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.

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.

Settling for More: 9th Circuit Rules on Standards for Class Action Settlements

In most circumstances, opposing parties can resolve a legal dispute among themselves out of court until a court case is over. Class cases are different. To settle a class case, the parties have to ask the court hearing the case for approval.

This is because in class action settlements, absent class members waive their claims in exchange for the benefits of the settlement. Without notice of the settlement and its key terms, class members could waive their legal claims without realizing it, having a say in the terms of the agreement, or having the opportunity opt out of the agreement. This implicates absent class members’ due process rights.

To protect absent class members’ rights, the hearing court has a special duty to ensure that sufficient notice is provided to class members. The court must also take care that the settlement itself is fair. While courts usually balance and adjudicate competing interests in an adversarial context, the settling parties are in agreement in the context of a class action settlement. Especially concerning is the prospect that the parties could bargain away absent class members’ rights in order to secure a quick resolution that may not be in the class’s best interest.

Earlier this month, the 9th Circuit Court of Appeals rejected a class action settlement agreement in the high-profile class action case Murphy v. SFBSC Management. A pair of erotic dancers filed a class action case on behalf of 4,681 putative class members who currently or previously worked as erotic dancers for SFBSC Management’s 11 adult entertainment clubs in San Francisco, alleging that they had been misclassified as independent contractors when they should have been classified as employees. Bryan Schwartz Law has blogged about the distinction between employees and independent contractors here and here.

The parties settled and sought court approval. The trial court preliminarily approved the settlement, providing for notice of the settlement agreement to be sent to the class members’ last known mailing addresses, posted at the nightclubs’ dressing rooms, and posted online on a website created for this purpose. Initially, 1,546 notices were returned as undeliverable; after the settlement administrator performed address traces and resent notices, 560 notices remained undeliverable. Many class members lodged objections on several bases, but the court approved the settlement. The objectors appealed.

On appeal, the 9th Circuit agreed with almost all of the objectors’ complaints about the settlement agreement and the notice process.

I.                    Adequacy of the Notice

The objectors attacked the notice of class settlement in two ways. First, they argued that the notice did not inform class members that other similar lawsuits had been filed by other erotic dancers. The 9th Circuit rejected this claim—the only argument the objectors raised that the court rejected—holding that the class notices did not need to provide information to class members regarding related cases. Likewise, the notice did not need to describe any objections to the settlement agreement that had been raised.

Second, the objectors argued that the process of distributing the notice was insufficient. In particular, the objectors argued that the failure to provide any electronic notice (besides the website) was not the best practicable notice under the circumstances. The 9th Circuit agreed, noting that as many as 12% of the class received no notice by mail. In addition, the posters hung in the dressing rooms could only be viewed by current employees, whereas the class included former employees as well. Importantly, electronic notice may have been warranted if “reasonably calculated to appraise all class members of the settlement,” including email or even social media or “relevant online messaging boards.”

II.                 Standard of Review

Before the court examined the fairness of the agreement, the court first clarified the standard for courts to assess class action settlements. A court reviewing a class action settlement before the class has been certified requires a higher standard of fairness and a more probing inquiry. Reviewing courts should be on the lookout for subtle signs of collusion between the parties. The trial court in this case had begun its analysis with a presumption of fairness where a settlement was the product of arms-length negotiations between experienced attorneys. This standard was incorrect. The 9th Circuit also stated that it would not accept the mere presence of a neutral mediator as conclusive proof that the settlement was fair.

III.              Fairness of the Agreement

Next, the court examined several aspects of the settlement agreement that indicated possible unfairness. One of these was a clear sailing agreement with regards to attorneys’ fees. Under the provision, SFBSC Management agreed not to contest class counsel’s request for up to $1,000,000 in attorneys’ fees. The 9th Circuit observed that such agreements could be indicia that the agreement was reached at the expense of the class’s interests, especially in light of the high amount of attorneys’ fees requested.

The free sailing provision in this case called for attorneys’ fees greater than the net $864,115 to be distributed to the class. The parties arrived at the high amount of attorneys’ fees as a percentage of the total benefit of the settled claims, including the estimated value of two other areas of relief provided in the settlement agreement: (1) a Dance Fee Payment Pool, and (2) injunctive relief. Objectors challenged the sufficiency of the valuations for each, which had been set at $1,000,000 each.

Under the settlement agreement, class members could elect to receive payment from the Dance Fee Payment Pool of up to $1,000,000 in lieu of a lump sum cash settlement share. This money would come from the charges that the nightclubs would ordinarily retain from customer payments per dance. Dancers who selected this option could receive up to $8,000, but dancers had a limited amount of time in which to accrue payments from the Dance Fee Payment Pool.  

The court likened the Dance Fee Payment Pool to coupons, with reduced value to the class. This option had an expiration date, was not transferable, and required class members who no longer worked with SFBSC Management to do business with it again in order to claim the value. The 9th Circuit held that a court approving a class action settlement could not rely on such valuations except in the rare instance when non-monetary relief could be valuated exactly. Here, the parties did not put forth any evidence to support their valuation of the coupons.

Similarly, the 9th Circuit was troubled by the $1,000,000 valuation of the injunctive relief. The settlement agreement provided that SFBSC Management would allow dancers to elect whether to work as employees or independent contractors, each with its own form of compensation and employment structure. The court faulted the trial court for failing to make any findings specifically justifying the valuation of this benefit at $1,000,000.

The court was also wary of the enhancement awards called for in the settlement agreement for the named plaintiffs, to be taken from the general settlement fund. While the court was not concerned by the $5,000 enhancement payments in recognition of the plaintiffs’ efforts to represent the class and prosecute the case, the court found suspect the $20,000 enhancement payment for the general release the plaintiffs signed. The court saw no service to the class compensated by this enhancement. As such, the court viewed the enhancement as evidence of a potential side deal between the named plaintiffs and the employer, at the class’s expense, giving rise to a potential conflict of interest.

The court also looked at the settlement agreement’s reversionary effect. If class members did not cash their checks, those amounts would have reverted to SFBSC Management, rather than being redistributed to the class or a charitable organization that furthers the beneficial goals of the litigation. The 9th Circuit observed that reversionary agreements can indicate unfairness to the class, especially when coupons are involved. Combined, these factors drove the 9th circuit to reverse the trial court’s approval of the settlement agreement and remand for further proceedings.

If you have a dispute with your employer, contact Bryan Schwartz Law today.

Giving Thanks for Worker Protections—California Supreme Court and California Legislature Limit Arbitration Agreements in Employment

The California Supreme Court handed down a decision earlier this year that adds to the growing body of law surrounding mandatory arbitration agreements and delivering a victory for employees. The case is Oto, L.L.C. v. Kho (2019) 8 Cal.5th 111. This decision, plus the California Legislature’s recent legislation in AB-51, limit the extent to which employers can attempt to force their employees into binding arbitration.

Employers increasingly require their employees to sign mandatory arbitration agreements. By these agreements, employees waive their right to pursue employment actions against their employers by any means besides binding arbitration. The arbitration process often favors employers and effectively stymies employees’ efforts to vindicate their rights, protecting employers that wish to skirt the law. Employers’ reliance on mandatory arbitration has ballooned following the past decade of U.S. Supreme Court cases whittling away at employees’ right to vindicate their employment grievances in court or through an administrative proceeding. Given that mandatory arbitration agreements are so widespread, Bryan Schwartz Law has blogged about them many times, including here, here, here, here, and here.

One of the ways in which an employee may be able to escape from the requirements of a mandatory arbitration agreement is by arguing that the agreement itself is invalid, using the same legal arguments that could be made as to any contract. Oto v. Kho addressed one of these contract defenses in particular: the doctrine of unconscionability.

A contract might be unconscionable in one of two ways. First, the contract could be procedurally unconscionable. This means that the circumstances in which the contract was formed were so unfair that one of the parties could not have agreed to it based on their own free will.

Second, the contract could be substantively unconscionable. This means that the terms of the contract themselves are so unfair against one party that a court will refuse to enforce the contract.

Both were present in Oto v. Kho, the California Supreme Court ruled. The plaintiff in the case, Ken Kho, worked for One Toyota in Oakland, California, for three years before he was presented with several documents, including a mandatory arbitration agreement, by a low-level employee. Kho, whose first language is Chinese, was forced to sign the agreement immediately without a chance to review the agreement first. Later, Kho filed a complaint with the California Labor Commissioner against One Toyota for unpaid wages. One Toyota moved to compel arbitration on the eve of a hearing before the Labor Commissioner and refused to participate in the proceedings before the Labor Commissioner any further. The proceedings took place without One Toyota, and the Labor Commissioner entered an award for Kho.

The trial court vacated the award but did not compel arbitration. The court of appeal reversed, holding that, despite the apparent procedural unconscionability, the agreement was not substantively unconscionable.

The California Supreme Court disagreed. First, several aspects of the formation of the agreement smacked of procedural unconscionability. The agreement was presented to Kho at his workplace, along with other employment-related documents. No one explained the document or provided a copy in Kho’s native language, but he was required to sign it in order to keep his job. If Kho had insisted on taking the time to review the documents, his pay would have been reduced because he was paid on a piece-rate basis. The agreement was communicated to Kho by a low-level employee, indicating that One Toyota would not entertain any request for explanation. Furthermore, the low-level employee waited for Kho to review and execute the agreement, which created the impression that Kho was expected to do so immediately. One Toyota did not give Kho a copy of the executed agreement.

Moreover, the language of the agreement was rife with complex legalese and convoluted sentences. This dense paragraph was printed on tiny font; the court of appeal characterized it as “visually impenetrable.” The agreement’s deceptive nature was also apparent in how it characterized the responsibility for the costs of arbitration. The agreement set forth that the costs of arbitration would be split between the parties unless controlling case law provided otherwise, without noting that the controlling decision in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, created an exception to this default rule in employment cases. Taken together, these aspects of the agreement demonstrated that it “did not promote voluntary or informed agreement.”

Second, the agreement was substantively unconscionable. It provided no indication as to how one could bring an action in arbitration, as the agreement required. The process set forth in the mandatory arbitration agreement was as complex and intricate as the process for civil litigation, requiring arbitration to be initiated through the filing of a complaint and setting forth specific motions and discovery procedures. These procedures ran counter to the supposed benefits of arbitration—its purported speed and efficiency. The Court was also concerned that the arbitration agreement all but required claimants to hire legal counsel due to the complexity of its procedures, forcing employees to incur attorneys’ fees, whereas employees bringing wage claims have access to free legal assistance from the Labor Commissioner. Given that Kho’s mandatory arbitration agreement was both procedurally and substantively unconscionable, it was unenforceable.

The California Legislature also made a foray into mandatory arbitration provisions, amending the Fair Employment and Housing Act (“FEHA”) to protect employees against forced arbitration. The amendment, AB-51, makes it an unlawful employment action to require any current or prospective employee to waive the right to pursue their FEHA claims in court or any other forum—in other words, employers cannot require employees to sign mandatory arbitration provisions as a condition of employment. The new legislation, set to take effect on January 1, 2020, also includes a provision prohibiting employers from retaliating against any employee because of their refusal to agree to mandatory arbitration.

If you have an employment dispute against your current or former employer, contact Bryan Schwartz Law.

Attorney’s Fees Awarded When Whistleblower Acted in the Public Interest

Have you ever blown the whistle on illegal activity in the workplace and then been retaliated against? Did you have trouble finding a lawyer who would represent you? California protects whistleblowers, but defendants sometimes argue that whistleblower retaliation claims under California Labor Code section 1102.5 (California’s general whistleblower statute) do not require defendant to pay the whistleblower’s attorney’s fees. Attorney’s fees awards are critical to helping whistleblowers get their day in court. Because most people can’t afford to hire an attorney on an hourly basis, laws that allow for the recovery of attorney’s fees allow attorneys to take cases on a contingency basis – the attorney only gets paid if you get paid. An award of attorney’s fees also means that the attorney’s payment doesn’t have to come out of the amount you recover. You get your recovery and the attorney gets her fees, without the attorney having to take her fees out of your recovery (typically at least 1/3 to 40% of your recovery).

Attorney’s fees awards are available under California Code of Civil Procedure section 1021.5 where the case involves the enforcement of an important right affecting the public interest if: (1) a significant benefit, monetary or non-monetary, has been conferred on the general public or a large class of persons; (2) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate; and (3) such fees should not in the interest of justice be paid out of any recovery (i.e., the attorneys should not be paid out of what the employee recovers). The question is, does a violation of 1102.5 warrant the recovery of attorney’s fees as outlined in 1021.5? Can whistleblowers recover their attorney’s fees?

The California Court of Appeals recently said yes.

In Hawkins v. City of Los Angeles (2019) 40 Cal.App.5th 384, two employees blew the whistle on illegal activity happening in the City of Los Angeles’ Department of Transportation. Todd Hawkins and Hyung Kim were hearing examiners who reviewed parking violations. When people challenged parking tickets, Mr. Hawkins and Mr. Kim decided whether those people had in fact violated parking laws or if the City had gotten it wrong and needed to issue a refund for the fines they had charged.

Both men complained internally that their supervisor was pressuring them to change decisions from “not liable” to “liable” – in other words, saying people had violated parking laws when they hadn’t and cheating people out of refunds for the fines they had paid. Both men were then fired for speaking up.

They sued for whistleblower retaliation under 1102.5, the California Bane Act, and other claims. They also filed claims with California’s Labor and Workforce Development Agency seeking PAGA (Private Attorneys General Act) penalties. The matter went to a jury trial, and the jury found in the employees’ favor on their 1102.5 and Bane Act claims, awarding Hawkins $238,531 and Kim $188,631 in damages. The trial court then assessed a $20,000 PAGA penalty, and subsequently awarded the employees $1,054,286.88 in attorney’s fees. The City appealed.

The Court of Appeals upheld the jury’s verdict, upholding the award of attorney’s fees for whistleblower retaliation under 1102.5. As the Court explained,

Here, the City argues that a significant benefit was not conferred on the public because all the action did was remedy retaliation for whistleblowing. However, the City ignores the trial court’s finding that the action also conferred a significant public benefit because the public is entitled to fair hearings with respect to parking citations. The Vehicle Code entitles the public to “an independent, objective, fair, and impartial review of contested parking violations.” (Veh. Code, § 40215, subd. (c)(3).) Plaintiffs’ action revealed that, for years, the City had been pressuring, sometimes successfully, hearing examiners to change decisions, usually to find that refunds were not warranted. In short, the public had been deprived of independent and impartial hearings. Instead, the City undermined the process provided by the Vehicle Code to generate revenue.

Mr. Hawkins and Mr. Kim were whistleblowers under 1102.5 who satisfied the requirements under 1021.5 of acting in the public interest, warranting their recovery of attorney’s fees.

                The Court of Appeals also upheld the award for attorney’s fees for Mr. Hawkins’ and Mr. Kim’s PAGA claim. This is a big deal: in an unpublished portion of the opinion, the Court explains that an individual whistleblower under 1102.5 can still be representative of a broader group of people, as required by PAGA, when that individual whistleblower is furthering the public interest. The Court distinguishes another case, Kahn v. Dunn-Edwards Corp. (2018) 19 Cal.App.5th 804, where the plaintiffs’ PAGA claim was denied because it wasn’t representative:

 We express no opinion as to the correctness of Kahn’s holding. Whether correct or not, we do not interpret Kahn so literally as to hold that a plaintiff whose prefiling notice uses the incorrect pronoun—I instead of we and my instead of our—fails to comply with the Labor Code’s administrative procedures. Rather, we must determine whether the prefiling notice, as a totality, gave the requisite notice. Plaintiffs’ prefiling notices are materially different than the notice in Kahn. Their notices referred to complaints that Walton-Joseph had hearing officers change written decisions from not liable to liable. Hawkins referred to Walton-Joseph’s actions “in coercing employees, including Claimant to change their decisions.” (Italics added.) Similarly, Kim referred to another hearing examiner who had complained to government officials about the conduct. Thus, the notices here expressly referred to conduct not limited to the individual complainants. They complained about conduct that impacted them and fellow hearing examiners, as well as the public. We therefore conclude that plaintiffs complied with section 2699.3 [PAGA].

While attorneys cannot cite to the above portion of the Hawkins opinion, it’s worth noting the Court’s implicit suggestion to use the pronoun “we” in PAGA claims to forestall any argument from the defendant employer that the plaintiff does not have a viable PAGA claim.

Hawkins strengthens whistleblower protections, making it more likely that whistleblower cases will be brought to court – and therefore making it more likely that the harms whistleblowers uncover will be remedied. Hawkins will be a key case moving forward to combat public corruption and the silencing of those who dare to speak truth to power.

Bryan Schwartz Law has written about attorney’s fees for whistleblower retaliation and PAGA before. If you believe that you were retaliated against for exposing illegal activity at your workplace, please contact Bryan Schwartz Law today.

New (Watered-Down) Overtime Pay Rule Announced By Department of Labor

This week, the U.S. Department of Labor announced a final rule that starting January 1, 2020, 1.3 million more American workers will be eligible for overtime pay under the Fair Labor Standards Act (FLSA). The final rule expands the definition of who “non-exempt” workers are, i.e. workers who are subject to minimum wage and overtime pay requirements. “Exempt” workers are exempt from minimum wage and overtime pay requirements. Exempt workers include, for example, those meeting the tests (including the salary-basis test) for the white-collar exemptions as executive, administrative, or professional employees.

The rule is a watered-down version of an Obama Administration proposal, which would have expanded overtime pay to around 4 million workers by raising the maximum salary for which non-exempt workers are entitled to overtime pay to $47,000 a year for full-time work, a highly-compensated employee (“HCE”) exemption level of $147,000, and (perhaps most importantly) tying future increases to the cost of living. That proposal was met by fierce opposition from various business groups, who teamed up with some Republican-controlled states to take the Obama Administration to court, resulting in the rule being blocked by a conservative federal judge in 2017.

Here are the main changes the new rule makes:

·         raises the “standard salary level” to qualify for a white-collar exemption from the current level of $455 per week (equivalent to $23,660 per year for a full-year worker) to $684 per week (equivalent to $35,568 per year for a full-year worker);

·         raises the total annual compensation level for “HCEs from the current level of $100,000 to $107,432 per year;

·         allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level; and

·         revises the special salary levels for workers in U.S. territories and in the motion picture industry.

What the new rule does not do is tie the standard salary level to the rate of inflation. Adjusted for inflation, the $23,660/year would rise to a current minimum salary level for non-exempt status of $55,000/year. By also allowing employers to take nondiscretionary bonuses and commissions into account in determining how much employees make and therefore if they’re eligible for overtime pay, the rule immediately undercuts the impact of the relatively small increase provided to the standard salary level. That 10% caveat creates room for confusion and discretion on the part of employers that could adversely affect the very workers the rule is supposedly designed to help. The $107,432/year level for HCEs is also laughably low for many parts of the country where such a salary is much closer to the average.

After 15 years of no updates to overtime pay eligibility, any update is welcome. But once again, the Trump Administration does far less than is needed (and far less than was approved by the prior Administration) to help vulnerable workers. The bottom line: If you make less than $35,568 a year for full-time work, starting next year, you’re more likely to be entitled to overtime pay. But, your employer can count up to 10% of your earnings from things like bonuses and commissions to determine if you qualify for overtime. Note that this new rule doesn’t affect the “outside sales exemption.”

Bryan Schwartz Law has written about overtime issues before here. If you believe you were denied overtime pay you were owed, contact Bryan Schwartz Law today.

Congratulations on Your Courage, Governor Newsom!

It is very easy to be cynical about politicians. This is nothing new, but the cynicism has to be at an all-time high based on the extent of media coverage devoted to the current, corrupt, dishonest, morally bankrupt, cowardly occupant of the Oval Office.

As such, it is worth taking a moment to recognize a politician - California's Governor - who acts with real courage. Gavin Newsom did something brave today when he signed into law Assembly Bill 5 (AB5), taking a strong, cutting-edge position toward the developing gig economy and how it affects average Californians. Misclassification of workers as "independent contractors," as Governor Newsom sagely recognized in his signing message, is further "hollowing out" our middle class, and contributing to the erosion of basic worker protections that all people of conscience should agree upon - the minimum wage, paid sick days, and health insurance benefits.

Uber and other gig economy companies are a powerful financial force. By the Governor's strong position today - which more politicians should emulate - he says something unequivocally true: all of us, standing together, are stronger than any corporation.

Thank you, Governor Newsom.