Trump Policy to Stop Covid-19 Relief Found Unlawful

A federal court in California recently struck down the Trump Administration policy that prevented currently and formerly incarcerated individuals from receiving their $1,200 stimulus payments under the COVID-19 lockdown relief bill. The preliminary injunction requires the U.S. Treasury, the IRS, and the United States of America to stop withholding CARES Act stimulus funds from individuals based solely on their incarcerated status. The case is Scholl v. Mnuchin, 20-cv-05309-PJH. 

Because of the decision, thousands of currently and formerly incarcerated folks will now be entitled to the $1,200 check that non-incarcerated Americans have already received. For more information about who is eligible and how to file, please visit  the IRS’s “Economic Impact Payment Information Center.”  

Congress passed the CARES Act to help stimulate the economy during the ongoing COVID-19 pandemic. The Act allocates, among other things, $1,200 to “eligible individuals,” as well as $500 for each qualifying child. An “eligible individual” is defined as “any individual” other than: (1) someone who isn’t an American citizen, (2) any individual who is claimed as a dependent on someone else’s tax return, and (3) an estate or trust. 26 U.S.C. § 6428(d). 

Though the Act did not explicitly or impliedly exclude incarcerated people, the Trump Administration refused to issue checks to anyone currently in prison or jail. In fact, after the IRS sent 84,861 payments to incarcerated individuals, the government required them to return the payments. Plaintiffs Colin Scholl and Lisa Strawn filed a class action on behalf of themselves and other currently and formerly incarcerated persons, asserting that excluding them from the COVID-19 relief was unlawful. 

The court’s injunction rejected the Trump administration’s practice of withholding CARES Act payments from individuals on the basis of their history of incarceration, at least until trial. The court also certified the class, so that all those Americans denied relief in this manner could proceed together. 

The court recognized the current economic reality faced by many incarcerated individuals across the U.S., and subsequently, how refusal of the CARES Act payment has caused and would continue to cause “irreparable harm.” Most individuals who enter prison were economically disadvantaged beforehand. Inmates often must purchase basic necessities to survive while incarcerated, as the court explained:

[P]risons do not provide all basic necessities required by incarcerated persons, including food and hygiene. With respect to food, incarcerated people supplement their food with items from the commissary, especially since … some institutions have reduced the number of calories or meals provided to inmates…. [S]ome penal institutions require inmates to pay for their own soap and personal hygiene items. 

Scholl v. Mnuchin, at 31.

The economic strain on family and loved ones of inmates has only intensified since the pandemic struck. Id at 31. As of October 15th, there are 1,560 cases per 10,000 prisoners in California, which is 623% higher than California overall. In the first three months of the pandemic, more than 10,000 federal prisoners applied for compassionate release, though only 156 were approved. Many states have suspended visitation--including legal visits--all together. The pandemic, as well as the opinion itself, raises concerns about whether America’s prisons are humane, if inmates do not have necessities for survival.

The Court found that the Trump administration’s interpretation of the CARES Act would likely be considered “arbitrary and capricious.” Scholl v. Mnuchin, at 28. “Defendants have not directed the court to any other evidence indicating that the Treasury Department or IRS gave any reason for its decision, much less an adequate one.”  Id. at 34.

Among other things, Trump’s administration claimed that the plaintiffs had shown no injury, but the court found that the denial of CARES ACT payments now, when they are most needed, was a sufficient injury. Id. at 11-12.

For more information about the case, please visit Lieff Cabraser Heimann & Bernstein’s blog post, “Federal Judge Certifies Class, Orders Trump Administration to Stop Denying Pandemic Relief Funds to Incarcerated Persons.” For information about the impact of COVID-19 on incarcerated people, please visit Equal Justice Initiative’s article, “COVID-19’s Impact on People in Prison.” 

Vote No on Proposition 22 to Protect Workers

By now, most California voters have received their vote-by-mail ballots.  One of the most critical issues on the ballot this year is Proposition 22. Prop 22 would reverse the California Supreme Court, legislature, and Governor in order to provide a windfall to ultra-rich corporations like Uber and Lyft. Prop 22 seeks to classify app-based drivers as “independent contractors,” rather than “employees,” denying drivers worker protections that are required by law to be afforded to all employees.

Uber, Lyft, DoorDash, Instacart, and Postmates have spent over $180 million trying to boost their profits at the expense of hard-working drivers, in the Prop 22 campaign. They have tried to mislead voters so that they do not have to pay their workers as the law requires. Voters must look past the barrage of pro-Prop 22 advertising and vote NO to protect workers.   

Here is what is really going on: Prop 22 would exempt app-based rideshare and delivery companies from their responsibilities under A.B. 5 and the Supreme Court of California’s decision in Dynamex, which currently classify drivers as employees. Unlike true independent contractors (like plumbers and electricians who come to fix something in your home or office), employees are guaranteed protections like minimum wage, overtime pay, reimbursement for their expenses, health insurance, and the right to organize. Via Prop 22, the ride-hailing and delivery companies are attempting to avoid providing their drivers with such protections.

 

Bryan Schwartz Law has written about A.B. 5 and Dynamex many times, for example: here, here, here, here, and here. To recap, A.B. 5 was signed into law in September of 2019, and codified the “ABC Test” laid out in Dynamex. Under the ABC Test, a worker 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.

 

For Uber, Lyft, and others to avoid paying wages, they are trying to say that driving customers is outside the usual course of what Uber and Lyft do and that the drivers are not central to the companies’ core business. They are just “technology platforms” – not companies that provide rides. Really? We’ve taken some Uber and Lyft rides – sure seems like they’re providing rides, and that the drivers are the way they do it!

 

They are lying, to say that Uber and Lyft drivers are like those contract plumbers and electricians with their own independent businesses. Given the amount of control ride-hailing and delivery companies have over their workers and the drivers’ centrality to their business model, app-based drivers have to be considered employees under the ABC Test.

 

Courts have gotten tired of the companies’ lies and their refusal to follow the law, which is why they came up with Prop 22. For example, in an August 10 order, Judge Ethan Schulman of the San Francisco Superior Court reprimanded Uber and Lyft, writing, "To state the obvious, drivers are central, not tangential, to Uber and Lyft's entire ride-hailing business."

 

According to Ballotpedia, Prop 22 is the most expensive ballot measure ever to appear in California. These companies make billions on the rides the drivers provide, so for them, spending over $180 million to buy your vote with countless television, radio, and digital ads makes sense. Lyft have even sent “Yes on 22” push notifications to customers’ phones and forced them to press “confirm” on a pro-Proposition 22 message, before being able to order a ride.

 

The ads pretend that the issues are “flexibility” and “independence.” The ads say that if Californians vote No on Prop 22, drivers will lose the flexibility to determine their hours. This is a phony argument. Nothing in the current law that Uber, Lyft, and the other companies are breaking prohibits employers from offering employees flexible schedules or part-time work. Many California employers offer that kind of work currently. One Lyft driver, Jerome Gage, put it perfectly when he wrote, “Uber and Lyft claim I want to be ‘independent.’ What I really want is to be safe and paid a living wage. That would give me independence.”

 

What Uber, Lyft and the others are not telling you is that a recent survey of San Francisco ride-hailing and delivery drivers shows that more than 70% of Uber and Lyft drivers work more than 30 hours a week, including up to “50% who work more than 40 hours and 30% who work more than 50 hours a week.” Many drivers are working full time for Uber and Lyft, without the companies respecting any of the protections that apply to employees.  The majority of the drivers say that driving for these companies is their primary or sole source of income. These workers deserve to be compensated like employees of these companies, because that is what they are.

 

Prop 22 purports that drivers will get guaranteed pay equal to 120% of the minimum wage. That rate would be about $15.60 per hour. An analysis by the UC Berkeley Labor Center shows that because of loopholes in Prop 22, the actual hourly pay rate would be closer to $5.64 an hour. You have to factor in unpaid waiting time, unreimbursed waiting time expenses, underpayment for driving expenses, and unpaid payroll taxes and employee benefits. With drivers classified as independent contractors under Prop 22, they would be responsible for costs like vehicle maintenance, gas, car insurance, taxes, and their own health insurance.  These costs eat up any “guaranteed pay” by Uber and Lyft.

 

Uber, Lyft, DoorDash, and Instacart support Proposition 22 because it protects their massive profits, not because they care about drivers. Prop 22 allows these companies not only to avoid fairly compensating their workers, but also to avoid paying payroll taxes and contributing to Social Security, Medicare, and Unemployment Insurance. Every business in California is required to provide baseline protections to their employees. Uber, Lyft, DoorDash, and Instacart should have to follow the law, like other employers.

 

If you believe you have been misclassified as an independent contractor or denied basic employee protections, please contact Bryan Schwartz Law.

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.

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.

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.

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 Starbucks, McDonald’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.

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.