Congratulations to Patrick Maloney and Lisa Von Eschen, who have been selected to the 2021 Southern California Super Lawyers list. Each year, no more than five percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor.
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A business litigator and the founder of the Maloney Firm, Patrick has been recognized as a Super Lawyer each year from 2015 to 2021, and had been a Rising Star – an award given to just 2.5% of attorneys who have been in practice for ten years or less – from 2005 to 2008.
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Lisa represents management in employment matters. This is Lisa’s second year of recognition by Super Lawyers. Lisa has previously been recognized on the Los Angeles Daily Journal’s list of Top Women Lawyers.
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Firm attorneys Gregory Smith and Carl Mueller have also been consistently recognized by Southern California Super Lawyers. In 2020, Greg was selected to the Super Lawyers Rising Stars List for the fifth consecutive year, and earned the further distinction of being named to the Up-and-Coming 100 list. Carl was recognized on the Rising Stars list for the first time last year.
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Super Lawyers, part of Thomson Reuters, is a research-driven, peer influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys.
On November 30, 2020, the California Department of Industrial Relation’s Office of Administrative Law (OAL) approved the Division of Occupational Safety and Health’s (Cal/OSHA) temporary emergency standards for COVID-19 infection prevention. These temporary standards apply to most California workers not covered by Cal/OSHA’s Aerosol Transmissible Diseases Standard (ATD).
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Shortly after the Emergency Temporary Standards (ETS) went into effect in November, Cal/OSHA released their first set of Frequently Asked Questions (FAQs) and Templates to help clarify these new safety standards and testing and reporting requirements. However, the first set of FAQs left several critical questions unanswered and contradicted the standards published by the California Department of Health.
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On December 14, 2020, Governor Newsom issued an Executive Order compelling Cal/OSHA to adhere to California Department of Public Health guidance. In response, Cal/OSHA released a second set of FAQs on January 8, 2021 to update and further clarify the ETS.
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Employer Requirements under the Emergency Temporary COVID-19 Prevention Standards
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Under the ETS, employers are required to:
Establish, implement, and maintain an effective written COVID-19 Prevention Program that includes:
Identifying and evaluating employee exposures to COVID-19 health hazards.
Implementing effective policies and procedures to correct unsafe and unhealthy conditions (such as safe physical distancing, modifying the workplace, and staggering work schedules).
Providing and ensuring workers wear face coverings to prevent exposure in the workplace.
Provide effective training and instruction to employees on how COVID-19 is spread, infection prevention techniques, and information regarding COVID-19-related benefits that affected employees may be entitled to under applicable federal, state, or local laws.
Employers face further testing, reporting, and notification requirements when there are multiple COVID-19 infections and COVID-19 outbreaks in the workplace. Find Cal/OSHA’s fact sheet explaining employer requirements under the ETS here.
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Noteworthy Updates in Cal/OSHA’s Second Set of FAQs
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Updates on Earnings Continuation Requirement
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Cal/OSHA’s COVID-19 Standards require employers to “maintain an employee’s earnings, seniority, and all other employee rights and benefits, including the employee’s right to their former job status, as if the employee had not been removed from their job” when employees are “able and available” to work and are removed from the workplace due to transmission-related concerns.
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However, employees who are ill with COVID-19, as well as employees who are unable to return after they have completed the normal quarantine period due to illness, are ineligible for this continued earnings mandate. Instead, they may be eligible for Workers’ Compensation or State Disability Insurance benefits. Relatedly, employees who receive temporary disability workers’ compensation benefits are not entitled to the continued earnings provisions, as they are not considered “able and available to work.”
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As we described previously, SB 1159 creates a statutory rebuttable presumption that certain employees who test positive for COVID-19 contracted the virus at work, which entitles them to workers’ compensation benefits. In order to rebut this presumption, employers must conduct “comparable investigations and produc[e] comparable evidence to show it is more likely than not that an employee’s COVID-19 exposure did not occur in the workplace.”[1] Employers that wish to rebut the presumption should follow this same framework.
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Aerosol Transmissible Diseases (ATD) Standard
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Cal/OSHA’s Emergency Temporary Standards (ETS) do not apply to:
places of employment with one employee who does not have contact with others,
For those covered by the ATD Standard and others in the healthcare industry, it is important to note that an employee in a single-person workplace cannot be subject to both the ETS and ATD standards.
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Partitions in Fixed Workplaces
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Employers are required under the ETS to install “cleanable solid partitions” at work locations where it is not possible to comply with the physical distancing requirements at all times. The new FAQs clarify that unless the workplace has “complete barriers” (likely meaning barriers that cover floor to ceiling), these partitions do not eliminate the risk of COVID-19 transmission and workers within six feet of one another should be considered close contacts for contact tracing, quarantine, and testing purposes.
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Testing Location Considerations
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When employers must provide their employees with testing for COVID-19, it need not be at their work location. Instead, as long as employees incur no cost for the testing, employers may refer employees to a free testing site, clinic, or their own physician. Ensuring that employees do not incur costs to get tested includes paying employees’ wages for their time to get tested and their travel time to and from the testing site and reimbursing employees for travel costs to the testing site (e.g., mileage or public transportation costs).
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Relatedly, if an outbreak occurs in the workplace, employers are required to offer testing but are not required to mandate that employees get tested.
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Quarantine and Return to Work Recommendations
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Cal/OSHA’s quarantine length requirements were adjusted in accordance with updated guidance from the California Department of Public Health (CDPH). While Cal/OSHA still recommends that employees exposed to COVID-19 in the workplace quarantine for 14 days, exposed employees who do not develop symptoms may return to work 10 days after the date of their last known exposure. Cal/OSHA also updated their standards to permit healthcare, emergency response, and social services workers to return to work after 7 days with a negative PCR test result collected after day 5 when there is a critical staffing shortage.
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While employers are allowed to request a waiver from the requirement to quarantine/isolate exposed or COVID-19 positive employees from the workplace if doing so would create an undue risk to public health and safety, Cal/OSHA has not yet provided clear guidance regarding the waiver submission process and criteria. However, Cal/OSHA specified that businesses that qualify for a waiver must provide goods or services that, if interrupted, “would cause an undue risk to a community’s health and safety.” This exception is more stringent than the definition of critical industries. Moreover, the business’s facility “must be facing a potential staffing shortage based on actual COVID-19 cases or exposures in order to qualify for a waiver.” Although Cal/OSHA does not define criteria that employers must meet to be granted a waiver, the agency outlines specific information that employers could provide to constitute a complete waiver request.
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Determining Outbreaks
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When there are COVID-19 outbreaks in the workplace, employers are subject to testing and reporting requirements under the ETS. A workplace outbreak occurs when there are three or more cases in a workplace in a 14-day period, and a major outbreak occurs when there are 20 or more cases in a 30-day period.
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In order to measure the 14- or 30- day period to determine if an outbreak or major outbreak has occurred under Cal/OSHA’s standards, employers should look to the testing date of the cases; employers should review “any cases for which the tests occurred within a 14-day period…to see if the other criteria for an outbreak have been met.”
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For the purposes of determining outbreaks, employers who have several non-overlapping work shifts at a facility may consider each shift a separate “exposed workplace” if “the facility is well ventilated and the cleaning and disinfection requirements of the ETS are met between or before shift changes.”
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Resources for California Employers
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Find the full text of Cal/OSHA’s Emergency Temporary Standards here.
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Find the full text of Cal/OSHA’s COVID-19 Emergency Temporary Standards Frequently Asked Questions here.
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Find the Cal/OSHA Aerosol Transmissible Diseases (ATD) Standards here.
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If you have questions regarding the application of Cal/OSHA’s Emergency Temporary COVID-19 Standards to your business, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick Maloney, Lisa Von Eschen, Samantha Botros, or Nicholas Grether.
In a decision published on Thursday, January 14, 2021 in Vazquez v. Jan-Pro (“Vazquez”), the California Supreme Court held that the 2018 Dynamex decision, which outlined a standard for classifying workers as independent contractors, applies retroactively. The decision in Dynamex will now apply to all nonfinal cases predating the effective date of the Dynamex ruling.
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As we reported last November, while weighing arguments presented by the parties in Vazquez, the Ninth Circuit Court asked the California Supreme Court to determine whether or not Dynamex applied retroactively. Although the general rule in California is that Supreme Court rulings apply retroactively, the court makes an exception for when a decision materially changes a settled rule of law. Jan-Pro’s attorneys argued to the Ninth Circuit that Dynamex is a “sea change in the law,” as opposed to a clarification of an existing rule, and does not apply retroactively.
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Answering the Ninth Circuit’s questions in its decision in Vazquez, the California Supreme Court states that “because we had not previously issued a definitive ruling on the issue addressed in Dynamex, we see no reason to depart from the general rule that judicial decisions are given retroactive effect.”
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The California Supreme Court did not address the second question posed in Vazquez regarding whether Jan-Pro’s multitiered franchising business structure affects Dynamex’s applicability to the business. As the Ninth Circuit previously held that franchising operations are within the scope of the Dynamex decision, the court wrote that “the question of California law posed by the Ninth Circuit that we agreed to answer does not involve any inquiry into the general relationship or applicability of the Dynamex decision to franchise agreements or arrangements, and we do not address that subject.”
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The Supreme Court’s decision to adopt the ABC Test has been met with significant resistance, especially from the app-based gig economy. Although the 2018 ruling created a rigid test for classifying workers as independent contractors, the court left several crucial questions unanswered. Last September, California lawmakers adopted Assembly Bill 2257 (AB 2257) to clarify which industries would be exempted from the ABC Test. The Supreme Court’s opinion in Vazquez closes a critical loop in determining the retroactive effect of the Dynamex decision.
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Resources for California Employers
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Read the California Supreme Court’s full opinion here.
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Read more about AB 2257 and applying the ABC Test here.
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Read our 2021 California Employment Law Update here.
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If you have questions about applying independent contractor classification laws to your business, please contact one of the following attorneys in The Maloney Firm’s Employment Law Department: Patrick Maloney, Lisa Von Eschen, Samantha Botros, or Nicholas Grether.
Patrick has been a member of the Board of Directors of the South Bay Bar Association (SBBA) since 2013, has served on its executive committee for several years, and is the Chair of the Employment Law Section.
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Founded in 1953, the South Bay Bar Association has served the South Bay area of Los Angeles for over 50 years. The SBBA has over 300 active members who are dedicated to serving and supporting its members though ongoing education, programs, and events, and the general public in education and referrals.
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Patrick is the Managing Shareholder of The Maloney Firm and represents clients in disputes involving contracts, fraud and anticompetitive conduct, employment litigation, and shareholder and partnership disputes. He also represents both clients and lawyers in legal malpractice and fiduciary duty cases and in fee disputes. Patrick has served as lead trial counsel in numerous matters in state and federal court, as well as in arbitration.
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Patrick frequently speaks on business litigation and legal malpractice topics and volunteers with the Los Angeles County Bar Association. He is a member of the Hon. Benjamin Aranda III Inn of Court. He earned his J.D. from the University of San Diego School of Law and his B.A. from San Diego State University.
2020 presented a myriad of challenges for California employers, including new restrictive employment laws. Start the new year right by staying informed about recent employment law developments.
A recent California appellate court opinion, Sarah Coughenour v. Del Taco, LLC (November 20, 2020) Appellate No. E072772, San Bernardino Super. Ct. Case No. CIVDS1831552 (“Coughenour”), addresses the applicability of an arbitration clause in an existing employment agreement after a minor reaches the age of majority during employment.
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Guidance for California Employers
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Many employers choose to include arbitration clauses in their employment agreements which mandate that disputes be resolved through private arbitration rather than by the courts. As the Coughenour decision shows, however, employers must be vigilant to maintain these arbitration rights. While minors may enter into employment contracts in California, such employees have a statutory right to disaffirm employment contracts, including agreements to arbitrate disputes.1
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To avoid disaffirmance issues, a California employer who hires minor employees should institute strict protocols to ensure employee reaffirmance or ratification of all employment contracts and agreements upon reaching the age of majority. For example, an employer’s human resources department could set calendar reminders for the 18th birthday of minor employees, and ask such employees to re-execute any employee agreements after reaching majority. Failure to do so may result in the employer waiving rights set forth in the agreements.
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Coughenour v. Del Taco, LLC
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In Coughenour, Plaintiff was 16 years old when hired by Defendant Del Taco, LLC (“Del Taco”). Upon her employment, Plaintiff signed a “Mutual Agreement to Arbitrate” which mandated that disputes between herself and her employer were to be arbitrated (the “Agreement”). Plaintiff continued to work for Del Taco for four months after her 18th birthday. Plaintiff then resigned and filed a civil lawsuit against Del Taco in Superior Court, alleging sexual harassment, wage and hour violations, and other claims under the Labor Code and the Fair Employment and Housing Act (“FEHA”). In response, Del Taco filed a motion to compel arbitration, citing to the Agreement.
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The trial court denied Del Taco’s motion, finding that Plaintiff had effectively disaffirmed the Agreement by filing her lawsuit against Del Taco. The Court’s finding was based on Family Code Section 6710, which allows a person to disaffirm a contract entered into as a minor before reaching majority age, or within a reasonable time afterward.2 Del Taco appealed.
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Appellate Review
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At issue in Del Taco’s appeal was the interpretation of the “reasonable time” standard in Family Code Section 6710 pursuant to which a person may disaffirm a contract. Del Taco argued that because Plaintiff continued to work for employer for four months after reaching the age of majority, she had ratified the Agreement. Del Taco further argued that because she did not formally disaffirm the contract prior to filing her lawsuit nearly eight months after reaching majority, disaffirmance had not occurred within a reasonable time.
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The appellate court affirmed the trial court’s finding that Plaintiff had effectively disaffirmed the Agreement, writing: “Coughenour’s continued employment does not constitute a ratification of the Agreement and an acknowledgment that she was giving up her right to disaffirmance. . .. To hold that Coughenour impliedly ratified the Agreement by continuing to work at Del Taco for four months after she turned the age of 18 would go against the policy ‘of the law to protect a minor against himself and his indiscretions and immaturity.’”3
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The appellate court further addressed Del Taco’s argument that Plaintiff’s disaffirmance had not occurred within a reasonable time, noting that in the absence of clear statutory guidance, what constitutes a reasonable time must be determined by the specific circumstances at issue:
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“Here, Coughenour worked for almost two years for Del Taco until she reached the age of 18. After she reached majority age, she quit her position after four months and filed her lawsuit within four months of quitting. . .. The filing of the lawsuit was notice that she disaffirmed the Agreement. The trial court did not abuse its discretion by concluding that Coughenour disaffirmed the Agreement within a reasonable time.”
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In so finding, the appellate court confirmed that Plaintiff was not bound by the Agreement’s arbitration terms and could proceed with her suit against her former employer in the court system.
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Coughenour demonstrates one of the many challenges faced by employers in maintaining contract rights. A conversation with qualified counsel can help employers with questions or concerns regarding employment agreements or employee disaffirmance issues.
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About the Author:
Craig Reese is an attorney at The Maloney Firm, APC. If you have questions regarding this alert, he can be contacted at creese@maloneyfirm.com.
1 Family Code § 6700 et seq.
2 Family Code § 6710(“Except as otherwise provided by statute, a contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards or, in case of the minor’s death within that period, by the minor’s heirs or personal representative.”)
As California continues to be hit with COVID-19, employers in California must remember the minimum wage is going up again soon. On January 1, 2021, the State of California’s minimum wage will increase to $13.00 per hour for employers with 25 or fewer employees and $14.00 per hour for employers with 26 or more employees. These increases apply to all employers in the State of California.
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In the next few years, all of California will be moving closer to a minimum wage of $15.00 per hour. On January 1, 2022, the State of California’s minimum wage will be going up to $14.00 per hour for employers with 25 or fewer employees and $15.00 per hour for employers with 26 or more employees. On January 1, 2023, all employers in California will be required to pay a minimum wage of $15.00 per hour.
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Remember that on July 1, 2020, the minimum wage went up in the City of Los Angeles and for unincorporated areas in Los Angeles County. For small businesses (25 or fewer employees) and non-profit corporations, the minimum wage is $14.25 per hour. For all other employers (26 or more employees) the minimum wage is $15.00 per hour. On July 1, 2021, these areas will all be at $15.00 per hour no matter how many employees. Employers also need to remember the impact minimum wage increases have on the salary requirements for exempt employees. To be properly classified as exempt, the employee must earn a salary of at least twice the applicable minimum wage for a full-time employee.
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For more information on the minimum wage, please visit these resources:
In 2018, the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court, 416 P. 3d 1 (2018), seemingly established a bright-line rule for using independent contractors in California. Under the ABC Test created by the Supreme Court in Dynamex, a worker is considered an employee and not an independent contractor, unless the employer can prove that the following conditions are met:
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(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(B) The person performs work that is outside the usual course of the hiring entity’s business.
(C) The person 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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Despite the seemingly rigid nature of the ABC test, some key questions were left unanswered. Would there be any exemptions for professions where workers typically operate as independent contractors? What about the app-based gig economy? Does the Dynamex decision apply retroactively?
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AB 5, AB 2257, and Prop. 22
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To answer the first question, in 2019, the California Legislature passed AB 5, which codified Dynamex and the ABC test in the California Labor Code. AB 5 was amended in September 2020 by AB 2257 to add additional exemptions. For more on AB 2257 and the exemptions, click here.
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On Election Day, California voters chose to provide app-based businesses such as Uber and Lyft with an additional exemption allowing their drivers to be considered independent contractors by passing Proposition 22.[1] The new exemption applies to app-based rideshare and delivery drivers and provides the drivers with a healthcare subsidy, a minimum earnings guarantee, compensation for vehicle expenses, and insurance to cover on-the-job injuries. While opponents of Proposition 22 argued that this does not go far enough and only applies to companies like Uber, Lyft, and DoorDash, the drivers will now be considered independent contractors.
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Does Dynamex Apply Retroactively?
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Election Day also brought us a step closer to whether or not the decision in Dynamex will operate retroactively. On Tuesday morning, the California Supreme Court heard oral argument in Vazquez (Gerardo) et al. v. Jan-Pro Franchising International, Inc., S258191, to answer that question. While the general rule is that judicial decisions apply retroactively, California makes an exception for when a decision changes a settled rule. The attorneys argued as to whether Dynamex was a change in the law or if it simply created a brighter line to clarify and develop existing law. Now that oral argument is complete, we wait on the California Supreme Court to rule on the issue.
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What Can Businesses Do?
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As always, having clear policies and employment agreements will be useful in the event there is any litigation over classifying workers as independent contractors. Consult with employment attorneys to determine if any of the exemptions apply. Use common sense. Does your business expect to have any control over the contractor? What type of work is the contractor performing? If the business has in the past or continues to use independent contractors, make sure to consult with an employment attorney to assess any potential for liability.
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While the success of Prop. 22 has demonstrated that large businesses are increasingly able to create their own employment laws, the same is unlikely to be true with smaller California businesses. Indeed, many industry and trade groups sought exemptions with little success and the California Legislature is likely to remain hostile to using independent contractors except in very limited situations.
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About the Author:
Nicholas Grether is an employment attorney in the Employment Law Department at The Maloney Firm, APC. If you have questions regarding this article, contact Nicholas Grether at ngrether@maloneyfirm.com.
All California Attorneys Should Review The State Bar’s Ethical Opinion Providing Guidance On Third-Party Litigation Funding Before Considering Litigation Funding
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The California State Bar’s Standing Committee on Professional Responsibility has issued Formal Opinion No. 2020-204 setting out the ethical considerations and disclosure requirements for attorneys whose clients are considering or utilizing third-party litigation funding. With litigation funders becoming more numerous and more creative in the funding structures offered, the committee’s opinion comes at an excellent time. Within the opinion, the committee points out the following issues and disclosures that attorneys must consider or make before utilizing third-party litigation funding:
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Duties of Competence and Communication: Pursuant to a lawyers’ duties of competence (Rule of Professional Conduct (“CRPC”) Rule 1.1(b)) and communication (CRPC 1.4(a)), an attorney must discuss whether third-party “litigation funding would assist in accomplishing the client’s goals. Such advice would likely need to include a discussion of the pros and cons of obtaining litigation funding and alternatives, if any.” To that end, in order to advise on a litigation funding contract, “the lawyer must understand how the terms of the funding agreement impact decisions in the litigation.”
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Duties of Independent Judgment and Loyalty: CRPC 2.1’s duty to provide “independent professional judgment” and the general duty of loyalty imposed on attorneys interplays with CRPC 1.7’s proscription on an attorney accepting representation “if there is a significant risk that the representation will be materially limited by the lawyer’s relationship with a third person” to limit some possible litigation funding arrangements. Furthermore, CRPC 1.8.6 requires specific disclosures and waivers before a lawyer can accept payment from a third person for the representation of a client. In combination, all of these rules require an attorney to take care when considering third-party litigation funding that requires any of the following: (1) payments made directly to law firms rather than to the clients; (2) rights of review or information sharing requirements with litigation funders; and (3) control over any aspect of the litigation by a third-party funder. While the committee did “not reach a general conclusion that any particular degree of control is per se unethical,” the opinion serves as a warning that such a possibility exists, and warnings and waivers as to the above are a minimum requirement for attorneys considering such an arrangement.
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Protecting Confidential Information: Importantly, attorneys must also consider CRPC 1.6, which bars an attorney from sharing confidential information without a client’s consent. To that end, it is paramount that attorneys seek and obtain a non-disclosure and confidentiality agreement with any third-party litigation funder before communicating any confidential information. Further, such an agreement may aid in protecting communications and work product from being discoverable. The committee cites Laguna Beach County Water Dist. v. Superior Court (2004) 124 Cal.App.4th 1453, 1459 for the proposition that such an agreement may shield work product shared with a litigation funder from discovery. However, as caselaw on these issues has not been developed to a point where a clear answer is known, an attorney must obtain informed consent from a client that such a waiver could occur before undertaking any sort of confidential communication with a third-party litigation funder or entering a litigation funding agreement.
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Although attorneys are often justified in asking exactly what, if any, value they receive in exchange for their bar dues, in this instance, Formal Opinion No. 2020-204 gives California lawyers something useful. By following the guidance therein, attorneys should be able to more effectively craft the appropriate disclosures and conflict waivers for their clients that wish to utilize third-party litigation funding, allowing the attorneys to avoid the headaches and expense of malpractice and breach of fiduciary duty claims.
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About the Author:
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Carl Mueller is a business litigation attorney that represents clients in all phases of civil litigation. Mr. Mueller’s practice has a focus on attorney-client disputes of all kinds. If you have questions regarding this article contact Carl Mueller at cmueller@maloneyfirm.com.
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