Tag Archives: nonexempt workers

California Labor Commissioner says an Uber driver is an employee, not a contractor

Shocking News! (Really? Actually, no, not really.) Last night, Uber filed an appeal in San Francisco Superior Court.  The appeal is to challenge a ruling of the California Labor Commissioner that an Uber driver should be classified as an employee, not an independent contractor. Uber claims that its drivers are not employees; instead, Uber facilitates logistics for contractors who sign on to its service.   Drivers and passengers use the app for “private transactions.”   But behind that app is, well, a fleet of drivers: earlier this month, Uber announced it has 26,000 drivers in New York City, 15,000 in London, 22,000 in San Francisco, 10,000 in Paris and 20,000 in Chengdu, China. Uber’s position is that does not exert any control over the hours its drivers worked and does not require drivers to complete a minimum number of trips. The Labor Commissioner reviewed the ways Uber does act more like an employer – providing drivers with phones and deactivating the driver app if the individual is inactive for a period of time.  And when it comes to determining whether a worker is an employee or a contractor, the Labor Commissioner, the IRS, the EDD, etc., see the default to be an employment relationship when work is performed. What does this mean for  you – even if you aren’t a facilitator of private transactions? You should take a close look at any contractors you use. It is critical to review what the contractor is actually doing on behalf of your business and what rights the business has retained in controlling that “contractor.”

On June 18, 2015 I presented a webinar on independent contractors and the Uber case. You can view it at the HR Options webinar archive site here.   You can read more about the webinar here. For more on the Uber matter, the New York Times has a short article here with a link to the underlying ruling.

Just because you can (track your employees with an app), should you?

Well, I had planned on a quick post about the new CFRA regulations issued last month, but then my assistant sent me this article about a case filed in Bakersfield. The plaintiff alleges that she was terminated when she uninstalled an app that allowed her employer to track her movements – during work hours and after hours. The author of the article, Daniel Howley of Yahoo! Tech is a better writer than me, so I won’t steal any more from him.

I want to point out that even if you aren’t tracking your employees’ movements via an app, or a GPS device, there are important issues raised in this article. Almost every employer I work with has employees with smartphones (or watches. . .or tablets. . .) that are used for personal matters and work, during work hours and after work hours, paid for by the employer, or not. There are privacy issues, confidentiality issues, wage and hour issues, harassment issues, etc. I’d like to send the entrepreneurs who create in this area a big thank you for creating great products, and additional employment law work!

“But we couldn’t make it without our volunteers!” — A very expensive trap for the unwary business owner (even if you don’t think of it as a “business”)

As you may gather from the very title of this blog, I focus on California employment law (!). This past week, a colleague whose practice has a focus on helping wineries and breweries with legal issues gave me a heads up on a confluence of our practice areas: the use of volunteers at wineries. While you, dear reader, may not operate a winery, you may use volunteers – read on!

For most people, getting to work for a small winery is that rare chance to do something you love. Some even perform the work for free because it is fun, or because volunteering is a great opportunity to get a foot in the door, or because it is a chance to help a friend. Many wineries rely upon volunteers to work in the tasting room, pour at festivals, and help with the bottling line. And while months, or years may go by where this creates a seemingly symbiotic system, with rewards for both the volunteer and the winery, the employment concerns are a ticking time bomb of penalties and unpaid wages.

In general, both California and federal laws that govern how people are to be paid prohibit most private sector, for-profit employers from using volunteers. For the most part, only public sector and non-profit organizations can use volunteers and only when the volunteer is performing civic, charitable, or humanitarian work.

An important thing to remember about California’s employment laws is that, for the most part, they apply to every employer — from every “new economy” tech company with the latest killer app to every small business started 40 years ago. Needless to say, there is no exception for small, medium or large wineries.

In California, an individual is an employee if he or she works in the service of another person (the employer) and that employer has the right to control the details of the employee’s work performance. There are a few, very limited exceptions to the rule that California expects workers to be paid as employees. These exceptions include bona fide independent contractors (bona fide being a key phrase!), educational internship programs and immediate family members of the employer (spouse, parent, child). There are also limited exceptions for certain types of jobs. Except for those limited exemptions to the general rule, California requires that an employee be paid at least minimum wage for all hours worked, be paid overtime for all hours worked over eight in a day (and 40 in a workweek), and to be provided the opportunity to take meal and rest periods of a minimum length. This means that, at a minimum, a winery or any other employer must make the appropriate arrangements to properly hire, pay and employ workers.

Before someone can begin working, the employer must require the individual to show that he or she is legally authorized to work in the United States. The employee must complete a Form W4 to determine withholdings for income tax purposes. The employer must track the hours worked by the employee on a daily basis to ensure overtime is paid. The employer must issue paychecks at least every two weeks, and the paystubs must include specific information such as the hours worked, the overtime earned, and the rate of pay, among many other pieces of information. A written offer letter and/or a letter setting forth certain terms and conditions of employment can be invaluable – and sometimes required. This is just a short summary of the requirements for being an employer, but it is a good starting point.

After my colleague told me about this issue for local wineries, I did the heavy research of looking up the matter on the internet. I found some commentators suggesting that wineries simply pay the (former) volunteers as “1099 workers” or as contractors. This decision could get the winery into different, and expensive trouble with the workers and government agencies. It is the rare winery worker who is properly classified as an independent contractor because a critical factor in assessing that status is the degree of control over the worker. For example, the individuals who work in the tasting room pouring your wine the way you want it poured, talking about your wines, and selling them, is an employee. The workers who come every two weeks to maintain the landscaping are contractors.

In the end, many wineries—and other types of companies! – have used volunteers to supplement their paid work force. They have done this without any evil intent. The law, however, is set up to protect workers from, well, “other” companies – the ones that force workers to volunteer for a period before they may consider being hired, the ones that don’t pay at least minimum wage, etc. In any event, no matter how generous you are with your volunteers in ways other than wages, it could be a very detrimental decision to continue using them in this manner. Volunteers can seek back wages for four years’ time, along with substantial penalties, interest and attorneys fees. It is not uncommon for the penalties and fees to exceed the underlying wages owed. And these situations are ripe for the dreaded, financially crippling class action.

If you think you may need to take a close look at how you pay (or don’t pay) people who work at your company, give any of the attorneys at McPharlin Sprinkles & Thomas LLP a call!

(And for a link to my colleague who can help with your winery, brewery and distillery legal issues, click here.)
Whew. I need a drink!

Trick or Treat, Part 2 – More on California’s New Employment Laws

In my last post, I talked about the “noisier” new laws that California employers need to be prepared for at the start of the year.   Here are some others to keep in mind – and a few of the noisiest bills that didn’t make the cut:

Wage Statements.  Along with everything else you need to do to get ready for 2013, make sure that your payroll department or service is complying with California’s rules for wage statements.  Last year, a court found that if some information was missing from a wage statement, it wasn’t that big of a deal – the employee wasn’t really “injured” and a penalty wasn’t appropriate.  Under the new law, an employee is definitely injured if the wage statement is incorrect.  So, make sure that an employee can “promptly and easily” determine from the wage statement the gross wages earned during the pay period, the deductions taken, the employer’s name and address, and identifying information of the employee (name, last four digits of the SSN or other ID number).

Salaries for Nonexempt Workers.   If you have a contract with a nonexempt employee to pay her a salary or fixed amount for “all hours worked,” that amount will be used to determine the base or regular rate for overtime pay, no matter what the agreement says about an overtime rate.

Protected Status for Breastfeeding Employees.  The Fair Employment and Housing Act (FEHA)  now specifically states that employers can’t discriminate against employees based on their breastfeeding status.  This was already the law, but now FEHA states that  the term “sex” also includes breastfeeding or medical conditions related to breastfeeding.

Written Commission Agreements.  This is a reminder about a law signed last year with a delayed effective date.  By January 1, 2013, all employers who pay California employees on a commission basis must have written, signed commission agreements.  The agreement must set forth the method by which commissions are computed and paid and must be signed by both the employer and employee.  This is a great opportunity to define when a commission is actually “earned,” since when it is earned it becomes a wage that cannot be forfeited.

What bills got “stuck on Capitol hill” (or California’s version of that)? There are three big ones.

AB 1450 would have prohibited discrimination in hiring based on an applicant’s unemployed status – in other words, no “help wanted” ads that require the applicant be currently employed.   Governor Brown vetoed the bill, saying it would cause unnecessary confusion.

AB 889 would have required the state to create overtime, meal and rest break, and other working condition rules for domestic workers like nannies, elder care providers and maids.  The governor vetoed the bill, saying that the issue needs more study.

AB 2039 got stuck in Committee.   The Bill would have expanded the California Family Rights Act by  (1) permitting an employee to take protected leave to care for his independent adult child suffering from a serious health condition, (2) expanding the definition of parent to include a “parent-in-law”, and (3) permitting an employee to also take leave to care for a seriously ill grandparent, sibling, grandchild, or domestic partner.

There are a lot of other new laws.  California’s State Senate and Assembly introduced 1,899 bills this year. 996 bills were sent to Governor Brown, who signed 876 and vetoed 120. I’ve talked about less than 10.  If you were hoping to read about a new employment law that I didn’t talk about, let me know!  Email me at jdebacker@mstpartners.com