Kate

THE CALIFORNIAN 2018 Q3 – WHEN DOES  A “TALL” BECOME A “VENTE?”

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Bradley & Gmelich LLP’s Legal Corner

In this issue, we have two articles.  From our Employment Team, we address a new California Supreme Court case requiring payment of wages for trivial work that may be performed after an employee clocks out, even if it only takes two minutes.  We also present, from our Business Team, an article to those PPOs who are thinking of selling to another company – some questions to help you look for potential blind spots.

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From Our Employment Team:

WHEN DOES  A “TALL” BECOME A “VENTE?”

(OR, WHEN DOES SOMETHING MINIMAL BECOME BIG?)

Barry A. Bradley, Esq., Bradley & Gmelich, CALSAGA Network Partner

On July 26, 2018, the California Supreme Court dealt another blow to employers, as it departs from applying federal law to our wage and hour issues.  In Troester vs. Starbucks Corporation, plaintiff brought a class action on behalf of himself and all non-managerial hourly employees who had to perform store closing tasks.

Essentially, Troester said he was required to clock out at closing, and then transmit data from the computer regarding daily sales, profit and loss, and store inventory data to Starbuck’s corporate headquarters. Troester would then activate the alarm, exit the store, and lock the front door.  Occasionally he would escort other employees to their cars, pursuant to Starbucks policy. These tasks typically took anywhere from 4 to 10 minutes to complete, but averaged less than 5 minutes.

He sued Starbucks arguing that he (and all non-managerial employees who closed the stores at night) should have been compensated for this minimal time.  (Over a 17-month period, it added up to $102.67.)  Starbuck’s argued that the time was de minimus, or so trivial that it doesn’t deserve to be counted.  Federal labor laws have long recognized that such minimal work need not be compensated, under the so-called de minimus doctrine.

Although the district trial court threw out the case, the California Supreme Court unanimously disagreed with Starbucks and the district trial court. In holding that the de minimus doctrine does not apply to California wage and hour laws, it opened the door for class action lawsuits on these new grounds.  The Court held that even though the employee’s tasks only took a few minutes, the fact that employees were required to regularly work for nontrivial periods of time without providing compensation was tantamount to requiring off-the-clock work.  Besides, to Troester, the Court reasoned that $102.67 may not have been so trivial – it could have paid for a monthly gas bill, or perhaps a nice dinner.

Thus, the Troester plaintiffs can now pursue their class action lawsuit against Starbucks alleging unpaid wages, as well as the “coat-tail” claims of inaccurate wage statements, failure to pay all final wages in a timely manner, and unfair competition.

[Note:  the Court expressly did not decide the question of whether an employee who, on rare occasion needs to spend a few minutes doing something after they clock out, would constitute a violation. The Court limited its decision to the specific facts presented, and left open the fight of whether occasional work need be compensated for another day.]

RECOMMENDATION:  Do not require your employees to regularly perform tasks after they clock out.  This could include writing in a pass-down log, conducting verbal shift-change information, calling-in to their supervisors to give updates, or just cleaning out a patrol vehicle to lock up the items.  If this is part of their job duties and it is required to be performed after they clock out, you are in violation of the wage laws. This could result in a serious class action or a Private Attorneys General Act (PAGA) lawsuit.

 

Barry A. Bradley is the Managing Partner of Bradley & Gmelich LLP located in Glendale, California, where he heads up the firm’s Private Security Team and oversees the Employment and Business Teams at the firm.  A former Deputy District Attorney, Barry’s practice concentrates on representing business owners in employment, business and licensing issues, as well as defending litigated cases involving negligent security, employment and business related issues.  The firm acts as general counsel for many security companies in California.  Barry is the Legal Advisor to CALSAGA.

He has been conferred an AV-Preeminent Peer Rating by Martindale Hubbell, the highest rating attainable, and has been named a Southern California Super Lawyer for the past 14 consecutive years in the area of Business Litigation.  Barry is also the recipient of CALSAGA’s Security Professional Lifetime Achievement Award. bbradley@bglawyers.com  818-243-5200.

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Kate

THE CALIFORNIAN 2018 Q3 – CALIFORNIA SUPREME COURT DECISION REDEFINES THE GUIDELINES OF INDEPENDENT CONTRACTORS

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CALIFORNIA SUPREME COURT DECISION REDEFINES THE GUIDELINES OF INDEPENDENT CONTRACTORS

Shaun Kelly, Tolman & Wiker, CALSAGA Preferred Broker

On April 30, 2018, The California Supreme Court issued a ruling in Dynamex Operations West. Inc. v. Superior Court, making it much more difficult to classify an individual as an independent contractor (rather than employee). The previous standard for classifying individuals as employees or independent contractors had been in place since the 1980’s and was based on a multi-factor test that considered, among other factors, the individual’s abilities, the method of payment, and the extent of control exercised over individual. In the Dynamex ruling, the Supreme Court adopted a new three-part “ABC Test” that is intended to reduce the use of independent contractors in the California workforce.

The new standard adopted by the California Supreme Court requires the hirer to establish three factors in order to properly classify a worker as an independent contractor – and in the process greatly expands the definition of “employee” under California law. Here is the information to classify an individual as an Independent Contractor:

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

Performs work that is outside the usual course of the hiring entity’s business; and

Is customarily engaged in an independent established trade, occupation or business.

All three are required in order to fulfill the test.

Even though the “ABC Test” is written to simplify the definition of independent contractor, the application of the three part test is not going to be that simple. It will be the hirer’s responsibility to satisfy the “ABC Test” in order to lawfully classify an individual as an independent contractor. Please keep in mind, this decision was made under the Wage Orders of the Industrial Welfare Commission. As we all know, there will more than likely be subsequent cases, actions and rulings that will be restricting or expanding the Court’s decision to other state department (i.e. Workers’ Compensation).

So, if you are hiring independent contractors or being hired as an independent contractor, now is the time to review the following regarding the new “ABC Test”:

-Identify your independent contractor relationships

-Description of duties of those relationships to the “ABC Test”

-Review contracts involving independent contractors

-Prepare a file for each relationship to include name, description of duties, FEIN#, insurance certificates…

-And any additional information to support the independent contractor relationship (Remember, independent contractors must have the ability to work for multiple clients and they provide their own tools and materials to complete the job free from control of the hirer)

 

Thank you for taking the time to read the article.

Shaun Kelly joined Tolman & Wiker Insurance Services in 2005.  He specializes in all lines of property and casualty insurance for industries including contract security firms, agriculture, construction, oil and gas. Shaun received a BS in Business Administration with a major in Finance from California State University in Fresno, California. He is an active member of several industry associations, including the Association CALSAGA, the Kern County Builders Exchange and the Independent Insurance Agents of Kern County. Shaun can be reached at 661-616-4700 or skelly@tolmanandwiker.com.

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Kate

THE CALIFORNIAN 2018 Q2 – A BUY-SELL AGREEMENT?

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A BUY-SELL AGREEMENT?

Harold A. Laufer, Esq., Bradley & Gmelich

When a business has at least two owners, it’s important that the owners have some form of “partnership” agreement between them. This document is sometimes called a Buy-Sell, a Shareholders Agreement if a corporation, and an Operating Agreement if an LLC.

You can address many potential issues, or just a few in the agreement. Some of the most frequent topics addressed are: 1) restricting the right of an owner to transfer his or her ownership to an outsider, without offering the equity first to the company; 2) how to handle death, disability, termination of employment (voluntary or involuntary) of an owner; 3) how to handle decision deadlocks between owners; and 4) how to value an owner’s equity if a buy back is going to occur

Having a Buy-Sell Agreement allows the business owners to know in advance how each of these circumstances will be handled, rather than some important event occurring with no one knowing exactly how to respond.

 

Harold Laufer is a highly experienced corporate transactional lawyer. He has been affiliated with Bradley & Gmelich LLP for over two years.  He spent much of his career practicing corporate law as an equity partner at a major Midwest law firm, where he headed the Mergers and Acquisitions Practice Group. He has represented companies of all sizes, from start-ups to Fortune 500 companies. Mr. Laufer handles a wide variety of transactions for corporate clients, with experience in all aspects of a business’ life cycle, starting with deal structuring and entity formation, and continuing through Founder’s documentation, initial HR, IP, rights and licensing issues, financing, growth, corporate governance and eventually ending in liquidity events and exits.

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