Tuesday, January 28, 2020

New Decade, New Worker Protections: AB-5, Dynamex, and Independent Contractor vs. Employee Status in 2020

Struggles over newly-in-force AB-5 are already well under way.

AB (California State Assembly Bill) 5 is a newly-enacted California law codifying the landmark California Supreme Court case Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903, under which many California workers are considered employees, who better benefit from California legal protections, rather than independent contractors. Bryan Schwartz Law has written about Dynamex here and here, and about AB-5 here. To recap, Dynamex established the “ABC” test for determining whether a worker is an employee or an independent contractor, with a presumption that a worker is an employee, and with the burden on companies to demonstrate that workers are independent contractors. Id. at 957. To meet this burden, the putative employer must show that the worker: (a) is free from the control and direction of the hiring entity, (b) performs work outside the usual scope of the entity’s business, and (c) is engaged in an independently established trade, occupation, or business. Id. at 964. Failing to demonstrate any one of these elements is sufficient to show an employee-employer relationship. Id. at 964. AB-5 codified this test for most workers in California.

The business community has mounted a campaign to weaken or eliminate this expansive protection for California workers. For instance, gig economy giants Uber, Lyft, and DoorDash have spent millions of dollars introducing a ballot measure to exempt them from AB-5 and permit them to continue exploiting their drivers. Uber has also changed its operations in California to try and satisfy AB-5, sending a letter to riders explaining their changes and threatening that AB-5 could hurt riders. Uber has also argued that it is a technology company instead of a transportation company (which does not even pass the laugh test), to try to help Uber satisfy the “B” prong of the test.

The trucking industry has also fought AB-5. On New Year’s Eve, federal judge Roger Benitez issued a temporary restraining order temporarily preventing enforcement of AB-5 “as to any motor carrier operating in California,” in the case California Trucking Association v. Becerra, 3:18-cv-02458-BEN-NLM. The temporary restraining order opined that there was a significant likelihood that AB-5’s applicability to truck drivers would be preempted (and thereby unenforceable) by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA” or “F-Quad-A”), which has language that applies to “any motor carrier.”

Los Angeles County Superior Court judge William Highberger went further in an order issued earlier this month in California v. CAL Cartage Transportation Express LLC, BC689320. The Los Angeles City Attorney’s Office filed the case on January 1, 2018, before Dynamex had been decided, and alleged that the company defendants had misclassified their truck drivers as independent contractors when they should have been classified as employees. Following Dynamex and AB-5, the Los Angeles City Attorney argued that the stronger “ABC” test should apply, while the defendant companies maintained that the previous multi-factor independent contractor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, should apply instead. The judge sided with the defendant companies, opining that AB-5 was in fact preempted by the FAAAA, under the premise that “Prong B of the ABC test . . . prohibits motor carriers from using independent contractors to provide transportation services.”

The issue is far from decided. Judge Highberger’s decision is surely going to be challenged on appeal, and hundreds of truck drivers have filed labor complaints to enforce their rights under AB-5, signaling further litigation. There also remains the question of whether Dynamex’s ABC test applies retroactively to disputes arising before Dynamex was handed down. Last fall, the 9th Circuit Court of Appeals certified this question to the California Supreme Court in Vazquez v. Pan-Pro Franchising International, Inc. The California Supreme Court is also reviewing a state appeals court case, Gonzales v. San Gabriel Transit, Inc., which held Dynamex to apply retroactively. The struggle over the worker protections of Dynamex and AB-5 goes on.

If you believe you are being treated as an independent contractor when you should be treated as an employee, contact Bryan Schwartz Law.

Friday, January 10, 2020

CoreLogic Sanctioned Over $86,000 For Violating Court Orders Compelling Arbitration

This week, a federal court in Orange County issued an order requiring CoreLogic, a real estate appraisal company, to pay over $86,000 in sanctions for “willfully and unreasonably disobey[ing]” court orders regarding arbitration.

Bryan Schwartz Law, along with co-counsel Nichols Kaster, LLP, filed a class and collective action case against CoreLogic at the end of 2017. The plaintiffs in Mitchell v. CoreLogic, Inc. et al., Case No. 8:17-cv-02274-DOC-DFM (C.D.Cal.) – real estate appraisers for defendant CoreLogic – alleged a variety of violations of state and federal wage and hours laws, including failure to pay overtime, failure to provide adequate meal and rest breaks, and failure to pay premiums for missed breaks.

In February 2019, CoreLogic successfully moved to compel many of the plaintiffs to arbitration, but then balked when approximately 160 of the plaintiffs filed arbitrations and CoreLogic was suddenly faced with the accompanying bills. CoreLogic twice sought relief from U.S. District Court Judge David O. Carter, and twice the judge denied its request.

In its first effort to avoid the very arbitration it moved to compel, CoreLogic raised a variety of administrative issues, which the court rejected. In his order on May 28, 2019, Judge Carter stated:

 “CoreLogic moved this Court to order Plaintiffs to arbitrate their claims. As CoreLogic previously argued, issues of arbitrability or the implication of statutes of limitation must be resolved by the arbitrator . . . CoreLogic asked for resolution of any and all disputes by the arbitrator. Having compelled arbitration, the Court will not now stay those proceedings due to associated costs.”

Undeterred, CoreLogic tried again to get out of the arbitrations by arguing that certain “threshold issues” had to be resolved before it proceeded with certain arbitrations. In a December 17, 2019 order, Judge Carter stated:

“The Court is very concerned about (and will no longer tolerate) more foot dragging on this issue. The Court ORDERS the parties to refile these cases with the [American Arbitration Association] and participate in the arbitration proceedings.”

In a follow up order on January 9, 2020, Judge Carter ordered CoreLogic to pay $18,482.49 in sanctions to Bryan Schwartz Law and $67,482.49 to Nichols Kaster for the attorneys’ fees and costs incurred in complying with the court’s prior orders to arbitrate.

CoreLogic’s tactics are part of a growing trend of companies that, upon forcing arbitration, balk when they have to pay up. Thankfully, the court’s sanctions order here is also part of a growing trend of courts calling companies’ bluff.

The issue of arbitration is an evolving one in CA. Bryan Schwartz Law is committed to holding companies accountable when they force their employees to arbitrate rather than allow their employees to have their day in court. The sanctions order is yet another victory in holding corporate America accountable.

If you have been forced to arbitrate your claims but your employer is not cooperating, contact Bryan Schwartz Law today.