$5.0 Million For Financial Media Employees
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Commission disputes are all too common in California.  The threshold question in most of these cases is do the commissions at issue constitute earned wages under the California Labor Code?

What is a “Commission”? 

In order to answer this question, let’s first look at what counts as a “commission” under California law. Section 204.1 of the California Labor Code states, “Commission wages are compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof. Section 2751 specifies that commissions do not include the following: 

Constructive discharge is a term used to describe a situation where an employer forces an employee to quit.   Rather than firing an employee for an illegal reason, some employers attempt to skirt liability by forcing the employee to resign.

A constructive discharge occurs when an employee is coerced into resigning as a result of the employer imposing unusually intolerable working conditions on the employee with the intention of forcing the employee to quit.  In such cases, the employee’s resignation is legally deemed a firing rather than a voluntary resignation.    

Establishing a claim of constructive discharge requires the employee to prove “that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.”  Vasquez v. Franklin Real Estate Fund, Inc. 

California employment relationships are generally at-will, meaning either party may terminate the relationship with or without cause at any time and for any reason or no reason at all. However, there are exceptions, and an employer cannot terminate an employee for reasons that violate California public policy.

What Does It Mean to Violate “Public Policy?”

A wrongful termination that violates public policy occurs when an employer terminates an employee for exercising a legal right or obligation that affects the greater public. These cases generally fall into four categories whereby an employee is terminated for: (1) refusing to violate a statute; (2) performing a statutory obligation; (3) exercising a statutory right or privilege; or (4) reporting an alleged violation of a statute of public importance.

Of the estimated 50,000 Uber drivers operating in California, thirty of them have started a classaction lawsuit against the company.  The complaint claims that Uber has been misclassifying all of its California drivers as independent contractors rather than employees ever since the Dynamex case was decided.     

Dynamexof courseis the California Supreme Court decision, published on April 30, 2018, that proclaimed that the ABC Test is the proper test for determining whether someone is an independent contractor or an employee. The decision was a significant departure from previous case law on worker classification.  Notably, the ABC Test presumes that someone is an employee unless the hiring entity can demonstrate all three parts of the ABC Test.  In this way, Dynamex almost completely shifted the burden of proof in misclassification cases from workers to hiring entities.   

Nevertheless, Uber has asserted since Dynamex that it can and will continue to treat all of its California drivers as independent contractors.  Accordingly, in this new lawsuit, it will be Uber’s burden to prove all of the following 

Proper classification of independent contractors and employees has never been simple, and the passage of California’s new gig law Assembly Bill 5 (“AB5”) ensures this issue will continue to pose challenges for workers and businesses alike. AB5 took effect on January 1, 2020. While the full impact of this new legislation is yet to be seen, there are legitimate concerns about how this law will impact musicians and other independent artists.

What is AB5?

AB5 is the legislative result of the Dynamex decision, whereby the California Supreme Court employed a three-part test to determine employment status and ultimately concluded that Dynamex delivery drivers were employees and not independent contractors. Dynamex Operations W. v. Superior Court, 4 Cal.5th 903, 942 (2018).

Some things seem certain for gig economy companies like Uber in 2020:  they will continue to accrue legal fees and continue to claim they are just “mobile application platforms” and emphatically not service providers.   Let’s look at Uber as an example.  

Even as it defends against multiple lawsuits brought by its drivers, Uber is now suing the State of California. Case No. 2:19-cv-10956. 

The central issue in these lawsuits is whether Uber’s operations constitute a legitimate business model matching independent drivers to riders needing rides, or whether Uber is just a modern profit machine rebuilt from the age-old cogs and widgets of exploited workers 

The new “Gig Economy Law”  also known as Assembly Bill 5 (AB5) – was signed into law on September 18, 2019.  How much the law will actually impact California companies, employees and independent contractors has been a hot topic ever since.   Here are five things you should know about AB5: 

1.  The law’s intent is to guard against further “erosion of the middle class and the rise in income inequality,” and to protect workers from being exploited in the gig economy. 

Experts estimate that it is up to 30% cheaper to hire independent contractors than employees because then companies aren’t required to pay for things like unemployment insurance, workers’ compensation premiums, payroll taxes or Social Security contributions. 

Wet Seal has been charged in California federal court for discriminating in favor of blond-haired, blue-eyed employees, as reported by the Los Angeles Times this week.

The suit, Nicole Cogdell et al v. The Wet Seal Inc et al, was filed in the Northern District of California last week and alleges that the California-based retail chain had a company-wide policy of discriminating against African American managers.

The complaint was filed by three former managers of the chain on behalf of all similarly situated managers who had been discriminated against in hiring, firing or promotion because of their race. With 550 stores across the country, there are up to 250 managers employed by Wet Seal who may be covered by the complaint, exposing Wet Seal to perhaps tens of millions of dollars in liability.

The City of San Francisco has agreed to settle a Department of Parks and Recreation overtime discrimination suit for $250,000 pending approval from the city council, as reported in the Bay Citizen today.

The suit in question, Michael Horan v. City and County of San Francisco et al., was filed in the San Francisco Superior Court in 2009 by an employee of the city’s Department of Parks and Recreation. The plaintiff Michael Horan had worked as a security guard for the Parks Department for a number of years. During his employment, Hogan alleged that workers were collecting overtime benefits for hours they had not worked, and that his supervisor discriminated against non-Asian Americans in the distribution of those hours.

Hogan filed a complaint with the Parks Department about the abuse of overtime hours and the discrimination in the allocation of those hours. After he complained, he immediately faced retaliation and retribution from the workers in his department. He was verbally abused and threatened with physical harm. His complaints to the Department were ignored, and in November 2008 he finally left his job, fearing for his safety.

The Montana Supreme Court has ruled that obesity discrimination is illegal under its state human rights law, as reported last week by the San Francisco Chronicle. The court’s decision marks an unprecedented step towards recognition of obesity as a protected status under both state and federal antidiscrimination laws.

The Montana Supreme Court made its ruling in response to a certified question from the District Court of Montana on the state’s stance on the issue. The case in question, BNSF Railway Co. v. Feit, had been filed under the Montana Human Rights Act by an applicant who claims he was rejected for a position at a railway company because of his obesity. Eric Feit was offered a conditional offer of employment as a conductor trainee at the company, contingent on his passing a drug screening, physical examination and background check. After passing all these screening tests, the company told him that they would only hire him if he lost 10 percent of his body weight and underwent further physical examinations at his own expense, including s sleeping study.

Feit lost the weight, and took all the required examinations except one. He was unable to take the sleeping study however, which at $1,800 he could not afford. After the company refused to hire him, Feit filed suit against the railway company for discriminating against him because of a physical disability under the Montana Human Rights Act.

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