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Parents are ready to return to work, but where will their kids go?

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The resurgence of California’s economy — the fifth largest in the world — could rest on one sector shattered by the pandemic: child care.

SACRAMENTO, Calif. — The resurgence of California’s economy — the fifth largest in the world — could rest on one sector in particular that’s been shattered by the pandemic: child care.

Steep revenue losses and costly new health and safety requirements are putting beleaguered child care programs out of existence in the high-cost state just as more parents return to the workplace. Even a relatively small percentage of closures could have an outsize effect given pre-pandemic shortages, experts say.

That could sideline workers and hamper recovery efforts, particularly in California’s signature tourism, entertainment and dining sectors where remote work is simply not possible. States across the country are experiencing the same challenge as more parents are ready to return to work but may have few options for their children.

“I really feel like we can’t reopen the economy until we open our child care centers, and I would extend that to K-12 as well,” said California Assembly Speaker Anthony Rendon, who ran an early education nonprofit before entering politics.

In sectors such as leisure and hospitality, as well as many jobs in health care, construction and manufacturing, “there is very little ability to work from home and be able to juggle your hours around child care,” said Elise Gould, a senior economist at the Economic Policy Institute in Washington, D.C.

The situation also has a disproportionate effect on women, she said, who remain more likely to assume the burden of caring for children and elders, even if they work outside the home.

Further complicating the child care equation is the K-12 school system, which educates some 6 million children in California. The state Department of Education suggested last week that schools could reopen for as few as two days a week to maintain smaller group sizes and social distancing.

The availability of before- and after-school programs will be critical, said Rachel Michelin, president of the California Retailers Association. “If that doesn’t happen, it’s going to be a mess because that really provided a lot of affordable child care for a lot of folks,” she said.

The CARES Act provided an additional $3.5 billion to help child care programs weather the pandemic, of which California received $350 million. Some child care centers also managed to receive federal aid under the Paycheck Protection Program, buying them time to figure out a plan. But advocates say more is needed from Washington, along the lines of a new, $50 billion proposal from Reps. Rosa DeLauro (D-Conn.), Bobby Scott (D-Va.) and Sen. Patty Murray (D-Wash.).

“The airlines got a huge subsidy,” said Eric Sonnenfeld of the Tulare County Office of Education, which runs 22 early childhood education programs in the heart of California’s Central Valley. “We’re looking to something of the same degree.”

In California, 72 percent of home-based day cares surveyed in late April reported they had remained open through the pandemic, caring for children of essential workers, according to a late April poll of child care providers by the University of California, Berkeley’s Center for the Study of Child Care Employment. 

But just 34 percent of the state’s licensed centers — which, combined, have roughly twice the capacity as home-based providers — kept their doors open this spring, it found.

Those reductions came on top of widespread closures of campus-based child care for school-age children as California districts ended physical classes in mid-March.

California on Friday allowed a wide array of sectors to reopen, which is sure to increase demand for child care. But centers that closed abruptly in March are figuring out if, when and how to reopen with cohorts of just 10 children, as the CDC has recommended. In many cases, that’s half the number of children that once shared a classroom. 

Like K-12 schools, child care centers face a difficult choice to maintain social distancing, especially in a recession. They could hire more staff and acquire additional space. Or they could reduce their enrollment. Both come with cost pressures, either through greater expenses or lower revenues, in a sector that historically has operated on the thinnest of margins.

Programs across the country are in the same precarious position as they try to adapt to the costly new requirements, said Beth Bye, a former Connecticut state senator who now leads that state’s Office of Early Childhood.

“The economic model doesn’t work that well,” Bye said of child care programs generally. “Now you take a business that was barely holding on and say, ‘You can take half as many kids.’ The math just doesn’t work.”

Sonnenfeld says he has been getting calls from Tulare County parents, wondering when they can once again send their kids to his county’s state preschool and Head Start programs. He still doesn’t have a firm answer.

“Businesses are reopening, restaurants are reopening, retail is reopening again,” he said, “but our county superintendent has been very adamant that it has to be safe — not only for students, but for staff — to return.”

While many regions will lack enough child care to meet demand, some providers say they can’t easily replace long-enrolled families choosing to stay home.

In addition to the continuing spread of the virus — and a lack of data on the transmission of Covid-19 by asymptomatic children — is a problem of reliable demand: Some parents might keep their children home as a health precaution or because they’re out of work. 

Yessika Magdaleno stayed open when the pandemic hit, caring for the children of nurses, fast food workers and grocery store employees at her home in the Orange County city of Garden Grove. But earlier this month she said nine of the 16 children who had been in her care before the pandemic had not returned. 

“I don’t know after June how we’re going to survive if more than half of my children are not here,” she said. 

Some parents haven’t even heard from their children’s programs amid the chaos of the pandemic, said Mary Ignatius, a longtime organizer for Parent Voices, a parent-led organizing effort. 

“Just figuring out who’s going to be open when everything goes ‘back to normal’ is going to be a test,” Ignatius said. “I think that’s been a lingering pit in every parent’s stomach: ‘I don’t know what is going to happen. I don’t know what this new normal is going to look like.'”

In California, child care has some important allies in the Legislature, including Rendon (D-Lakewood). He said he first met Sen. Holly Mitchell (D-Los Angeles), now the state Senate’s budget chair, 20 years ago at a rally for early education funding. 

Legislative leaders rejected Gov. Gavin Newsom’s proposal to cut reimbursement rates for state-subsidized child care by 10 percent, a move the governor himself would cancel if federal leaders provide budget relief. Assemblymember Kevin McCarty (D-Sacramento) called that cut “a nonstarter,” saying in an interview that it would “be a death knell for a lot of these programs.”

Newsom in April waived certain eligibility restrictions for state child care assistance to help essential workers who may not have previously qualified for subsidies. He also introduced an online portal to help connect families with child care, Mychildcare.ca.gov, that allows parents to search for child care facilities by ZIP code, including hundreds of new “pop-up” centers the state established in response to the pandemic.

Several lawmakers, anticipating child care challenges, are advancing bills to expand job-protected leave for working parents who need to stay home and care for their children, arguing that parents shouldn’t be forced to choose between their children’s safety and keeping their jobs.

Rendon said he worries about the effect on children’s development if they stay home from school much longer. Hand-washing and other health protocols have long been embedded in child care programs, he said, making them better positioned than other settings to open with proper precautions. 

Still, he said, “People are still quite scared. And to drop off your child, that’s a tremendous leap of faith.”

This blog originally appeared at Politico on June 11, 2020. Reprinted with permission.

About the Author: Katy Murphy covers consumer regulations with a focus on data privacy for POLITICO California. Before joining the team, she was a one-woman Capitol bureau for the The Mercury News and East Bay Times and previously covered K-12 and higher education for more than a decade, based in the Bay Area.


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AB 5 repeal could land on 2022 ballot

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AB 5 enshrined in law the California Supreme Court’s test for distinguishing employees from independent contractors. 

Voters could get a chance to dissolve California’s controversial worker classification law in 2022.

Assemblyman Kevin Kiley (R-Rocklin), one of the measure’s most ardent opponents in the Legislature, announced he will try to qualify a ballot initiative to repeal the law. It’s too late to run a referendum suspending AB 5, so Kiley would aim to strip its language from statute in the 2022 election.

AB 5 enshrined in law the California Supreme Court’s test for distinguishing employees from independent contractors. While organized labor backers have called that a boon to workers, Kiley has highlighted stories of Californians who have lost work as a result and sought unsuccessfully to repeal it with legislation.

The law is already likely to be on the 2020 ballot, with app-based gig companies like Uber and DoorDash qualifying a measure to keep their workers independent contractors. Kiley said in an interview that his measure would be far broader than one focused on the tech industry.

“The supporters of AB 5 from the beginning have demonized two companies and used that as their main rationale for the law,” Kiley said in reference to Uber and Lyft, but his proposed initiative “is not about one or another company but about the principle of economic freedom and the right to earn a living and the hundreds of professions in California that have been wiped out because of this law.”

A ballot committee Kiley launched last month does not yet have any money in it, and Kiley said he has yet to line up financial backers. He said he hoped his effort would provide an impetus for the Legislature to make a deal — a tactic that has not worked for the tech industry.

This blog originally appeared at Politico on June 2, 2020. Reprinted with permission.

About the Author: Jeremy B. White co-writes the California Playbook and covers politics in the Golden State. He previously covered the California Legislature for the Sacramento Bee, where he reported on campaigns, myriad nationally significant policy clashes and multiple FBI investigations of sitting lawmakers.


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California Authorities Take Steps to Protect Workers’ Health and Rehiring Post-Quarantine

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State and local governments in California have recently signed into law several measures aimed at protecting workers. At the state level, Gov. Gavin Newsom signed an executive order offering additional paid sick leave to food sector workers. At the local level, both the County and City of Los Angeles have now adopted worker retention and right of recall ordinances protecting the jobs of certain service sector workers. While the potential harm to workers resulting from COVID-19 remains great, these measures should provide some comfort to vulnerable workers at a time of financial insecurity. 

Food workers entitled to additional paid sick leave for reasons related to COVID-19

The statewide measure pertaining to food workers was signed into effect by Gov. Newsom on April 16, 2020. Executive Order N-51-20 points out that food service workers are far less likely to stay home from work when they’re sick if they do not have available paid sick leave. If workers feel they have no choice but to work while sick, there is a greater risk that the infection will spread to all coworkers.

The order addresses these concerns by mandating that employers of food service workers must offer supplemental paid sick leave related to COVID-19 to food service workers. Workers become eligible for this leave when: the worker has been ordered to quarantine or isolate by a federal, state, or local order; the worker is told by a healthcare worker to self-quarantine or self-isolate; or, the worker has been barred from working by their employer based on concerns of transmission of COVID-19. The amount of paid sick leave to which workers are entitled will vary based on the number of hours the employee worked. Workers considered to be “full-time” employees or who were scheduled to work an average of 40 hours per week for the two weeks prior to taking COVID-19-related leave will be entitled to 80 hours of COVID-19 supplemental sick leave. For those working fewer hours per week, the worker will be entitled to take the number of hours of paid leave across two weeks as they would have normally been scheduled to work in that time.

Los Angeles County workers now have a right to rehire and to be retained by new owners

Many laid-off workers fear that, due to the struggling economy, their positions may be filled by new and inexpensive workers rather than the experienced, possibly older, workers who held the position previously. After similar ordinances were signed into effect by City of Los Angeles Mayor Eric Garcetti, the County of Los Angeles has now enacted two ordinances designed to assure laid-off workers in the service industry that they have a right to be rehired when businesses reopen. The City’s orders offer protections to those working at airports; as janitorial, maintenance, or security workers at commercial properties; and at large event centers, hotels, and hotel restaurants. The City’s orders go into effect on June 14, 2020. The County’s orders cover only those who work at commercial properties and hotels, and go into effect on May 12, 2020. Both measures offer workers a right to pursue legal action if they believe their rights have been violated under these ordinances.

The City’s Worker Retention ordinance and the County’s Right of Retention ordinance each mandate that, upon the sale of a business to a new owner, any laid-off employees of that business have a right to be kept on as an employee under the new ownership. The former owner must provide a preferential hiring list of the business’ employees to the new owner. The new owner must hire from that list for six months after the business is again open to the public. In order to be eligible for inclusion on this list, the worker must have worked for the business for at least six months, must have been primarily employed by that business, who is directly employed by or works for someone who has contracted with the former owner, and who worked for the former owner after March 4, 2020 and before the business was sold. These ordinances do not include managerial, supervisory, or confidential employees. Workers rehired by a new owner must be retained for at least 90 days unless the employer can show cause for firing the worker.

The City and County ordinances related to the Right of Recall state that workers laid off on or after March 4, 2020 must be prioritized when businesses begin to rehire workers. The worker must have performed at least two hours of work for that employer each week to be eligible, and have worked for the employer for at least six months prior to layoff. Workers are entitled to an offer for open positions with their former employer if they held the same position previously, or if they could become qualified for the position after completing the same amount of training that a new worker would need. If two workers are eligible for the same position, employers must offer the more senior employee first right of refusal.

About the Author: Kurt R. Mattson is the President of Union Legal Research. He has spent more than 30 years in the legal services industry as a research attorney, writer, editor, and marketer. 


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California lawmakers blast ‘atrocious’ UI system overloaded with 4.9M claims

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SACRAMENTO — California state lawmakers unleashed their frustrations about the state’s unemployment system Thursday, demanding answers from an agency director about the problems their jobless constituents have endured trying to access the financial lifeline during the pandemic. 

“We’ve never heard the type of suffering people are experiencing right now,” said Assemblyman David Chiu (D-San Francisco). “The feedback we’re getting is atrocious.”

The comments at a budget subcommittee hearing came hours after the U.S. Department of Labor released data showing California’s number of pandemic-induced unemployment claims had climbed to nearly 4.9 million — about 25 percent of California’s pre-pandemic workforce. The avalanche of claims has overwhelmed the state’s Employment Development Department and its aging technology systems, sending many desperate residents to lawmakers for help.

Lawmakers told the agency’s director, Sharon Hilliard, that their staff had been flooded with calls from constituents struggling to learn about the status of their claims or unable to reach EDD staff to have their questions answered. They cited a litany of problems, from delayed claims updates — provided by regular mail — to a lack of capacity to assist workers who speak languages besides English and Spanish, which Chiu said was a civil rights concern. 

Constituents desperate for a lifeline will call the department, make their way through an automated menu and then get “hangups, for Pete’s sake,” said Assemblyman Tom Lackey (R-Palmdale).

“Even from some of the live calls we have hangups,” he added, referring to residents being dropped mid-call. “That’s really unacceptable.”

Hilliard did not refute the criticism, but explained that the agency — staffed earlier in the year for an unemployment rate of a mere 3.9 percent — had to rapidly escalate its operations.

“I don’t like it either,” she said. “I totally agree with you. It’s not acceptable.”

She said agency leaders expect to hire some 1,700 people in the next two weeks and upgrade the IT system as was planned before the pandemic, choosing a new vendor this fall. In response to lawmakers’ questions, she said the department was considering ways to send certain notifications by email and how to alert people more quickly if there were errors or missing information on their applications that could delay payments. 

Assemblyperson Buffy Wicks (D-Oakland) said she had some sympathy for the department. But, she said, “I have more sympathy for the folks in my district, many of whom were already living on the brink of poverty.”

This blog originally appeared at Politico on May 21, 2020. Reprinted with permission.

About the Author: Katy Murphy covers consumer regulations with a focus on data privacy for POLITICO California. Before joining the team, she was a one-woman Capitol bureau for the The Mercury News and East Bay Times and previously covered K-12 and higher education for more than a decade, based in the Bay Area.


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California Assembly Bill 9 Expands the Statute of Limitation for Discrimination Claims

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Statutes of limitations, are designed to ensure that an alleged victim does not delay in making a claim for damages or other relief.  A long delay can deprive the defendant of the evidence necessary to fight the claim. By failing to act with reasonable diligence to pursue a claim, relevant document may be lost and witnesses’ memories may fade.

With respect to claims under the California Fair Employment and Housing Act (“FEHA”), employees must file a complaint with the Department of Fair Employment and Housing (“DFEH”) and obtain a right-to-sue letter before filing in court.  Until January 1, 2020, employees had one year to initiate this process to exhaust administrative remedies.  Following the passage of California Assembly Bill 9, which amends Government Code sections 12960 and 12965, employees now have three years to file these claims with the DFEH.  But, AB 9 is not retroactive.  Old claims are not revived by the new law.

What Does AB 9 Do for Employees?

AB 9 represents a significant expansion of employee rights in California. The one-year statute of limitations will continue to apply to claims made under the Unruh Civil Rights Act, Ralph Civil Rights Act of 1976 and under Civil Code provisions addressing “Blind and other Physically Disabled Persons.”

AB 9 also includes four expansions of the three-year filing deadline for cases brought under the FEHA.

  • First, the statute of limitations is tolled (or temporarily stopped) for up to 90 days following a person’s discovery of the facts of the alleged discrimination.
  • Second, the statute is tolled for up to one year in situations where one first discovers the identity of the employer after three years have passed.  Thus, for example, the true employer might be disguising its identity within a maze of companies.  AB 9 provides a limited tolling under such circumstances to permit an employee to substitute the actual employer into the claim.
  • Third, the statute is tolled for up to one year in cases brought under Civil Code § 51.7 (Ralph Civil Rights Act of 1976) from the date the employee learns the identify of the person liable for the discrimination.
  • Fourth, the statute is tolled for up to one year after the person aggrieved by the discrimination reaches their majority (18 years).

How Does Exhaustion of Administrative Remedies Under the FEHA Work?

Filing a discrimination complaint with the DFEH requires the employee to complete an online form that identify themselves, their employer and the violations they allege occurred.  A failure to include all of the claims available or to sufficiently describe the claims being asserted can deprive the employee of the right to pursue the claims at the DFEH or in court.

After completing the complaint form, the employee is asked whether they wish to have the DFEH investigate the claims or to issue an immediate right-to-sue letter.  Generally, an employee should not ask for a right to sue letter unless they are represented by an attorney. Once the employee obtains a right-to-sue letter, the DFEH will stop any investigation.  The employee has one year to file a lawsuit based on the allegations set out in their complaint.

AB 9 is Not Meant to Encourage Delays

Although an employee in California now has three years to file a complaint with the DFEH, an employee being subjected to unlawful discrimination, harassment or retaliation at work should not delay too long to challenge those unlawful conditions.

Unreasonable delays can be used by the employer to argue that conditions must not have been very bad if the employee continued to work there.  In addition, evidence of the discrimination can be lost to time as witnesses move on to new places and new jobs.

Finally, delay often means that the employee will continue to labor under conditions that are intolerable.  While filing a complaint with the DFEH is not a fix-all solution to discrimination at work, initiating the complaint process can lead to positive changes there.  It is also a way for an employee to take back some of the power they have lost in the hostile environment.

Reprinted with permission.

About the Author:  Patrick R. Kitchin is the founder of Kitchin Legal APC, a San Francisco, California employment law firm. He has represented thousands of employees in both individual and class action cases involving violations of California and federal labor laws since founding his firm in 1999. Patrick also represents employers requiring guidance in California employment law. Patrick is a graduate of The University of Michigan Law School and rated AV-Preeminent by Martindale-Hubbell, its highest ranking for legal knowledge, skill, experience and ethics.


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How Does the Passage of AB 5 in California Affect Me and Others in the Gig Economy?

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Today Governor Gavin Newsom signed into law Assembly Bill 5.  The untitled new law will have a significant impact on the gig economy in California.  It will be increasingly difficult to lawfully classify California workers as independent contractors.  With the exception of several significant carveouts, which I discuss below, the definition of “to employ” announced by the California Supreme Court last year in Dynamex v. Superior Court (2018) 4 Cal.5th 903 will define the relationship between the hired and the hirer moving forward.  The core of the new law takes effect January 1, 2020.

Dynamex is Now the Law of the Land (Most of the Land, At Least)

Assembly Bill 5 codifies the ABC Test adopted in Dynamex for most California workers currently classified as independent contractors.  The ABC Test states that a hiring party “employs” a person (as an employee) unless it can prove each of the following:

  • The hired person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  • The hired person performs work that is outside the usual course of the hiring entity’s business.
  • The hired person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

This three-pronged definition of “to employ” describes the prototypical independent contractor relationship:  a plumber, for example.  First, when I hire a plumber to fix a leak in my office, I do not exert any control of the performance of their work.  The plumber does their job based on their best judgment using their own tools.  Second, the plumber is not performing tasks that are within the scope of my law firm’s work.  While my legal practice is broad in scope, plumbing repairs is not something Kitchin Legal offers to any client.  Third, when the plumber finishes their work at my office, they will drive away in their company truck to another plumbing job for another client.  They are engaged in an independent trade.

But there are significant exceptions under the new law.  For a wide range of professionals exempted under AB 5, an older test of the employer-independent contractor will apply.  However, even the exemptions themselves have multiple requirements.

The Existing Borello Test Will Still Apply to a Substantial Number of Workers in California

Prior to the passage of Dynamex last year, California courts relied on the “economic realities test” or “Borello Test” to determine whether someone was engaged as an independent contractor or as an employee.  This test was announced in 1989 by the California Supreme Court in a case called S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.  In Borello, the high court set out a multiple-factor test for evaluating the relationship between the hirer and the hired.  While the most important indications of an employer-employee relationship under Borello are the hirer’s right to control the work of the hired person and the hirer’s right to terminate the worker at will, other factors are relevant to the determination as well:

  1. Whether the person performing work is engaged in an occupation or business that is distinct from that of the company;
  2. Whether the work is part of the company’s regular business;
  3. Whether the company or the worker supplies the equipment, tools, and the place for the person doing the work;
  4. The worker’s financial investment in the equipment or materials required to perform the work;
  5. The skill required in the particular occupation;
  6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the company’s direction or by a specialist without supervision;
  7. The worker’s opportunity for profit or loss depending on his or her own managerial skill (a potential for profit does not include bonuses);
  8. How long the services are to be performed;
  9. The degree of permanence of the working relationship;
  10. The payment method, whether by time or by the job; and
  11. Whether the parties believe they are creating an employer/employee relationship.

Are You Excluded from the New Definition of “To Employ”?

Labor Code §2750.3 lays out the exceptions to the ABC Test for which the Borello Test will continue to apply.  Exempted from the new definition of “to employ” are insurance brokers, doctors, dentists, lawyers, architects, engineers, private investigators, accountants, human resource professionals, investment agents, marketing professionals, certain salespeople, commercial fishermen, repossession professionals, construction sub-contractors, referral agencies, motor clubs (think roadside assistance) and real estate professionals.  Freelance media-makers, including journalists, also are carved out of the ABC Test if they limit their contributions to any one media outlet to 35 pieces a year.  AB 5 directs the courts to use the Borello Test definition of “to employ” in cases involving these professionals, and not the ABC Test.

Who Will be Affected by AB 5?

The media are reporting that up to two million workers will be affected as they are reclassified under the law from independent contractor to employee.  While the media have focused primarily on the hundreds of thousands of Uber, Lyft and DoorDash workers who will affected, it is likely that the vast majority of affected workers currently work for small companies across the state.

Based on my experience representing misclassified workers in California, I have found that small companies, particularly tech start-ups, frequently classify workers as independent contractors because they believe it is easier and less expensive than hiring employees.  These employers fail to factor in the cost of the wage and hour lawsuit that may follow.

What Do Misclassified Workers Have in Common?

In all of my employee-side, misclassification cases, my clients were trained and controlled by the employers.  Their work hours were often scheduled by the employers.  They were subject to discipline if they failed to perform as expected.  They performed work directly related to the core business of the employers.  Many of them worked full time, had company business cards, company email addresses and in one case, a company credit card.  Almost all of them were paid by the hour.  One of them earned performance bonuses.  But, none of them was entitled to unemployment benefits based on their time working for these employers none was provided with workers compensation insurance coverage.

All of these workers ended their relationships with the employing parties because of a dispute over what and how they were paid, or over their opportunity to take meal and rest breaks.  While some of them had issues about how they were scheduled for work, most of them accepted fairly strict control over their work schedules in exchange for their earnings.  They all looked a lot like employees.

Finally, none of these clients fully understood the scope of the damages and penalties they were entitled to under California law until they spoke with an employment attorney.  Their hirers’ decisions to classify them as independent contractors led to a wide range of violations and valuable claims.

What Do Companies That Misclassify Employees Have in Common?

I also have represented a number of employers in several different industries who faced misclassification claims.  Based on my own experience, discussions with colleagues and the rich case law on the subject of the meaning of “to employ,” it is clear that companies that misclassify workers also share a number of characteristics.

First, most of these companies think they are saving money by avoiding the expenses of employing workers.  Second, many of these companies fail to put into place wage and hour policies that comply with California law.  Third, these companies typically do not have mandatory written sexual harassment and retaliation policies, and do not provide sexual harassment training to their workers as required by California law.  Fourth, most do not provide their workers with paid sick leave in compliance with state and/or local laws.  Fifth, these companies do not provide workers compensation insurance coverage.  Fifth, these companies fail to reimburse their workers for business expenses, including cell phone plans, internet costs and transportation costs.  Sixth, these companies do not comply with federal and state tax laws.  Seventh, all these companies are vulnerable to costly lawsuits and governmental audits.

What Do I think About the Law?

Subject to the section 2750.3 exceptions, classifying someone else as an independent contractor who performs work within your business establishment and within the usual course of your business operations still most likely violates the Borello TestIt certainly violates AB 5 and Dynamex.

Similarly, having someone perform work within the usual course of your business from a home office also likely creates an employer-employee relationship.  Under the ABC Test, it makes no difference whether the person signed an independent contractor agreement, sets their own hours, works relatively independently from direction or works from home.   The focus of the inquiry is much more limited.

As an employment attorney, I have always been suspicious of companies that have more independent contractors working for them than they have employees.  A disproportionate number of independent contractors might be evidence of an illegal scheme designed to avoid providing workers the benefits of employment: possible subterfuge.  Under the Borello Test (i.e., Economic Realities Test), the court should take into account what relationship the parties themselves were attempting to form when they entered into the working arrangement.  But the parties’ intentions do not matter under the ABC Test.  Even under Borello, however, the Supreme Court warned parties to classify workers with care. “The label placed by the parties on their relationship is not dispositive, and subterfuges are not countenanced.”

Finally, I have found that the harder it is to justify a decision to classify someone as an independent contractor, the more likely it is that the person is actually an employee entitled to all of the benefits given to employees under the law.

What Should a Misclassified Worker Do Now?

Claims for unpaid wages are governed by a three-year statute of limitations.  Under certain circumstances, a worker can reach back four years to recover unpaid wages pursuant to a misclassification claim.  If a person has been working as a misclassified worker for more than one year and has not been paid for all work time, and/or has worked overtime hours without overtime pay, and/or has not been provided meal and rest periods, and/or has not been provided complete and accurate paystubs, and/or has terminated for complaining about any of these things, that person should speak with a lawyer.

If a person is currently working as an independent contractor and wishes to make a smooth transition to becoming an employee of the hirer, they should also speak with an attorney.  As we move through this transition in California’s workforce, some employers are going to make efforts to pressure workers to sign illegal waivers of their right to obtain unpaid wages and penalties for past violations.  At this moment in our history, workers in transition should reach out to a competent lawyer for advice.

What Should an Employer Do Now?

The first step every employer who regularly relies on independent contractors should do is to consult with an employment lawyer.  This is a critical juncture for employers in California where risks that were once delayed for all sorts of reasons are at the door.  Assembly Bill 5 did not radically alter the law.  If a worker is deemed to be an employee under AB 5, it is most likely they will be deemed to have been an employee last week and last year in a lawsuit.

If hiring an employment attorney is not feasible, then employers should read about the new law.  Check with industry groups about the effect of AB 5.  Visit the website of the Division of Labor Standards Enforcement (“DLSE”) at https://www.dir.ca.gov/dlse/ I expect the DSLE will be issuing advisories he help in this transition.

Will AB 5 Slow “the erosion of the middle class and the rise of income inequality,” as it Promises in the Preamble?

By passing AB 5 into law, California has taken a substantial step in addressing the burgeoning gig economy and its impact on workers’ rights.  The law is based on the assumption that most workers are better off as employees than independent contractors.  Guaranteed minimum wage, paid sick and family leave, workers compensation coverage, unemployment benefits will be seen by many as a fair trade for giving up a little, or a lot, of scheduling flexibility.

Major critics of the law dispute this assumption and argue that this new law will be a jobs killer and will undermine the flexibility and profitability of the on-demand economy.  In June, Uber CEO Dara Khosrowshahi and Lyft co-founders Logan Green and John Zimmer, co-wrote an op-ed piece for the San Francisco Chronical in which they stated, “…, most drivers prefer freedom and flexibility to the forced schedules and rigid hourly shifts of traditional employment; and second, many drivers are supplementing income from other work.”  The new law, they have argued will require them to undertake a fundamental change in their business model and they warn of adverse effects on their operations and profits.

I am not certain who will be proved right over time.  This is only day one, but I am leaning heavily in favor of any law that provides additional benefits to workers and helps to level the economic playing field.  What is certain is that AB 5 is now one of the most complicated labor laws on California’s books.  The core of the new law, Labor code § 2750.3, is nearly 4,000 words long, has a total of 109 separate paragraphs and makes reference to a host of other California codes and regulations.  AB 5 also defines two distinct employment tests by reference to two California Supreme Court decisions separated in time by 30 years.  Borello has a lengthy citation history as appellate courts have wrestled with its meaning and application.  Already, Dynamex has been cited in nearly a hundred court decisions.  Of course, no matter how clearly written, no appellate decision is immune from different interpretations by parties advocating from different positions over different interests.

The way these two pivotal cases and Assemble Bill 5 are applied to the thousands of employee misclassification claims that will be made in the coming years will define the nature and scope of the employment relationship in California with every-increasing clarity—at least many of us hope for that.

 

 

About the Author: Patrick R. Kitchin is the founder of Kitchin Legal APC, a San Francisco, California employment law firm. He has represented tens of thousands of employees in both individual and class action cases involving violations of California and federal labor laws since founding his firm in 1999. According to retail experts and the media, his wage and hour class actions against Polo Ralph Lauren, Gap, Banana Republic, and Chico’s led to substantial changes in the retail industry’s labor practices in California. Patrick is a graduate of The University of Michigan Law School and is personally and professionally committed to the protection of workers’ rights everywhere.

 


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Hey, Uber and Lyft: Gig Work Is Work. California Just Said So.

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The rideshare industry seems to have been on an unstoppable tear, running roughshod over regulations, filling the streets with cars, and making astronomical sums of Wall Street capital. But California just tripped up Uber and Lyft’s business model with pioneering legislation to rein in the freewheeling “gig economy.”

The law, Assembly Bill 5 (AB5), passed overwhelmingly in the California Senate this week and is expected to be signed by Governor Gavin Newsom soon. It lays out a clear standard, the so-called “ABC test,” to ensure employers are properly categorizing workers as independent contractors, taking into account how much control the company exerts over their working conditions. Under the law, an independent contractor is defined as a worker with real autonomy: a person who (a) is not directly controlled by the company, (b) does work in the same trade or field independent of that company, and (c) is “independently established” as a proprietor of a separate business in the same sector. Under AB5, if you’re a rideshare driver whose entire livelihood depends on the rides your app funnels into our smartphone every hour, you’re likely an employee under California law.

The ABC test will codify the decision made in a landmark California Supreme Court case last year, Dynamex Operations West, Inc. v. Superior Court of Los Angeles. The Court ruled in favor of delivery service workers who argued they deserved to be classified as employees because they were forced to wear the company’s uniform and display its logo despite being legally deemed “independent.” A major goal of the AB5 legislation is to stop employers’ widespread abusive misclassification of workers as independent contractors, in order to deny them regular employment rights and protections, often by insisting that their workers are merely app users.

Once classified as employees under state law, gig workers—not just platform-based workers, but also nail technicians, home-repair workers and dog walkers—would have access to California’s minimum wage, overtime pay, paid rest break, parental leave and workers’ compensation.

Yet Uber and Lyft both continue to resist AB5, and Uber has even indicated that it does not plan to follow the law once it goes into effect at the start of 2020. The company argues that neither the companies, nor many of their drivers, want to be bound by state labor laws and prefer to drive Uber as a casual side hustle.

But thousands of drivers are already organizing in California for more power over their working conditions. According to Brian Dolber, an organizer with the California-based Rideshare Drivers United, a fledgling union of 5,000 drivers, AB5 paves the way to formal unionization. But Rideshare Drivers United has not yet decided on what form the union will take. For now, he said, “We’re really putting drivers’ voices first.” Dolber added, “We want to continue organizing drivers and have drivers decide how they want their union to be structured.’

Critics of AB5 point to the potential loss of “flexibility” once gig workers are regarded as  employees. However, labor advocates dismiss the flexibility question as concern trolling by the bill’s corporate foes. Nayantara Mehta of the National Employment Law Project argues that current labor laws do not automatically exclude jobs with irregular hours, such as union nurses and construction workers, from being employees. Besides, AB5 deals with the degree of control a company exerts over a worker, not how the schedule is set. “Courts have found that just because a worker has a flexible schedule doesn’t mean she is somehow transformed into the operator of her own business—the true benchmark of independent contractor status,” writes Mehta.

Moreover, the fixation on flexibility elides the reality of many gig jobs. Workers’ schedules may be unstable, but not by choice: Often workers are glued to their phones so they can scramble for whatever rides pop up on their phone, or get paid for each manicure they do or each burger they deliver. Their pay could be so dismal that workers “flex” themselves into exhaustion.

“We drive and we drive and we drive,” said Nicole Moore of Rideshare Drivers United, who helped coordinate a rideshare strike in May. “We don’t have dinner with our kids, we don’t do all the things that we’re supposed to be doing in life. Yet we’re expected to pay the rent, we’re expected to put food on the table, and try to make a better life for our kids.”

This is not the first time Uber’s independent contractor system has been challenged. Various lawsuits in recent months have sought to establish workers’ formal employment rights, with mixed results. Uber managed to wriggle out of two lawsuits in March, which together settled for $20 million with 13,600 drivers—but did not address their status as non-employees. Meanwhile, growing efforts to organize rideshare drivers, particularly the New York Taxi Workers Alliance, have helped win increased labor protections at the state and local level, including a minimum wage for drivers in New York City.

Facing the prospect of their payrolls becoming saddled with thousands of brand new workers, gig-company executives are panicking. Uber and Lyft spent a total of about $750,000 lobbying the California legislature, alongside other professional and industry associations that sought exemptions from the law. In the end, Uber and Lyft were not granted the carve-out they were hoping for in the bill, but other trades—including real estate and insurance agents, doctors, engineers, architects and lawyers—were exempted.

Now Uber, Lyft and DoorDash are reportedly joining forces to fight AB5 using a time-honored California political strategy: investing $90 million on a ballot initiative asking voters to overturn the law and erect a different legal regime for gig workers, which might include some weaker benefits and pay standards.

So the gig economy’s leading lights are bent on fighting the law until the bitter end. But in this next round of legal battles, California’s new law, which is based on a Supreme Court ruling and reflects growing public disillusionment with the gig economy titans, might finally put the brakes on the platform economy’s regulatory rollbacks.

Moore is hopeful that the law can help narrow the gulf between Uber executives and drivers. “There’s no difference between my humanity and their humanity, sha says, adding: “The basic American agreement is that yes, be innovative, become a millionaire, build your own business, but the American compromise is that you will need to share some of those millions with the people who do the work in your company, so that they can also afford to take a Lyft.”

This article was originally published at In These Times on September 13, 2019. Reprinted with permission.

About the Author: Michelle Chen is a contributing writer at In These Times and The Nation, a contributing editor at Dissent and a co-producer of the “Belabored” podcast. She studies history at the CUNY Graduate Center. She tweets at @meeshellchen.


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Economic and environmental cost of Trump’s auto rollback could be staggering, new research shows

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The Trump administration’s plan to freeze fuel efficiency standards in defiance of California’s stricter, more environmentally friendly rules is set to have dire ramifications for emissions levels and the economy, according to new research out Wednesday.

Rolling back California’s robust vehicle emissions requirements will cost the U.S. economy $400 billion through 2050, an analysis from the environmental policy group Energy Innovation found. President Donald Trump’s efforts to undo Obama-era rules will also increase U.S. gasoline consumption by up to 7.6 billion barrels, subsequently increasing U.S. transport emissions up to 10% by 2035.

Under Trump, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) have been engaged in a bitter feud with California over emissions standards.

California has set its own standards for decades under the Clean Air Act’s Section 177 through an EPA waiver, with significant success: 14 states and the District of Columbia have adopted the same standards. Data shows that those “Section 177 states” — which represent more than 35% of the U.S. auto market — have reduced pollution and improved air quality, improving both public health and the environment.

But the Trump administration has targeted California’s waiver, arguing in favor of freezing fuel efficiency standards on new vehicles through 2025 nationally while stripping the state of its exemption. The government is also embroiled in litigation with the Section 177 states, which are fighting to keep their standards.

As California and the White House escalate their feud, Energy Innovation’s new modeling gives a preview of what the Trump administration’s plans would mean long-term.

“Freezing federal fuel economy and [greenhouse gas] emissions standards will harm U.S. consumers, who will pay more money to drive their cars the same distance,” the Energy Innovation report warns, pointing to both economic implications and likely associated climate impacts and poorer air quality.

“The only winners are the oil companies, who stand to sell more gasoline at the expense of American consumers, manufacturers, and the environment,” the group underscores.

Initially, the firm found that there would be economy-wide financial gains, as low-efficiency cars are cheaper to make. But over the years, increasing fuel expenses are projected to cut into those gains, ultimately costing the national economy hundreds of billions.

Using the open-sourced and peer-reviewed Energy Policy Simulator (EPS), the group looked at the economic impact of freezing the standards nationally and revoking California’s waiver, in addition to a scenario in which California retains its waiver following litigation but the rest of the country is held to the frozen standard.

In the first scenario, the economic cost by 2050 is projected to be $400 billion.

The second scenario is more uncertain. However, the report estimates it would affect around 65% of vehicle sales and could create a split market — one where automakers sell more efficient vehicles in Section 177 states and less efficient vehicles elsewhere.

Energy Innovation estimates that scenario would cost between $240 billion and $400 billion by mid-century. Costs on the lower end reflect a situation in which carmakers in non-Section 177 states would still largely comply with California’s standards, while those on the higher end reflect a split market possibility.

In addition to the economic costs, the report also underscores the climate implications. While the growing market for electric vehicles would mitigate climate impacts beginning in the 2040s, Energy Innovation finds that vehicle emissions would spike to their highest point in the 2030s based on current trends.

Under current policy, “transportation sector emissions are projected to be 1,370 million metric tons (MMT) of carbon dioxide equivalent (CO2e)” by 2035, the report notes. But with a nationwide freeze, emissions would increase to 1,510 MMT in 2035 — a 10% increase. If Section 177 states retain their autonomy, that increase would fall between 1,460 and 1,510 MMT.

The report’s authors clarify that all estimates should be viewed as somewhat conservative, however, given that they assume a trend towards purchasing electric vehicles — meaning the actual emissions impact could be much larger.

Energy Innovation policy analyst and report author Megan Mahajan told ThinkProgress that the overall result of a freeze would be rising emissions and increasing costs.

“Although the current administration argues the standards freeze is in Americans’ best interest, we find that it hurts consumers and the climate,” Mahajan said. “Our results show that the economic impacts to consumers will only grow over time as they continue to lose out on the significant fuel savings that come with stronger standards.”

The report also focuses on the international implications of the proposed freeze. Due to the Canada-California fuel economy memorandum of understanding, impacts associated with the move will be felt across the border. Canada’s auto market is closely tied with the United States and the country has indicated it will likely side with California in a split market scenario.

But if that doesn’t happen and Canada follows the U.S. federal freeze, Energy Innovation predicts the move could cost Canadian consumers up to $67 billion through 2050. It could also increase Canadian transport emissions up to 11% by 2035.

“In addition to hurting U.S. consumers, a fuel economy and… emissions standards freeze would have global implications,” the report argues.

Energy Innovation’s findings are only the latest to counter the Trump administration’s push for the freeze. Even the auto industry has expressed deep reservations. Many carmakers had already incorporated the emissions standards into their products, along with Obama-era efficiency efforts. The sudden change could cost companies, and some have made efforts to insulate themselves from any shifts in policy.

At the end of July, California inked a deal with Ford, BMW, Honda, and Volkswagen, with all four major carmakers pledging fuel-efficient cars. At the time, California Gov. Gavin Newsom (D) linked the deal to broader efforts to combat global warming.

“Clean air emissions standards … are perhaps the most significant thing this state can do, and this nation can do, to advance those goals,” the governor said. “The Trump administration is hellbent on rolling them back. They are in complete denialism about climate change.”

But the standoff between California and the White House is only set to escalate. Last Friday, the EPA and NHTSA sent the final proposed rule to the White House for review.

That same day, California and New York led a group of states in suing NHTSA, which has reduced the penalties facing automakers who fail to meet Obama-era corporate average fuel economy (CAFE) standards. Under Trump, the penalty has been reduced from $14 to $5.50 per tenth of a mile per gallon.

And on Tuesday, 30 Senate Democrats encouraged 14 major automakers to join the four companies that have already made a deal on emissions with California.

“In the absence of an agreement between the Federal government and states, the California agreement is a commonsense framework that provides flexibility to the industry to meet tailpipe standards while also taking important steps to reduce greenhouse gas emissions and save money on fuel for consumers,” the senators wrote in a letter to the companies, which include Nissan, Toyota, and Volvo.

The letter was signed by several presidential candidates, including frontrunners Sen. Bernie Sanders (I-VT), Elizabeth Warren (D-MA), and Kamala Harris (D-CA).

This article was originally published at Think Progress on August 7, 2019. Reprinted with permission. 

About the Author: E.A. (Ev) Crunden covers climate policy and environmental issues at ThinkProgress. Originally from Texas, Ev has reported from many parts of the country and previously covered world issues for Muftah Magazine, with an emphasis on South Asia and Eastern Europe. Reach them at: [email protected]


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When is a hairstyle not just a hairstyle? When it’s a pretext for discrimination.

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African Americans in particular find that their afros, cornrows and dreadlocks are held against them at school and when applying for jobs.

Employers in California no longer will be allowed to reject job candidates because they dislike their curls, coils, kinks or locks, after the governor signed a first-of-its-kind bill outlawing hair discrimination.

The new measure, signed Wednesday by Gov. Gavin Newsom (D), bans discrimination against a job candidate or school applicant for wearing natural hairstyles.

“There’s a human element to this. We don’t want to diminish people, we don’t want to demean people … We have to own up to the sins of the past,” Newsom said. “I hope that folks are paying attention all across this country.”

The bill was approved unanimously in both the California House and Senate.

The text of the measure states that throughout its history the United States has been “riddled with laws and societal norms that equated ‘blackness,’ and the associated physical traits, for example, dark skin, kinky and curly hair to a badge of inferiority, sometimes subject to separate and unequal treatment.”

The issue is a particularly fraught one for African Americans who have been expected to style their hair to conform with Caucasian norms of beauty or acceptability, especially in the workplace.

“Professionalism was, and still is, closely linked to European features and mannerisms, which entails that those who do not naturally fall into Eurocentric norms must alter their appearances, sometimes drastically and permanently, in order to be deemed professional,” the text of the legislation said.

Discrimination over her dreadlocks led Chastity Jones to fight a 10-year legal battle with an employer who fired her because she refused to get rid of the hairstyle. “It had nothing to do with the job,” she said. “It just had everything to do with my hair.”

Jones sued in 2013 for discrimination and lost wages, but her was dismissed by the court. The NAACP filed a petition last year on her behalf to the Supreme Court, but it declined to take the case.

And it has not just been a problem for workers: Last August, Louisiana sixth grader Faith Fennidy was kicked off the grounds of her Catholic school because her hair, neatly parted and swept back into braided ponytails, violated school policy.

ThinkProgress readers might also recall the case of Andrew Johnson, the high school wrestler in New Jersey who was told in December that he would have to submit to having his dreadlocks shorn off or forfeit the match.

California state Sen. Holly Mitchell introduced the anti-discrimination bill in her state, which extends the same protections that an individual would be afforded because of their skin color to their natural hairstyle and texture.

“The way the hair grows out of my head as a black woman is a trait of race,” Mitchell said, explaining the thinking behind her legislation, which has been dubbed the CROWN Act.

Reports say similar legislation is being considered in New Jersey and in New York, where a bill against discrimination on the basis of a person’s natural hair has passed both chambers of the state legislature and is awaiting Gov. Andrew Cuomo’s signature.

This article was originally published at In These Times on July 2, 2019. Reprinted with permission.

About the Author: Stephanie Griffith is a senior editor. She has worked as an editor and reporter for the Associated Press, The Washington Post, and Agence France-Presse, among other journalism gigs.

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Minimum wage workers just got a raise in two states, D.C., and 15 cities or counties

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Minimum wage workers in two states, Washington, DC, and 15 cities and counties got a raise on Sunday. These state and local governments had passed laws to increase the minimum wage on a schedule, with July 1 and January 1 being the most common dates for raises.

  • Oregon doesn’t have a single statewide minimum wage, but it went up! The minimum is now $10.75 as a standard, $10.50 in “nonurban” counties, and $12 in the Portland metro area.
  • Maryland’s minimum wage went up to $10.10. In Maryland, Montgomery County boosted its minimum wage from $11.50 to $12.25
  • Washington, D.C., rose from $12.50 to $13.25.
  • Eleven California cities saw minimum wage increases, with Emeryville the high point at $15.69 an hour for larger businesses. Los Angeles, Los Angeles County, Malibu, Milpitas, Pasadena, and Santa Monica all went from $12 to $13.25. San Francisco rose from $14 to $15.
  • Workers in Portland, Maine, are seeing a modest bump from $10.68 to $10.90.
  • In Illinois, Chicago went from $11 to $12 and Cook County went from $10 to $11.

The federal minimum wage remains stuck at $7.25 an hour, with Republicans continuing to refuse to consider an increase. Perhaps most depressingly—and showing most clearly where Republican priorities are—Birmingham, Alabama, and Johnson County, Iowa, were both supposed to have minimum wage increases on July 1, but didn’t. Their state legislatures stepped in to pre-empt local governments from improving life for workers.

About the Author: Laura Clawson is labor editor at DailyKos.

This blog was originally published at DailyKos on July 4, 2018. Reprinted with permission.


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