UPDATES FOR CALIFORNIA EMPLOYERS – JULY 2014

Factors to Consider When Classifying Workers As Independent Contractors

In Ruiz v. Affinity Logistics Corporation, the plaintiff was a truck driver for Penske Logistics, a furniture delivery company that had a contract with Sears.  The plaintiff was initially classified as a Penske employee; however, in 2003, defendant Affinity Logistics Corporation took over the services that Penske Logistics had been providing to Sears.  Defendant advised plaintiff and his co-workers that it would continue to employ them, but only on an independent contractor basis.  Plaintiff filed a class action lawsuit against defendant and alleged that defendant incorrectly classified its truck drivers as independent contractors rather than employees, thereby depriving them of employee benefits, such as sick leave, vacation, holiday, and severance wages.  The trial court concluded that plaintiff and his co-workers were properly classified as independent contractors.  On appeal, the Ninth Circuit reversed.  The Ninth Circuit applied the following factors used by California courts to analyze whether a worker is an employee or an independent contractor:  1) The degree to which the principal has the right to control the manner and means by which work is accomplished; 2) Whether the worker is engaged in a distinct occupation or business; 3) As a matter of local industry custom and practice, whether the type of work performed is typically done under the direction of a principal or specialist without supervision; 4) The skill required in the particular occupation; 5) Whether the principal or the worker supplies the tools and place of work; 6) The length of time for which services are to be rendered; 7) Whether or not the work is part of the regular business of the principal; and 8) Whether or not the parties believe they are creating the relationship of employer-employee.  While the principal’s right to control the worker is the most important factor, California courts still consider the other secondary factors in determining whether a worker is an employee or an independent contractor.

Failure to Prove Exhaustion of FEHA Remedies Does Not Affect Subject Matter Jurisdiction

In Kim v. Konad USA Distribution, Inc., the plaintiff prevailed in a bench trial as to her employment discrimination claims under California’s Fair Employment and Housing Act (“FEHA”).  Defendants appealed, arguing that the trial court lacked subject matter jurisdiction since the plaintiff had failed to prove at trial that she exhausted her administrative remedies as required under FEHA.  The Court of Appeal affirmed the trial court’s holding.  The Court explained that exhaustion of administrative remedies does not affect the fundamental subject matter jurisdiction of a trial court to decide plaintiff's case.  Furthermore, the Court found that the defendants had forfeited their right to a judgment of dismissal as to plaintiff’s FEHA claims by failing to request dismissal of the claims before submitting the matter for decision.

California Employers May Be Required To Provide Paid Sick Leave to Employees

On June 12, 2014, California’s Senate Labor and Industrial Relations Committee voted in favor of Assembly Bill 1522, which requires California employers to provide employees with paid sick leave.  Under AB-1522, the “Healthy Workplace, Healthy Families Act,” any employee who works at least seven days in a calendar year is entitled to sick leave at the rate of one hour per every thirty hours worked.  AB-1522 allows employers to cap available sick leave at three days per calendar year.  AB-1522 is still subject to review by the Senate Judiciary Committee, but is expected to pass the full Senate.  It is also expected that Governor Brown will sign the bill and that the law will go into effect next year.

 

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