The International Franchise Association, along with the Dunkin’ Donuts, Supercuts, and Asian-American Hotel Owners franchisee associations, have sued California in San Diego’s federal court to prevent the state from classifying franchisees as employees.

A franchise is a business model where one company (franchisor), e.g., McDonald’s or Burger King, grants the right to another (franchisee, the local outlet) to sell the franchisor’s products or services under an identifying trademark and operating standards in exchange for license fees.

While franchisees have operated as independent contractors to their franchisors for decades, the model comes into potential conflict with California’s strict ABC “Dynamex test,” instituted in 2014 and now incorporated in Labor Code section 2775. See, Independent Contractor Status in California Now Falls Under Radically Different Rules (June 1, 2018). A worker is automatically presumed to be an employee unless the hiring company can prove:

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; and

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

Prong “A” – no control by the hiring entity – and prong “B” – work outside the hiring entity’s course of business – appear directly contrary to the longstanding franchise model. For example, franchisors exercise considerable control over what franchisees do in building design, color schemes, uniforms, what can be sold or what services can be provided, and so on. Franchises are also clearly in the same business as their franchisors.

The issue is significant. According to the suit, in 2019 there were some 82,600 franchises in California, generating $82.9 billion in revenue and employing 827,000 people earning $35.3 billion in payroll. Unlimited franchise opportunities exist in dozens of industries.

Citing to the Federal Trade Commission’s “Franchise Rule,” the suit contends franchisees are independent businesses and not employees of the franchisor. It also cites a September 2020 Massachusetts court ruling barring the ABC test conversion of a franchisee to an employee as an evisceration of the franchise business model.

Stay tuned.

See also,

• California’s Newest Independent Contractor Law Part 2 - Revised Referral Agency Exception (September 24, 2020)
• California’s Newest Independent Contractor Law Part 1 - Revamped Business-to-Business Exceptions (September 17,2020)
• Gagging the Gigs, Plan B - California Remodels Exceptions to Its Strict Independent Contractor Test (September 11, 2020)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
January 8, 2021

The Internal Revenue Service (IRS) has announced its 2021 optional standard mileage reimbursement rate for employee business use of a personal vehicle, effective January 1, 2021, down from 57.5 cents to 56 cents/mile.

These annual adjustments stem from government survey of fixed and variable automotive operating costs, including insurance, repairs, maintenance, gasoline and oil.
Under California Labor Code section 2802, employers must reimburse employees for all actual work-related expenses necessarily incurred.

According to the state’s Division of Labor Standards Enforcement, using the IRS mileage reimbursement rate will normally satisfy an employer’s reimbursement obligation. However, if the employee can show the IRS reimbursement rate does not cover all of his/her actual and necessary business-related vehicle expenses, the employer must pay the difference.

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
December 29, 2020

From 2016’s Senate Bill (SB) 3, California minimum wage will increase on January 1, 2021 to $13.00 per hour for employers with 25 or fewer employees and $14.00 for employers with 26 or more. SB 3’s final statewide increase to $15.00 per hour will be in 2022 for larger employers and in 2023 for those with 25 employees or less. See California’s Gradual Increases in Minimum Wage, to Reach $15.00 Per Hour by January 1, 2022 (April, 2016).

Several municipalities have ordinances directing even higher minimums. This can present particular challenges for businesses with workers active in one or more of these local jurisdictions.  Best practice is to set the hourly rate by highest among the applicable cities or counties.  The UC Berkeley Center for Labor Research and Education publishes regular updates.

Employers should promptly review the information for their location(s). Some cities require written notice to employees of the increase by a certain date.  Covered employers must also conspicuously post an updated wage notice/bulletin for each applicable jurisdiction.

See also:

• New Local Minimum Wage Rates Effective July 1, 2020 (June 18, 2020)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
Daniska Coronado
December 23, 2020

Failing to list each required paystub item – nine basic ones and up to another seven for piece pay recipients – for every worker and in every payroll period can subject a California employer to potentially devastating damages and civil penalties. For example, a trucking company employing 50 drivers and five office staff could find itself facing up to $1,000,000 in such damages and penalties for the simple – and inadvertent – omission of its address on the stubs over the space of just 12 months.

A. The First Nine Required Pay Stub Items: Labor Code 226(a) specifies the basic items for all earnings statements (paystubs):

(1) Gross wages earned;
(2) Total hours worked (except salaried exempt employees);
(3) Piece rate units and rate, if applicable;
(4) All deductions, including taxes, disability insurance, and health and welfare payments (deductions ordered by the employee may be aggregated and shown as one item);
(5) Net wages earned;
(6) The inclusive dates of the pay period;
(7) The name of the employee along with the last four digits of his or her social security number (listing full number is a violation) or an employee identification number;
(8) The name and address of the legal employing entity; and
(9) All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.

B. Required Listing of Employee’s Paid Sick Days Benefit: Under Labor Code 246(i), most employers are also required to list:

(10) Written notice of the amount of available paid sick leave on the employee’s pay stub or a separate writing provided with the employee’s payment of wages.

An employer which provides unlimited sick leave (no maximum cap) may meet this notice requirement by indicating “unlimited” sick leave on such wage statements or separate writings.

C. Further Required Paystub Listing of Rest and Recovery Pay for Certain Employers: By Labor Code 226.2, an employer utilizing a piece work (production-based) compensation system must list three further items on each pay statement or stub:

(11) Total hours of compensable rest and recovery periods in the applicable pay period;
(12) Rate of compensation for such periods; and
(13) Gross wages paid for such rest and recovery periods during that pay period.

Under Labor Code 226.2(a)(2)(B), and unless a piece work-paying employer includes an hourly minimum wage base rate in its compensation system, that employer will also have to list yet three more items on each pay stub for affected workers:

(14) Total hours of other compensable nonproductive time in the applicable pay period;
(15) Rate of compensation for such time; and
(16) Gross wages paid for that time during the pay period.

This state’s Labor Commissioner lists samples for:

• a basic nine-item paystub; and
• a 16-item stub for piece work compensation plans

See also:

• What’s Even Newer in 2021 California Expands COVID-19 Paid - Detailed, Retroactive Requirements for Employers with 26 or More on Payroll (April 9, 2021)
• Minimum Wage Laws, a History (April 2, 2021)
• What’s New In 2021: California Minimum Wage Increases (December 23, 2020)

For further assistance, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Law Offices of Timothy Bowles
December 23, 2020

Continually changing COVID-19 quarantine and isolation standards – commonly at variance between federal, state, and local governments -- have joined death and taxes as the only certain things in life.

The latest Cal/OSHA emergency temporary standards (ETS) (November 30, 2020) specified a 14-day symptom-free employee quarantine after a COVID-19 exposure.

Now two weeks later comes the latest California Department of Public Health (CDPH) COVID-19 Quarantine Guidance (Guidance) and accompanying Executive Order N-84-20 (Executive Order), suspending that ETS 14-day quarantine rule for many asymptomatic workers.

Instead, based on the latest CDC pronouncement (December 2) and unless an applicable local public health specifies another duration, the December 14 Guidance directs a ten-day quarantine for an asymptomatic individual after the last close contact with a COVID-confirmed or symptomatic person.

The Guidance also allows exposed asymptomatic health care workers and “exposed asymptomatic emergency response and social service workers who work face to face with clients in the child welfare system or in assisted living facilities” to return to work after a seven-day quarantine following last exposure with a negative PCR test on a specimen collected after day five.

Acknowledging governmental impositions are creating hardship and distrust as the pandemic wears on, the Guidance observes that while the CDC and CDPH are recommending 14-day quarantines as “upper limits of the COVID-19 incubation period,” that duration “can impose burdens that may affect physical and mental health as well as cause economic hardship that may reduce compliance. In addition, the prospect of quarantine may also dissuade recently diagnosed persons from naming contacts and may dissuade contacts from responding to contact tracer outreach if they perceive quarantine as onerous.”

The Guidance still requires asymptomatic persons ending quarantine on these earlier ten- and seven-day time frames to:

• Wear face coverings “at all times” and stay at least 6 feet from others;
• Wear surgical face masks at all times upon return to work after day seven and face coverings away from home through day 14 after last exposure; and
• “Self-monitor for COVID-19 symptoms through Day 14 and if symptoms occur, immediately self-isolate and contact their local public health department or healthcare provider and seek testing.”

See also,

• Dancing with Corona - New Wave of California and Local Stay-at-Home Orders (December 4, 2020)
• Industry Suffocation Orders - California’s Safety Agency Now With Pandemic “Imminent Hazard” Shutdown Powers (October 2, 2020)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
December 18, 2020

The federal Equal Employment Opportunity Commission (EEOC) has again expanded its pandemic guidelines to address the effect of the Americans with Disabilities Act (ADA) and other workplace anti-discrimination laws on the national COVID vaccination campaign that now lies ahead.

A major “tension” point is between an employee’s right to maintain the privacy of his or her medical information and an employer’s responsibility to protect the health and wellbeing of its workforce. Since the declaration of COVID as a pandemic, the EEOC has relaxed ADA confidentiality restrictions to give business greater ability to thwart widespread workplace disease transmission. See, Infection Protection; What an Employer Can Ask in a Pandemic (March 25, 2020).

The agency’s December 16, 2020 updated COVID guidance offers new vaccination-related “do’s and don’ts,” including:

• An Employer May Ask Whether a Worker Has Been Vaccinated: The EEOC does not regard a vaccination as a “medical examination” because a shot to prevent an infection is not a procedure or test seeking the existence of a health-related condition. Thus, an employer is free to ask an employee if he/she has been inoculated.
  Thus, an employer may ask an employee for proof of receipt of a COVID-19 vaccination. However, follow-up employer questions, such as asking why an individual has not received a vaccination, may elicit disability information subject to the pertinent ADA standard that the inquiry be “job-related and consistent with business necessity,” discussed below. Thus, the EEOC counsels that the “employer may want to warn the employee not to provide any medical information as part of the proof in order to avoid implicating the ADA.”
• An Employer Requiring Vaccination Must Limit Screening Questions: As pre-vaccination medical screening questions are likely to elicit disability or religious affiliation information, an employer requiring COVID inoculation may only ask such questions as are “job-related and consistent with business necessity.” Permitted questions must thus concern information that if not disclosed will “pose a direct threat to the health or safety” of that worker or others.

Thus, if a business is to make vaccination mandatory and management encounters an employee claiming she or he is unable to receive the inoculations due to a disability or religious belief/practice, the EEOC counsels that management can and should discuss the prospects of reasonable accommodation with that individual, e.g., prospect of performing tasks remotely, short of an undue hardship to company operations.

• An Employer Must Explore Possible Reasonable Accommodations for Those Declining Vaccination Due to Disability or Religion: Process is vital here. The EEOC stresses that management must be flexible and interactive, include determination “whether it is necessary to obtain supporting documentation about the employee’s disability and considering the possible options for accommodation given the nature of the workforce and the employee’s position. The prevalence in the workplace of employees who already have received a COVID-19 vaccination and the amount of contact with others, whose vaccination status could be unknown, may impact the undue hardship consideration. In discussing accommodation requests, employers and employees also may find it helpful to consult the Job Accommodation Network (JAN) website as a resource for different types of accommodations, www.askjan.org.”
• Disability-Related Vaccination Screening Questions Are Permitted in Two Circumstances: The EEOC advises there are two situations where disability-related screening questions can be asked without needing to satisfy the “job-related and consistent with business necessity” requirement: (a) an employer offering a voluntary vaccination program must also give the employee the choice of answering pre-screening, disability-related questions; and (b) if an employee receives an employer-required vaccination from a third party that does not have a contract with the employer (e.g., an independent pharmacy or other health care provider), that third party is free to ask pre-vaccination medical screening questions.
• Preserve the Confidentiality of Medical Information: The new guidance also reiterates that an employer must keep confidential any employee medical information obtained in the course of its vaccination program.
• Excluding an Unvaccinated Worker is the Last Resort: Ultimately, the guidance states: “[i]f an employee cannot get vaccinated for COVID-19 because of a disability or sincerely held religious belief, practice, or observance, and there is no reasonable accommodation possible, then it would be lawful for the employer to exclude the employee from the workplace. This does not mean the employer may automatically terminate the worker. Employers will need to determine if any other rights apply under the EEO laws or other federal, state, and local authorities.”
• Possible Leave for an Unvaccinated Worker: An unvaccinated worker who must be excluded from the workplace for lack of any possible reasonable accommodation may be eligible to take leave under the Families First Coronavirus Response Act (FFCRA), the Family and Medical Leave Act (FMLA), other state or local leave laws or the employer’s policies.

See also:

• COVID’s Constant? … Change; EEOC’s Expanded Guidelines on Screening, Testing, and Pandemic Management (September 18, 2020)
• Older Folks are People Too - Expanded Federal Pandemic Guidelines Allow Favorable Treatment for Aged 65-Plus Personnel (July 24, 2020)
• Thinking the Unthinkable - Expanding Federal Post-Pandemic Guidelines for Safeguarding Returning Personnel (April 23, 2020)

We continue to assist employer clients on pandemic-related policies, protocols and problem solving. For more information, contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Tim Bowles
December 17, 2020

Our collective unwanted pandemic “house guest” continues to spur government’s unprecedented measures toward the virus’s permanent eviction.

Beginning November 21 and to December 21, the California Department of Public Health imposed a statewide 10:00 p.m. to 5:00 a.m. curfew with certain exceptions for essential services, medical emergencies, etc.

Starting tomorrow, Saturday, December 5, and through December 26, a further Regional Stay Home Order will be in place. Any of five regions in California will be subject to the order’s strict standards if and when that region’s total available adult ICU bed capacity falls to less than 15%.  The regions are:

• Northern California: Del Norte, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Shasta, Siskiyou, Tehama, Trinity
• Bay Area: Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, Sonoma
• Greater Sacramento: Alpine, Amador, Butte, Colusa, El Dorado, Nevada, Placer, Plumas, Sacramento, Sierra, Sutter, Yolo, Yuba
• San Joaquin Valley: Calaveras, Fresno, Kern, Kings, Madera, Mariposa, Merced, San Benito, San Joaquin, Stanislaus, Tulare, Tuolumne
• Southern California: Imperial, Inyo, Los Angeles, Mono, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, Ventura

Once triggered, the regional order substantially limits public and commercial activity, for example including cut-backs of indoor retail and shopping center operation to 20% capacity; hotels and lodging open for critical infrastructure support only; restaurant take-out or delivery only; remote office work only except for critical infrastructure; and worship and political expression outdoors only.

We count 22 counties and one city which have rescinded their previous local orders and now  follow statewide guidances:

• Colusa
• Calaveras
• Culver City
• El Dorado
• Fresno
• Inyo
• Kern
• Kings
• Lake
• Mono
• Nevada
• Placer
• Riverside
• San Benito
• San Bernardino
• San Luis Obispo
• Santa Cruz
• Solano
• Stanislaus
• Tehama
• Tulare and
• Yolo

As of today, December 4, 2020, we list these counties and cities as continuing with “safer at home” or “shelter in place” ordinances supplemental to and stricter than Sacramento’s statewide directives:

Thanks again to our legal assistant Daniska Coronado for these continuing updates. Please use the above links and other online resources for further developments. Requirements of varying strictness continue to change frequently, municipality-by-municipality.

See also,

• Fourth and Long - California’s Employer Playbook For a Safe Reopening (July 31, 2020)
• Cabin Fever in a Pandemic - California’s Updated Coronavirus Response (July 11, 2020)

For further information, please or contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Timothy Bowles
Daniska Coronado
December 4, 2020

On September 9, 2020, Cal/OSHA announced citations and $400,000 in proposed penalties to Overhill Farms Inc. and its temporary employment agency Jobsource North America Inc. for repeatedly failing to protect hundreds of workers from COVID-19 exposure in Vernon frozen food plants.

The agency alleges that on April 28, it found 510 employees unnecessarily exposed to COVID-19 with at least 20 employees contracting the disease and one fatality.

According to Cal/OSHA the employers failed to install physical barriers or implement other workplace protection procedures such as where employees clock in and out, in the break room, during parking operations and at the cart where they put their uniforms. The employers also allegedly failed to train employees on COVID-related hazards, investigate the COVID illnesses or report the fatality to Cal/OSHA as required by law.

Cal/OSHA Chief Doug Parker commented: “It is critical that employers evaluate the workplace and take proactive measures to prevent transmission of COVID-19 in the workplace. If a COVID-19 illness occurs, employers must investigate the case to determine if additional protective measures should be taken and report the serious illnesses and deaths to Cal/OSHA. Employers should also notify workers of possible exposure and report outbreaks to county public health officials.”

Cal/OSHA has recently issued temporary emergency standards to further protect workers from COVID-19. The agency also offers multi-lingual employer guidances by industry, webinars, training and other educational materials, and FAQs regarding pandemic protection, recordkeeping and reporting standards.

See also:

• Cautionary Tale Episode 38: Food For Second Thought - Cal/OSHA Fines Supermarkets For COVID-19 Violations (October 16, 2020)
• Suffocation Orders – California’s Safety Agency Now With Pandemic “Imminent Hazard” Shutdown Powers (October 2, 2020)
• Update California COVID Plan B – “Blueprint” Workplace Return Improving Conditions Statewide (September 25, 2020)
• Pandemic Police on Patrol – Cal/OSHA Hitting Employers Statewide for COVID-19 Non-Compliance (September 10, 2020)

For further information, please or contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
December 2, 2020

If an office seeks to pull off an in-person 2020 year-ending holiday gathering party (survival celebration?), pandemic social distancing is but the newest element in the planning and execution. Management must ensure such gatherings serve to acknowledge production and promote team morale, not to spiral out-of-bounds into an otherwise preventable harassment incident or worse.

Some DO’s and DON’Ts:

DO: Consider whether the prevailing COVID-19 restrictions and common sense dictate having an in-person event in the first place;

DO: If such planning is to proceed, design a super-spreader free celebration that includes workplace-appropriate acknowledgment and team building and minimizes the prospect for unwelcome, inappropriate conduct. For example, a luncheon rather than an evening party may diminish opportunity for unwanted romantic advances and other improper conduct;

DO: Provide advance dress code guidelines appropriate to the workplace, e.g., outfits not likely to be insulting or offensive to other races, cultures, religions, etc.;

DO: Make it clear that participation is voluntary; and

DO: Enforce guidelines as needed during the event, for instance directing an offending employee to leave.***
DON’T: Permit any supervisor, manager, or executive to behave inappropriately. Leaders must set the example for appropriate behavior;

DON’T: Ignore any instance of off-color banter or other offensive behavior. Inaction is akin to condoning such conduct, significantly increasing the chances of a harassment claim; and

DON’T: Allow alcohol consumption. Management otherwise lowers its ability to reasonably maintain the event’s intended professional demeanor while increasing company exposure to liability for a drink-fueled offender’s conduct. If alcohol is to be available, provide advance guidelines to prevent any inappropriate or unfortunate incident. The HR-advising firm Employers Council has published some relevant points.

See also:

• The Boundaries of Holiday Office Gatherings (November 22, 2017)
• Holiday Parties – Harassment Hotbed (November 20, 2013)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Tim Bowles

November 27, 2020