On September 11, 2019, the California Senate passed Assembly Bill 5 (A.B. 5), which – if signed into law – will codify the so-called “ABC Test” utilized by the California Supreme Court in Dynamex v. Superior Court of Los Angeles to hold that the company’s delivery drivers were employees, not independent contractors, for the purpose of applying California Department of Industrial Relations Wage Orders. The bill, which California Governor Gavin Newsom is expected to sign, will have major implications on so-called “gig economy” workers, potentially leading to many being reclassified as employees rather than independent contractors.
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California employers, take note: On October 9, 2015, California Governor Jerry Brown signed into law AB 622, a bill that prohibits California employers from using the federal E-Verify system for most current employees and applicants.

The E-Verify system, administered by the U.S. Citizenship and Immigration Services, allows employers across the country to confirm that applicants and employees are authorized to work in the United States. The agency boasts that E-Verify is used nationwide by more than 600,000 employers, and is the only free online service to verify employee data against millions of government records within seconds. California’s new law creates strict rules regarding employers’ use of the E-Verify system to prevent discrimination in employment.
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Effective July 1, 2015, California will join Connecticut and Massachusetts[1] in providing mandatory paid sick leave for employees who work in the state at least 30 days within a year, and who are employed for at least 90 days. Under the new law, employees will accrue at least 1 hour of paid leave for every 30 hours worked, for approximately 8 days a year for full-time employees. However, the new law allows an employer to limit the amount of paid sick leave its employees may take in one year to 24 hours (3 days). Employees must be allowed to carry over unused sick leave from one year to the next, but an employer can cap the amount of sick leave an employee may accrue at 48 hours (6 days). This law applies to all California employees regardless of whether they are part-time or temporary employees, with limited exceptions. Even small employers are subject to the new rules.

AB 1522 requires employees be allowed to take paid sick leave for either their own health condition or the health condition of a family member, including preventative treatment. Family members include the employee’s parent, child, spouse, registered domestic partner, grandparent, grandchild, and sibling. Employers are not required to increase the number of paid leave days allowed for in existing policies if they provide for equal benefits as the new law.
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Employers in states across the country are known to shudder and cringe at the thought of contending with the vast array of employment law regulations that apply to California employers. Employers — especially those headquartered elsewhere but with employees in California — have also been known to use clauses in employment agreements with these California employees in an attempt to avoid application of California law. Such clauses include forum selection and choice of law clauses specifying that the law of another state governs the employment relationship, and requiring that employment disputes be litigated in that other state. This approach suffered a heavy blow recently in the guise of a California Court of Appeal’s decision in Verdugo v. Alliantgroup, L.P. The court in Verdugo held that a forum selection clause in the plaintiff’s employment agreement was unenforceable, relying upon a legal test that makes it all but impossible to use such a clause as a device to avoid application of California employment laws.
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In an August 27, 2014 decision, the Ninth Circuit U.S. Court of Appeals ruled that FedEx Ground misclassified approximately 2,300 California package delivery drivers as independent contractors from 2000 to 2007, resulting in the failure to pay certain wages and reimbursements for business-related expenses. For businesses that make use of independent contractors as part of their regular workforce, the decision, Alexander v. FedEx Ground Package System, Inc., furnishes current guidance into how courts in the Ninth Circuit can be expected to apply California’s “right to control” test in determining whether workers are appropriately classified.
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On September 10, 2014, Governor Jerry Brown signed into law AB 1522, known as the “Healthy Workplaces, Healthy Families Act of 2014.” This bill requires California employers, large and small, to provide paid sick leave for their employees. California and Connecticut are the only states in the country thus far to mandate paid sick leave. The law goes into effect on July 1, 2015.

Coverage: Unlike certain other employment laws that are limited to larger employers, there is no minimum number of employees required to trigger coverage under AB 1522. The law broadly extends paid sick leave to most employees, with limited exceptions for certain employees covered by collective bargaining agreements, to providers of in-home supportive services, and to certain employees of air carriers. The exclusion for employees covered by collective bargaining agreements applies if the agreement expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for 1) paid sick days or a paid leave or paid time off policy that permits the use of sick days for those employees; 2) final and binding arbitration of disputes concerning the application of its paid sick days provisions; 3) premium wage rates for all overtime hours worked; and 4) regular hourly rate of pay of not less than 30% more than the state minimum wage rate. A separate exclusion also applies to employees in the construction industry covered by a collective bargaining agreement if the agreement includes specified provisions and was entered into before January 1, 2015 or expressly waives the requirements of AB 1522.
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In a victory for franchisors, the California Supreme Court has ruled that Domino’s Pizza (Domino’s) was not liable as an employer or as a principal in a sexual harassment lawsuit filed by an employee of a Domino’s franchisee. Patterson v. Domino’s Pizza LLC, No. S204543, 2014 WL 4236175 (Cal. Aug. 28, 2014). The plaintiff worked in a Domino’s Pizza franchise store operated by Sui Juris, LLC. She claimed that shortly after she began working, her supervisor sexually harassed her whenever they worked the same shift. She complained to the franchisee, who suspended the supervisor pending an investigation. Despite the supervisor never returning to work, the plaintiff resigned and filed a lawsuit, bringing multiple claims under the Fair Employment and Housing Act (FEHA) for sexual harassment, failure to prevent discrimination, retaliation, and constructive discharge, among others.
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In Cochran v Schwan’s Home Service, Inc., a California court of appeal recently held that employers are on the hook for reimbursing employees who are required to use personal cell phones for work-related calls — even when such calls do not require any out-of-pocket expenditure by the employee, because they are included in the employee’s “unlimited minutes” cell phone plan.

Cochran is especially relevant for employers who authorize or permit employees to use personal cell phones and other devices for work. Under Cochran, where such use is, under the circumstances, required by the employer, the obligation to reimburse arises.
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In a significant reversal of prior precedent, the California Supreme Court ruled on June 23, 2014, in Iskanian v. CLS Transportation Los Angeles, LLC, No. S204032, that employment arbitration agreements with mandatory class action waivers are generally enforceable in light of the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). Prior to the Iskanian decision, class waivers in employment arbitration agreements were regularly invalidated under prior California Supreme Court precedent as set forth in Gentry v. Superior Court, 42 Cal. 4th 443 (2007). (In Gentry, the court held that class waivers in employment arbitration agreements may be unenforceable where a trial court concluded that class arbitration would be a more effective means of vindicating the employees’ rights than individual litigation and arbitration.) In last week’s Iskanian decision, the court concluded that, in light of Concepcion, its ruling in Gentry was abrogated by the Federal Arbitration Act (“FAA”), and accordingly, class waivers in employment arbitration agreements are generally enforceable.
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