Much like the Hollywood movie season, this summer saw a number of "blockbuster" employment law decisions that you may have missed while on vacation.
The summer kicked off with two big decisions from the Supreme Courts of California and the United States. First, in Dynamex Operations W. v. Superior Court1, the California Supreme Court set forth a new set of rules for determining whether a worker is an employee or independent contractor for the purposes of wage and hour claims (e.g. unpaid minimum wage, overtime, meal and rest periods, etc.).2 Instead of the multifactor Borello test centered around an employer's ability to control workers, the Court held that under the California Wage Order, a worker is considered an independent contractor only if all three of the following factors are satisfied:
(A) The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance for the work and in fact.
(B) The worker performs work that is outside the usual course of the hiring entity's business. (Examples: A plumber hired by a retail company to repair a bathroom leak is an independent contractor; a cake decorator hired by a bakery to work on custom designed cakes on a regular basis is an employee); and
(C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. (Factors include whether the worker has taken steps to establish and promote an independent business through incorporation, licensure, advertisements, and routine offerings to provide services to potential customers.)
This new "ABC" test will have an immediate impact on employers whose industries have traditionally relied on contractors.
Second, in May, the United States Supreme Court issued its decision in Epic Systems Corp. v. Lewis3, holding that an employer's arbitration agreement that provides for individual arbitration of employee disputes rather than collective (i.e., class) actions is enforceable and not in violation of the Federal Arbitration Act (FAA) or National Labor Relations Act (NLRA). The Court resolved a circuit split, reversing, among others, a Ninth Circuit decision holding that class action lawsuits are protected activity under the NLRA. The NLRA generally gives employees the right to form unions and take collective actions against employers for unfair labor practices. Section 7 of the NLRA provides that employees have the right to self-organize, form, join, or assist labor organizations, bargain collectively, and engage in "other concerted activities" for the purpose of collective bargaining or other mutual aid or protection. The Supreme Court ruled that the definition of "other concerted activities" must be narrowly defined and does not include the right to engage in class action lawsuits.
Other decisions of interest include:
1. Huff v. Securitas Sec. Servs. USA, Inc.,4 in which the court held that a plaintiff that brings a representative action under California's "Private Attorneys General Act" (PAGA) for Labor Code violations is not limited to suing for the violations that he or she personally suffered. PAGA allows an "aggrieved employee" to bring a representative action. The court found that "aggrieved" means that the person must be affected by a least one Labor Code violation committed by the employer. If the employee meets that standard, he or she can bring an action for any other violations committed by the employer, even those the plaintiff did not personally experience.
2. Abed v. W. Dental Servs., Inc.5 This case involved discrimination claims under the California Fair Employment and Housing Act (FEHA). A pregnant extern at a dental office was told by the employer that there were no available positions. The facts suggested that this information was false and the extern did not apply for a position that she was well-qualified for. When the extern sued the employer for sex discrimination, the employer argued that FEHA protects employees and applicants, and that the plaintiff was neither because she never applied. The court allowed plaintiff to proceed on her "failure to hire" case. The plaintiff was not required to apply for the position since the evidence suggested it would have been a "futile gesture." The court also cited U.S. Supreme Court authority that employment discrimination statutes discourage a broad range of activity, including "deterring job applications."
3. Finally, Nishiki v. Danko Meredith, APC, 6 is interesting as a cautionary tale. There a dispute between an employer and a departing employee over $80.00 in the employee's final paycheck led to an administrative hearing before the California Labor Commissioner and ultimately the employer's appeal of the administrative decision via a trial in the Superior Court. Both the employee and employer had meritorious arguments, with the employer prevailing on two of three claims and the employee receiving an award of $4,200.00. However, because California Labor Code section 98.2 provides for attorney's fees to the party that "unsuccessfully appeals" a Labor Commissioner Decision and that an employee is "successful" if the court awards an amount "greater than zero," the employer was also ordered to pay the employee $86,160.00 in attorney's fees.
1 4 Cal.5th 903 (2018)
2 The Dynamex decision was issued on April 30, 2018, but if Marvel's Infinity War (released April 27, 2018) counts as a summer blockbuster, then so does this case
3 138 S.Ct. 1612 (2018)
4 23 Cal.App.5th 745 (2018)
5 23 Cal.App.5th 726 (2018)
6 25 Cal. App.5th 883 (2018)