California employment law

On April 30, 2018, the California Supreme Court substantially narrowed the class of individuals who qualify as independent contractors under California wage-hour law and paved the way for a new wave of class actions. In Dynamex Operations West, Inc., the Court adopted the restrictive “ABC test” used in other jurisdictions for determining when a worker qualifies as an independent contractor under California’s Industrial Wage Orders.

Under that test, the court presumes‌ all workers qualify as employees. A hiring entity can prove that the worker qualifies as an independent contractor only if it can show that the worker:

A) is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

B) performs work that is outside the usual course of the hiring entity’s business; and

C) is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.


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On March 5, 2018, the California Supreme Court changed the test for factoring flat sum bonuses into the overtime rate in Alvarado v. Dart Container Corporation of California, ordering a calculation that will increase the costs of overtime for employers who pay such bonuses.  Under the federal formula, an employer must divide an employee’s total weekly pay (including non-discretionary bonuses) by the total number of hours the employee worked in a week to get the regular rate; the employer then must pay time-and-a-half that rate for all overtime hours. But under the Alvarado court’s formula, the employer must divide the total weekly pay by only “the number of nonovertime hours the employee [actually] worked during the pay period.” That smaller divisor will lead to higher overtime rates.

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On October 3, 2017, California Governor Jerry Brown signed into law Senate Bill 306, dramatically limiting an employer’s right to defend itself against allegations that it retaliated against an employee for making wage claims.  In short, the law makes it far easier for employees and the California Labor Commissioner to obtain injunctive relief in

Today, the Ninth Circuit in Mendoza v. Nordstrom, No. 12-57144, affirmed dismissal of the plaintiffs’ California Private Attorneys General Act (PAGA) claims.  The plaintiffs sought to recover from the luxury retailer on behalf of themselves and other employees for violations of California’s day-of-rest rules, Cal. Labor Code §§ 551 and 552.  The court rejected the plaintiffs’ arguments that it should remand the case to permit them to name a new PAGA class representative after their underlying claims failed, reasoning that nothing prevented a proper plaintiff from filing a new suit.

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