Midyear Recap of Manatt’s Top Employment Law Stories

Employment Law

Halfway through 2019, it’s time to recap the five biggest employment law stories to date based on the top trafficked links to Manatt’s Employment Law newsletter.

  1. Dynamex continues to dominate

    The impact of the California Supreme Court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court continues to play out. In Dynamex, the state’s highest court adopted a test that ultimately makes it much more difficult for businesses to classify workers as independent contractors—an “ABC” test that presumptively considers all workers to be employees. Our readers took a closer look at Dynamex in a closely watched case in the context of the gig economy in Lawson v. Grubhub, Inc., a case involving a Grubhub driver who alleged that he was incorrectly classified as an independent contractor. The court granted the company’s motion to dismiss. After Dynamex was issued, Lawson filed a motion seeking relief from the judgment. U.S. District Judge Jacqueline Scott Corley acknowledged she was torn. The plaintiff raised “a substantial issue,” she noted, but it was unclear whether Dynamex applies retroactively. A few months later, the U.S. Court of Appeals for the Ninth Circuit answered the question, holding that the new legal standard has retroactive effect.

  2. On-call scheduling dangers

    A cautionary tale about potential liability for on-call scheduling practices took the second spot on the list of popular reads. Ward v. Tilly’s, Inc. involved a sales clerk at a Tilly’s store in Torrance, California, where the employer scheduled workers with a combination of regular and “on-call” shifts. Employees were required to contact the store two hours before the start of their on-call shift to find out whether they were needed to work. If they failed to contact the store before an on-call shift, if they contacted the store late or if they refused to work on-call shifts, employees were disciplined. Tilly’s did not pay employees for the time they spent calling in or for on-call shifts that they were not required to work. Reversing dismissal of the suit, a California appellate panel found Tilly’s scheduling practices triggered the reporting time pay requirements of Wage Order 7. The February decision puts California employers using on-call scheduling on notice to review their practices or face liability.

  3. DOL steers middle course with white collar exemption proposal  

    In March, the Department of Labor (DOL) published a new proposed rule that would raise the annual minimum salary requirement for the Fair Labor Standards Act “white collar” overtime exemption to $35,308, or $679 per week. The white collar exemption—which applies to executive, administrative, professional, outside sales and computer employees and excludes them from overtime compensation—has been the subject of controversy in recent years. Under the Obama administration, the DOL proposed a rule that would have increased the current $23,660 per year ($455 per week) to $47,476 per year, or $913 per week. While that rule was set to take effect December 1, 2016, a lawsuit filed by a coalition of 21 states resulted in an injunction halting its enforcement. Under the new administration, the DOL took a step back and issued an amended proposal that provides an increase, albeit a lower one.

  4. Age may be just a number, First Circuit holds 

    In an Age Discrimination in Employment Act (ADEA) case, the U.S. Court of Appeals for the First Circuit refused to infer discriminatory animus simply because a 62-year-old employee was replaced by a 36-year-old worker for a new position that was inferior to the plaintiff’s previous job, which he held before a department-wide round of layoffs. The federal appellate panel had little trouble affirming judgment as a matter of law for the employer, finding multiple fatal defects in the plaintiff’s prima facie case, including the fact that he never even applied for the subsequent position, as well as the minimal overlap in duties between his prior job and the new position. Despite the relatively short time period between the plaintiff’s termination and the new hire, the First Circuit declined to infer discrimination based on the age difference, lacking other evidence.

  5. Uber drives home victory with NLRB.

    A new Advice Memorandum issued by the National Labor Relations Board (NLRB) in May declared that Uber drivers are independent contractors and not employees. Multiple charges were filed with the NLRB by UberX and UberBLACK drivers, seeking to be classified as employees of the app-based ride-sharing platform. Applying the ten-factor common law agency test set forth in a January 2019 agency case, Supershuttle DFW Inc., the Memorandum found the drivers had “significant entrepreneurial opportunity by virtue of their near complete control of their cars and work schedules, together with freedom to choose log-in locations and to work for competitors.” Given the lack of control exerted by Uber over the drivers, the NLRB concluded they were independent contractors. The Advice Memorandum will have an impact not just on Uber and other ride-sharing companies, but on the greater gig economy as well, as the Board found that the business model reflected an independent contractor relationship and not that of employer/employee. Uber still faces litigation from drivers across the country, however, who are similarly seeking classification as employees—and the accompanying benefits.

Why it matters: The most popular stories of the first half of 2019 reflect the hot topics facing employment law attorneys right now, from the ongoing battle over classification of workers as employees or independent contractors to the continuing reverberations of major decisions such as Dynamex.



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