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Earlier this year, in the case of Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court rejected the “all circumstance” standard, and held that the “ABC” test is to be used to determine whether workers are employees or independent contractors.  Under the suffer or permit to work standard in California’s wage orders, an individual worker who has been hired by a company can properly be treated as an independent contractor only if the worker is the type of traditional independent contractor who would not reasonably be viewed as working in the hiring business. 

The California Court of Appeal for the Second District issued a ruling in Pebley v. Santa Clara Organics, LLC; et al. Case No. B277893, which permits a plaintiff with available medical insurance, who nonetheless elects to treat an injury on a lien basis, to introduce the full amount billed under the lien as evidence of medical damages regardless of the earlier holdings in Haniff and Howell.  The plaintiff may do so even though the same quality of care could be obtained through his or her medical insurance for substantially less.  Of great import, the Pebley Court excluded all evidence of Pebley’s available insurance under the California Evidence Code as likely to be misleading or prejudicial to the jury’s determination

On May 21, 2018, the U.S. Supreme Court held that arbitration agreements in which employees agree to arbitrate their claims against an employer on an individual basis, rather than on a class or collective basis, are enforceable and do not violate the National Labor Relations Act (“NLRA”).  Epic Systems Corp. v. Lewis, 584 U.S. ___ (2018) The Court reasoned that through the Federal Arbitration Act (“FAA”), Congress “instructed federal courts to enforce arbitration agreements according to their terms – including terms providing for individualized proceedings” and that the NLRA did not conflict with this principle. 

On May 21, 2018, the U.S. Supreme Court held that the inclusion of class and collective action waiver provisions in arbitration agreements given to workers as a condition of employment are valid and enforceable.  Prior to this holding, the enforceability of arbitration agreements that included such waivers remained uncertain due to a split among the Federal Courts of Appeal.  Specifically, the Appellate Courts for the Sixth, Seventh and Ninth Circuits held that arbitration agreements containing these provisions that restrict employees’ rights to pursue class and collective actions violate the National Labor Relations Act (“NLRA”) while the Second, Fifth and Eighth Circuits held that such provisions were enforceable as written pursuant to the Federal Arbitration Act (“FAA”).  In the consolidated cases of Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and National Labor Relations Board v. Murphy Oil USA, Inc., the U.S. Supreme Court finally resolved this split and rejected the argument that there was a conflict between the FAA and NLRA.   

On April 30, 2018, the California Supreme Court adopted a test for independent contractor that generally restricts the classification of independent contractors. In a ruling in Dynamex Operations West, Inc. v. Superior Court, S222732, 2018 WL 1999120 (Cal. April 30, 2018), the Court adopted a test that assumes all workers are employees unless a hiring company can establish each of the following three factors, commonly known as the “ABC” test:

  1. that 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 of such work and in fact;
  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 for the hiring entity.

On April 9, 2018, the Ninth Circuit Court of Appeals ruled en banc that prior salary alone cannot be used to justify payment of lower wages to a female employee.  The case, Rizo v. Yovino, 887 F.3d 453, involved a female math consultant hired by the Fresno County Office of Education (“Fresno”) who alleged Fresno paid her less than comparable male employees for the same work. 

Posted in General Matters

On March 27, 2018, California Judge Mary E. Wiss of the San Francisco Superior Court issued an order overruling a demurrer by internet kingpin Google in the proposed class action of Kelly Ellis et al. v. Google, LLC (formerly Google, Inc.), case number CGC-17-561299  Plaintiffs, four former female employees of Google, brought suit for systematic favoritism of male employees over female employees, including hiring position and salary, promotion time frames, positions and amounts, and paying women less than men for substantially equal or similar work.  The suit proposes a class of six employee categories containing a total of 30 positions and targets Google’s entire California operation, which includes approximately 21,000 employees at its headquarters alone. 

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