California Uber Case May Revive California Law Weakened by Supreme Court

A U.S. Supreme Court decision recently weakened a unique California law allowing workers to join and sue their employer over labor law violations. However, the California State Supreme Court is considering reviving the law in a suit by another Uber driver in Adolph v. Uber Technologies.

The Case: Adolph v. Uber Technologies

The Court: Alameda County Superior Court

The Case No.: S274671

What is the PAGA:

The PAGA (Private Attorneys General Act) was enacted in 2004 to allow employees to sue their employers, individually or collectively, in the state's name for violating employment laws like those governing minimum wages, overtime, and meal and rest breaks. Successful PAGA suits result in the employees collecting 25% of the penalties provided by labor law, with the rest going to the state. Previously, PAGA allowed workers to sidestep standard provisions in employment contracts requiring all disputes to be heard individually by private arbitrators instead of the court. Limiting employee disputes to private arbitrators severely limits their opportunity for resolution, as arbitrators' decisions are virtually unappealable. According to studies, arbitrators usually favor employers, who are their regular customers.

How Was the PAGA Weakened by the U.S. Supreme Court?

On June 15th, however, the nation's high court, the U.S. Supreme Court, ruled that California's PAGA violates employers' right under federal law to take disputes to arbitration when doing so is a requirement included in the work contract. The nation's high court argued that when the contract is signed by both the employer and the employee, allowing an employee to take the issue to court circumscribes the freedom of parties to determine which issues are subject to arbitration and what rules apply to the arbitration.

How the California Supreme Court Could Restore the PAGA's Power:

However, the California Supreme Court is the highest authority on the meaning of California state law. And the California State Court will decide whether PAGA allows workers who have consented to take their disputes to arbitration, to file labor-law claims for other workers in the name of California state. (Justice Sonia Sotomayor suggested the alternative in a separate opinion in the same Supreme Court case). Proponents of PAGA are confident the court will allow workers forced into arbitration to maintain PAGA claims for their coworkers, turning to California court's unanimous 2020 ruling allowing an employee to proceed with a PAGA suit even after his employer had settled his individual claims as a basis for their argument. However, as a backup, state lawmakers are discussing a potential amendment to PAGA to authorize employees to sue on behalf of other workers. Uber and others who do not support PAGA insist that the court will surely consider the recent U.S. Supreme Court decision and require the dismissal of any suit of this type that reaches the court.

If you have questions about how to file a California employment law complaint, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Lawsuit Settled for $46.5 Million: Did Instacart Misclassify their Workers?

In recent news, Instacart settled a worker classification lawsuit for $46.5 million.

The Case: District of Columbia v. Maplebear, Inc. D/B/A Instacart

The Court: California Superior CourtCalifornia Supreme Court

The Case No.: CV-496 June 2015

The Plaintiff: District of Columbia v. Maplebear, Inc. D/B/A Instacart

In September 2019, a California misclassification lawsuit alleged that Instacart improperly assigned delivery personnel as independent contractors. According to the complaint, Instacart failed to fully pay its grocery delivery crew due to the alleged misclassification. The lawsuit stated that Instacart employees were responsible for paying for COVID-19 personal protective equipment (PPE) and were also required to use their personal phones and maintain and fuel their personal cars. These are some expenses that the parties considered when negotiating the settlement amount.

The Defendant: District of Columbia v. Maplebear, Inc. D/B/A Instacart

The defendant in the case, San Francisco-baed Instacart, is the country's largest third-party grocery delivery service. Throughout the case, Instacart claimed they correctly classified their California personal shoppers. Instacart's personal shoppers picked, packed, and delivered grocery orders for Instacart customers, and they did so as independent contractors. Allegedly, Instacart failed to give employees adequate pay and breaks.

Details of the Case: District of Columbia v. Maplebear, Inc. D/B/A Instacart

The parties in the case, District of Columbia v. Maplebear, Inc. D/B/A Instacart, agreed to a $46.4 million settlement to resolve allegations that Instacart's California workers were wrongfully classified as independent contractors instead of employees. The proposed judgment submitted to San Diego Superior Court affects approximately 308,000 workers. The workers affected by the settlement worked for Instacart between September 2015 and December 2020. Settlement distribution will be based on how many hours workers put in during their time with the company. The settlement includes more than $6 million in civil fines to be deposited into a trust fund for consumer protection. The funds in the trust are designated for enforcing consumer protection laws. Individual restitution payments for the busiest workers will range from a few hundred dollars to thousands of dollars, depending on the number of hours worked. Instacart debuted its service in the city and county of San Diego in the middle of 2016 and has a significant market share, according to the city attorney's office. Also of note, Instacart made it clear that their agreement to the settlement does not constitute an admission of guilt.

The Issue in the Case: District of Columbia v. Maplebear, Inc. D/B/A Instacart

The issues, in this case, underscore the ongoing discussion of how companies should classify their workers, particularly gig economy workers like drivers for ride-hail services (Uber, Lyft, etc.) and delivery services for apps like Instacart, UberEats, DoorDash, etc. As part of the settlement agreement, the parties in the case dropped their appeal to the California Supreme Court.

If you have questions about how to file a California employment law complaint, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Matco Misclassification Lawsuit Resolved with $15.8M Settlement

John Fleming, a former Matco franchisee distributor filed a California misclassification suit alleging numerous labor law violations.

The Case: Fleming v. Matco Tools Corp.

The Court: U.S. District Court Northern District of California

The Case No.: 19-cv-00463-WHO

The Plaintiff: Fleming v. Matco Tools Corp.

The plaintiff in the case, John Fleming, filed suit in 2021 and moved for class certification on his wage and hour claims alleging that during his time employed by Matco Tools Corp. he worked roughly 20 hours of overtime per week. Fleming described the agreement that required franchise operators to pay an initial fee to Matco, only distribute Matco-approved brand tools using the Matco system, attend Matco's training program for new distributors (including sixty hours of classroom training plus eighty hours of field training)*, lease or purchase a Matco Truck with the company’s branding, make the vehicle available for required company inspections, wear Matco branded uniforms; and refrain from operating the “Matco” truck outside of the company-identified territory. Despite the described conditions that appear to amount to tight company control, Fleming and other distributors were classified as independent contractors, leaving them ineligible for overtime pay and other benefits and protections afforded to non-exempt employees.

*They were required to pay for travel and hotel costs associated with the training.

The Defendant: Fleming v. Matco Tools Corp.

The defendant, Matco Tools Corp., is a manufacturing and distribution company for professional quality mechanic's tools and service equipment. The brand’s products are distributed primarily by authorized franchisee distributors, who enter into a Matco Distributorship Agreement ("DA"). Matco classifies its franchise distributors as independent contractors.

The Case: Fleming v. Matco Tools Corp.

The United States District Judge, William H. Orrick, granted Fleming's motion for class certification on the issues of misclassification and reimbursement claims, wage statement, and UCL (in regards to the wage statement claim). Judge Orrick denied the motion for class certification with respect to the overtime, meal and rest breaks, waiting time, and wage deduction claims.

If you have questions about California employment law or need help filing a California employment law complaint, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Former Advance Kids Employee Alleges Misclassification

A former employee of Advancec Kids, Inc. alleges misclassification led to overtime violations, wage and hour violations, etc.

The Case: Lillye Buckans, v. Advance Kids, Inc.

Court: Sacramento County Superior Court

Case No.: 34-2021-00303450

The Plaintiff: Lillye Buckans, v. Advance Kids, Inc

The plaintiff in the case is Lillye Buckans, a former employee of Advance Kids, Inc. According to court documents, Buckans was employed by the defendant from June 2019 through August 2020. During her time with the company, Buckans was classified as a non-exempt employee, paid an hourly wage, and was entitled to meal and rest periods, minimum wage, and overtime pay as mandated by employment law. Buckans brought a California class action on behalf of herself and other individuals previously employed by Advance Kids, Inc. who were classified as non-exempt employees anytime from four years prior to the filing of the complaint through the ending date determined by the court.

The Defendant: Lillye Buckans, v. Advance Kids, Inc

The defendant in the case is Advance Kids, Inc. Advance Kids, Inc. is a California corporation that conducts a substantial amount of their business in the state of California. The company’s main services include in-home services, center-based services, educational services, and non-public preschool services to assist individuals of all ages and disabilities.

The Case: Lillye Buckans, v. Advance Kids, Inc

According to the complaint, Advance Kids, Inc. allegedly violated California Labor Code. Buckans claims the company failed to provide her (and other employees in similar situations) with legally required meal breaks, and rest periods. Buckans also alleges that the company failed to pay accurate overtime wages in accordance with employment law. Additional allegations of employment law allegations were also listed in the lawsuit including: failure to pay minimum wage, failure to provide itemized wage statements, failure to reimburse employees for required expenses, and failure to provide wages when due. The plaintiff also alleges that Advance Kids, Inc. engaged in unfair competition due to their company-wide policy allegedly failing to accurately calculate and record missed meal and rest periods for the plaintiff and other California workers.

If you have questions about California labor law violations or overtime pay violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Taco Bell Recruiter Claims he was Denied Benefits through Misclassification

A recent California complaint alleges violations under the Employee Retirement Income Security Act (ERISA) and related state law actions.

The Case: Alders v. YUM! Brands, Inc, Taco Bell Corp., et al

The Court: United States District Court, Central District of California

The Case No.: 8:21-cv-01191-JLS-DFM

The Plaintiff: Alders v. YUM! Brands, Inc, Taco Bell Corp.

The plaintiff in the case is Tim Alders, a 63 year old resident of Orange, California. According to the complaint, the plaintiff was employed by Taco Bell through Yum! Brands from 1995 through 2020 as an executive recruiter. The plaintiff alleges that during the time he worked for the company, he met the test for employee status under the Nationwide Mutual Insurance v. Darden, 503 U.S. 318 (1992) and Dynamex Operations West Inc. v. The Superior Court of Los Angeles County and Charles Lee, Real Party in Interest, 4 Cal.5th 903 (Cal. 2018). Plaintiff claimed other workers in a similar situation were eligible to participate in various YUM Plans under the terms of the governing plan documents even though they were not labeled as “employees.” Alders filed suit for unpaid benefits he did not receive due to misclassification as an independent contractor.

The Defendant: Alders v. YUM! Brands, Inc, Taco Bell Corp.

The defendants in the case are YUM! Brands and Taco Bell. YUM is incorporated under North Carolina state law (1997). The main offices of YUM are located in Kentucky, and the company conducts business throughout California. The second defendant listed in the case is Taco Bell. Taco Bell is a California corporation operating out of Irvine, California. Taco Bell is a subsidiary of YUM. Taco Bell also conducts business throughout California. Various individuals were also listed as defendants.

The Case: Alders v. YUM! Brands, Inc, Taco Bell Corp.

Alder, the plaintiff, alleges he was misclassified during the 25 years he worked for the company, and by doing so, the company denied him retirement and other benefits. The lawsuit seeks recognition of his 25 years of employment for purposes of calculating his retirement benefits for the three different YUM Plans sponsored by the company. The complaint alleges that according to the plans’ governing documents, common law employees were eligible to participate in the Yum Plans, and that the plaintiff met the test for employee status in accordance with prior case law. Based on prior case law, the plaintiff alleged the defendant misclassified him as an independent contractor. The plaintiff argues his status as an employee noting that he participated in Yum corporate events, team meetings, the company dictated his work hours, he was issued a corporate email account, assigned an office at the company’s corporate headquarters, and was given access to the company’s computer system to complete his work. The company also prohibited Alders from accepting similar work from other fast food entities. While other similarly situated workers received benefits, Alders only received monthly compensation as an independent contractor.

If you have questions about California employment law or if you need to file an employment law lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

The “Gig” Driver Misclassification Issue Outlasted the Pandemic of 2020

The outcome of some recent California lawsuits could alter how California handles issues of classification for employees and independent contractors in the gig economy. 

Details About Referenced Cases: 

People of the State of California v. Uber Technologies, Inc., et al

Filed: 10/22/2020 in the Court of Appeal of the State of California First Appellate District Division Four

A160701, A160706 (City and County of San Francisco Sup. Ct. No. CGC-20-584402)

Dynamex Operations West, Inc. v. Superior Court of Los Angeles County

Court: Los Angeles County Superior Court

Case No: BC332016

Rideshare Company Drivers: Employees or Independent Contractors

The California Court of Appeals upheld a trial court ruling that major rideshare companies Uber and Lyft both classify their California drivers as employees rather than independent contractors (People of the State of California v. Uber Technologies, Inc., et al.) The suit started over claims that both companies were violating California state law AB-5, which requires employers classify their workers as employees unless they can prove that the worker is "free from the control and direction of the hiring entity in connection with the performance of the work." The trial court ruled in favor of the state. 

Distinguishing Between Employees and Independent Contractors: 

Courts attempting to differentiate between employees and independent contractors using similar wording usually focus their determinations on the level of independence or control the worker retains compared to the employer. However, determining how much control the employer retains over their worker while performing their work is not the only factor. The issue often hinges on the individual's work itself - and whether or not it falls "outside" the hiring entity's usual course of business. 

Are Drivers Performing Work Outside Uber & Lyft's Usual Course of Business? 

The trial court ruled in favor of California, granting a preliminary injunction prohibiting the two major rideshare companies from classifying their drivers as independent. They found that their drivers were not performing work outside the company's "usual course" of business. Uber and Lyft appealed the trial court's decision. However, Justice Jon Streeter of the Court of Appeals upheld the lower court's decision. He stated that the drivers' misclassification would cause significant irreparable harm noting the lack of wage protections, rest periods, meal breaks, overtime pay, health insurance, etc.

Prop 22 Opposes General Push of California Case Law Toward Greater Classification as Employees:

While California case law's general direction reflects a push toward a greater classification of California workers as employees, Proposition 22 presented a challenge when California voters adopted it in the November 2020 election. This proposition counteracted AB-5. The proposition was backed by the rideshare companies and organizations supporting the classification of gig-economy workers as independent contractors instead of employees. The California Supreme Court's decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles resulted in a "presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission." AB-5 took this presumption and codified the decision of the court. Proposition 22 presented a different definition in opposition to the presumption created by the court's findings in Dynamex Operations West, Inc. v. Superior Court of Los Angeles and the subsequent AB-5. According to Proposition 22, drivers are only considered "engaged" after picking up a passenger, delivery, etc. The definition created by Proposition 22 removes a significant amount of time previously considered to be engaged in work such as when the driver is marked as "available" for a pickup. As such, drivers cannot receive payment for this time or mileage, and they cannot accrue any other type of benefits. 

In our increasingly technology-driven society, the debates for handling gig-economy workers will continue. In addition to rideshare drivers for companies like Uber and Lyft, the issue directly affects many other workers connected to different industries like Grub Hub, and Uber Eats delivery drivers, etc. The debates defining when an individual is "engaged" in work will significantly narrow the definition of when a worker should be classified as an independent contractor.

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

According to the California Supreme Court, Dynamex Applies Retroactively

When the Ninth Circuit asked the question, “Does your independent contractor ABC test in Dynamex Operations West, Inc. v. Superior Court (Dynamex) apply retroactively?” in Vazquez v. Jan-Pro Franchising International (Vazquez), the California Supreme Court’s answer was “Yes.” 

The Court’s Conclusions in the 2018 Dynamex Case:

In 2018, in relation to the Dynamex case, the Court concluded that under California wage orders, workers are presumed to be employees entitled to the protections afforded by wage orders, and that an employer can avoid this presumption for independent contractors if they are able to establish certain standards. 

Standards Required to Classify a Worker as an Independent Contractor: 

In order to avoid the presumption of employee status and wage order protections, employers must establish that the worker is an independent contractor if: 

1. The worker is free from the employer’s control and direction when it comes to completing their work (both under the employment contract and in fact), 

2. the worker performs a job that is outside the employer/company usual course of business, and 

3. the worker is usually engaged in a trade that is independently established and the same type of work they perform for the employer. 

The “ABC Test” detailed above was codified into California state law by Assembly Bill 5, known as AB 5. 

Before the ABC Test California Employers Used the Borello Test: 

Prior to Dynamex and the ABC Test, California courts and employers used a different, multifactor test referred to as the Borello Test (S.G. Borello & Sons, Inc. v. Department of Industrial Relations). The Borello test focused on how much control an employer had over a worker based on multiple factors. The more control the test indicated an employer held over a worker, the less likely the worker would be classified as an independent contractor. 

The ABC Test is More Stringent than the Previously Used Borello Test: 

The ABC Test provides a stricter set of standards allowing a California worker to be appropriately classified as an independent contractor. Since the standards set by the new test are more strict, many California employers argue they shouldn’t be held to the newer standard in misclassification lawsuits predating the Dynamex opinion that set the standard. However, the California Supreme Court disagreed with the Vazquez case. The court concluded that there was no reason to depart from the generally accepted rule that judicial decisions are considered retroactive. 

If you need to discuss misclassification or if you need to file a California misclassification lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.