California Supreme Court Declines to Hear Appeal in Case Upholding Janitors' Rights

A group of displaced janitors just won a major victory. This month the California Supreme Court declined to hear an appeal in SEIU-USWW v. Preferred Building Services, Inc., leaving in place an appellate court decision that affirms the rights of janitorial workers under the Displaced Janitor Opportunity Act (“DJOA”).

The DJOA is an essential law that ensures that janitorial workers have the job security they deserve. If a building owner or manager terminates their contract with a contractor providing janitorial services, any successor contractor hired within 30-days must retain many of the janitorial workers employed when the contract ends for a sixty-day transition period. If the janitorial workers continue to perform well, the new contractor must then keep them on permanently. This law is a vital piece of legislation that helps janitorial workers have stable and fair working conditions.

In SEIU-USWW, a group of janitors sued the contractor who replaced their employer (also a contracting agency) for failing to retain them as employees. The plaintiffs’ employer had tried to avoid their obligations under the DJOA by effectively terminating all of the janitors they employed three days before the official end of their contract with the building. The defendant then argued that since there were no janitors employed at the time that the contract ended, the next contractor did not have to retain any of the original janitorial staff. 

The court did not buy these evasive arguments. The appellate court affirmed the trial court’s decision that the original contractor's contract ended the last day that the janitors provided services, regardless of the date specified in their agreement with the building owner. The appellate court then upheld the summary judgment in favor of the plaintiff janitors. The defendant contractor appealed, but the California Supreme Court declined to hear the appeal, instead choosing to leave this victory for janitorial workers undisturbed. 

Now that the appeal has been denied, the appellate court’s ruling is final. This appellate court’s decision, and the California Supreme Court’s decision not to hear an appeal on the case, should serve as a reminder to employers that they can’t get away with end-runs around worker protections. For employers that try to get around their statutory obligations, workers’ advocates are ready to fight back, empowered by strong statutory protections.

If you are a janitorial worker and have been terminated or forced to resign after a change in contractors, please contact Bryan Schwartz Law. 

The Jury Has Spoken: Tesla Liable for $136.9 Million in Individual Race Harassment Case

Owen Diaz was vindicated after fighting back against the appalling racial harassment he endured at the hands of Tesla. He won a resounding victory this month when a jury awarded him $136.9 million, including an enormous $130 million in punitive damages. This verdict is one of the largest of its kind.

Mr. Diaz, who is African-American, worked at Tesla‘s Fremont factory as an elevator operator. Supervisors accosted him using racial epithets frequently, including the N-word, and Mr. Diaz found racist caricatures and swastikas written in the factory and bathrooms. Mr. Diaz complained to management, which did nothing. Dismayed but undeterred, Mr. Diaz courageously stood up to Tesla’s behavior “straight from the Jim Crow era and filed a lawsuit against Tesla.

Tesla fiercely litigated against Mr. Diaz over the four years that followed, but Mr. Diaz prevailed. Tesla argued that even though Mr. Diaz worked at Tesla, followed Tesla workers’ instructions, and earned a rate of pay set by Tesla, that it somehow had no responsibility to prevent the awful treatment he and other African-American workers at the Fremont Tesla factory endured. The jury did not fall for it.

Tesla also argued that Mr. Diaz had not shown any evidence of race discrimination, but the jury saw through that ruse. At one illustrative point in the trial proceedings, Tesla’s attorney asked a witness if the N-word was used in the workplace. After the witness confirmed it was, Tesla’s attorney asked if the epithet was used in a friendly way, completely failing to recognize that such degrading language has no place in any workplace, in any context, for any reason. The evidence of race discrimination at Tesla was so overwhelming that the jury returned an unprecedented verdict with $130 million in punitive damages, finding that Tesla intentionally violated the law.

Tesla forces most employees to sign arbitration agreements, which prevents them from coming together to hold Tesla accountable for its discriminatory treatment and veils in secrecy much of Tesla’s unlawful employment practices. Thanks to Mr. Diaz’s courage, Tesla is at last being held accountable publicly and by the community for its disgraceful and unlawful actions.

Whether Tesla’s expensive loss prompts corporate changes is yet to be determined; as Bryan Schwartz Law previously wrote, Tesla CEO Elon Musk stated that it was “worth it” to intentionally violate securities law and incur a $20 million fine, and he unlawfully threatened employees with a loss of stock options if they chose to unionize. Hopefully, this verdict pushes Tesla to begin to treat its workers with fairness and respect.

Tesla’s disdain for the employees on which it relies – particularly its non-white employees – is familiar to Bryan Schwartz Law. Bryan Schwartz Law has been litigating against Tesla in a race discrimination class action lawsuit, along with co-counsel the California Civil Rights Law Group, which also represents Mr. Diaz. If you have been the subject of race discrimination at Tesla, please contact Bryan Schwartz Law.

A Victory for App-Based Drivers: California Superior Court Strikes Down Proposition 22

In a momentous win for app-based drivers, the California Superior Court struck down Proposition 22 on August 20th, 2021. Gig companies such as Uber and Lyft spent an unprecedented $200,000,000+ to pass Proposition 22 in order to exempt themselves from treating app-based drivers as employees. Designating these workers as independent contractors allows companies like Uber and Lyft would to avoid their obligations to provide basic protections to their drivers, including a minimum wage, health insurance, contributions to workers compensation, and the ability to unionize. Bryan Schwartz Law has written before about these and other dangers of Prop 22: as independent contractors, drivers are paid an effective rate of about $5.64 per hour, well under the minimum wage, and would be denied an array of vital benefits and protections. 

Although proponents of Proposition 22 claimed that it would protect the independence of app-based drivers, the California Superior Court disagreed in Castellanos. The court even found that a provision of Proposition 22 that prohibited the Legislature from passing laws allowing app-based drivers to unionize only served to “protect the economic interests of the network companies in having a divided, ununionized workforce” and was completely unrelated to the stated goal of protecting drivers. The court found that this provision was therefore outside of the “single-scope” of Proposition 22; however, because the provision was severable, this finding did not impact the rest of the proposition.

Even more striking to the court was how Proposition 22 curtailed the ability of the Legislature to provide a robust system of workers’ compensation, an essential part of our social safety net. Our Legislature’s ability to protect injured workers through an expansive workers’ compensation program is so critical that the power is enshrined in the California Constitution and completely unlimited by any other provision of the Constitution. Only a Constitutional amendment can reduce workers’ right to receive worker compensation. Proposition 22’s attempt to create a statute that reduced the number of employees eligible for workers compensation was therefore unconstitutional. Unlike the provision limiting drivers’ ability to unionize, this provision limiting workers’ compensation was not severable, so the court’s ruling that this provision was unconstitutional meant that the entirety of Proposition 22 was rejected.

Before Proposition 22 was in place, California used the ABC test that was established by the 2018 California Supreme Court decision in Dynamex, and codified by AB5, to determine whether someone is an employee or an independent contractor. Under the ABC test, a worker is an independent contractor only if: 1) the worker is not controlled or directed by their employer in how they perform their work, 2) their work is outside the scope of the employer’s usual business, and 3) the worker is working in an independently established trade or business that matches their work for their employer. The employer must prove each of these elements before it can call a worker an independent contractor. The ABC test makes it much more difficult for employers to classify workers as independent contractors, which allows many more workers to receive the benefits and protections to which they are entitled. 

The decision in Castellanos vindicates the rights of hundreds of thousands of app-based drivers throughout California. This decision will likely be appealed, but it still represents an important step towards ensuring that app-based drivers receive the respect and protections that they deserve.

 

If you believe you have been misclassified as an independent contractor, please contact Bryan Schwartz Law.

Rescission of Trump-Era Joint Employer Rule Strengthens Workers’ Rights

The federal government is scrapping a rule created under the Trump administration to narrow the protections of the Fair Labor Standards Act (“FLSA”) for workers with more than one employer. Because this Trump administration rule shrank the category of entities liable for wage violations, it made recovering earned wages more difficult for employees. Its implementation would have cost employees one billion dollars per year, according to the Economic Policy Institute. A federal court struck down a large portion of the rule last year in New York v. Scalia; now, the Department of Labor (“DOL”) has decided to rescind the rule entirely. The rescission will take effect on September 28, 2021. 

When multiple entities are considered joint employers, they can be held accountable for the same employee’s wages and other rights and benefits. For example, some workers hired through staffing agencies are jointly employed by the agency and the business at which they perform their duties. In such a case, both the agency and the other business is legally responsible for ensuring that the worker is appropriately compensated. The Trump-era “Joint Employer Status Under the Fair Labor Standards Act”' redefined the criteria for the joint employer classification, to make fewer employers liable. 

The rule broke from past DOL interpretations of the FLSA, as B
ryan Schwartz Law previously wrote. It did away with the traditional “economic dependence” analysis in favor of an employer-favorable four-factor analysis of the entity’s control over the employee. These Trump administration-preferred factors were whether an entity

(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.

The court in New York v. Scalia threw out most of this rule, siding with the seventeen states and the District of Columbia that challenged it. However, the court’s decision applied only to “vertical” joint employment—when an employee obtains work with an entity through a contractor, such as a staffing agency, and in similar situations. Meanwhile, the Trump administration’s rule continued to govern “horizontal” joint employer liability, which can apply when a worker splits time between two employers. 

The Biden administration’s DOL will eliminate the Trump DOL’s rule in its entirety, providing a clear set of uniform regulations. This rescission fuels advocates’ hopes that the Biden Administration will continue to reverse regressive Trump-era policies undermining workers’ rights. Bryan Schwartz Law has written about previous reversals. For instance, in May, the Biden Department of Labor prevented the Trump administration’s Independent Contractor Rule from going into effect. That rule would have made it easier for employers to misclassify workers as independent contractors, denying them the rights of employees under the FLSA. Biden also revoked a memo issued by Trump’s Justice Department attempting to limit the protections that the landmark decision Bostock v. Clayton County affords LGBTQ+ workers. 

If you have been denied wages, breaks, overtime pay, or any other workers’ rights, please contact Bryan Schwartz Law.

Employees Win Victory in California Supreme Court Ruling on Meal and Rest Break Compensation

California law provides non-exempt employees with meal and rest periods. If an employer does not provide compliant meal or rest periods, employees are entitled to “one additional hour of pay at the employee’s regular rate of compensation.” (Cal. Lab. Code Section 226.7(c).) But are forms of pay such as incentives or commissions included in this calculus, or is it limited to hourly pay? In a victory for employees, the California Supreme Court decided earlier this month that other non-discretionary pay must be included in calculating an employee’s regular rate.

The case was filed by Jessica Ferra, a former bartender at the Loews Hollywood Hotel. Ferra claimed Loews had underpaid her and a class of similarly-situated employees for non-compliant meal and rest breaks because she and the other class members’ incentive payments were excluded from the calculation of missed breaks premiums. These payments were part of the pay Ferra expected and Loews promised, so Ferra contended that they should be factored into the formula for the “regular rate of compensation” used to calculate missed break premiums. In Ferra v. Loews Hollywood Hotel, LLC (2021) No. S259172 , the California Supreme Court agreed. 

 

“Regular rate of compensation” versus “regular rate of pay”

The decision came down to whether the “regular rate of compensation” for meal and rest break premiums is calculated the same way as is the “regular rate of pay” for overtime purposes. Loews contended that the calculations were different because the legal phrases were different, arguing that when the legislature uses different terms, it intends their meaning to differ. The court was not persuaded, noting that “compensation” and “pay” are synonyms. Regardless, the key phrase was “regular rate,” which applies to the calculations for both overtime and meal and rest break premiums. The court reasoned that the “regular rate” calculation follows that of the federal Fair Labor Standards Act (“FLSA”), looking to California case law and legislative history. Therefore, the “regular rate of pay” under California law must follow the same method of calculation as the “regular rate” in the FLSA, both for overtime calculations and for meal and rest break premium calculations. The court further opined that even if “compensation” and “pay” had different meanings in a relevant way, compensation covers a broader range of employment benefits than pay, such as wages, commissions, medical benefits, and other benefits.

Retroactive application

Sweetening the victory for employees, the Court determined that its decision applies retroactively to violations that came before the July 15 decision. The Court reasoned that its ruling rested on statutory interpretation, which merely clarifies a statute’s meaning, rather than setting forth new law. The Court rejected Loews’s misguided argument that this decision would put employers on the hook for millions of dollars, pointing out that “it is not clear why we should favor the interest of employers in avoiding ‘millions’ in liability over the interest of employees in obtaining the ‘millions’ owed to them under the law.” Consequently, employees may have a legal claim for non-compliant meal and rest break premiums, even if they were denied compensation before Ferra was decided.  

If you believe you have been wrongly denied meal or rest breaks or premiums paid at the correct rate of pay, please contact Bryan Schwartz Law here.

Biden Administration Rescinds Trump-Era "Independent Contractor Rule"

It has been a rough year for workers, but recent developments in worker classification suggest better days are ahead. On May 5, 2021, the Department of Labor (“DOL”) rescinded Trump-era guidelines regarding independent contractor classification under the Fair Labor Standards Act (“FLSA”). The withdrawal came days before the Trump Administration’s “Independent Contractor Rule” would have gone into effect, essentially preserving the status quo with respect to federal independent contractor classification guidelines.

The FLSA does not cover independent contractors. As a result, they are not guaranteed minimum wage, overtime pay, unemployment insurance, workers’ compensation, and other vital protections. Given its dramatic implications, worker classification remains a hot-button political issue. Courts commonly apply the “economic realities” approach to assess worker classification, a multi-factor balancing test that evaluates whether a worker depends on their employer to make a living as a matter of economic reality. If the “totality of the circumstances” indicate that more factors than not show that worker is economically dependent on their employer, several federal circuit courts nationwide held that they are classified as an employee.

The Trump Administration adopted a pro-business position on worker classification in 2017. In keeping with this position, the DOL issued a final “Independent Contractor Rule” (Rule) on January 6, 2021. Bryan Schwartz Law blogged about this Rule previously. Although the Rule purported to reaffirm the extant “economic realities” test, in practice it abandoned longstanding judicial precedent in favor of a more business-friendly standard. The new guidelines would have made it easier for employers to classify workers as independent contractors by reducing the considerations traditionally included in the analysis. Instead of the multi-factor balancing test applied by courts for decades, the Rule prioritized two main factors, the worker’s level of control and opportunity for profit, above all other considerations. If analysis of these main factors proved inconclusive, the Rule then required employers to weigh three additional factors: (1) the level of skill required for the work, (2) the permanence of the working relationship between the worker and the employer, and (3) whether the work is integral to the employer’s overall business operation. This approach ultimately would have reduced the number of workers classified as employees under the FLSA, thereby depriving them of federal protections.

After the Trump Administration’s exit, the Biden Administration instructed its DOL to withdraw the “Independent Contractor Rule.”  The DOL offered three reasons to rescind the Rule: first, that it conflicted with the text, purpose, and judicial precedent interpreting the FLSA; second, that its hierarchy of main and guiding factors contravened the balancing approach used in the economic realities test; and third, that it restricted “the totality of the circumstances” traditionally analyzed when determining worker classification.

Workers’ rights advocates hope more administrative and legislative actions will follow. As part of his 2020 presidential campaign, Biden promised aggressive FLSA enforcement to crack down on employers who misclassify their workers as independent contractors. In addition, Biden committed to designing a federal standard for worker classification modeled after the “ABC test.” California’s AB-5 legislation is one such example of this test. To qualify as an independent contractor under the ABC test, that worker must (a) be free from the control and direction of the hiring entity, (b) perform work outside the usual course of the hiring entity’s business, and (c) engage in an independently established trade, occupation, or business. That worker may be classified as an independent contractor only if they satisfy all three prongs.

If you believe you have been misclassified as an independent contractor, contact Bryan Schwartz Law. 

Juneteenth: A Celebration and a Call to Action

What is Juneteenth and why is it a national holiday?

The oldest known celebration of the end of slavery in the U.S. became a national holiday last week. President Biden signed the Juneteenth National Independence Day Act on June 17, creating the first new federal holiday since Martin Luther King Jr. Day was established in 1983.

Juneteenth originated in Texas to mark Maj. Gen. Gordon Granger’s announcement on June 19, 1865, at Galveston, that formerly enslaved people were free under the law. This day is a celebration of freedom, but it also serves as a reminder for the country that just as the Emancipation Proclamation did not actually end slavery in 1863, Black Americans’ fight against oppression did not end with freedom from slavery. Instead, these moments mark turning points in a struggle that is ongoing today.

What does the Juneteenth National Independence Day Act really do?

This law doesn’t guarantee a day off for most workers. Though most federal employees got Friday, June 18 off this year (June 19 being a Saturday), and some states (though not California) also made the day a paid holiday for state employees, private employers can choose whether or not to cancel work.

Recognition of Juneteenth as a milestone of national importance is certainly cause for celebration, though advocates recognize it is only a step toward racial justice. Opal Lee, who helped lead the movement to make Juneteenth a federal holiday and was in attendance as Biden signed the bill, said, “We've got all of these disparities that we've got to address and I mean all of them. While we've got some momentum I hope we can get some of it done.”

What is the role of employment law in effecting change?

While legal action can address only a limited range of racism’s manifestations, it can serve as an important tool against certain forms of race-based harassment and discrimination that employees face at work. For example, a class represented by Bryan Schwartz Law is suing Tesla for the rampant racism its members have experienced as workers in the car manufacturer’s Fremont factory. On April 9 of this year, the court denied Tesla’s motion to end class claims, fueling hopes for the lawsuit’s future.

As an employment law firm, Bryan Schwartz Law is committed to fighting race-based discrimination and harassment in the workplace. If you are experiencing harms of these kinds and are seeking legal assistance, you can reach out to us here.