New Federal Guidance on Independent Contractors

by Sergio H. Parra li_sp

sergio@lg-attorneys.com

 

In June 2017, U.S. Secretary of Labor Acosta announced the withdrawal of the U.S. Department of Labor’s previously asserted guidance on independent contractors.

The prior guidance adopted the position that “most workers are employees under the FLSA” and adopted an economic realities test that focused on whether the worker is really in business for himself or is economically dependent on the employer (as an employee).  The former guidance also went as far to state that any agreement between an employer and a worker designating the worker as an independent contractor was not relevant to the analysis of the worker’s status.

Although the withdrawal of this guidance is not binding, it hampers the ability of federal courts and plaintiffs’ attorneys to rely upon it in support of their cases. Employers operating under California law must still heed the California legal tests as it pertains to defining an employee versus an independent contractor.

For this reason, employers should consult with counsel to minimize their legal exposure as it pertains to their company’s independent contractor/employee classifications. Regular review of policies and agreements as it pertains to independent contractors should be conducted by HR managers with the assistance of counsel on an annual basis.

Contact our firm if you are looking for more information and guidance on this very important issue.

 

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

https://centralcoastemploymentlaw.com/

May an Employer and its Attorney Be Sued by a Former Employee for Calling ICE to Deport Him?

by Sergio H. Parra li_sp

sergio@lg-attorneys.com

This question was answered last week by the 9th Circuit of Appeal in the case of Arias v. Raimondo, (2017 BL 214215, 9th Cir., No. 15-16120, 6/22/17). This case arose from an earlier lawsuit in 2006 wherein Jose Arias sued his former employer Angelo Dairy in State Superior Court for various wage and hour violations, including failure to provide overtime, rest and meal periods, and under PAGA. The case had been hotly contested for over five years before it had been finally set for trial for August 15, 2011.

Ten weeks before trial, however, the Angelos’ attorney, Anthony Raimondo, hatched an ”underhanded plan” to have Immigration and Custom Enforcement (“ICE”) arrest and deport Arias at an upcoming deposition. Evidently, after Plaintiff Arias became aware of the plot, he instead agreed to settle the case to avoid the threat of deportation hanging over him and his family. It seemed liked the plot had worked.

However, two years later on May 8, 2013, Plaintiff Arias filed a federal lawsuit against his former employer and their attorney for retaliation under the Fair Labor Standards Act (FLSA). Although Angelo Dairy and its owners settled their part of this case early on, Arias continued his case against the attorney on the theory that he, acting as the Angelos’ agent, retaliated against him, by trying to him deported during the earlier lawsuit.
Although the FLSA primary wage and hour obligations fall squarely on the shoulders on the employers, the 9th Circuit held that the anti-relation provision of the FLSA, was specifically also applied to any agent or “person acting directly or indirectly in the interest of an employer in relation to an employee.” As such, the 9th Circuit rejected Mr. Raimondo’s argument that because he was never Arias’s actual employer, he could not be held liable for retaliation under the FLSA. There is no current word yet if Mr. Raimondo will try to seek review by the United States Supreme Court.

Regardless, this case presents several lessons that all employers should heed. First off, an employer must try to avoid temptation, during the heat of the litigation battle, to create additional risk for the company and, instead focus on narrowing the issues involved and winning a case on its merits. Involving federal authorities in a state law dispute not only raises certain moral and ethical concerns, but may also be a double-edged sword. A telephone call to ICE by an employer to report that one of its employees may not be legally entitled to work in the US, may lead ICE itself to also wonder about the reporting employer’s I-9 and employment verification practices. Most importantly, as evident by the Arias case, an employer must analyze and appreciate there are many protections under both federal and state law that prevent retaliatory conduct after a lawsuit or claim had been filed by the employee.

Lastly, any person involved in making HR decisions, whether as an employee or as attorney, must be cognizant that their own actions and electronic communications may be later scrutinized. In reaching its opinion, the Ninth Circuit Court’s opinion quotes from various text messages sent by Mr. Raimondo to ICE and other attorneys not only where he describes his deportation plot, but where Mr. Raimondo admits doing the same thing on five other occasions. Ouch.  As stated by the Court, the FLSA is “remedial and humanitarian in purpose. We are not here dealing with mere chattels or articles of trade but with the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others… Such a statute must not be interpreted or applied in a narrow, grudging manner.”

Click here for the full written opinion.

Sergio H. Parra is the lead attorney for L+G’s labor and employment practice. Sergio represents a wide array of employers and businesses in labor and employment related litigation in state, federal and administrative venues. Sergio is also called on a daily basis to provide practical advice on employment matters, including internal complaints and investigations, employment agreements and wage and hour matters.

https://centralcoastemploymentlaw.com/

Restaurant Surcharges: The Right Way to Pass the Buck?

If you’ve eaten in San Francisco recently, odds are that your restaurant bill had a charge below the sales tax, charging you up to 4% of your bill to cover healthcare costs for its employees. A recent trend in California and nationwide has seen the increasing use of surcharges, either in response to the passage of the Affordable Care Act, living wage ordinances or statewide increases to the minimum wage.

Earlier this year, an investigation was launched by the San Diego District Attorney’s Office of local restaurants that had recently implemented 3% surcharges in response to minimum wage increases. These restaurants are being investigated for violations under California’s Unfair Competition Laws, which are designed to protect consumers from unfair business practices and false advertising. Because of these broad consumer protections, customers must be made fully informed about these surcharges as soon as possible, not after they’ve eaten their food and received the bill, or worse yet, on the way home.

On the back end, restaurants must also be taken to ensure that the monies are separately accounted for and actually expended as charged. There is also specific guidance from the State Board of Equalization and the IRS on how these monies should be treated. Moreover, individual restaurants should be careful in pursuing these surcharges in concert with other business owners to avoid any antitrust allegations.

The bottom line is that although restaurant surcharges are not per se illegal in California, the legality of such surcharges are currently under scrutiny and thus, will require the attention of attorney to minimize the risks associated with their introduction.

Sergio H. Parra li_sp

sergio@lg-attorneys.com

Liability of Corporate Individuals for Labor Code Violations under the new Fair Day’s Pay Act

A strong reason for establishing a corporation or limited liability company is to attain protection against personal liability as the result of the company’s debts or liabilities. While it is traditionally true that the corporate form provides direct protection for owners, directors and officers, California courts are increasingly holding owners liable for labor code violations.

This trend led to the enactment of California’s so-called “A Fair Day’s Pay Act” on Jan. 1, 2016, which formalized and extended the case law even further.

Labor Code Section 558.1 now holds that “any owner, director, officer, or managing agent of the employer” that is “acting on behalf of an employer” who violates, or causes certain wage and hour laws to be violated, may be held liable as the employer for such violation.

This expanded liability encompasses most of the common wage and hour violations, such as overtime, minimum wage, pay stub violations, meal and rest periods, and failure to reimburse business expenses, as well as waiting time penalties. A “managing agent” under Civil Code 3294 is one who exercises substantial discretionary authority over decisions that ultimately determine corporate policy. In most cases, personal liability would not reach payroll managers and may not reach HR managers. From the employee/plaintiff’s point of view, individual defendants are chosen for their deep pockets or for their control of the litigation.

Because of this, owners (including directors, officers and managing agents) of corporate entities must be cognizant that if they are wrongly directing employees in regards to work schedules, wages etc., that they may be unknowingly creating liability for themselves as individuals. If possible, owners etc., should train and rely upon its work supervisors and HR staff to supervise wage/hour compliance. This new liability risk should provide even more incentive for businesses to have strong employment policies in place and to review their labor and employment practices on an annual basis to avoid liability in the first place.

Sergio H. Parra li_sp

sergio@lg-attorneys.com
http://www.lg-attorneys.com/expertise/labor-and-employment/

Welcome

Welcome to the Central Coast Employment Law blog. The mission of this blog will be to act as a resource to you concerning significant legal developments affecting employers throughout Northern California including Monterey, Santa Cruz,  San Benito and Santa Clara Counties.

Regardless if you operate an ag company in Salinas, run a hotel or restaurant in Carmel or manage a start-up tech company in Santa Cruz, you are facing an ever-increasingly complex regulatory environment that can lead to draconian penalties if you are not up to speed with the latest legal trends.

Each month, this website will attempt to spotlight some of the most pressing areas that human resource managers, executives and business owners should consider as they conduct medium and longer-term planning of their businesses. While most blogs spit out daily robo-news articles and alerts regarding some new case or new regulation that usually does not apply to you, our blog will attempt to introduce you to innovative new trends and practical policies of general importance that will hopefully help you run a smarter, and more profitable, business.

Thank you for visiting.

Sergio H. Parrali_sp

sergio@lg-attorneys.com