Two Flexible Work Schedule Bills

With America reopening in the wake of the covid-19 pandemic, employees are returning to the office after working remotely for more than a year, but some may not be able to come back for various reasons. In order to ease the transition for all parties involved, two bills were recently introduced before the California legislature that would give employers and employees the power to agree to mutually-beneficial flexible work schedules. The two pieces of legislation, Assembly Bill 230 and Assembly Bill 1028, introduced in January and February 2021, respectively, would create a narrow new exception to the existing 8-hour overtime rule by giving employees the right to request a remote, flexible work schedule of up to four 10-hour days per week. However, under this new arrangement, the employer would not be required to pay increased overtime wages for the 9th and 10th hours of each workday as is normally required by state law. AB1028 would also allow employees working these flexible schedules more leeway when planning their meal and rest breaks throughout the workday. With the introduction of these bills, it seems clear that California is prepared to give both employers and employees additional benefits to make flexible work schedules easier to create and maintain.

Give and Take

While AB230 and AB1028 would put more power into the hands of employees by giving them the ability to request remote, flexible schedules, it should be noted that employers are not required to approve the request and that nothing introduced in either AB230 or AB1028 is mandatory. Additionally, the flexible work schedule may be discontinued at any time by either the employer or employee giving notice to the other party, so it’s not a permanent imposition. Further, employers who agree to a flexible work schedule are no longer required to pay the overtime rate unless the employee works more than 10 hours in a day or 40 hours in a week, which provides some economic relief and incentive. So these bills would not be all bad for employers as they provide some impressive carrots for employers who have the capacity to allow their employees the opportunity to work remotely.

Uncertain Future

Though employers may be skeptical of such changes and allowing more employees to work remotely, it must be noted that AB230 and AB1028 are both still pending in the California Legislature. Both bills have been referred to the Committee on Labor and Employment where they will be subject to further debate and scrutiny by committee members before an eventual vote is taken and AB 1028 has also been referred to the Committee on Judiciary. All of this means that the bills face some hurdles and could be changed or outright rejected before the full legislature ever gets a chance to vote on them. In the meantime, employers should consider the possible impact of this legislation when making plans for how and when they will let employees who can’t return to the office work remotely.

Sources:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB1028

https://www.jdsupra.com/legalnews/pending-california-bills-suggest-trend-2329262/

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB230

Gig Companies Take Another Blow in the Courtroom

Earlier this year, gig economy companies operating in California lost another lawsuit seeking to allow them to determine questions of gig worker classification via private arbitration instead of using the courts. On April 22, the Second Appellate District of the Court of Appeals of the State of California invalidated an arbitration provision in Uber’s contracts that would have waived the right for workers to file a suit against the company under California’s Private Attorney General Act. Uber argued that this contractual provision meant that issues such as gig worker misclassification and labor law violations must first be decided in arbitration before the worker could sue under PAGA, but the courts once again declined to adopt this position. With this loss, Uber joins other gig companies like Zum Services and Skip Transport, both of which have previously failed to halt PAGA lawsuits on the basis of contractual arbitration waivers. With this series of courtroom setbacks, it appears that gig companies operating in California will be faced with the possibility of incurring significant liability if workers take them to court under PAGA.

What is The Private Attorney General Act?

Codified in 2004, California’s PAGA is an expansive law that allows “aggrieved employees” to file lawsuits on behalf of themselves, other employees, and the State itself for violations of California’s labor laws. Despite the fact that private individuals bring the claim themselves, California courts have routinely held that a PAGA lawsuit is not “an individual action at all, but instead is one that is indivisible and belongs solely to the state.” Indivisibility is key because gig companies have repeatedly argued that worker classification questions are “threshold issues” that must be settled first to determine whether the worker is indeed an aggrieved employee or simply an independent contractor. Further, gig companies argue that any such threshold issues should be decided in private arbitration according to contractual provisions because independent contractors have no standing to sue under PAGA in the first place. However, California courts have rejected this argument outright, finding that there are no divisible threshold issues in PAGA cases and that courts, not private arbitration, should determine whether the aggrieved employee was actually aggrieved and actually an employee. Likewise, courts have found that a worker’s right to file a PAGA lawsuit cannot be waived and that any arbitration provision that seeks to do so is unenforceable and invalid.

What Does it Mean for Companies?

Uber’s loss in the courtroom appears to be even more evidence that California courts will protect a worker’s right to sue under PAGA, regardless of any possible threshold issues. Gig companies operating in California should be aware of the increased risk and potential liabilities they face from PAGA lawsuits and that contractual waivers appear to be unenforceable in the state. However, it is unknown how Proposition 22, the voter-approved ballot initiative that exempts most gig workers from the state’s worker status laws, will affect existing and future PAGA lawsuits going forward.

Sources:

https://www.jdsupra.com/legalnews/uber-can-t-compel-arbitration-of-paga-5557494/#:~:text=The%20plaintiff%2C%20Jonathan%20Gregg%2C%20filed,provisions%20that%20triggered%20his%20rights

https://cases.justia.com/california/supreme-court/2014-s204032.pdf?ts=1403542881

https://www.dir.ca.gov/Private-Attorneys-General-Act/Private-Attorneys-General-Act.html

In late April, the Ninth Circuit Court of Appeals handed down a ruling that could have massive implications for lab

or law in California, especially for the trucking industry. In a major ruling, the Ninth Circuit reversed the district court’s preliminary injunction against California’s Assembly Bill 5, finding that the law is not preempted by the Federal Aviation Administration Authorization Act. The FAAAA preempts any state law that is “related to a price, route, or service of any motor carrier… with respect to the transportation of property.” However, the Ninth Circuit found that AB5 is a labor law of general applicability that “does not bind, compel, or otherwise freeze in
to place the prices, routes, or services of motor carriers” and is therefore not preempted by federal law.

Case History

Passed in 2019, AB5 codified and expanded the California Supreme Court’s three-pronged ABC test used to determine whether a worker is classified as an employee or an independent contractor. Following this, the California Trucking Association amended an existing complaint in federal district court to file suit to halt implementation of AB5 in the state. The CTA, which represents independent trucking companies, aka motor carriers, and 70,000 drivers who operate as independent contractors, claimed that AB5 was preempted by federal law because it would force members to be reclassified as employees after they voluntarily opted to classify as independent contractors. The district court, agreeing that the CTA was likely to succeed on the merits of its claims and that enforcement of AB5 was likely to have an effect on prices, routes, and services, granted an injunction against the implementation of AB5. The State of California then appealed the case to the Ninth Circuit.

The Ninth Circuit’s Ruling

The 2-1 ruling, authored by Circuit Judge Sandra S. Ikuta, a George W. Bush appointee, the Ninth Circuit reversed the lower court’s injunction. Although AB5 would raise costs for trucking companies by forcing them to hire more employees to remain compliant, the court held that this is not enough to cause federal preemption. Instead, the majority relied on Ninth Circuit precedent to find that the effect of AB5 would not interfere to the point where “it compels a result at the level of the motor carrier’s relationship with its customers or consumers.” The court further rejected the CTA’s claims that AB5 must be preempted because implementation would cause some small trucking companies to shutter and force others to leave the state, leaving the remaining companies providing “diminished services.” The majority stated that Ninth Circuit precedent isclear and that it has consistently rejected arguments that state law must be preempted by federal law on the basis of these kinds of “indirect effects” on the trucking industry. Circuit Judge Mark J. Bennett, a Donald Trump appointee, provided the lone dissent, stating that AB5 “significantly impacts the services motor carriers provide to their customers” and should thus be preempted. The ruling in California Trucking Association v. Bonta now paves the way for implementation of AB5 in California.

Source: CA Trucking Assoc. V. Bonta, https://cdn.ca9.uscourts.gov/datastore/opinions/2021/04/28/20-55106.pdf