Colorado Issues Sweeping Wage and Hour Law Changes for Private Employers Through New Wage Order

Effective March 16, 2020, COMPS Order #36 (the Order), issued by the Colorado Department of Labor and Employment, will bring about sweeping changes to Colorado’s overtime and minimum pay standards (COMPS) impacting private employers. The Order will also succeed the currently operative Amended Minimum Wage Order #35, which is the source of Colorado’s wage rights and responsibilities beyond those provided by law.

The Order, like the department’s prior annually issued wage orders, includes laws pertaining to an individual’s eligibility for Colorado minimum wage, overtime pay for work past 40 hours per week and 12 hours per day, meal and rest breaks, and other rights and responsibilities belonging to Colorado employers and employees, such as what wage deductions are permissible, how hourly rates are calculated from non-hourly pay for overtime, and posting requirements. Unlike many previous wage orders, however, the new Order expands beyond current federally mandated wage and hour requirements in several key areas, includes numerous substantive changes favoring employees, and imposes significant compliance difficulties on private employers, requiring swift adjustment prior to the March deadline. A summary of key changes contained in the Order is provided below. Continue Reading

Bring Forth the Tiger-Dogs! Here’s a Quick Status Check on the Challenges to California’s New Independent Contractor Law

When outside forces pose a threat to people’s livelihood, people will go to great lengths to fight back.

For example, when monkeys began ravaging the crops of a farmer in Karnataka, India, the imaginitive farmer painted his dog to look like a tiger, to scare away the pesky invaders. [Photo here.]

Business owners in California are taking more conventional measures to fight back againt the tyranny of Assembly Bill 5, the new California law that seeks to reclassify many of the state’s independent contractors as employee. Here’s a quick summary of the resistance:

  • Owner-operator truckers claim the new California law cannot be applied to them because of a federal law (FAAAA) that prohibits states from enacting their own laws that affect the “price, route, or service of any motor carrier with respect to the transportation of property.” They won a preliminary injunction last month, temporarily preventing the law from applying to them.
  • Freelance writers and photographers are challenging the law too. The law has an exception for freelancers, but the exemption goes away if freelancers submit 35 or more pieces to a single publication. In other words, they’re independent contractors for submissions #1 through #34, but they instantly become employees with submission #35. They argue that the exemption is arbitrary and violates their First Amendment and equal protection Rights.
  • Rideshare and food delivery apps filed their own lawsuit, alleging that the exemptions are arbitrary and violate their equal protection and due process rights.
  • Five gig economy app companies have contributed $110 million to a ballot measure that will be voted upon in the November 2020 election if the measure collects 625,000 signatures. The law would exempt app-based gig economy drivers from the new test if the companies provide workers with specific levels of pay, benefits, and rights, which are defined in the proposal.
  • Republican lawmakers have proposed a constitutional amendment (A.C.A. 19) called the “Right to Earn a Living Act,” which would overturn Assembly Bill 5 and enshrine in California law “the right to pursue a chosen business or profession free from arbitrary or excessive government interference.” The amendment would reinstate California’s S.G. Borello balancing test for determining whether a worker is an independent contractor or an employee.

Meanwhile, the California Supreme Court is considering whether the 2018 Dynamex decision, which first imposed the ABC Test for wage and hour claims, applies retroactively. If it does, then businesses can be liable for failing to comply with a test that did not yet exist. Really.

That’s a lot of action, and we’ll continue to watch for new developments. Meanwhile, California businesses that use independent contractors should tread carefully, follow the status of legal challenges, and paint their dogs to look like tigers — just in case that turns out to be effective.

Editor’s Note: For more information, tips, and developments on issues related to joint employment and independent contractor misclassification issues, follow Todd Lebowitz’s blog, at whoismyemployee.com.

What Is Joint Employment? New DOL Rules Take Effect in 60 Days

This week’s post is Family Feud Style. Name Three Things That Sound Like They Would Be “Joint Employment” But Are Not:

1. Long-haired, easy-going product tester at the local wacky tobacky dispensary.

2. Note taker at an orthopedist’s office.

3. The guy on radio ads for non-approved supplements claiming to relieve joint pain who says – really, really fast – “These statements not approved or validated by the FDA.”

Each of those jobs has something to do with joints, but that’s not what the Department of Labor (DOL) means when it addresses “joint employment.”

Under the Fair Labor Standards Act (FLSA), more than one person can be an employee’s employer, and when there’s joint employment, both employers are fully liable for any minimum wage or overtime owed to the employee. So, when is a business a joint employer?

On Sunday, the DOL issued new rules for determining when a business is a joint employer under the FLSA. The new rules take effect in 60 days. Here’s what you need to know. Continue Reading

UPDATE: Texas Legislature and Courts Clash With Cities Over Mandatory Sick Leave: What Employers Need to Know

This is an update to previous posts from June 24, 2019 and July 31, 2019.

On Friday, November 22, Bexar County Judge Peter Sakai ordered that San Antonio’s paid sick leave ordinance, which was scheduled to take effect December 1, be delayed once again. Implementation of the ordinance was first delayed in July of this year by agreement of the City of San Antonio and the business groups challenging the ordinance. Following court approval of that agreement, San Antonio revised its ordinance to attempt to appease local businesses. The revisions, which were passed by San Antonio’s City Council on Oct. 3, were not enough to satisfy the plaintiff businesses, which subsequently requested a temporary injunction to block the revised ordinance from taking effect on December 1. Following a hearing, Judge Sakai granted the injunction, which will prevent the ordinance from becoming effective while the case proceeds. A trial will be set to determine whether the ordinance should be enjoined permanently. In the meantime, the city may decide to appeal the injunction to the Fourth Court of Appeals in San Antonio.

The San Antonio Chamber of Commerce released a statement applauding Judge Sakai’s decision, calling San Antonio’s ordinance “a local infringement on the rights of private employers.” See Statement from Chamber on Injunction of Sick Leave Ordinance.

Meanwhile, Dallas and Austin also continue to face legal challenges to their own respective paid sick leave ordinances. Dallas’s ordinance, the only one of the three that has gone into effect, is currently facing a challenge in federal court in the Eastern District of Texas. The judge in that case has not yet ruled on the Dallas companies’ request for injunction or the city’s motion to dismiss. It is important to note that while Dallas’s paid sick leave ordinance became effective on August 1, 2019, the city of Dallas has deferred enforcement of the ordinance, other than for claims of retaliation, until April 1, 2020.

Austin’s paid sick leave ordinance, like San Antonio’s, has been prevented from taking effect by Texas state courts. In November 2018, the Austin ordinance was enjoined by Texas’s Third Court of Appeals, which declared the ordinance unconstitutional. The city of Austin has appealed that decision, and the parties are expected to complete briefing to the Texas Supreme Court on January 7, 2020. The court will likely not issue its ruling until the spring of 2020. While only the Austin ordinance is at issue in the case pending before the Texas Supreme Court, the court’s decision will almost certainly have legal implications for the Dallas and San Antonio ordinances as well.

Due to the uncertainty caused by these legal challenges, employers operating in San Antonio, Dallas or Austin should continue to closely monitor the events relating to all three ordinances. Our Texas Labor and Employment Group would be happy to answer any specific questions you may have regarding the paid sick leave ordinances and how you or your business may be affected.

Not Dead Yet: The States’ New Strategy for Attacking Independent Contractor Misclassification Can Be Relentless — and Costly.

For years, state governments have claimed they were losing hundreds of millions of dollars in unpaid withholdings as a result of independent contractor misclassification. Now, one state is making a grab for a massive piece of that pie — all at once.

On November 12, the state of New Jersey sent a bill to Uber Technologies for $459 million and a bill to its subsidiary Rasier LLC for $642 million seeking unpaid contributions, penalties, and interest. The bills cover 2014 through 2018 and allege a failure to make required payments under the New Jersey Unemployment and Temporary Disability Insurance Laws.

Contributions, of course, are due only for employees, not independent contractors. And there’s the rub. Like many states, New Jersey uses an ABC Test to determine whether a worker is an employee or an independent contractor for unemployment insurance purposes, and the state is claiming that Uber and Rasier misclassified drivers.

Uber and Rasier will appeal, and there are defenses available. They have good arguments, and they will assert them vigorously. But the stakes are high, and the outcome is uncertain. When a state brings a claim like this one, a company’s arbitration agreements and class action waivers don’t help. These are not arbitrable claims. Continue Reading

New York City Extends NYCHRL Employment Protections to Freelancers and Independent Contractors

On Oct. 13, 2019, New York City enacted Int. 136-A (the Law), expanding the employment protections of the New York City Human Rights Law (NYCHRL) to freelancers and independent contractors. The Law will take effect on Jan. 11, 2020.

The NYCHRL applies to employers with four or more employees. The Law changes the counting rule so that, when determining whether there are four employees, the headcount will now include (i) interns, freelancers and independent contractors and (ii) the employer’s parent, spouse, domestic partner or child, if employed by the employer.

The Law has a 12-month look-back period for counting purposes. This means that to have fewer than four employees, the employer must have fewer than four “at all times during the period beginning twelve months before the start of an unlawful discriminatory practice and continuing through the end of such unlawful discriminatory practice.” The four-employee threshold does not apply to gender-based harassment claims, as the NYCHRL’s prohibition on sexual harassment covers all New York City employers, regardless of size. Continue Reading

California Court of Appeal Determines Customer of Staffing Agency Is Employer Because of Direction and Control

In Jimenez v. U.S. Continental Marketing, Inc., the California Court of Appeal addressed whether the plaintiff and appellant, Elvia Velasco Jimenez, was an “employee” of a contracting employer under the California Fair Employment and Housing Act (FEHA). In answering this question, the court also provided useful guidance to California businesses on the standard for whether an employment relationship exists under the FEHA. This guidance is particularly relevant for staffing companies and their clients because there can be ambiguity as to which company employs these workers. This question was highly consequential to the parties because, unless Jimenez could establish that she was an employee of the contracting employer under the FEHA, she could not prevail on her claims against that company for harassment, retaliation, failure to prevent harassment or retaliation, and wrongful termination.

Jimenez was a “direct employee” of a staffing agency named Ameritemps, Inc., which assigned her to U.S. Continental Marketing, Inc. (USCM), a manufacturer of shoe care products. At the time USCM terminated her engagement, Jimenez oversaw the production work of up to 30 workers. Ameritemps was responsible for tracking work time, providing benefits and paying Jimenez. With respect to her day-to-day experience at USCM, however, there was virtually no difference between Jimenez and direct employees of USCM.  Jimenez used USCM’s equipment, she was expected to comply with USCM’s policies, she supervised and in turn was supervised by USCM’s direct employees, and USCM sent her to its clinic for any on-the-job injuries. Continue Reading

Ahead of 2020 Election, New York City Issues Enforcement Guidance on National Origin and Immigration Status Discrimination

The Dictionary definition of the word “discrimination” photo taken through magnifying glass from a page of a dictionary with selective focus.Immigration has been at the forefront of news reports and court cases recently, and has already proven to be a hot button issue for the 2020 election candidates to debate. As we move closer to the election, such political conversation may find its way into the office. If it does, employers should ensure that they know what is and is not permitted commentary and actions with respect to individuals who are not U.S. citizens or are of a different national origin.

As you are likely aware, the New York City Human Rights Law (NYCHRL) prohibits discrimination, harassment and retaliation on the basis of, among other protected categories, actual or perceived “alienage and citizenship status” and “national origin.” Citing various statistics to support that New York City is one of the most diverse cities in the world, the NYC Commission on Human Rights (the Commission) released enforcement guidance and a fact sheet, emphasizing that fighting national origin and immigration status discrimination is a priority of the Commission. Continue Reading

California Employers Receive Favorable Interpretation of “Regular Rate of Compensation” in Labor Code Provision Concerning Meal and Rest Period Premium Pay and Guidance Regarding Lawful Rounding Practices

Close-up picture of a personal check and American Dollars with selective focus. Great use for financial concepts.Earlier this month, a California Court of Appeal issued an opinion that is good news for California employers. The opinion addressed the meaning of “regular rate of compensation” in California Labor Code section 226.7, which requires employers to pay employees a premium wage when employees do not receive meal or rest periods, and also addressed under what circumstances an employer’s rounding policy is lawful. The court’s opinion is favorable on both points for employers.

In Jessica Ferra v. Loews Hollywood Hotel, LLC, the Court of Appeal addressed whether the term “regular rate of compensation” within Labor Code section 226.7 has the same meaning as the term “regular rate of pay” within Labor Code section 510. Labor Code section 226.7 requires an employer that fails to provide its employee with a required meal, rest or recovery period to pay the employee an additional hour of pay “at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.” Labor Code section 510 requires an employer to pay overtime at either one and one-half or twice the employee’s regular rate of pay when the employee works more than a specified number of hours within a workday or within a workweek. Continue Reading

California Court of Appeal Concludes That Claims Under Labor Code 2800 and 2802 Not Excluded From Coverage by “Wage and Hour” Exclusion in Lloyd’s of London Insurance Policy

In a win for California employers, the California Court of Appeal for the Fourth District held in Southern California Pizza Co., LLC v. Certain Underwriters at Lloyd’s, London Subscribing to Policy Number 11EPL-20208, 2019 WL 4572859, that claims against the insured employer brought under California Labor Code §§ 2800 and 2802 were potentially covered by the applicable Lloyd’s of London policy. In doing so, the Court narrowly interpreted the policy’s “wage and hour” exclusion and overruled the trial court’s order sustaining the carrier’s demurrer to the insured’s coverage and bad faith complaint.

The applicable policy language reads, “[t]his Policy does not cover any Loss resulting from any Claim based upon, arising out of, directly or indirectly connected or related to, or in any way alleging violation(s) of any foreign, federal, state, or local, wage and hour or overtime law(s), including, without limitation, the Fair Labor Standards Act; however, we will pay Defense Costs up to, but in no event greater than $250,000 for any such Claim(s)…” Continue Reading

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