Labor and Employment

The California Legislature has been pretty busy this year introducing various bills that will affect certain California employers.  Below is a brief summary of two bills recently signed by the Governor – one that amends the new mandatory sick leave law, and one that ensures that professional cheerleaders are treated as employees for purposes of employment entitlements and protections.

Assembly Bill 304 – Amending the New Healthy Workplaces-Healthy Families Act (aka Mandatory Paid Sick Leave Law).

The bill which takes effect immediately, amends the Healthy Workplaces, Healthy Families Act of 2014 that went into effect on July 1, 2015.  Among other things, this bill clarifies that an employee must work for the same employer within California for 30 or more days per year in order to qualify for accrued sick leave.  It also authorizes an employer to provide for employee sick leave accrual on a basis other than one hour for each 30 hours worked, provided that the accrual is on a regular basis and the employee will have 24 hours of accrued sick leave available by the 120th calendar day of employment.   Additionally, the bill clarifies that an employer may limit an employee’s use of paid sick days to 24 hours or 3 days as follows: in each year of employment; in a calendar year; or in a specified a 12-month period.  The bill also provides that an employer has no obligation to inquire into or record the purposes for which an employee uses sick leave or paid time off.

Further, for specified industries, the bill permits the delay in the application of the notice requirement and also permits an employer who provides unlimited sick leave to its employees to satisfy notice requirements by indicating “unlimited” on the employee’s itemized wage statement. The bill also requires an employer to calculate paid sick leave based upon an employee’s regular rate of pay, total wages divided by total hours worked in a 90-day period, or the wages for other forms of paid leave, as specified. The bill clarifies that an employer is not required to reinstate accrued paid time off to an employee, rehired within one year of separation from employment, that was paid out at the time of termination, resignation, or separation. The bill also clarifies that an employer is not required to provide additional paid sick days if the employer has a paid leave policy or paid time off policy, the employer makes available an amount of leave applicable to employees for specified uses, and the policy satisfies specified accrual, carry over, and use requirements, or provides paid sick leave or paid time off to employees before January 1, 2015, as specified, or pursuant to specified provisions of law or of a memorandum understanding that meet the requirements of the law.

The full text of the bill can be obtained at http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_0301-0350/ab_304_bill_20150622_amended_asm_v92.pdf.

Assembly Bill 202 – Cheerleaders for Professional Sports Teams are Employees.

This bill provides that for purposes of all of the provisions of state law that govern employment, including the Labor Code, the Unemployment Insurance Code, and the California Fair Employment and Housing Act, cheerleaders utilized by a California-based professional sports team during its exhibitions, events, or games will be deemed to be employees.   Because a violation of specified employment laws, including wage and hour laws, that would apply to California-based professional sports teams utilizing cheerleaders would be a crime, this bill imposes a state-mandated local program.

The full text of the bill can be obtained at http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_0201-0250/ab_202_bill_20150702_enrolled.pdf.

By: Labor & Employment Group

On June 24, 2015 California’s Senate Bill 406 was passed by the Senate and has been sent to the Assembly Committee on Appropriations.  If passed this bill would implement changes to the California Family Rights Act (“CFRA”).   Under the current law, employees may take up to 12 weeks of protected leave during any 12-month period in order to bond with a child, to care for a family member, or for the employee’s own health condition.  Currently, CFRA applies only to businesses with 50 or more employees.  This bill will lower this threshold, requiring businesses with 25 or more employees to grant CFRA leave.

Additionally, as currently enacted, the law only requires employers to provide leave for an employee to care for a family member that is a child, parent, or spouse of the employee.  The bill would redefine the term “child” to include biological, adopted, or foster children, a stepchild, a legal ward, or the child of a domestic partner, and would remove the current restriction on age or dependent status. The bill also would expand the availability of leave to care for others with a serious health condition to include leave to care for a grandparent, grandchild, sibling, or domestic partner. The bill would include a parent-in-law in the definition of “parent.”

In a 5-4 decision authored by Justice Kennedy and joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan, the United State Supreme Court issued a landmark decision in Obergefell at al. v. Hodges, Director, Ohio Department of Health, et al. on June 26, 2015.

The essence of the holding is that:

1.  The right to marry is a fundamental right inherent in the liberty of the person, and under the Due Process and Equal Protection Clauses of the Fourteenth Amendment of the Constitution, couples of the same-sex may not be deprived of that right and that liberty;

2.  The state laws challenged by the petitioners in the consolidated cases before the Court are invalid to the extent they exclude same-sex couples from civil marriage on the same terms and conditions as opposite-sex couples.

Below is a brief summary of the decision:

Michigan, Kentucky, Ohio, and Tennessee define marriage as a union between one man and one woman. The petitioners, 14 same-sex cou­ples and two men whose same-sex partners are deceased, filed suits in Federal District Courts in their home states, claiming that re­spondent state officials violated the Fourteenth Amendment by deny­ing them the right to marry or to have marriages lawfully performed in another state given full recognition. Each District Court ruled in petitioners’ favor, but the Sixth Circuit consolidated the cases and reversed.

The U.S. Supreme Court granted review of the consolidated cases to decide once and for all whether bans against same sex marriages violate the U.S. Constitution.  The Court outlined the history of the subject now before the Court as follows:

1.  The history of marriage as a union between two persons of the opposite sex marks the beginning of these cases. To the respond­ents, it would demean a timeless institution if marriage were extend­ed to same-sex couples. But the petitioners, far from seeking to de­value marriage, seek it for themselves because of their respect—and need—for its privileges and responsibilities, as illustrated by the petitioners’ own experiences.

2.  The history of marriage is one of both continuity and change. Changes, such as the decline of arranged marriages and the abandonment of the law of coverture, have worked deep transformations in the structure of marriage, affecting aspects of marriage once viewed as essential. These new insights have strengthened, not weakened, the institution. Changed understandings of marriage are characteristic of a Nation where new dimensions of freedom become apparent to new generations.

3.  This dynamic can be seen in the Nation’s experience with gay and lesbian rights. Well into the 20th century, many States condemned same-sex intimacy as immoral, and homosexuality was treated as an illness. Later in the century, cultural and political developments allowed same-sex couples to lead more open and public lives. Extensive public and private dialogue followed, along with shifts in public attitudes. Questions about the legal treatment of gays and lesbians soon reached the courts, where they could be discussed in the formal discourse of the law. In 2003, this Court overruled its 1986 decision in Bowers v. Hardwick, 478 U. S. 186, which upheld a Georgia law that criminalized certain homosexual acts, concluding laws making same-sex intimacy a crime “demea[n] the lives of homosexual persons.”  Lawrence v. Texas, 539 U. S. 558, 575. In 2012, the federal Defense of Marriage Act was also struck down. United States v. Windsor, 570 U. S. ___. Numerous same-sex marriage cases reaching the federal courts and state supreme courts have added to the dialogue.

According to the high Court, the fundamental liberties protected by the Fourteenth Amendment’s Due Process Clause and Equal Protection Clause extend to certain personal choices central to individual dignity and autonomy, including intimate choices defining personal identity and beliefs. (cites omitted).  Further, the Court said that courts must exercise reasoned judgment in identifying interests of the person so fundamental that the state must accord them its respect. While “[h]istory and tradition guide and discipline the inquiry [they] but do not set its outer boundaries. When new insight reveals discord between the Constitution’s central protections and a received legal stricture, a claim to liberty must be addressed.”

According to the Court, four principles and traditions demonstrate that the reasons marriage is fundamental under the Constitution apply with equal force to same-sex couples.

1.  The first premise of this Court’s relevant precedents is that the right to personal choice regarding marriage is inherent in the concept of individual autonomy. This abiding connection between marriage and liberty is why Loving v. Virginia, 388 U. S. 1, 12 invalidated interracial marriage bans under the Due Process Clause. Decisions about marriage are among the most intimate that an individual can make. See Lawrence, supra, at 574. This is true for all persons, whatever their sexual orientation.

2.  A second principle in this Court’s jurisprudence is that the right to marry is fundamental because it supports a two-person union unlike any other in its importance to the committed individuals. The intimate association protected by this right was central to Griswold v. Connecticut, which held the Constitution protects the right of married couples to use contraception, 381 U. S. at 485, and was acknowledged in Turner, supra, at 95. Same-sex couples have the same right as opposite-sex couples to enjoy intimate association, a right extending beyond mere freedom from laws making same-sex intimacy a criminal offense. See Lawrence, supra, at 567.

3.  A third basis for protecting the right to marry is that it safeguards children and families and thus draws meaning from related rights of childrearing, procreation, and education. See, e.g., Pierce v. Society of Sisters, 268 U. S. 510. Without the recognition, stability, and predictability marriage offers, children suffer the stigma of knowing their families are somehow lesser. They also suffer the significant material costs of being raised by unmarried parents, relegated to a more difficult and uncertain family life. The marriage laws at issue thus harm and humiliate the children of same-sex couples. See Windsor, supra. This does not mean that the right to marry is less meaningful for those who do not or cannot have children. Precedent protects the right of a married couple not to procreate, so the right to marry cannot be conditioned on the capacity or commitment to procreate.

4.  Finally, this Court’s cases and the Nation’s traditions make clear that marriage is a keystone of the Nation’s social order. See Maynard v. Hill, 125 U. S. 190, 211. States have contributed to the fundamental character of marriage by placing it at the center of many facets of the legal and social order. There is no difference between same- and opposite-sex couples with respect to this principle, yet same-sex couples are denied the constellation of benefits that the states have linked to marriage and are consigned to an instability many opposite-sex couples would find intolerable. It is demeaning to lock same-sex couples out of a central institution of the Nation’s society, for they too may aspire to the transcendent purposes of marriage.

The Court said that Respondents’ argument that allowing same-sex couples to wed will harm marriage as an institution rests on a counterintuitive view of opposite-sex couples’ decisions about marriage and parenthood. Finally, the First Amendment ensures that religions, those who adhere to religious doctrines, and others have protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths.

Ultimately the Court held that the Fourteenth Amendment requires a state to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawful­ly licensed and performed out-of-state.

A California Labor Commissioner has ruled that one of San Francisco-based Uber’s drivers, Barbara Ann Berwick, is an employee, not an independent contractor. The Labor Commissioner awarded Berwick just over $4,000 for incurred but un-reimbursed business expenses and interest. On a positive note, the Commissioner denied Berwick’s request for wages, liquidated damages, and waiting time penalties.

Traditionally, it is the “right to control” the means and manner of work that is the primary element of the independent contractor test. Here, though, the Labor Commissioner did not rely on the right to control.  Instead, she noted that the absence of such control is not necessarily dispositive where the actual details of the work required little or no supervision.

Instead, the Commissioner’s decision found that other “Borello factors” justified finding that Berwick is an employee. First, the Commissioner was swayed by the fact that Berwick’s work is integral to Uber’s business, which provides transportation services to passengers. Without drivers like Berwick to transport the passengers, Uber’s “app” connecting potential passengers to potential rides, would be useless; its business would not exist.  Second, Uber provided some of the tools essential to the work – its proprietary iPhone application. Third, Uber has total control over the service fee –if a passenger cancels, only Uber can waive the fee, not the driver, and Uber prohibits drivers from taking tips. Fourth, Uber carefully pre-screens its drivers and has the right to approve or reject the driver’s “fleet” vehicle.

The Commissioner was not persuaded by the equal number of Borello factors in Uber’s favor: that drivers make their own hours – indeed, decide whether to work or not, use their own “tools of the trade” (i.e. their own car), provide their own insurance, have to obtain their own permits, are paid “by the job”  (each trip), and have no set length of employment – indeed, after a period of inactivity, their service is disconnected and the driver has to re-apply for access to the Uber platform.

The Commissioner’s decision only affects Ms. Berwick, but could prompt other drivers for Uber, Lyft and similar ride-hailing services to file their own complaints with the Department of Industrial Relations while the class action lawsuits percolate through the courts.  Ms. Berwick, ever the entrepreneur hopes to capitalize on her award: she told Slate that she plans to offer classes – for a $50 fee – to other Uber drivers who want to copy her.

Of note, the Commissioner relied on dicta from the 1989 Borello case discussing the “modern” trend of looking to whether the work being done is an “integral part” of the regular business of the employer, and when the worker, relative to the employer, does not furnish an “independent business or professional service.”  The Commissioner’s reliance on a 25-year-old case as guidance for what the “modern trend” is a bit dubious.  It certainly does not reflect the modern world and the burgeoning growth of the smartphone-based “on demand” service industry which relies on razor-thin margins and provides opportunities for would-be entrepreneurs like Berwick that, if characterized as employees, could very well make the business model unsustainable and deprive those drivers of a lucrative income.  Perhaps the time has come for a legislative carve out, similar to the real estate professional or computer software professional exemption.

Uber is appealing from the decision in the San Francisco Superior Court.  We will continue to follow this case closely on this blog.

By: Labor and Employment

In George Vranish, Jr. et al. v. Exxon Mobil Corporation, 2014 DJDAR 761, January 23, 2014, the Court upheld the terms of a collective bargaining agreement (“CBA”) which set forth overtime pay for Exxon Mobil’s employees. Pursuant to the CBA, Plaintiffs were paid at the overtime premium rate of 1.5 times their regular rate of pay for hours worked over 40 hours in a workweek or over 12 hours in a workday but were not paid overtime for hours worked between the eighth and twelfth hour in a workday. Thus, Plaintiffs argued that they were not paid premium compensation for all “overtime hours worked” as required under Labor Code section 510. That section provides that any work in excess of eight hours in one workday is compensated at 1.5 times the regular rate of pay for an employee and any work in excess of 12 hours in one day is compensated at 2 times the regular rate of pay for an employee.

However, Labor Code section 514 provides that Labor Code section 510 does not apply to an employee covered by a valid CBA if the agreement expressly provides for the “wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.”

Here, the Court engaged in a statutory construction analysis with a view of promoting rather than defeating the general purpose of the statute, so as to avoid an interpretation that would lead to absurd consequences. The Court held that the CBA at issue satisfied all the requirements of Labor Code section 514, including the fourth requirement that it provide “premium wage rates for all overtime hours worked.” According to the Court, Labor Code section 514 did not require Exxon to “look to the definition of ‘overtime’ as that word is defined in section 510(a).” Alternatively, the Court found that, because Plaintiffs worked an alternative workweek schedule adopted as part of the CBA, the CBA, rather than Labor Code section 510, defined what work constituted overtime hours for purposes of Labor Code section 514.