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Quick Takes on 3 Recent Employment Law Cases

by D. Gregory Valenza | | January 18, 2019

Here are some summaries of three miscellaneous recent cases affecting California employers.  These decisions are be industry or employer-specific.  

Prevailing Wage – Employers with public works contracts, particularly construction-related ones, take note – The U.S. Court of Appeals for the Ninth Circuit asked the California Supreme Court to decide the following question:

Is operating engineers’ offsite “mobilization work”—including the transportation to and from a public works site of roadwork grinding equipment—performed “in the execution of [a] contract for public work,” Cal. Lab. Code § 1772, such that it entitles workers to “not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed” pursuant to section 1771 of the California Labor Code?

Contractors on public works projects have to pay at least “prevailing wage,” which is a premium wage rate that varies based on the type of work.  The prevailing wage requirement and the specifics of this case, Mendoza v. Fonseca McElroy Grinding Co., are explained n the 9th circuit’s opinion requesting the California Supreme Court’s input here.  If the California Supreme Court accepts the case, it will answer the 9th Circuit’s question in the coming months. 

Arbitration (Transportation Industries) – The U.S. Supreme Court decided that the Federal Arbitration Act does not apply to independent contractors who are performing certain transportation occupations in interstate commerce. The FAA expressly excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”  At issue here was whether a “contract of employment” included not only “employees” but also “independent contractors.”  The Court wrote that it did.  As such, independent contractors involved in trucking and other transportation duties in interstate commerce   can not be forced to arbitrate claims under the Federal Arbitration Act.  That said, many states enforce arbitration agreements under state law.  But when the Federal Arbitration Act does not apply, state laws and court decisions may be less protective of arbitration than they must be when the FAA applies.  This case is New Prime Inc. v. Oliveira and the opinion is here

Home / Domestic Care Workers –  This case is a reminder that domestic caregivers may be covered by the exemption from overtime contained in Wage Order 15, but they nevertheless may be eligible for overtime under the “Domestic Workers Bill of Rights,” Labor Code section 1450 et seq.  Under the DWBR, even personal attendants exempt under the Wage Order are due overtime if they work more than 9 hours in a day or 45 hours in a week.

However, the wage orders and the DWBR apply only to employees, not independent contractors.  So,  Nichelle Duffey sued Tender Heart Home Care, claiming she was misclassified as an independent contractor and due overtime.  Reversing the trial court, the court of appeal decided there was a triable issue of fact regarding whether Duffey was an employee.  But the Court refused to apply the “ABC test” that the California Supreme Court announced last year.  The Court also refused to apply the “Borello” test.  Instead the Court held that the DWBR’s standard was different:

the DWBR contains two alternative definitions of employment for purposes of its provisions: (1) when the hiring entity exercises control over the wages, hours, or working conditions of a domestic worker; or (2) when a common law employment relationship has been formed. Both definitions must be construed broadly in light of the purposes of the DWBR, and the hiring entity bears the burden of establishing that a domestic worker is an independent contractor rather than an employee.

So, this means that a plaintiff can rely on the “Borello” common law analysis, or in the alternative, establish control.  Of note, the Court found that Tender Heart’s ability to set Duffey’s compensation by the clients was relevant to employee status.  Also, Tender Heart’s contract stated that Tender Heart could not “fire” an attendant, but could choose not to make further referrals to the contractor.  The Court, stretching like an Olympic gymnast, held that Tender Heart’s power not to do further business with the contractor was akin to “at will employment.”  Separately, the Court concluded Tender Heart did not qualify as an “employment agency” under  which would have shielded it from liability for unpaid overtime.  Home care agencies seeking to form or continue independent contractor relationships must carefully review this case.  The opinion is here. 









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