Earlier this month, a California company petitioned the United States Supreme Court (“SCOTUS”) to reverse a California Appellate Court ruling that claims made under the Private Attorneys General Act of 2004 (“PAGA”) cannot be arbitrated. Under PAGA, individuals are empowered to stand in the shoes of the State of California and can sue over workplace violations, such as meal and rest violations, individually as well as on behalf of other current or former employees.

Court Dismisses Lawsuit Alleging AB 1513 Payments Were Unlawful

 By: Gregory Blueford

On August 9, 2017, the United States District Court for the Central District dismissed a lawsuit against the Secretary of the California Labor and Workforce Development Agency, the Director of the Department of Industrial Relations and the California Labor Commissioner (“Defendants”) challenging the constitutionality of AB 1513’s safe harbor provision. As employers know, the AB 1513 safe harbor allowed employers to choose to pay either the actual sums owed or 4% of the employee’s gross earnings in pay periods where any piece rate was worked with offsets allowed for nonproductive time (“NPT”) already paid – even if this was less than the actual sums owed. Plaintiffs, who sought to represent all non-exempt piece-rate agricultural workers in California, argued that the State of California violated the U.S. Constitution by allowing employers to utilize the 4% method to settle employee claims for less than the amounts actually owed to Plaintiffs.

A recent California Court of Appeal decision serves as an important reminder of the importance of properly classifying employees and adhering to other wage and hour requirements under the law.  In Ming-Hsiang Kao v. Joy Holiday the Court clarified when an employee can be treated as a “trainee,” addressed what benefits may be used to determine if an employee is exempt from overtime requirements, and stressed that the requirement that employers pay employee immediately upon termination is a strict one.

As we reported here and here, the Supreme Court is currently reviewing three consolidated cases in order to resolve a split among the circuit courts regarding the legality of class action waivers in employment contracts under the National Labor Relations Act (“NLRA”).  Under the Obama Administration, the DOJ had defended the National Labor Relations Board’s position that class action waivers violated the NLRA. However, in a move widely expected following President Trump’s election win, the Department of Justice (“DOJ”) recently reversed its position, arguing in an amicus brief filed with the Supreme Court that class action waivers do not violate the NLRA and asking the Supreme Court to uphold the use of class action waivers.

AB 1897, signed into law in September 2014 and codified in Section 2810.3 of the Labor Code, provides that a client employer is strictly and jointly responsible for a labor contractor’s (1) failure to pay wages, and, (2) failure to secure valid workers’ compensation coverage for workers supplied by the labor contractor.  There is no requirement under AB 1897 that the client employer be found to be a joint employer of the labor contractor’s workers.  The passage of AB 1897 significantly impacted client employers in the agricultural industry, who frequently rely on farm labor contractors (“FLCs”) or vineyard management companies (“VMCs”) to provide them with necessary workers.  

Last week, new Labor Secretary Alexander Acosta announced that the Department of Labor (“DOL”) will submit a request for information (“RFI”) on the DOL’s proposed overtime rule in two to three weeks. The proposed overtime rules, explained here, seek to increase the federal “white collar” salary basis threshold for overtime exemption from $23,660 to $47,476. The proposed rule has been blocked from going into effect here by the federal courts after a challenge from 21 states since November 2016 and has been continuously delayed since President Trump was inaugurated and Secretary Acosta was confirmed.

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