In a significant decision for employers, the California Supreme Court adopted a new test for determining whether an individual worker is an independent contractor or an employee under California wage orders, which regulates minimum wage, overtime, meal and rest breaks, and other conditions of employment. Adopting a modified version of a test from other jurisdictions referred to as the ABC test, a worker is presumed to be an employee unless the hiring company can establish each of the following factors: (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work; (B) […]

On all subcontracts entered into after January 1, 2018, direct contractors (such as general contractors, home-builders, and builders/developers) could become liable for unpaid wages of employees of subcontractors on private projects under the new California Labor Code § 218.7 (AB1701). This could also impact subcontractors who are liable to direct contractors for sub-subcontractors who fail to pay their employees. Although the new law allows direct contractors to request payroll information from subcontractors, direct contractors could get stuck paying twice for work if the subcontractor’s information is inaccurate, false, or incomplete. Therefore, the only certain way for direct contractors to avoid […]

Direct Contractors to Assume Liability for Unpaid Wages by Subcontractors on Private Works That’s right–direct contractor liability just increased. Assembly Bill 1701, which adds section 218.7 to the Labor Code, imposes liability on direct contractors for any unpaid wages or fringe benefits owed by a defaulting subcontractor, even if the subcontractor has been paid in full. Here’s a breakdown of the law, which goes into effect on January 1, 2018: Who is Impacted?  Labor Code section 218.7 applies to any private works direct contractor, meaning “the [contractor] that has a direct contractual relationship with the owner.” Cal. Civ. Code § […]

Nearly 1,000 bills were presented to the California Governor for his signature this legislative session. Here are five bills signed by Governor Brown that California employers should be aware of: Assembly Bill 168 – Prohibition on Requesting Salary History  Assembly Bill 168 prohibits all California employers (including state and local governments) from seeking salary history information about an applicant for employment; however, applicants can voluntarily provide such information. The bill also requires an employer to provide the pay scale for a position to an applicant upon reasonable request. Senate Bill 63 – Expansion of Parental Leave to “Small” Employers Senate […]

On October 12, Governor Brown signed into law two bills that California employers should be watching: AB 168 – Prohibition on Requesting Salary History  Assembly Bill 168 prohibits all California employers (including state and local governments), from seeking salary history information about an applicant for employment. The bill also requires an employer to provide the pay scale for a position to an applicant upon reasonable request.  The law seeks to eliminate “wage inequality that has spanned generations of women in the workforce” by removing institutionalized gender wage discrepancies, according to its author, Assembly member Susan Eggman.  SB 63 – Expansion […]

The Fifth Circuit Court of Appeal dismissed the U.S. Department of Labor’s appeal of an order enjoining the Department from enforcing a rule that raised the minimum annual salary for an employee to be exempt from overtime from $23,660 to $47,760. This comes on the heels of the District Court invaliding the salary increase, finding the Department exceeded its authority in adopting the rule. These two rulings effectively end the Obama-era increase to the minimum salary threshold for overtime exemptions. Here’s how the litigation played out.  November 22, 2016 – a U.S. District Court in the Eastern District of Texas […]

Proposed California Assembly Bill 1209, if passed in its present form, will require companies to have information regarding gender pay differentials published on the Internet.  Effects of Pay Inequity  In 2016, the U.S. Congress Joint Economic Committee released a report stating that working women earn approximately 79 percent of what men earn, which can amount to nearly half a million dollars over the course of a woman’s career. Pay inequity has devastating effects on individuals, companies, and the workforce. Internally, it can cause reduced output and higher absenteeism, resulting in decreased economic productivity. It has also been shown to play […]

California has traditionally permitted a broad scope of discovery under the theory that discovery allows parties to ascertain the strength of their case prior to trial. Until recently, the California Supreme Court had not considered the scope of discovery in actions arising under California’s Private Attorneys General Act. Among other things, the Act has been used in recent years by savvy plaintiffs’ attorneys when bringing wage and hour class actions. In the recent California Supreme Court case of Williams v. Superior Court (Marshalls of California, LLC), a Marshall’s employee brought an action under California’s Private Attorneys General Act (“PAGA”) on behalf of […]

If you are a specialty trade contractor, material supplier or other potential lien or bond claimant, you’ve undoubtedly faced this dilemma: “The customer will only release payment if we give them an unconditional waiver and release. Everyone does it!” From a purely legal perspective and without taking into account business considerations, giving an unconditional waiver until you verify clearance of the payment is a very bad idea. There is a reason that most states (including California) offer an alternative: the conditional waiver. The conditional waiver and release upon final payment is the most underutilized of the 4 statutory release forms in California. It exists, however, […]