News Type: Blogs

If you’re in management, there’s some good news to report out of the National Labor Relations Board-at least theoretically.

The NLRB has just ruled that it’s not a violation of federal law-namely, the National Labor Relations Act-when employers misclassify their workers as independent contractors, as opposed to employees.

Classification issues have made headlines of late, especially in the wake of the California Supreme Court’s decision in Dynamex Operations West Inc. v. Superior Court, which significantly relaxed the standard applied in California to determine whether any given individual may be acting as an employee or independent contractor. But let’s put a pin in that for just a moment.

In the matter before the NLRB, Velox Express (a medical logistics company) was found to have misclassified certain workers as independent contractors. Despite this conclusion, the Board held that the misclassification didn’t violate the NLRA, which makes it illegal for employers to punish workers for forming unions or otherwise engaging in “concerted activities.” The NLRB determined that misclassification on the part of Velox didn’t serve to suppress workers’ organizing rights-this because the workers in question weren’t “inherently threatened” with firing or other discipline for acting together (and misclassification, by itself, wasn’t tantamount to such a threat).

The takeaway from the case is straightforward-employers that misclassify workers aren’t subject to NLRB litigation in the absence of some other labor law violation-though perhaps it’s something of a non-issue given the impact of certain state laws.

In California, for example, misclassification violates state law and related claims can still be brought by aggrieved workers (either individually or in a representative capacity) and the Division of Labor Standards Enforcement – the administrative agency charged with enforcement of the Labor Code. That being said, and given the ruling in Dynamex-by which an individual may be denied the status of employee only if the worker is the type of traditional independent contractor (such as an independent plumber or electrician) who would not reasonably have been viewed as working in the hiring business-there may well be an uptick rather than downturn of misclassification cases notwithstanding the NLRB’s take on the topic.

Long story short: (1) misclassification should remain front and center on company radar screens, and (2) the upside of the NLRB’s Velox Express ruling is likely reserved for entities with locations in states that largely track federal law.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance in specific situations.

It’s a given that employers are prohibited from discriminating against employees on the basis of sex, race, color, national origin and religion – this according to Title VII of the Civil Rights Act of 1964, which generally applies to employers with 15 or more employees, including federal, state and local governments. It’s also been a given that a court lacked jurisdiction over a court action for discrimination under Title VII until and unless an employee first filed a charge of discrimination on the underlying claim with the U.S. Equal Employment Opportunity Commission (EEOC). Not anymore. By way of its recent ruling in Fort Bend County v. Davis, the U.S. Supreme Court has determined that this now-familiar administrative filing precondition is a “procedural obligation” and not a jurisdictional prerequisite to a lawsuit.

The “jurisdictional” vs. “procedural” distinction is important because if the failure to satisfy the charge-filing requirement itself does not divest a federal court of its jurisdiction over a Title VII lawsuit, an employer-defendant to a lawsuit must now affirmatively raise the plaintiff-employee’s failure to file a charge before a court is required to enforce the requirement. And critically, although the Court noted the plaintiff-employee’s charge-filing requirement is mandatory if properly raised, the defendant-employer may forfeit such requirement it “waits too long to raise the point.”

Translation: federal courts do not lack jurisdiction over discrimination claims simply because plaintiffs bypass the EEOC. Therefore, employers and their counsel must carefully review Title VII lawsuits to ensure they do not contain allegations and claims not previously specifically identified in an EEOC charge. Failure to timely object (e.g., in a responsive pleading) to such allegations and claims not raised to the EEOC may result in a waiver of the defense that a plaintiff has failed to exhaust administrative filing requirements.

Have questions about the EEOC, Title VII or anything in between? The labor and employment attorneys at Michelman & Robinson, LLP are here with answers.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance in specific situations.

The Family Medical Leave Act (FMLA) is admittedly complex. Still, covered employers are required to strictly comply with its terms. To assist employers as they navigate the intricacies of the FMLA, the U.S. Department of Labor (the “DOL”) recently issued several opinions concerning some difficult and unresolved issues.

FMLA Benefits to Be Tapped First

According to the DOL, once an eligible employee learns that his or her absence from work falls under the umbrella of FMLA protection, the 12-week leave benefit is triggered. In such cases, covered employers are advised not to permit workers to take paid sick time that may be available to them before first using their FMLA leave. As otherwise stated, employers must start the clock running on workers’ 12 weeks of FMLA time as soon as a worker’s absence is determined to qualify for leave under the federal statute. In its opinion letter, the DOL also noted, however, that “nothing in FMLA supersedes any provision of state or local law that provides greater family or medical leave rights than those provided by FMLA.” To that end, an employer may provide additional leave when FMLA leave is exhausted (but such additional time cannot be designated as FMLA leave.)

Of note, the DOL’s opinion directly contradicts a Ninth Circuit ruling that specifically allows workers to defer FMLA leave and take paid time off instead. In Escriba v. Foster Poultry Farms (decided back in 2014), the court held that employees could decline to use FMLA leave. Given this decision, employers in the Golden State (which is decidedly employee-friendly) shouldn’t be too quick to change their current policies as they pertain to family or medical leave. Rather, the DOL’s opinion, which is not binding, simply suggests that employers may prevent employees from extending their FMLA leaves by using paid time off first.

Organ Donors Covered Under the FMLA

Another question often raised is whether a voluntary organ donation falls within the scope of the FMLA. As otherwise stated, are these procedures an impairment or physical condition that qualifies as a serious health condition under federal law? In a separate opinion letter, the DOL has decided that they are. According to the DOL, organ donations surely trigger employers’ FMLA leave obligations.

Incremental Leave

The FMLA allows workers to take leave in periodic (read: noncontinuous) increments. But what about that employee who elects to be out of the office – say – every Friday? Is there anything an employer can (or should) do about that? The answer is tread lightly.

While such a pattern of absence from the workplace may be difficult for an employer (both in terms of inconvenience and tracking the time away), it’s absolutely within a worker’s rights to take necessary time off pursuant to the FMLA to attend to personal or familial care. Still, an employer can request documentation that confirms that an employee must be out on Fridays (or whatever the relevant day or days may be), and workers must do their best to schedule leave so that interference with company operations are kept at a minimum. But all things being equal, if an employee’s reason for being absent from work on “Fridays” is legitimate, he or she can take leave on those days under the FMLA.

The Bottom Line

No doubt, the intricacies of the FMLA can be a bit tricky. To reduce your company’s administrative burden and exposure under the law, ensure complete and consistent documentation of all requests and accurate tracking of FMLA leave time. And, in the event you have questions about your obligations under the FMLA, the California Family Rights Act (CFRA) or any other employment-related issues you may be facing, feel free to contact Lara Shortz at (310) 229-5500 or [email protected] Kathryn Lundy (212) 730-7700 or [email protected].

This blog post is not offered, and should not be relied upon, as legal advice. You should consult an attorney for guidance in specific situations.

Are you in the business of creating, acquiring, owning, publishing, licensing or financing original works entitled to copyright protection, such as books, movies, sound recordings, musical compositions, audio/visual works, software, photos, artwork, or articles? If so, the U.S. Supreme Court’s recent decision in Fourth Estate Public Benefit Corp. v. Wall-Street.com should be of interest.

The use of a copyrighted work without the owner’s permission is unlawful under the Copyright Act and can result in a copyright infringement lawsuit. Such a case may subject the infringing party to significant damages and the payment of the copyright owner’s attorneys’ fees. But this begs a procedural question that has existed for some time without consensus: when can a copyright infringement lawsuit properly be filed? The Supreme Court in Fourth Estate provided a clear-cut answer – a copyright owner cannot file a copyright infringement lawsuit until the U.S. Copyright Office has registered the work subject to dispute.

For copyright owners, this decision, written by Justice Ruth Bader Ginsburg, is not welcome news given that it takes the Copyright Office seven months, on average, to process applications. Justice Ginsburg acknowledged this delay, but dismissed its impact by assuring plaintiffs that despite the bureaucratic lag, they will have plenty of time to sue (read: the ruling does not present statute of limitation issues) and recoveries may contemplate infringement that began even before the copyright owner’s submission of an application. This should come as some comfort to victims of copyright infringement, as may the option to expedite the registration process (though such “special handling,” which typically results in action by the Copyright Office within days, is costly and may now take longer as a result of the flood of expedited submissions expected in the wake of Fourth Estate).

The Takeaway

To avoid having to wait months to initiate litigation under the Copyright Act (or pay a substantial fee for expedited registration), copyright owners are encouraged to register their works sooner rather than later. The attorneys at Michelman & Robinson, LLP are here to help in that regard. If you have IP that has yet to be legally protected, please contact Jeremy Richardson at (212) 730-7700 or [email protected], and should you have questions about how the Court’s decision affects your rights as an owner, acquiror, lender or financing source for creative works, please contact Michael Poster at (212) 730-7700 or [email protected].

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.

Attention employers with 26 or more employees operating in the cities of Los Angeles, Santa Monica and Malibu and unincorporated Los Angeles County, on July 1, 2018, the minimum wage you are legally required to pay jumped to $13.25 an hour. This latest increase is a steppingstone to the $15 hourly rate that will be mandated in 2020.

For companies in those same cities (and county) with 25 or fewer workers, July 1 was marked by a minimum wage boost to $12 an hour – this from the $10.50 minimum hourly rate previously imposed by law.

There is more. Also as of July 1, the minimum hourly rate that must be paid to hotel workers in Los Angeles and Santa Monica increased to $16.10 pursuant to the Citywide Hotel Worker Minimum Wage Ordinance (applicable to hotels in L.A. with 150 or more rooms) and the Santa Monica Hotel Worker Minimum Wage Ordinance (which applies to all hotels in that coastal city).

In contemplation of the minimum wage hike, employers are considering their various options, some having to resort to a reduction of working hours assigned to employees, outsourcing and layoffs. Yet even for companies unduly burdened by the new minimum wage requirement, compliance is a must.

No matter your particular circumstances, the labor and employment attorneys at Michelman & Robinson, LLP can certainly assist – navigating wage and hour issues, in the hospitality space and otherwise, is most definitely a firm specialty. Do not hesitate to contact our California employment team at (310) 299-5500.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.

Given the choice, most California employers facing a lawsuit filed by an employee or, in the case of sexual harassment, a complaint with the Department of Fair Employment and Housing (DFEH), would pick arbitration as the favored forum for dispute resolution. Why? Because arbitration is typically a faster, more cost-effective and confidential process for litigants. Likewise, it allows for more streamlined discovery, and imposes simplified rules of civil procedure and evidence. But perhaps the most significant reason employers lean toward arbitration is that an unreasonable damage award is less likely to be levied by an arbitrator, as opposed to a jury. No wonder, then, that mandatory arbitration clauses are a fixture in employment agreements.

That being said, labor advocates suggest that forced arbitration is unfair, that contracts containing such provisions are lopsided, and that “the deck is stacked against any employee who is forced to sign one of these agreements,” especially in the wake of sexual harassment, this according to Assemblywoman Gonzalez Fletcher. Consequently, Assemblywoman Fletcher has introduced AB 3080 to the California State Legislature, a bill that, among other things, seeks to prohibit employers in California from requiring an applicant or employee to agree to arbitrate discrimination, harassment or retaliation claims as a condition of employment, continued employment, or receipt of any employment-related benefit. The proposed legislation also forbids an employee from prohibiting an employee or independent contractor from disclosing sexual harassment he or she suffers, witnesses or discovers. If the bill passes, these banned acts will be characterized as unlawful employment practices under the Fair Employment and Housing Act (FEHA), which would entitle employees to remedies for every violation.

Without question, California’s employee-friendly landscape might be getting even friendlier given the pendency of AB 3080 and other proposed bills inspired by the #MeToo movement. As they weave their way through the legislative process, we’ll be sure to keep employers posted.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.

There is big, BIG news out of the California Supreme Court that impacts every employer in the Golden State. At the very least, for California employers, the recent decision in Dynamex Operations West Inc. v. Superior Court is something that should grab their attention. And that’s because for the first time in nearly three decades, the standard to classify an individual as an employee or independent contractor has been altered.

Since 1989, courts have adopted a multifactor test to determine an individual’s employment status. More particularly, an employer’s control over a worker claiming to be an employee was the critical consideration by the courts making an employee/independent contractor classification; that, along with several secondary factors (e.g., among others, whether the work undertaken was a part of the regular business of the principal or alleged employer; whether the principal or the worker supplied the instrumentalities, tools and the place for the person doing the work; the alleged employee’s investment in the equipment or materials required by his or her task; and whether the service rendered required a special skill). Not any longer, as control has taken a back seat to a three-pronged “ABC test.”

With its decision in Dynamex, in which a delivery company challenged a decision decertifying a class of delivery drivers in a wage and hour case, the Court now leans into a presumption that workers are employees. It has done so by adopting a standard (the ABC test) that labels a worker as an employee unless a business can show (1) the worker is free from its supervision or control, (2) performs work that is outside the hirer’s core business, and (3) customarily engages in “an independently established trade, occupation or business.” The Court expressly ruled that “the hiring entity’s failure to prove any one of these three prerequisites will be sufficient in itself to establish that the worker is an . . . employee, rather than an . . . independent contractor . . ..”

Without question, this approach to employment classification is much more liberal than what had been the norm for 29 years. Now, an individual may be denied the status of employee “only if the worker is the type of traditional independent contractor – such as an independent plumber or electrician – who would not reasonably have been viewed as working in the hiring business,” this according to the Court in Dynamex, which provided the following example:

A plumber temporarily hired by a store to repair a leak or an electrician to install a line would be an independent contractor. But a seamstress who works at home to make dresses for a clothing manufacturer from cloth and patterns supplied by the company, or a cake decorator who works on a regular basis on custom-designed cakes would be employees.

The burden is now squarely on the hiring entity to establish that a worker is an independent contractor, and that burden appears to be a hefty one. No doubt, more employers will have to consider (or reconsider) whether their arrangements with certain workers support independent contractor classification, a reality that will be felt across industries and is sure to “shake the halls” of the gig economy (read: Uber, Lyft, et al.).

Of course, the difficulty lies in making the necessary classification modifications and minimizing exposure.  That being said and despite the new standard’s presumption of employee status, it remains to be seen – likely through subsequent judicial and labor commissioner interpretation – just how different in practice the ABC test will be from the longstanding, and familiar, standard based primarily on control. Whatever the case may be, employers are encouraged to revisit their practices and take steps to best position themselves to withstand challenges to their contractor relationships. Rest assured, M&R’s California employment team stands ready to help in that regard.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.

No doubt, Airbnb has found its way prominently onto the radar screens of those occupying the hospitality space. But the question remains: how much of a threat is the short-term rental platform to hotels and resorts?

Some commentators have surmised that competition to hoteliers by Airbnb is not necessarily a negative, nor an overwhelming concern given the projection of shared growth in the overall hospitality marketplace going forward-not to mention the strong grip that hotels continue to have on business travelers, the great majority of whom favor traditional accommodations over Airbnb. They also raise the increasing legal impediments in the form of regulations, zoning laws, and the like confronting Airbnb hosts that might place a ceiling on-or at least slow the pace of-Airbnb’s supply-side growth.

The New York Times recently elaborated on this latter point, emphasizing steps being taken by the American Hotel and Lodging Association to frustrate Airbnb’s march for market share. In her article, “Inside the Hotel Industry’s Plan to Combat Airbnb,” NYT journalist Katie Benner reports on a multipronged, national campaign by the hotel industry to reduce the number of Airbnb hosts. According to Ms. Benner, the national hotel association is making it known – systematically, at the local, state and federal level – that many Airbnb hosts fail to comply with anti-discrimination legislation, tax collection laws, and safety and fire standards imposed on hotels and resorts. It is the hope that these efforts will disrupt Airbnb hosts (undeniably operating as quasi-hoteliers), and lead to more laws and restrictions that will ultimately inure to the benefit of hotel operators.

With a projected market capitalization in the neighborhood of $30 billion, Airbnb’s value sits squarely between that of Hilton’s (~$19 billion) and Marriott’s (~$35 billion). Clearly then, despite the calculation that Airbnb does not pose a significant threat to the traditional hotel model, its size and market penetration cannot be ignored. The American Hotel and Lodging Association certainly agrees. How about you?

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.