On September 18, 2019, California Governor Gavin Newsom signed Assembly Bill (“AB”) 5, thereby codifying the California Supreme Court’s landmark decision in Dynamex Operations West, Inc. v. Lee.  This represents the culmination of a seismic shift in California employment law that began a little over a year ago.

To refresh, starting in 1989, the leading test in California for distinguishing employees and independent contractors was the multifactor standard set forth in S.G. Borello & Songs, Inc. v. Department of Industrial Relations.  Under Borello, the key question was whether the employer “[had] the right to control the manner and means of accomplishing the result desired.”  In addition to this factor, the Borello test also endorsed multiple “secondary” indicia in analyzing and determining the employment relationship.

In April 2018, the California Supreme Court issued its decision in Dynamex.  In Dynamex, the Court announced a new, more objective standard for determining worker classification for the purposes of the California wage orders.  Under this new standard, the burden is on the hiring entity to establish that the worker is an independent contractor who was not intended to be included within the coverage of the California wage orders.  In order to satisfy this burden, the hiring entity must establish all of the following:  (1) that the worker is free from the control and direction of the hiring entity in connection with the performance of work, (2) that the worker performs work that is outside the usual course of the hiring entity’s business, and (3) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Continue Reading California Codifies Dynamex – Now What?

Continuing its aggressive enforcement of California wage and hour laws, the Labor Commission issued wage theft citations of $1.9 million to Fullerton Pacific Interiors, Inc. for failing to pay minimum wage and overtime and failing to provide rest periods to 472 workers on 26 construction projects throughout Southern California.

Fullerton Pacific Interiors provided drywall work

As we’ve previously blogged, for several years the Obama Administration has been on a calculated campaign to increase unionization in America. Federal agencies, particularly that National Labor Relations Board, have been systematically changing longstanding rules to make it more likely that unions can prevail in election representation campaigns.  We previously blogged about two earlier key components of this campaign: the revised rules from the NLRB approving “quickie” union elections on dramatically shortened time frames; and even earlier efforts to allow unions to designate “micro-units,” increasingly small groups of employees so that unions may narrowly focus their organizing efforts.  Now, in the twilight of the Obama Administration, the final effort in the campaign to increase unionization has just been announced: the Department of Labor has finally issued its long threatened regulations that would dramatically narrow the scope of confidential advice employers can receive when dealing with union organizing campaigns.
Continue Reading The Third Shoe Drops: The Department of Labor Issues Revised “Advice” Regulations

A number of recent legal changes will have a notable impact on employee benefits law both now and in the future.  Some of the most significant of those changes are the U.S. Supreme Court’s same-sex marriage decision in Obergefell v. Hodges, and the expansion of Title VII’s discrimination protections to lesbian, gay, bisexual, and transgender (“LGBT”) individuals by the Equal Employment Opportunity Commission (“EEOC”) and some federal courts.

Same-Sex Marriage:  Windsor and Obergefell v. Hodges

In the 2013 Windsor decision, the U.S. Supreme Court ruled that the federal government must recognize same-sex marriages for purposes of federal law.  After Windsor, the federal government issued guidance that it would look to the law of the state where the same-sex couple was married (state of celebration), rather than to the state law where the couple lived (state of residence), in most instances under federal law to determine if the same-sex couple was validly married.  On June 26, 2015, the U.S. Supreme Court held, in a 5-4 decision in Obergefell v. Hodges, that state laws banning same-sex marriage are unconstitutional, and mandated that states both permit same-sex couples to marry and recognize same-sex marriages lawfully performed in other states.  As a result of Obergefell, the “state of celebration” test for determining whether to recognize a same-sex couple’s marriage is no longer relevant under federal law.
Continue Reading Developments in Employee Benefits Law: Same-Sex Marriage and Title VII’s Protection for LGBT Employees

The IRS issued Notice 2013-45 recently, the official guidance document explaining the one-year delay in the implementation of the employer pay-or-play penalties under the Patient Protection and Affordable Care Act (“PPACA”) health care reform.

As announced in a Treasury blog, the IRS has delayed for one year the information reporting requirements (found in sections 6055 and 6056 of the Internal Revenue Code) that apply to insurers, self-funded plans, government agencies and large employers regarding health plan coverage.  This purpose of this delay is to allow the IRS addition time “for dialogue with stakeholders in an effort to simplify the reporting requirements”  and for employers and other reporting entities to “develop their systems for assembling and reporting the needed data.”  Since the collection of this information crucial for the IRS’ determination of an employer’s liability for pay-or-play penalties will not occur in 2014, the IRS has announced that it will not impose pay-or-play penalties for 2014.  In the Notice, the IRS states that it expects that proposed regulations on the information reporting requirements will be issued later this summer.

Continue Reading IRS Guidance On Delay in Implementing Pay-or-Play Penalties of ACA Health Care Reform Law

The Occupational Safety and Health Administration (OSHA) issued an interim final rule and request for comments regarding procedures for handling employee whistleblower complaints under the Affordable Care Act (ACA), Section 1558. This part of the ACA added a new Section 18c to the Fair Labor Standards Act (FLSA), which protects employees from retaliation for exercising certain rights under the ACA, including (1) receiving a federal tax credit or subsidy to purchase insurance through the employer or a future health insurance exchange, (2) reporting a violation of consumer protection rules under the ACA (which, for instance, prohibit denial of health coverage based on preexisting conditions and lifetime limits on coverage), and (3) assisting or participating in a proceeding under Section 1558.

The interim final rule states the time frames and procedures for bringing a whistleblower complaint under Section 18c and covers the investigation, hearing, and appeals processes. An employee has 180 days from the date of the alleged retaliation to bring a whistleblower complaint to the Secretary of Labor. Where a violation is found, remedies can include reinstatement, compensatory damages, back pay, and reasonable costs and expenses (including attorneys’ fees). If the employee brought the complaint in bad faith, an employer may recover up to $1,000 in reasonable attorneys’ fees.

Continue Reading OSHA Issues Interim Final Rules on Whistleblower Protection Provisions Under ACA

Although it’s almost been four years since it was issued in January 2009, Executive Order 13495, known as “Nondisplacement of Qualified Workers Under Service Contracts” (74 Fed. Reg. 6103) has not had much impact upon government contracting employers. That is about to change as the final rule and regulations that will make Executive Order 13495 enforceable go into effective January 18, 2013.  

What Executive Order 13496 Says

Executive Order 13495 requires most federal service contractors (including subcontractors)under a contract that succeeds a contract for performance of the same or similar services at the same location to offer the predecessor contractor’s employees a right of first refusal of employment under the contract for those positions for which they qualify. The requirement imposed by the Executive Order does not require a successor contractor to hire all of its predecessor’s employees. Successor contractors may still reduce the size of the workforce and give first preference to certain members of its own workforce (those employees that have worked for the successor contractor for at least three months and face layoff if they are not employed on the new contract). Certain contracts are exempt from this hiring obligation and waivers may be granted by senior procurement executives in limited circumstances.

Continue Reading New Hiring Obligations for Federal Service Contractors Effective January 18, 2013

The NLRB’s new posting rule, which would apply to virtually all private sector employers, was scheduled to go in effect on April 30, 2012.  Yesterday, we blogged about a South Carolina federal trial court decision striking down the posting rule.  More good news for employers arrived today, as the United States Court of Appeals for