ABC RULING IN CALIFORNIA. California’s new “ABC” ruling spells bad news for owner operator fleets! A California Supreme Court decision has made it much tougher for trucking companies to use owner operators in the state. The Western States Trucking Association, in fact, says the ruling will effectively end the practice. The group plans to challenge the ruling, potentially setting up a US Supreme Court challenge. The court ruled that Dynamex, a courier and delivery service, misclassified its couriers as independent contractors to cut costs. So, the court decreed that certain workers, in particular transportation drivers, should be presumed employees instead of independent contractors when evaluating wage and hour classification in class action cases.
The burden of proof is now on the company using the owner operators to make sure the classification is proper under the new “ABC” test – A: that the worker 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: that the worker performs work that is outside the usual course of the hiring entity’s business; and C: that the worker is customarily engaged in an independently-established trade, occupation or business of the same nature as the work performed.
“Most legal analysis of the ruling agrees the ABC test sets an impossible standard for most of our members to meet,” said WSTA in an announcement to members. It’s the second part of the test that is problematic, explains Miles Kavaller, a trucking attorney in Woodland Hills, CA. “If you’re in the trucking business, it’s going to be a very difficult fight, because the “B” prong of the ABC test basically says the contractor has to be in a different business.”
Noting that it remains committed to supporting trucker choice, it is also important to note that both Massachusetts and New Jersey use the ABC test for independent contractors and still utilize owner operators in their trucking industries. But, the big difference is those states do not recognize anything but workers’ compensation, which, with its high rates, would put most small companies out of business. The main problem is what usually starts in California spreads like a virus through the rest of the nation. Let’s hope that doesn’t happen. Stay tuned.
NEW EQUAL PAY LAWS PASSED. Some states are now passing more expansive legislation to address pay disparities. On July 1, 2018, both Massachusetts’ Equity Pay Act (MEPA) and New Jersey’s Law Against Discrimination (LAD) go into effect. Massachusetts’ recent legislation provides additional clarity as to what constitutes unlawful pay discrimination. The new legislation defines “comparable work” as work that requires substantially similar skill, effort and responsibility, and is performed under similar working conditions.
Certain differences in pay are permissible if based upon: 1) Seniority (note: time spent on pregnancy-related leave, paternal leave or FMLA leave may not reduce seniority); 2) Merit; 3) Any system measuring quantity or quality of production, sales or revenue; 4) Geographic location of the job; 5) Education, training or experience required for the job; or 6) Travel requirements.
One unique aspect of the Massachusetts Pay Equity Act is that employers may be immune from suit if, within the 3 years prior to the suit, the employer conducted an audit of its practices and took reasonable steps to eliminate any impermissible gender-based wage differentials revealed in the audit. Please note, however, that employers may not correct disparities by lowering another employee’s pay.
New Jersey’s Law Against Discrimination not only prohibits pay differences based on gender for “substantially similar work” absent a legitimate business reason, but also prohibits differences based upon any protected classes, including sex, race, creed, color, national origin, ancestry, nationality, disability, age, pregnancy, breastfeeding, marital status, gender identity/expression, sexual orientation, military status or genetics. Like Massachusetts, New Jersey prohibits employers from correcting pay discrepancies by reducing an employee’s compensation. With its new legislation, New Jersey will have one of the longest statutes of limitation to bring a compensation-related claim – six years – and employers who are not in compliance will face triple damages.
MORE MARIJUANA UPDATES. A bi-partisan bill has been proposed in the Senate that would remove all federal control of marijuana and put the future of legalization in the hands of the individual states. The Strengthening the Tenth Amendment Through Entrusting States Act – or the STATES Act – is sponsored by Senator Elizabeth Warren (D-MA) and Senator Corey Gardner (R-CO). It exempts any state that has legalized some form of cannabis from the current federal law. That means it takes all enforcement out of the hands of the federal government. If passed, federal agents would not be able to raid lawful, state-licensed businesses. The bill also amends the Controlled Substances Act which completely outlaws all use of marijuana.
BAN THE BOX BEING REVIEWED. Several House Republicans have asked the General Accounting Office (GAO) to look at the hires that have been made since the feds instituted “Ban the Box” policies in 2016 to see if there have been any unintended consequences. Under the current policies, agencies may not ask applicants any questions about their criminal or credit history until after a conditional offer of employment is made. There are some exceptions for law enforcement and other sensitive positions, but lawmakers are worried that banning the box (check here if you’ve been convicted of a felony) on applications might actually cause hiring managers to make assumptions about people’s past based on race alone. The policy is not yet law, and lawmakers want to know how it’s working before Congress considers the legislation.
NEW LANGUAGE RESTRICTIONS. New employment policies went into effect on July 1, 2018, that “limit or prohibit the use of any language” in the workplace presumed to be unlawful. This means that English-only policies are now presumed to violate California law unless: 1) the language restriction is justified by business necessity; 2) the language restriction is narrowly tailored; and 3) the employer has effectively notified its employees of the circumstances and time when the language restriction is required and of the consequence for violating the restriction. It is also important to note that even a single incident of the use of epithets, derogatory comments, slurs, or non-verbal conduct (including) mockery of an accent or language or its speakers may be sufficient to create an unlawful hostile work environment.
