pay meal and rest period premiums where a proper meal or rest period is not provided. The Naranjo Plaintiffs filed a putative class action lawsuit alleging that his employer failed to provide meal and rest periods or premium compensation in lieu thereof as required by California law. In addition to premium pay for meal and rest periods, Plaintiffs also brought derivative claims alleging failure to timely pay wages at termination and failure to provide accurate wage statements. Specifically, Plaintiffs argued that because meal and rest period premiums were not paid, they also were not timely paid all wages due at termination and their wage statements were invalid because they did not reflect the premiums that were not paid.
California
Ninth Circuit rules to lift preliminary injunction on California’s ban on mandatory employee arbitration agreements
By Michele Haydel Gehrke, Mara Curtis & Brandon Nhan on
A split Ninth Circuit panel vacated a 2020 preliminary injunction that blocked the enforcement of California’s A.B. 51, which prohibits mandatory arbitration clauses in employment contracts. If the majority decision stands, it will mean that California employers can no longer require their employees or new hires to sign arbitration agreements (among other types of waivers)…
Biden’s pay equity priority: federal and state updates, and what federal contractors can expect going forward
By Betty S.W. Graumlich, Liza Craig & Ozra Ajizadeh on
Federal contractors and other employers should anticipate greater scrutiny related to their compensation policies and practices as a result of recent policy shifts. President Biden has made it clear that a key priority of his administration is closing the gender and racial wage gap that currently exists in the United States, and that he plans to encourage changes at both the state and federal levels. At the federal level, that means the reintroduction of the Paycheck Fairness Act, the rollout of new policy initiatives, and the issuance of executive orders. This prioritization of pay equity will likely result in renewed enforcement efforts related to pay discrimination from the Office of Federal Contract Compliance Programs (OFCCP). State legislatures also continue to pass laws enhancing pay equity and transparency.
Background
The Equal Pay Act (EPA), passed in 1963, was one of the first anti-discrimination laws enacted and was intended to abolish wage disparity based on sex. The act prohibits wage discrimination between men and women who perform jobs that require substantially the same skill, effort and responsibility within the same company. Despite the existence of the EPA, however, the gender-wage gap still exists with the focus on pay disparities across both gender and race, as evidenced by statistical data.
Biden priority
On International Women’s Day, March 8, 2021, President Biden created the White House Gender Policy Council via Executive Order, to ensure that gender equity and equality are pursued in domestic and international policy. Specifically, the Council is tasked with advancing gender equity and equality by coordinating federal policies and programs that address the structural barriers to women’s participation in the labor force and by decreasing wage and wealth gaps. The Council is to work closely with the Domestic Policy Council, which is coordinating the interagency, whole-of-government strategy for advancing equity, as set forth in Executive Order 13985 of January 20, 2021 (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.) In addition, the President has promised additional funding for agencies such as the Equal Employment Opportunity Commission (EEOC), the U.S. Labor Department’s Office of Federal Contract Compliance Programs, and the Justice Department’s Civil Rights Division to investigate violations and enforce pay equity laws.…
California expands Family Care and Medical Leave eligibility
On September 17, 2020, Governor Gavin Newsom signed Senate Bill 1383 (SB-1383), which significantly expands employee eligibility for family and medical leave under the California Family Rights Act (CFRA).
The law, which will go into effect January 1, 2021, reduces the number of employees required for an employer to be covered under the CFRA and also expands the reasons why employees may take these leaves.
Currently, private employers with 50 or more employees working in a 75-mile radius are required to provide employees with leave under the CFRA, while private employers with 20 or more employees are required to provide limited leave time for baby bonding pursuant to the New Parent Leave Act (NPLA).
SB 1383 expands the leave entitlement to cover smaller employers, requiring employers with five or more employees to provide eligible employees with up to 12 weeks of unpaid leave within a 12-month period for a qualifying reason. Qualifying reasons include:
- Leave for the birth of a child of the employee or the placement of a child with an employee in connection with the adoption or foster care of the child by the employee;
- Leave to care for a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner who has a serious health condition;
- Leave because of an employee’s own serious health condition that makes the employee unable to perform the functions of the position of that employee, except for leave taken for disability on account of pregnancy, childbirth, or related medical conditions;
- Leave because of a qualifying exigency related to the covered active duty or call to covered active duty of an employee’s spouse, domestic partner, child, or parent in the Armed Forces of the United States;
This list of qualifying reasons further expands leave entitlement beyond what employers are required to provide under the current CFRA and NPLA. Under SB 1383, qualified employees will be entitled to take leave to care for the serious health condition of a grandparent, grandchild, or sibling in addition to the current requirement covering an employee’s parent, child, and spouse or domestic partner.…
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Gov. Newsom signs bill to expand CFRA rights
By Michele Haydel Gehrke & Nat Ochoa on
On October 10, 2019, California Governor Gavin Newsom officially signed a bill expanding protected leave rights under the California Family Rights Act (CFRA) to flight crew employees. We covered this issue in more detail here. The new law will allow flight crew employees to be eligible for CFRA protected leave with certain conditions.
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.…
Class arbitration requires contractual clarity
By Michele Haydel Gehrke & Brian Morris on
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
By Mara Curtis & Michael Kleinmann on
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. …
California Court of Appeal cracks down on non-compliant requests for trial courts to retain jurisdiction to enforce settlement agreements
By Remy Kessler & Garrett Parks on
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.…
California on call shifts may qualify for paid reporting time pay
In a recent decision involving retail store employees, the Second Appellate District Court held that employees subject to on-call scheduling must be paid reporting time pay, even when the employee only has to make a short call to determine if they are needed, but does not physically report to work.
The case, Skylar Ward v. Tilly’s Inc., Case Number B280151, involved a putative class action complaint filed by Plaintiff Skylar Ward (Plaintiff), a former sales clerk in a Tilly’s store. In the complaint, Plaintiff alleged that Wage Order 7 mandated that nonexempt retail employees be paid “reporting time pay” if either “an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work” or “an employee is required to report to work a second time in any one workday and is furnished less than two (2) hours of work on the second reporting.” (Cal. Code Regs., tit. 8, § 11070, subd. (5).) Specifically, Plaintiff contended that Tilly’s scheduling policy required employees to call in while on-call, disciplined employees for late or missed call-ins, and made call-in and reporting mandatory. Thus, Plaintiff alleged that when on-call employees contact Tilly’s two hours before on-call shifts they are reporting for work within the meaning of the wage order, and thus are owed reporting time pay.
The trial court sustained the demurrer by defendant Tilly’s on the grounds that Plaintiff is not entitled to reporting time pay under the Wage Order because: (1) the phrase “report to work” means that an employee physically appears at the workplace, and; (2) that merely calling in to learn whether an employee will work a call-in shift does not trigger reporting time pay under Wage Order 7. …
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