Relearning the ABCs: California Supreme Court Adopts New Independent Contractor Test

Last week, in Dynamex Operations West, Inc. v. Superior Court, 2018 WL 1999120 (Apr. 30, 2018) (Dynamex), the California Supreme Court upended the prevailing understanding of the independent contractor-employee distinction under California law. In a ruling that is certain to have wide-ranging repercussions for companies that rely on independent contractors, the Court declined to apply the multi-factor common law test derived from its 1989 decision in S.G. Borello & Sons, Inc. v. Dep’t of Indus. Rel’ns, 48 Cal. 3d 341 (1989) (Borello) to the question of whether a worker is an “employee” subject to the minimum wage and overtime protections of the California Industrial Welfare Commission’s (“IWC”) wage orders. Instead, the Court adopted a simple, three-part test that likely will expand the wage orders’ reach.

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Pennsylvania Federal Court Rules that Drivers are Properly Classified as Independent Contractors

In Razak v. Uber Technologies, Inc., a Pennsylvania federal judge ruled last week that drivers for UberBLACK, the company’s higher-end limousine service, are properly classified as independent contractors. In granting Uber’s motion for summary judgment, this court was the first federal court to determine whether drivers for UberBLACK are employees or independent contractors under the Fair Labor Standards Act (“FLSA”) and similar Pennsylvania state laws.

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U.S. Department of Labor Announces New “PAID” Program for Settling FLSA Claims

On March 6, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) announced a new pilot program through which employers may settle potential overtime and minimum wage claims under the FLSA by paying back pay owed to the affected employee(s), but without paying civil penalties or liquidated damages.  The Payroll Audit Independent Determination (PAID) program will be available for six months, after which the Department will evaluate the viability of the program.  This program is purely voluntary, both for employers, in that they would need to self-disclose the violation(s) to the WHD, and employees, who may choose to accept the back pay being offered by the employer as full settlement of the potential claim, or decline the offer and file suit, thus preserving the right to recover liquidated damages if successful.  If the employee chooses to accept the back pay, and thus settle the potential claim by signing a release of that claim, the WHD will only approve a release if it is tailored to the identified violations and the time period covered by the back wages payment.  Employers are not eligible for the program if they are already under investigation by the WHD, involved in litigation or arbitration regarding the particular claim, or the employee has already communicated an interest in litigating or settling the issue.  Claims that could be resolved through this program include misclassification of employees as exempt from overtime or failure to pay for “off the clock” work.

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The Department of Labor Reinstates Seventeen Bush Era Opinion Letters

Earlier this year, the United States Department of Labor (“DOL”) reinstated seventeen George W. Bush Era opinion letters which were issued in January 2009, but later withdrawn by the Obama Administration. Opinion letters are official guidance from the DOL’s Wage and Hour Division that provide employers with detailed responses to fact-specific questions pertaining to the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Davis-Bacon Act (DBA).

In 2010, the DOL stopped issuing opinion letters and instead began issuing “administrative interpretations,” which offered a more general interpretation of the law rather than a response to specific questions posed by employers or employees.

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Federal Court Dramatically Reduces Attorney-Fee Award to Plaintiffs in FLSA Collective Action Against Chipotle

The United States District Court for the District of Minnesota has dramatically cut an attorney-fee request in a wage-and-hour collective action against Chipotle Mexican Grill Inc. from $3.2 million to $600,000, finding the original amount “excessive” in light of the relatively small $62,000 recovery and straightforward nature of the case. Harris et al. v. Chipotle Mexican Grill Inc., No. 13-CV-1719 (SRN/SER), 2018 WL 617972 (D. Minn. Jan. 29, 2018).

The 81 percent fee reduction marks the end of an almost five-year saga, which began in 2013 as a nationwide putative collective action by employees Marcus Harris and Julius Caldwell. Through the action, Harris and other named plaintiffs, who were employed as hourly workers at Chipotle’s Crystal, Minnesota, restaurant sought unpaid straight time and overtime wages based on allegations that Chipotle forced its non-exempt employees to perform off-the-clock work, pursuant to the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219, and the Minnesota Fair Labor Standards Act, Minn. Stat. §§ 177.21-177.35.

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California at Work: New Labor Laws for 2018

*Originally published by CalCPA in the January/February 2018 issue of California CPA — the original article can be found here.

You may not have expected that the California Legislature in 2017 designated an official state dinosaur (Augustynolophus morrisi) and four state nuts (almond, pecan, walnut and pistachio), which are technically seeds, but that’s a separate article. Less surprising is that employer regulation and employee rights continue to expand in our state, the sixth-largest economy of the world. The rate of expansion, however, seems to have taken another pendulum swing: 304 bills introduced in 2017 mention “employer,” compared to 569 bills in 2016 and 224 in 2015. Most of those bills did not pass, and of the ones that did, most were not signed into law by Gov. Brown. Essential elements of several bills that became law affecting private employers, effective Jan. 1, 2018, unless noted otherwise, follow.

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