UPDATES FOR CALIFORNIA EMPLOYERS – NOVEMBER 2014

Employers May be Liable for Certain Labor Code Violations of Staffing Agencies

On September 28, 2014, Governor Brown signed Assembly Bill 1897 (“AB 1897”), which amends California Labor Code section 2810 by creating a new section, 2810.3.  Once AB 1897 becomes effective January 1, 2015, employers using labor contractors, such as temporary staffing agencies, will share liability with the labor contractor if the contractor fails to pay wages or to provide workers’ compensation insurance to individuals assigned to work for the employer.  The new law defines “labor contractor” as an individual or entity that supplies workers to perform labor “within the client employer’s usual course of business.”  The phrase “usual course of business” is defined as “the regular and customary work of a business, performed within or upon the premises or worksite of the client employer.”  Thus, AB 1897 applies only to labor contractors providing workers to an employer in the employer’s usual course of business, and does not apply to independent contractors, who are still covered under the independent contractor exception as long as they are bona fide independent contractors.

Ninth Circuit Holds that Statistical Sampling Can be Used to Certify Class

In Jimenez v. Allstate Insurance Co., the U.S. Court of Appeals for the Ninth Circuit upheld certification of a class of approximately 800 nonexempt insurance claims adjusters who alleged that they worked overtime without compensation, despite Allstate Insurance Company’s (“Allstate”) lawful written policy to pay nonexempt employees for all hours worked.  The plaintiffs were claims adjusters who did not prepare their own time sheets, and did not clock in and out.  Rather, plaintiffs’ time sheets were set to a default of eight hours per day and 40 hours per week.  Plaintiffs’ supervisors could submit “deviations” or “exceptions” for hours worked outside of this schedule.  The Ninth Circuit therefore found that a common question existed amongst plaintiffs as to whether this timekeeping method led to plaintiffs working unpaid overtime.  Notably, the Ninth Circuit held that liability on these issues, as well as the issue of whether Allstate should have known that employees were working off the clock, could be resolved by statistical sampling of records of selected plaintiffs.  This holding could potentially permit class certification whenever a plaintiff asserts that a lawful policy of an employer was not followed more than once, regardless of how individualized the evidence of departures from the policy may be.

National Origin Discrimination Under FEHA is Expanded

Existing California law under Vehicle Code section 12801.9 requires the Department of Motor Vehicles (DMV) to issue an original driver’s license to an individual who is unable to submit satisfactory proof that the individual’s presence in the United States is authorized under federal law, as long as the individual meets all other qualifications for licensure and provides satisfactory proof to the DMV of his/her identify and California residency.  Assembly Bill 1660 (“AB 1660”) makes it a violation of the California Fair Housing and Employment Act (“FEHA”) for an employer to discriminate against an individual because he/she holds a driver’s license issued under Vehicle Code section 12801.9.  Beginning January 1, 2015, FEHA’s definition of “national origin” discrimination will include discrimination on the basis of an individual’s possession of a driver’s license issued under Vehicle Code section 12801.9.

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