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[CA] Independent Contractor Misclassification: The Hidden Trap of Outsourcing

It’s a beguiling option. Companies that classify workers as independent contractors receive a number of benefits, including elimination of payroll taxes, workers’ compensation insurance, and unemployment insurance withholdings. Additionally, independent contractors are not entitled to overtime, double-time pay, or meal and rest breaks. The appeal of classifying workers as independent contractors can’t be questioned.

Your Rx for Complying with California’s Newly Effective Paid Sick Leave Law

The Healthy Workplaces, Healthy Families Act of 2014, which Governor Jerry Brown signed on September 10, 2014, goes into effect today, July 1, 2015. The Act requires California employers to provide employees with one hour of paid sick leave for every 30 hours worked. Below is a round-up of some helpful articles covering all the details of the Act, including employers’ obligations and the latest developments on the new law.


Employers often struggle to address conflicts between a supervisor and a subordinate. But what is an employer’s legal responsibility when an employee claims that working for a particular supervisor is so stressful that the employee is disabled and needs to be reassigned as a reasonable accommodation? Recently, in Higgins-Williams v. Sutter Medical Foundation, a California appellate court analyzed this very issue.


California’s stat-wide minimum wage is currently $9.00 per hour, increasing to $10.00 per hour on January 1, 2016. However, several cities have increased the minimum wage well beyond California’s requirements. Similarly, California’s paid sick leave law takes effect on July 1, 2015. But some local governments have passed their own sick leave provisions, providing greater sick leave benefits. Below are some of the local provisions that employers must follow, in addition to the statewide requirements.

Paid Sick Time Law Developments in the State of California; Emeryville, California; Eugene, Oregon; and Bloomfield, New Jersey

The wave of new sick leave legislation continues across the country. At the same time, state and local governments continue to refine existing laws to address new laws passed, as well as the complexities that surround providing for and administering paid sick leave benefits.

Burdensome San Francisco Retail Workers Bill of Rights Takes Effect Next Week

Next week, on July 3, 2015 the ordinances collectively known as the “Retail Workers Bill of Rights” - passed unanimously by the San Francisco Board of Supervisors in November 2014 - will go into effect in the City of San Francisco and the City will begin enforcing its provisions. The ordinances require the covered employers to ensure that they meet five major requirements.

California Requires Employers to Provide Paid Sick Leave

The State of California, pursuant to California’s Healthy Workplace Healthy Families Act of 2014 (AB 1522), requires employers, subject to certain limited exceptions, to provide full-time and part-time, and regular or temporary employees paid sick leave at their regular rate of pay. The new law applies to an employee who performs at least 30 days of work in California, even if that employee is headquartered outside of California. As of July 1, 2015, an employee accrues 1.0 hours of paid sick leave (“PSL”) for every 30.0 hours worked. This equates to just a fraction above 1.3 hours of PSL for exempt employees and most typical employees working 40.0 hours per week. An employer may impose a limit of paid sick leave an employee may take to a maximum of 24.0 hours (3 days) of PSL per year.

Court Refuses Enforcement of Forum Selection and Choice of Law Clauses

The recent published decision issued by the Fourth District California Court of Appeal (May 28) in Verdugo v. Alliantgroup, L.P. will make it more difficult for out-of-state employers to enforce forum selection and choice-of-law clauses in litigation with their California employees. The defendant, Alliantgroup, is a tax consulting firm headquartered in Texas, with one of its eleven regional offices in California. The plaintiff, Rachel Verdugo, brought a class action against the company on behalf of past and present employees, alleging various hour and wage claims under the California Labor Code. Upon being hired to work at Alliantgroup’s Irvine office, Verdugo signed an employment agreement that included a forum selection clause stating that Harris County, Texas would be the exclusive forum for disputes arising out of the agreement. The employment agreement also included a choice-of-law clause, designating Texas law as governing any arising disputes. California courts have traditionally held that they will not defer to a selected forum if doing so would violate public policy by diminishing the rights of California residents. Furthermore, the courts have established that if the claims at issue are based on rights that California statutes have deemed “unwaivable,” the party seeking to enforce the forum selection clause bears the burden of showing that enforcement will not diminish the substantive rights afforded under California law in any way. In making certain rights “unwaivable,” the California legislature and courts are primarily concerned with providing California residents with all of the protections they are entitled to under California law. In Verdugo, the court ruled that California Labor Code rights are unwaivable. In applying this rule, and the applicable precedent, the Court of Appeal held that defendant Alliantgroup could not enforce the forum selection clause or the choice-of-law provision in the agreement because it failed to show that the forum selection and choice-of-law clauses would not diminish plaintiff Verdugo’s statutory rights by requiring her to litigate her claims in Texas and under Texas law. The court did not create a specific test for determining whether deferring to a forum selection clause will diminish an employee’s rights under the Labor Code. Although it does not make forum selection and choice of law clauses per se unenforceable, the holding in this case is significant because it places the burden on the employer to show that application of the forum and/or choice of law clause will not diminish the employee's rights.

California Corner: Misclassification—What Do Managers Do? They Manage, Unless They’re in California.

Store managers are typically classified as exempt from overtime based on what is known as the "executive" exemption. The California Wage Orders set out a six-part test for this exemption, but in basic form, the test asks whether the employee: manages a department or unit; directs the work of other employees; has authority over personnel decisions; exercises discretion or independence in making decisions; spends a majority (more than 50 percent) of his time engaged in managerial duties; and makes a salary above a certain level. Pretty clear that a senior management person in a retail environment would fit the bill, right? Not necessarily.

No-Hire Clauses Common to Settlement Agreements Now Void In California

Executive Summary: The Ninth Circuit Court of Appeals recently broadened California's already expansive interest in promoting employee mobility by voiding any contract provision imposing a meaningful obstacle to a California resident's ability to work. The appellate court's decision calls into question the continued validity of post-employment restrictive covenants commonly included in severance packages and settlement agreements.