New Independent Contractor Test: 3 Clarifications from the Court of Appeal

If your business uses independent contractors at all, you have probably heard about Dynamex Operations West, Inc. v. Superior Court and the new “ABC Test” to analyze whether a worker is an employee or an independent contractor. You were probably worried about whether your independent contractors pass the ABC Test. You are justified in worrying because the new test makes it much more difficult for someone to be classified as an independent contractor. This then opens the door for claims of misclassification, for missed meal break and rest break penalties, and unpaid overtime because that’s what you paid your hourly workers but not your independent contractors. Your business may be sitting on a 5 to 6-figure time bomb.   ABC Test Recap If you have not heard about Dynamex or the ABC Test, or if you need a recap, here it is. Under this new independent contractor test, a worker is properly considered an independent contractor to whom the applicable wage order does not apply if the hiring entity establishes all of the following: (A) that the worker is free … Continue reading

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New California Employment Laws 2019

This is the time of year that Californians, especially California businesses, learn of the slew of new laws that will go into effect in the coming year.  This year is not any different and the new laws are reflective of the social discussions around sexual harassment over the course of the last couple of years. California employers now have a number of laws that will require changes in your documents, training requirements, and how you do business, to name a few.  Below is a list of new laws that I thought were the most interesting and relevant by category, although there is inevitably some overlap. Contracts 1. Employers will be prohibited, with certain exceptions, from requiring an employee to execute a release of a claim or right under the Fair Employment and Housing Act (FEHA) or to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.  This is applicable when the release is provided in exchange for a raise … Continue reading

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Salary History and Equal Pay Laws Clarified

News of the Pay Privacy law prohibiting reliance on an applicant’s salary history in determining employment and pay hit the business world at the end of 2017 and went into effect in January 2018.  Since pay is a large factor in the hiring decision, the new law raised many questions among business owners who are especially concerned about complying with California employment laws.  Some of the common questions related to the salary history requirements and equal pay were: Is it legal to ask an applicant about their desired salary or salary requirement?   Am I liable if an applicant voluntarily gives me their salary history or what they made a their last job?   If an applicant voluntarily discloses their salary history, can I take that information into consideration?   What about a current employee, I already know what they make, so can I take their salary into consideration to determine raises or pay for a new or different position? The conflict between California labor and employment laws and the practical questions that business owners must ask and take into … Continue reading

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New Independent Contractor Test Could be Game Changer

The California Supreme Court recently published an opinion that describes a new independent contractor test that is broader than the current independent contractor test.  The “Borello” multi-factor test has been applied for decades, and this new test makes it harder for businesses to properly classify a worker as an independent contractor. This opinion will affect many businesses that hire independent contractors within the State of California. The main take away from this opinion, Dynamex Operations W. v. Super. Ct., Cal. is this: There is a new independent contractor test for purposes of the obligations imposed by a wage order. Here is a breakdown to help understand the preceding statement: What are wage orders? In California, employment laws are spelled out in different places, including statutes, case law, and wage orders. This case specifically addresses the obligations that are imposed on employers by the wage orders that apply to different industries. These wage orders address issues such as the payment of wages (minimum wage), regulating meal and rest breaks, and the number of hours worked (overtime pay), for example. Since these wage … Continue reading

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Tip Pools – Law Changes (Again)

Two years ago, the Ninth Circuit held that employers may not share tips from tip pools to back of the house staff who aren’t in the “chain of service.”  Last month, this rule was revised by federal law.  This means that California employers in the restaurant, hotel, and other service industries where tips are common place, may now distribute tips to those who were previously excluded, such as cooks and dishwashers.  This is a welcome change that many of my clients who own restaurants and hotels believe is the fairer rule. Below is a recap on what this means for California employers: Tip pooling policies may now provide that back of the house employees can share in  tip pools. This means that tip pooling policies may now require tip pools to be distributed not only to bussers but also to cooks and dishwashers, for example.  This practice was prohibited in the last 2 years. Certain employees are still prohibited from being paid from tip pools. Owners, managers, or supervisors of the business may not share in tip pools.  Employers should … Continue reading

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End of Year Checklist

We are fast-approaching the end of the year, which is when most businesses evaluate the successes and challenges of the past year and make plans for improvements in the coming year.  Just like Santa goes over his list at this time of year, here is a checklist to help your business close out the year and prepare for 2018. Employee Pay Pay Audit – If your company has not performed a pay audit, this is the perfect time to do it since determining whether each employee should receive a raise and how much will require you to review each employee’s pay.  Extend that review to an analysis of whether a pay discrepancy exists between employees in the same or similar positions.  This will help mitigate your company’s risk of Equal Pay violation claims in the future.  If you discover pay discrepancies, this is the time to address those discrepancies and provide raises and bonuses where appropriate. Bonus – As you determine employee bonuses, make sure to review your written policies related to bonuses to ensure that you are meeting the … Continue reading

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New Law 2018 – Parental Leave Requirement Expanded to Smaller Employers

If your business employees 20 to 49 employees, you must prepare for a significant change that many small businesses deem a significant burden – job-protected parental leave.  On October 12, 2017, Governor Brown approved SB 63, which expands the leave requirements of the California Family Rights Act (CFRA) to employers who employ at least 20 employees within a 75 miles (down from the threshold of 50 employees).  If your company does not have a parental leave policy, or has one that does not meet the requirements of the new law, the next couple of months is the perfect time to create one, updated your employee handbook, and establish a contingency plan on how you will cover for employees who may take anywhere between 3 to 7 months of leave. Here is a short outline of the new Government Code Section 12945.6’s requirements: Employers with at least 20 employees within 75 miles of the worksite must now do the following: 1. Provide up to 12 weeks of parental leave to an employee who has worked for the employer for more than 12 … Continue reading

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New Law 2018 –Immigration Enforcement

Immigration was a hot topic this year and starting January 1, 2018, employers will see increased obligations as they relate to employees’ immigration status.  Earlier this month, Governor Brown signed AB 450 into law. Beginning January 1, 2018, employers will have the following obligations as they relate to immigration enforcement agents and the workplace: 1. No access without a warrant: Employers, and others acting on their behalf, may not voluntarily consent to immigration enforcement agents entering nonpublic areas of a place of labor without a warrant. For example, if you own a restaurant, immigration enforcement agents are free to enter the dining room but may not enter the kitchen or back office without a warrant permitting them to do so. Penalties for violating this requirement are $2,000 to $5,000 for the first violating incident and $5,000 to $10,000 for each subsequent violation. 2. No inspection of records without warrant or subpoena: Employers, and others acting on their behalf, may not voluntarily provide immigration enforcement agents the ability to access, review, or obtain the employer’s employee records without a subpoena or … Continue reading

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New Law 2018 – Pay Privacy

“What did you make at your last job?” will be an illegal question when asked of a job candidate in 2018.  California’s Governor Jerry Brown signed AB-168, the salary privacy bill, into law on October 12, 2017.  The law goes into effect on January 1, 2018, and applies to all California employers regardless of size and whether they are in the private or public sector. There are three main parts to the new Section 432.3 of the California Labor Code: An employer shall not rely on an applicant’s salary history as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant. An employer shall not, in any way, either directly or indirectly through third parties, seek an applicant’s salary history information (compensation and benefits). An employer, upon reasonable request, shall provide the pay scale for a position to an applicant applying for employment. However, employment applicants may voluntarily disclose their prior salary history (without prompting), in which case, the employer may use the voluntarily provided salary history in determining that applicant’s salary.  … Continue reading

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California Minimum Wage Increase 2017

The new year brings many things and one of those is a new minimum wage. Effective January 1, 2017, new minimum wage requirements go into effect at the local and state level. The minimum wage is the lowest rate per hour that an employer may pay a non-exempt employee.   However, since the salary test for exempt employees requires that they make at least twice the minimum wage for full-time employment, changes in the minimum wage will affect the minimum salary that you pay your exempt employees as well. Determining what you need to pay workers depends on: How many employees you have; and Where they work. If there is a conflict between the state, county, and/or local minimum wage rate, follow the stricter standard (i.e. the one that is most beneficial to employees). Below is a non-exhaustive chart of the effective minimum wage rates effective as of the date of this post. Location Employers with 26 or More Employees Employers with 25 or Less Employees State of California $10.50 $10.00 City of Los Angeles $10.50 (until July 1, 2017) $10.00 … Continue reading

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