Monday, September 21, 2020

Court Strikes Down Trump Administration Rule to Benefit Wage Violators

Recent Trump Administration efforts to chip away at employee protections under federal law faced a setback earlier this month. A federal court in New York struck down a large portion of a January 2020 Department of Labor (“DOL”) rule that changed how to determine whether multiple entities are an individual’s employer under the “joint employer doctrine.” The case is New York v. Scalia.

Non-exempt employees are entitled to a federal minimum wage and overtime under the federal Fair Labor Standards Act (“FLSA”). But sometimes it can be tricky to determine who is supposed to pay these wages when more than one entity directly benefits from the employee’s work—for example, when an employee works at a franchise or is placed by a staffing agency. Prior to the new rule, which took effect in March 2020, the Department of Labor’s guidance instructed that, in circumstances like these, multiple entities could be considered employers of the same individual if that individual economically depended on the multiple entities. The Trump Administration rule scrapped this analysis in favor of an employer-friendly four-factor test based solely on the level of control each possible joint employer exerts over the worker. The factors in the rejected test were whether the possible joint employer:

(i)                Hires or fires the employee;

(ii)              Supervises and controls the employee's work schedule or conditions of employment to a substantial degree;

(iii)           Determines the employee's rate and method of payment; or

(iv)            Maintains the employee's employment records.

This change strongly benefited employers who maintain franchise relationship or rely heavily on contractors or workers staffed by an agency. This corporate windfall would come at the expense of workers, who are far less likely to be able to enforce their FLSA rights under the new standard, if, for example, multiple entities govern their employment so that no one employer meets the new test.

Seventeen states and the District of Columbia sued to block the rule, culminating in the decision striking down much of the rule earlier this month. The Court’s ruling rested on two main reasons. First, the rule improperly relied solely on the FLSA’s definition of “employer,” out of context. The FLSA’s definition of “employer” defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee,” requiring that a court deciding which entities are liable consider the definition of the term, “employee.” The definition of “employee,” in turn, necessitates reference to the definition of “employ.” Accordingly, the Court determined that the DOL should not have taken the word “employer” out-of-context by ignoring the other statutory definitions in crafting its employer-friendly rule. In its analysis, the Court emphasized the background and purpose of the FLSA and noted that the law’s definitions of “employer,” “employ,” and “employee” are intentionally broad in order to provide robust protections for workers.

Second, the Court held that the new rule was too restrictive. The FLSA had intentionally refused to place its focus entirely on control in order to give the law a broader scope. Although control could be sufficient to establish joint employer liability, the Trump Administration rule made control necessary to establish an employer-employee relationship, which was a step too far.

The Court also found procedural deficiencies with the new rule. For one, the rule deviated from past DOL interpretations in 1997, 2014, and 2016 without adequate explanation. In another notable portion of the opinion, the Court observed that the DOL initially did not consider the cost of the new rule to employees when considering the rule—the DOL had merely stated that the rule would not affect wages “assuming that all employers always fulfill their legal obligations,” a position which the Court aptly described as “silly.” Although the DOL ultimately acknowledged that the impact of the new rule on wages before passing the rule, the DOL completely disregarded this impact and ignored an estimate by the Economic Policy Institute that the new rule would cost employees $1,000,000,000 (a billion dollars) per year. This decision laid bare the business community’s bald-faced power grab in passing the new rule, catering to business interests by short-changing their workers.

The ruling was not a complete victory for employees. The court struck down the new rule only as it applies to “vertical” joint employer liability, but not “horizontal” joint employer liability. A “vertical” joint employer relationship involves an employee who has a relationship with both an employer and another business contracting the employee’s services (such as a contractor, subcontractor, staffing agency, or franchise), whereas a “horizontal” relationship involves an employee who employed by two sufficiently related entities (such as a joint venture). The Court left the DOL’s changes to “horizontal” joint employment intact.

If you have been denied minimum wage or overtime due, contact Bryan Schwartz Law.

Friday, August 14, 2020

Judge Orders Uber and Lyft to Treat Drivers as Employees

On August 10, a California judge issued a remarkable order blocking Uber and Lyft from continuing to misclassify their drivers as independent contractors rather than employees. This preliminary injunction from Judge  Ethan P. Schulman of San Francisco Superior Court  comes as part of the litigation brought by the State of California against Uber and Lyft because of the ride-hailing companies’ flagrant disregard for their duties under Assembly Bill 5 (A.B. 5). 

A.B. 5 codified the Supreme Court of California’s decision in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903, and was signed into law in September of 2019. Under A.B. 5 and Dynamex, drivers for Uber and Lyft should be considered employees, not independent contractors. Despite this, Uber and Lyft have continued to misclassify their drivers as independent contractors. Hopefully, the August 10 injunction forces the companies to finally change course.


The court highlighted that when companies like Uber and Lyft misclassify their employees as independent contractors, they deprive them of access to basic workers’ rights and protections including minimum wage, overtime pay, meal and rest breaks, workers’ compensation, unemployment insurance, health insurance, paid sick leave, and paid family leave. These worker protections are extremely important to working families and the economy as a whole, especially in the face of the challenges posed by a pandemic. 


The court explains that in order to grant a preliminary injunction of Uber and Lyft’s violations of A.B. 5, the government must demonstrate that it had a reasonable probability of prevailing, with a presumption that the nonissuance of an injunction would be harmful to the public. This is different than in an ordinary case with private parties, where the party seeking the injunction faces a higher burden. This is because by enacting a statute, the legislature has already determined that a violation goes against the public interest.


In this case, the court opined that the government demonstrated an “overwhelming likelihood” of prevailing and that “substantial public harm” will result without an injunction. According to the court, Uber and Lyft’s violations of A.B. 5 pose, “real harms to real working people.” Under A.B. 5’s “ABC” test, a person is properly classified as an independent contractor if: (A) The person is free from the control and direction of the hiring entity in connection with the performance of the work; (B) The person performs work that is outside the usual course of the hiring entity’s business; and (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.


The judge in this decision primarily examined element B, which requires that the work performed be “outside the usual course of the hiring entity’s business.” Uber argued, as it has before, that it is a technology company, rather than a company that provides car rides, and that its “actual employees” work in engineering, development, marketing, and operations. Driving, the company insists, is not part of Uber’s usual course of business. The court rejected this argument, instead insisting that Uber could not survive without its drivers. Because drivers are central to Uber and Lyft's business models, they should be classified as employees. 


Since the August 10 order, Uber and Lyft have threatened to halt operations in California, and Judge Schulman has denied the companies’ request for an extension of the deadline to appeal. Uber and Lyft have been attempting to delay their compliance with A.B. 5 because the companies are funding a ballot measure, Proposition 22, which would re-classify drivers as independent contractors. In issuing the injunction, however, the judge explained that he could not excuse the companies from compliance with A.B. 5 simply because they are waiting to see if Proposition 22 passes in November.


Bryan Schwartz Law has written about A.B. 5 and Dynamex here, here, here, and here. If you believe you have been misclassified as an independent contractor, please contact Bryan Schwartz Law.

Thursday, July 30, 2020

Ashley Judd’s Sexual Harassment Case Against Harvey Weinstein Can Go Forward

Earlier this week, the Ninth Circuit Court of Appeals reversed the district court dismissal of actor Ashley Judd’s sexual harassment claim against former Hollywood producer Harvey Weinstein. The Ninth Circuit opinion allows Judd’s sexual harassment claim to go forward. This decision illustrates how sexual harassment claims are not limited to standard employer/employee or service provider/client relationships.

Judd alleges that she was sexually harassed by Weinstein in 1996 or 1997, when she was starting her acting career and Weinstein was a powerful producer. Judd says Weinstein harassed her during a meeting intended to discuss potential acting opportunities. After she rejected his advances, Judd claims Weinstein prevented her from being cast in movies he produced. Notably, Judd alleges that Weinstein blocked her casting in The Lord of the Rings adaptations in retaliation. In fact, the reason Judd can bring her suit so many years after the usual statute of limitations has passed is because she says did not discover that Weinstein had been retaliating against her until Peter Jackson, who directed, produced, and wrote The Lord of the Rings films, gave an interview in 2017 about Weinstein’s actions against Judd. See Judd v. Weinstein, No. CV 18-5724 PSG (FFMx), 2018 WL 7448914, at *3-5 (C.D. Cal. Sept. 19, 2018). Judd was able to use California’s “discovery rule,” which is an exception to the general rules regarding statutes of limitation. Under the discovery rule, the statute of limitation begins to run not when the injury occurs, but instead when the plaintiff discovers or has reason to discover the cause of action. See No. CV 18-5724 PSG (FFMx), 2018 WL 7448914, at *4.


Among other claims, Judd sued Weinstein in April 2018 for sexual harassment in a professional relationship under California Civil Code Section 51.9. While allowing her other claims to go forward, the United States District Court of the Central District of California dismissed Judd’s sexual harassment claim because it believed Judd and Weinstein did not have the requisite type of professional relationship described in section 51.9.


Section 51.9 is part of California’s Unruh Civil Rights Act, which prohibits business discrimination on the basis of sex, race, religion, disability, sexual orientation, and other characteristics. Section 51.9 specifically prohibits sexual harassment in a variety of business relationships outside the workplace. Over the years, section 51.9 has been amended to specifically cover producer/actor relationships. However, because the alleged harassment occurred in 1996 or 1997, the court clarifies that it must use the 1996 version of section 51.9.


In 1996, as the Ninth Circuit explains, the law required the plaintiff to have a certain type of business, service, or professional relationship with the defendant. The 1996 statute listed examples of the types of professional relationships covered by the law, including those between plaintiffs and physicians, attorneys, social workers, accountants, teachers, real estate agents, landlords, and other specific professions. The statute also covered relationships, “substantially similar to any of the above.” Because the relationship between an actor and a producer was not specifically enumerated in the statute, Judd argued that her professional relationship with Weinstein was substantially similar to those listed. The district court disagreed, holding that the defining characteristic of the enumerated relationships was that they were all between service providers and clients. See No. CV 18-5724 PSG (FFMx), 2018 WL 7448914, at *9. Because Weinstein and Judd did not have a service provider/client relationship, the district court dismissed her claim.


Fortunately, the Ninth Circuit agreed with Judd. The Ninth Circuit’s reversal of the district court opinion states that the key element in the enumerated relationships is that, “an inherent power imbalance exists such that, by virtue of his or her ‘business, service, or professional’ position, one party is uniquely situated to exercise coercion or leverage over the other.” Because Judd was an actor at the beginning of her career and Weinstein was an established and powerful Hollywood producer, their relationship may have been defined by an inherent power imbalance. Under the Ninth Circuit’s interpretation of section 51.9, Judd and Weinstein’s professional relationship is potentially covered by the statute and she may pursue her sexual harassment claim. The case has been remanded to the district court.


Section 51.9 looks different now than it did in 1996. The statute was amended in 2018 and now explicitly covers sexual harassment by directors, producers, elected officials, and lobbyists, in addition to all of the professions previously specified.


In this week’s decision, the Ninth Circuit recognized the importance of protecting people from sexual harassment in a wide variety of contexts. The Unruh Civil Rights Act and section 51.9 are important tools in the fight against injustice.


Bryan Schwartz Law has written about sexual harassment, gender discrimination, and retaliation many times before. If you believe you were sexually harassed, discriminated against, or retaliated against, please contact Bryan Schwartz Law.

Monday, July 27, 2020

Workers Sue Whole Foods After Being Disciplined for Wearing Black Lives Matter Masks

Employees of Whole Foods have filed a class action lawsuit against the supermarket for race discrimination and retaliation after they were allegedly disciplined for wearing masks supporting the Black Lives Matter (BLM) Movement. While Whole Foods—owned by Amazon—has always had a corporate policy forbidding workers from wearing slogans or logos that are not company-related, the workers allege that this policy was not enforced until many employees began wearing BLM slogans at work. The lawsuit seeks reimbursement for lost wages and expungement of any disciplinary action for the disciplined workers. It also seeks permanent injunctive relief for all employees, calling for Whole Foods to end its policy of not allowing BLM masks at work.


According to the complaint filed in Massachusetts District Court by fifteen workers across five stores, Whole Foods disciplined about 40 employees and fired one employee—Savannah Kinzer—for wearing BLM masks or slogans at work. Employees were sent home or threatened with termination when they wore their BLM masks. Others were written up or placed on a “corrective action pathway,” which requires employees to re-train. Kinzer, in particular, had also organized workers to wear BLM masks. When workers were disciplined, she filed complaints with the National Labor Relations Board and the Equal Employment Opportunity Commission but was fired within an hour of informing her manager of the complaints. Whole Food maintains that Kinzer’s termination has no relation to her wearing BLM masks and was due to her repeated violations of Whole Food’s Time & Attendance policy. 


The suit alleges that no employees have previously been disciplined for wearing non-work-related slogans, including employees who have worn pins supporting the LGBTQ movement and one employee who wore a pin that said, “Lock him up.” The workers and their lawyers argue that disciplining employees who wear BLM slogans constitutes discrimination against Black employees and other employees who support their Black coworkers. 


This lawsuit comes at a time when many companies have broadened their dress code policy to allow workers to wear BLM apparel at work, including StarbucksMcDonald’s, and Taco Bell. Meanwhile, an independent federal agency called the Office of Special Counsel found that federal employees may express support for the BLM Movement in the workplace without violating the Hatch Act, which restricts political activity by government employees, because the term BLM does not amount to “inherently political activity.”


Bryan Schwartz Law has written about the Black Lives Matter Movement, race discrimination, and retaliation many times before. If you believe you were discriminated against or retaliated against at work, please contact Bryan Schwartz Law today.

Tuesday, July 14, 2020

Court Forces Jones Day to Produce Salary Documents in Gender Discrimination Suit

Last week, U.S. District Judge Randolph Moss ruled from the bench that Jones Day must produce salary information for all its associates nationwide in a discovery dispute. This ruling is a huge win for the plaintiffs—a group of former female associates—in a $200 million gender discrimination lawsuit against Jones Day, a global law firm with more than 2,500 lawyers across five continents.

Judge Moss required Jones Day to provide salary information about every associate nationwide from 2012 to 2018. Jones Day had argued that it should only have to provide salary data for 580 associates who worked in its New York, Atlanta, and California offices from 2016 to 2018. The plaintiffs had requested salary data for every associate nationwide from 2012 to present. Judge Moss found that there would be little burden on Jones Day to produce the salary data until 2018, after which time none of the plaintiffs continued to work at the firm. Judge Moss also highlighted that not giving the plaintiffs all the salary information would just prolong proceedings. To protect the privacy of the associates, the data will be filed under seal, but analysis of the data can still appear in future filings.

The plaintiffs--Nilab Rahyar Tolton, Andrea Mazingo, Meredith Williams, Saira Draper, Jaclyn Stahl and Katrina Henderson—sued Jones Day in 2019 for gender discrimination through its compensation model, leadership structure, and “fraternity culture.” Jones Day is known for having a black box compensation structure, which keeps attorney pay completely under wraps. However, Jones Day allegedly does promise to compensate associates who produce high-quality work at or above the market. Despite this, the plaintiffs were not compensated within the “Cravath” market scale, which is considered top-of-line pay in Big Law. The plaintiffs’ attorneys have highlighted that the wide data set will ensure greater accuracy in any analysis completed for the case and help prove that Jones Day has been systemically discriminating against women.

Bryan Schwartz Law has written about gender discrimination many times before. If you believe you were discriminated against on the basis of sex, please contact Bryan Schwartz Law today.

Monday, June 29, 2020

Hope for Workers’ Wage Claims for Commute Time

Earlier this month, the California Court of Appeal found that workers may be entitled to pay and reimbursements for time commuting to and from their workplaces. Typically, time commuting is not compensable, but, time commuting that also is in service of the employer or under the employer’s control might be another story.


In the class action at issue, Oliver v. Konica Minolta Business Solutions U.S.A., Inc. (CA6 H045069 6/2/20), the California Sixth District Court of Appeal found that triable issues of material fact existed as to whether service technicians can be paid and reimbursed for commuting to and from their non-office locations of the day. The court reversed summary adjudication in favor of the defendant and remanded the case to the trial court for further proceedings. 

The technicians sought wages for time spent commuting to and from the first and last work location and reimbursement for the mileage accrued during such commutes. The technicians rarely drove to an actual branch location for work—instead, they usually began their days by driving from home to the first customer location of the day and ended their days by driving from the last customer location home. The Court held that the key to deciding if the technicians were entitled to be paid for commute time was whether the technicians were “required during the commute to carry a volume of tools and parts” that restricted them from using their time effectively for their own purposes. The technicians drove their personal vehicles containing their employer’s tools and parts to customer sites to make repairs to copiers and other machines. Such tools and parts included a laptop, small vacuum cleaner, a hand cart, a service case containing hand tools, and around 150-250 expensive replacement parts for machines. Although the technicians were not required to carry their employer’s tools at all times and could use “field stocking locations” to store parts between service locations, most technicians carried smaller tools and parts in their cars as “field stocking locations” were either inconvenient or unavailable. Technicians were also required to have at least 25 cubic feet of lockable cargo space in their cars for the tools, which, according to the employer’s “Field Parts Inventory Practice Guide,” should have been “easy to locate” and were subject to random audits. 


The trial court found for the defendants, determining that the commute time was not compensable as “hours worked” under Industrial Wage Commission Order No. 4-2001, which defines hours worked as the time which an employee is subject to control of an employer. The trial court also found that the service technicians were not entitled to reimbursement for the mileage under Labor Code § 2802. Labor Code § 2802 requires an employer to reimburse its employees for all duty-related expenses. 


The Court of Appeal, relying on Morillion v. Royal Packing Co., found otherwise. See 22 Cal. 4th 575 (2000). In Morillion, the California Supreme Court found that commute time to and from work is generally not compensable, but “compulsory travel time” is required to be compensated. Id. at 587. Under this analysis, the “level of the employer’s control over its employees . . . is determinative.” Id. In other words, if an employee cannot use their commute “time effectively for [their] own purposes,” such as dropping off their children to school or stopping for breakfast before work, the employee is subject to their employer’s control. Id. at 586. Therefore, in this case, if the service technicians were required to carry their employer’s tools and were not able to use their commute time “effectively for [their] own purposes,” then the technicians were subject to the control of their employer and Konica Minolta would have to pay the technicians for their commute-time wages and mileage reimbursement. The Court of Appeal found that this analysis involved two factual disputes that needed to be determined at the trial court: (1) whether service technicians were required to commute with tools and parts in their personal vehicles, and (2) the volume of tools and parts service technicians were required to carry in their vehicles while commuting.


The level of control an employer has over its employees is often determinative in wage cases. As Bryan Schwartz Law as written about before here, the Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles held that workers in California are presumptively employees of those for whom they labor. See 4 Cal. 5th 903 (2018). Among other factors, they must be free from the control and direction of the hiring entity to be considered an independent contractor in wage and hour cases.


With commute times in California being some of the worst in the nation, being properly compensated for time commuting that is under the control and in the service of the employer would make a big difference in workers’ paychecks.


Bryan Schwartz Law has written about compensation for commute times and wage and hour issues before. If you believe you are owed wages, please contact Bryan Schwartz Law today.

Monday, June 15, 2020

Victory! U.S. Supreme Court Rules that Employers Cannot Discriminate Against Their Employees for Being LGBT

Today, the Supreme Court ruled that Title VII protections apply to lesbian, gay, bisexual, and transgender workers. Title VII was created in 1964 and prohibits employment discrimination based on race, color, religion, sex, and national origin. After hearing oral arguments for three cases last October, the Court ruled in a 6-3 decision that prohibited discrimination “because of sex” under Title VII also extends to LGBT workers.  This landmark ruling is a huge victory for employees and the LGBT movement. 

Before Monday’s ruling, employees in more than half the states could be fired for being LGBT. The three cases discussed before the Supreme Court involved two gay men and one transgender woman, all of whom were terminated immediately after their employer discovered they were LGBT. Gerald Bostock was an award-winning child welfare advocate in Georgia but was fired after his employer found out he participated in a gay recreational softball league. Donald Zarda, a skydiving instructor in New York, was fired days after mentioning he was gay to a client. Aimee Stephens, a transgender woman working at Harris Funeral Homes in Michigan, was fired after announcing she planned to “live and work full-time as a woman.” 

The Court’s decision was surprising to most, as Justice Gorsuch, appointed by President Trump, wrote for the Court. Justice Gorsuch was joined by Republican-appointee Chief Justice John Roberts and Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan. The majority found that Title VII’s “because of sex” was originally enacted with protections for LGBT employees in mind. Further, even if an employer’s ultimate goal is to discriminate against its employees on the basis of sexual orientation, the employer intentionally treats an employee worse based on that individual’s sex along the way. For example, if two identical employees are attracted to men, and the employer fires the male employee for no other reason other than the fact he is attracted to men, the employer discriminates against him for traits it tolerates in its female employee. The Court found that this is simply discrimination based on sex, with Justice Gorsuch stating that this analysis “involve(s) no more than the straight-forward application of legal terms with plain and settled meanings.” 

Justice Gorsuch’s decision was surprising because of who appointed himbut, to the vast majority of Americans identifying with both political parties, it is clear that LGBT people in the workplace should not suffer discrimination because of their sexual orientation, i.e., because of sex. In fact, according to The New York Times, 90% of Democrats and 74% of Republicans believe it should be illegal for employees to be fired based on sexual orientation. Similarly, 86% of Democrats and 69% of Republicans believe it should be illegal for employees to be fired for being transgender.

Justice Samuel Alito and Clarence Thomas joined in a dissent out of touch with what the American public has long believed, arguing that the Court was wrongly stepping into the shoes of legislators. Justice Alito stated that if Congress wanted Title VII to include protections for the LGBT population, it would have amended the statute to explicitly include “sexual orientation” or “gender identity.” Meanwhile, in a separate dissent, Justice Kavanaugh focused primarily on statutory interpretation and argued that the majority failed to analyze appropriately the “ordinary meaning” of Title VII. 

The Court’s decision resolved a split among federal circuit courts, with the Eleventh Circuit previously holding that sexual-orientation-based claims were not actionable under Title VII but the Second, Sixth, and Seventh Circuit reaching the contrary decision. In Bostock’s case, the Eleventh Circuit upheld the district court’s dismissal of Bostock’s complaint due to a previous panel holding that found Title VII did not apply to sexual orientation claims, holding that “under [the] prior panel precedent rule, we cannot overrule a prior panel’s holding, regardless of whether we think it was wrong.” The prior panel had explained, “[d]ischarge for homosexuality is not prohibited by Title VII,” highlighting that no Supreme Court decision had ever “squarely address[ed] whether sexual orientation discrimination is prohibited by Title VII.” Evans v. Georgia Reg'l Hosp., 850 F.3d 1248, 1255-56 (11th Cir. 2017) (citing Blum v. Gulf Oil Corp., 597 F.2d 936, 938 (5th Cir. 1979)). Similarly, the district court in Stephen’s case stated that “neither transgender status nor gender identity are protected classes under Title VII.” E.E.O.C. v. R.G. & G.R. Harris Funeral Homes, 201 F. Supp. 3d 837, 861 (E.D. Mich. 2016). In his dissent in Zarda v. Altitude Express, Inc., the Second Circuit case finding that sexual-orientation-based claims were actionable under Title VII, Judge Gerard E. Lynch stated, “I would be delighted to awake one morning and learn that Congress had just passed legislation adding sexual orientation to the list of grounds of employment discrimination prohibited under Title VII[, but when] I actually woke up[, I] realized that I must have been still asleep and dreaming. Because we all know that Congress did no such thing.” 883 F.3d 100, 137 (2d Cir. 2018). With the Supreme Court’s decision today, we can wake up knowing that we all have the right to be protected against employment discrimination under Title VII.

In his opinion, Justice Gorsuch wrote that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.” We agree. To the tireless activists—including Mr. Zarda and Ms. Stephens, both of whom passed away before this decision could be published—and decades of LGBT activism that led to this momentous decision today, we thank you and look forward to ensuring employers adhere to this ruling in the years to come.

Bryan Schwartz Law celebrates today’s important decision. The firm has written about Title VII many times before. If you believe you were discriminated against on the basis of sex, please contact Bryan Schwartz Law today.