AB 1897, signed into law in September 2014 and codified in Section 2810.3 of the Labor Code, provides that a client employer is strictly and jointly responsible for a labor contractor’s (1) failure to pay wages, and, (2) failure to secure valid workers’ compensation coverage for workers supplied by the labor contractor.  There is no requirement under AB 1897 that the client employer be found to be a joint employer of the labor contractor’s workers.  The passage of AB 1897 significantly impacted client employers in the agricultural industry, who frequently rely on farm labor contractors (“FLCs”) or vineyard management companies (“VMCs”) to provide them with necessary workers.  

As we reported here and here, the Supreme Court is currently reviewing three consolidated cases in order to resolve a split among the circuit courts regarding the legality of class action waivers in employment contracts under the National Labor Relations Act (“NLRA”).  Under the Obama Administration, the DOJ had defended the National Labor Relations Board’s position that class action waivers violated the NLRA. However, in a move widely expected following President Trump’s election win, the Department of Justice (“DOJ”) recently reversed its position, arguing in an amicus brief filed with the Supreme Court that class action waivers do not violate the NLRA and asking the Supreme Court to uphold the use of class action waivers.

Last week, new Labor Secretary Alexander Acosta announced that the Department of Labor (“DOL”) will submit a request for information (“RFI”) on the DOL’s proposed overtime rule in two to three weeks. The proposed overtime rules, explained here, seek to increase the federal “white collar” salary basis threshold for overtime exemption from $23,660 to $47,476. The proposed rule has been blocked from going into effect here by the federal courts after a challenge from 21 states since November 2016 and has been continuously delayed since President Trump was inaugurated and Secretary Acosta was confirmed.

In addition to establishing an overtime pay phase-in for wage order 14 employees, AB 1066 also eliminated other longstanding exemptions.  This included eliminating the exemption to the seventh day rest requirement, which provides that employees are entitled to one day’s rest in every seven days.  Under the California Labor Code, employers cannot “cause” their employees to work more than six days in every seven.  However, at the time of AB 1066’s passage, there was no accepted interpretation of what “cause” meant, although the matter was before the California Supreme Court.

In a recent decision out of Oregon (Brunozzi v. Cable Communications), the Ninth Circuit discussed the effects of the Fair Labor Standards Act (“FLSA”) requirement that employers must use all payments, wages, piece work rates, and non-discretionary bonuses to compute an employee’s “regular rate of pay” for purposes of calculating the rate at which overtime must be paid. In Brunozzi, the plaintiffs were cable tv installers who were paid on a piece-rate basis for each installation, with a guarantee of at least minimum wage, plus overtime for hours worked over 40 in the week. Plaintiffs were also paid a production bonus equal to one-sixth the amount of their piece-rate earnings. However, in what was the fatal flaw for the Court, the employer subtracted the overtime premium earned on the piece-rate work from the production bonus for weeks in which the Plaintiffs worked overtime.  As a result, the more overtime hours Plaintiffs worked, the smaller their production bonus became. Because production bonuses must be included in an employees’ regular rate of pay for calculating overtime pay, the Court concluded that this diminishing “bonus” device in the employer’s pay plan caused it to undervalue the plaintiffs’ regular rate of pay during weeks in which they worked overtime. The Court concluded that this was a violation of the FLSA and reversed the trial court’s order granting summary judgment in the employer’s favor.

Last week, the Fifth Circuit granted the Department of Labor (“DOL”) yet another extension to file its reply brief in the appeal of the Obama Administration’s proposed changes to the federal overtime rules. The DOL’s brief is now due on June 30, 2017.

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