California Employment Law Update

California’s New Supplemental Paid COVID-19 Sick Leave, Effective September 19, 2020

On September 9, 2020, Governor Newsom signed Assembly Bill 1867 (“AB 1867”), which is intended to fill gaps left by the Families First Coronavirus Response Act (“FFCRA”). The new law requires that private employers with 500 or more employees in the United States provide eligible (non-food sector) employees with up to 80 hours of supplemental paid COVID-19 sick leave (“Supplemental COVID-19 Leave”). AB 1867 also codifies the food sector-specific supplemental paid leave provided under Executive Order N-51-20, and extends paid leave benefits to health care and emergency responders who were not provided with paid sick leave under the FFCRA.

For non-food or emergency sector employees, AB 1867 adds section 248.1 to the Labor Code (“Section 248.1”), which requires covered employers to provide eligible workers with Supplemental COVID-19 Leave, beginning September 19, 2020, when they are unable to work due to any of the following reasons:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
  • The employee is advised by a health care provider to self-quarantine or self-isolate due to concerns related to COVID-19; and/or
  • The employee is prohibited from working by the employer due to health concerns related to the potential transmission of COVID-19.

Eligible employees who are classified as “full time” or who worked or were scheduled to work, on average, at least 40 hours per week during the two weeks preceding the leave are entitled to up to 80 hours of leave. Workers who are not considered “full time” or who work fewer than 40 hours per week are entitled to leave based on one of three calculation methods.

Subject to certain conditions, Supplemental COVID-19 Leave runs concurrently with similar leave provided under local COVID-19 leave ordinances and/or orders, but it is distinct from and in addition to non-COVID-19 sick leave.  Like FFCRA paid leave, Supplemental COVID-19 Leave is capped at $511 per day and/or $5,110 in the aggregate per employee.

AB 1867 also requires that covered employers post a notice poster in workplaces or, if employees are not at the worksite, provide it to them electronically.  In addition, covered employers must include information regarding employees’ Supplemental COVID-19 Leave balances in the same manner as for non-COVID-19 paid sick leave, in accordance with Labor Code section 246(i), beginning the first full pay period after September 9, 2020.

California employers with 500 or more employees should, therefore, move quickly to update COVID-19-related leave policies, provide notice and update their wage statements, as non-compliance comes with the potential for penalties.

California Amends Independent Contractor Law (Again) – New Exemptions for Music Industry Workers, Freelance Writers and Photographers

Last Friday, September 4, Governor Newsom signed AB 2257, which includes a slew of modifications to the now-infamous AB5, which went into effect this year and codified the strict ABC independent contractor test, which we have addressed previously in this blog.

With this new amendment, there are now more than 100 exemptions and limitations to the original law, which was aimed at reclassifying the hundreds of thousands of Uber and Lyft drivers from independent contractors to employees. As we have reported before, AB 5 was authored by California Assemblywoman Lorena Gonzalez (D-San Diego), a former CEO of the San Diego and Imperial Counties Labor Council, AFL-CIO.

Legendary former Democratic Speaker of the California Assembly and Mayor of San Francisco Willie Brown has this to say about AB 5: “If there was a place to picket organized labor, I’d do it today,” Brown said. “If there was a place to picket a legislator, I’d do it,” he said. As Assembly Speaker, “I made sure that special interests, no matter who they were — labor or non labor — did not take advantage of the Legislature,” but he said it was clear this time was not the case.

Music Industry

The latest changes to AB5 is the introduction of exemptions for certain music industry workers – including recording artists, songwriters, lyricists, composers, proofers, managers of recording artists, record producers and directors, musical engineers and mixers, musicians, vocalists, photographers working in the music industry, independent radio promoters, and any other individual engaged to render creative, production, marketing, or independent music publicist services. The practical effect of the exemption is that the multi-factor Borello test, rather than the ABC test, would apply in determining whether the music industry worker qualifies as an independent contractor; and AB 2257 provides that, in all instances, any current or future collective bargaining agreements or contractual agreements between the applicable labor unions and respective employers shall govern the determination of employment status for these music industry workers.

AB 2257 specifically notes that workers in other entertainment industries (such as film and television unit production crews) do not qualify for an exemption.

Freelance Writers and Photographers

AB 2257 also modifies the exemption in AB 5 for freelance writers and photographers, removing the controversial 35-submission limit which had been the subject of litigation. The submission limit previously made writers and photographers who submitted more than 35 articles or projects per year ineligible for the exemption. Now such writers and photographers could be exempt from AB 5 and the ABC test, provided they meet certain requirements, including that: (i) there is a written contract that specifies rate of pay, intellectual property rights, and an obligation to pay by a defined time; (ii) the individual doesn’t otherwise replace an employee; (iii) the individual does not primarily work at the location of the hiring entity; and (iv) there is no restriction preventing the individual from working for more than one entity.

Other Changes and Where Do We Go From Here?

These are just some of the changes introduced by AB 2257. There are also several additions, changes, and clarifications to the business-to-business exemption. The new version of the B2B exemption requires that business service providers be free to provide services to other clients, rather than requiring that they provide services to more than one client. The modified exemption also allows business service providers to provide services directly to the customers of a contracting business so long as its employees are performing the services under the name of the business service provider and the business service provider regularly contracts with other businesses.

The referral agency exemption – which could apply to the relationship between an individual, on the one hand, and a business that refers that individual’s services to clients, on the other – also received an overhaul. For example, several types of services (including youth sports coaching and wedding planning) were added to the enumerated exemption list, and the phrase “including but not limited to” was added, expanding the scope of services covered. Also, like the change in the B2B exception, the referral agency exemption has been modified so that service providers now must only be free to provide services to other clients, but they are not required to maintain a varying clientele. These are just a couple of the nearly two dozen changes to this exemption.

It is also important to note that, regardless of the current status of AB 5, further change looms on the horizon. Democratic presidential nominee Joe Biden vows on his campaign website that “he will work with Congress to establish a federal standard modeled on the ABC test for all labor, employment, and tax laws.” If he is elected president and carries out this promise, AB 5’s hard-fought-for exemptions may very well fall by the wayside and all workers throughout the nation, including those in California, could be subject to a federalized ABC test, which will imperil the status of independent contractors everywhere in the country. In this dynamic legislative environment, we recommend working with counsel to determine whether your employees and contractors are (and remain) properly classified.

Bloomberg Law Podcast: Can Employers “Directly Observe” Drug Testing of Their Employees?

Recently, the Ohio Supreme Court ruled that employees had no claim for invasion of privacy when a drug-testing facility “directly observed” them as they provided a urine sample.  Proskauer’s Anthony Oncidi joins Bloomberg Law podcast host June Grasso to discuss the ruling’s significance and what it means for employers.

Listen to the podcast here.

“Oh, We Were Just Leaving!”: California Court Halts Order Requiring Uber and Lyft to Reclassify Drivers

Last week, Uber Technologies, Inc. and Lyft, Inc. announced that they would suspend ridesharing operations in the State of California in response to an August 10, 2020 San Francisco Superior Court judge’s preliminary injunction, requiring the companies to reclassify their California drivers as “employees” within 10 days.  The order came in the context of a lawsuit brought by California’s Attorney General Xavier Becerra and the City Attorneys of Los Angeles, San Diego and San Francisco, accusing Uber and Lyft of violating California’s recently enacted anti-independent contractor statute, known as “AB 5.”  However, before the trial court’s order could take effect and before Uber and Lyft suspended operations in the Golden State, the ride-sharing companies secured a temporary stay from the California Court of Appeal, which issued an order temporarily permitting Uber and Lyft to maintain their current driver classification as independent contractors rather than employees.

AB 5, which took effect on January 1, 2020, codified the now infamous “ABC Test” for determining whether a worker should be classified as an employee or an independent contractor.  AB 5 was introduced and championed by California Assemblywoman Lorena Gonzalez, a former CEO of the San Diego and Imperial Counties Labor Council, AFL-CIO, who, according to data from VoteSmart.org, received nearly 35% of her 2020 campaign cycle funding from the very same labor organizations that made AB 5 a legislative priority in their ongoing effort to unionize Uber, Lyft and other private-sector gig-economy employers.  While many employers secured job- and industry-specific exemptions, the gig-economy companies were not so lucky.

In response to AB 5, several gig-economy companies have sponsored a ballot measure – the “Protect App-Based Drivers & Services Act” – to establish a separate category of worker (in addition to employees and independent contractors) that would be eligible for certain minimum compensation and benefits.  The initiative received over one million signatures, and it will appear on the California ballot this November as Proposition 22.  Unsurprisingly, Proposition 22’s top donors are Uber, Lyft and other gig-economy companies, while the top donors to its opposition are nearly all labor organizations, including the SEIU, the California Federation of Teachers, and the California State Council of Laborers, each of which donated in excess of $200,000.

Even if Proposition 22 succeeds at the polls this fall, drivers, consumers and app-based companies face another hurdle:  As part of his campaign platform (which predominantly favors organized labor), Democrat nominee for President Joe Biden has indicated that he wants to federalize California’s ABC Test, which would threaten independent contractors nationwide.  So, if what Uber and Lyft contend is true (i.e., that classifying drivers as employees completely undermines the viability of the currently configured ride-sharing and delivery business), the end result may be a prolonged suspension of their operations from sea to shining sea – at least until driverless vehicles and drones become a viable alternative.

July 2020 California Employment Law Notes

We invite you to review our newly-posted July 2020 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

View PDF

Ninth Circuit Revives Ashley Judd’s Sexual Harassment Claim Against Harvey Weinstein

In 2018, actress Ashley Judd (“Judd”) sued producer Harvey Weinstein (“Weinstein”) for sexual harassment, defamation, intentional interference with prospective economic advantage, and unfair competition.  Judd alleges that during a meeting with Weinstein to discuss casting opportunities, she was directed to his hotel room where he appeared in a bathrobe and tried to coerce her into massaging him and watching him shower.  See Judd v. Weinstein, No. 2:18-cv-05724-PSG-FFM (C.D. Cal 2018).  After she refused his overtures, Weinstein allegedly defamed Judd by adversely commenting on her professionalism to prominent directors and others in the industry, which hurt Judd’s career opportunities.

Enacted in 1994, California Civil Code Section 51.9 establishes a civil cause of action for sexual harassment in non-employment relationships.  It covers “business, service, and professional relationships” such as those a person might have with a physician, psychotherapist, dentist, attorney, social worker, real estate agent, real estate appraiser, investor, accountant, banker, trust officer, financial planner, collection service, building contractor, escrow loan officer, executor, trustee, or administrator, landlord or property manager, teacher and any substantially similar relationship.  Largely in response to the #MeToo movement, the California legislature amended the statute in 2018 to include “investor, elected official, lobbyist, and director or producer” to the list of covered relationships.

Finding that Judd’s relationship with Weinstein was not covered by the prior version of Section 51.9 and that the 2018 amendment was not retroactive, the trial court dismissed Judd’s sexual harassment claim.  See Judd v. Weinstein, 2019 WL 926343, at *4-8 (C.D. Cal. 2019).  Judd appealed the decision to the Ninth Circuit Court of Appeals.  During oral argument before the Ninth Circuit on May 8, 2020, Judd’s attorney argued that Section 51.9 applied even without the amendment involving “director or producer” because it covered “business, service, or professional relationships,” which described Judd and Weinstein’s association in late 1996 or early 1997.  Weinstein’s attorney countered that Judd did not have a professional relationship with his client at the time of the alleged hotel meeting and that the “directors and producers” wording of the statute could not be applied retroactively.

On July 29, 2020, the Ninth Circuit reversed the district court’s dismissal of Judd’s sexual harassment claim.  The panel held “section 51.9 plainly encompassed Judd and Weinstein’s relationship” at the time of the alleged harassment.  See Judd v. Weinstein, No. 19-55499, 2020 WL 4343738, at *6 (9th Cir. 2020).  The court further held that “their relationship consisted of an inherent power imbalance wherein Weinstein was uniquely situated to exercise coercion or leverage over Judd by virtue of his professional position and influence as a top producer in Hollywood.”  The court also held that “whether Judd and Weinstein’s relationship was in fact an employment relationship outside the purview of section 51.9 was a question for the trier of fact” and remanded for further proceedings.

This is just the latest example we’ve seen of a sexual harassment claim related to an alleged power differential that existed outside the employment setting.

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