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At ILG Legal Office, P.C., we understand how challenging it can be to navigate the complexities of employment law, especially when ending a job. One area where employees must be vigilant is in understanding the severance agreement process. Under California Government Code 12964.5(b)(4), specific protections are put in place regarding the waiting period for severance agreements, designed to ensure that employees have adequate time to review and consider the terms being offered. Here’s what you need to know:

 

What is the Waiting Period?

The waiting period is a crucial time frame that California law provides to employees before they can be required to sign a severance agreement that includes a release or waiver of rights. Specifically, California Gov Code 12964.5(b)(4) sets a mandatory waiting period of at least five business days. This period allows employees the necessary time to review the severance agreement thoroughly and consult with legal counsel to ensure the terms are fair and in their best interest.

Note that other waiting periods may be triggered depending on the specific circumstances at issue. This article outlines the bare minimum waiting period applicable to a severance agreement in California. Details about the worker, such as age, may trigger longer waiting periods. Similarly, other circumstances regarding the termination may trigger additional waiting periods. Check out our other posts for more information on longer waiting periods that may apply.

 

Why is the Waiting Period Important?

The waiting period serves several essential purposes:

• Protection from Pressure: It protects employees from being pressured into signing an agreement quickly without having the opportunity to understand the implications.
• Legal Consultation: It provides the opportunity to consult with an attorney who can provide advice on the severance agreement’s contents, including what rights are being waived and the benefits being received.
• Consideration of Alternatives: Employees can consider whether negotiating for better terms is possible or even necessary.

 

Your Rights During the Waiting Period

During the waiting period, you, as an employee, have the right to:

• Seek Legal Advice: You are encouraged to use this time to consult with an employment law attorney who can provide guidance specific to your situation.
• Negotiate Terms: If you believe the terms are not favorable, this is the time to discuss potential changes with your employer.

 

Exemption from Minimum Waiting Period

There are two exemptions that commonly arise regarding this mandatory waiting period for severance agreements: (1) Very small companies with less than five employees and (2) agreements to resolve formal complaints.

• (1) According to FEHA, an “employer” includes “any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly ….” Cal. Gov’t Code § 12926(d). See Rohm v. Homer, 367 F. Supp. 2d 1278, 1285 (N.D. Cal. 2005). Thus, if an employer has one to four total employees, this rule does not apply.
• (2) This waiting period does not apply to agreements negotiated after a formal claim has been submitted. This means that the minimum waiting period discussed herein does not apply if you sign a settlement agreement after filing a formal claim in court, arbitration, or before an administrative agency like the federal EEOC or California’s Civil Rights Department (previously named the Department of Fair Employment and Housing). The exemption also has a vague reference indicating that this severance agreement waiting period does not apply if the employee filed a claim “through an employer’s internal complaint process.”

 

How ILG Legal Office, P.C. Can Help

At ILG Legal Office, P.C., we specialize in employment law and are committed to ensuring that employees fully understand their rights and options. If you are presented with a severance agreement, our experienced attorneys can help you review and negotiate the terms to ensure they meet your needs and reflect your contributions to the company.

Understanding your rights under California Gov Code 12964.5(b)(4) is vital in ensuring you make informed decisions about your employment transition. If you find yourself needing to negotiate a severance agreement, do not hesitate to reach out for professional legal support.

 

For more information or to schedule a consultation, please contact us at ILG Legal Office. Our team is here to help guide you through every step of the severance agreement process, ensuring your rights are protected and your future is secured.

“Transparency, fairness, and accountability” might sound like universal principles, but these are not merely aspirational values—they are rights that every employee deserves. This ethos is at the core of our ongoing representation of Mr. Leilei Shan in his lawsuit against Google LLC, a case with grave allegations that highlight concerns over the company’s internal practices. This case alleges a pattern of behavior that undermines the ethical standards we expect of a tech behemoth like Google.

As you may recall from our previous post, Mr. Shan, a former senior manager of corporate engineering at Google, has alleged a concerning series of events where he alleges that he was pressured to comply with unethical demands because of his Chinese heritage, under the guise of “loyalty.” This included being coerced into justifying unwarranted vendor relationships and participating in deceitful practices, all of which he courageously refused.

Disturbingly, the lawsuit highlights how an apprenticeship program, purportedly aimed at helping underprivileged youths, was manipulated. Instead of serving its stated purpose, the program reportedly funneled benefits to children of affluent Silicon Valley professionals, including those of a Google vice-president and other high-ranking executives. Mr. Shan’s objections to these practices marked the beginning of a series of retaliatory actions that culminated in his termination, despite his previous exemplary performance reviews.

Recent coverage of the case from media outlets like SFGate, LAW360, and Mountain View Voice paint a bleak picture of how deep-rooted bias and retaliatory culture permeates the tech giant. This is not just about one individual; it is about holding a corporate titan accountable and ensuring such grievances lead to substantial change.

Stay tuned for updates on this significant case, which serves as a reminder of the importance of corporate accountability and the impact it has on real lives.

For further information, visit our website or contact our office directly. Your rights matter, and we are here to defend them.

Once upon a time, “Don’t be evil” was Google’s corporate motto. It may be due for a revisit, as an employee was fired in retaliation for bravely speaking out against deceitful and unlawful practices.

ILG Legal Office is representing former Google employee Leilei Shan in his lawsuit against Google LLC. Mr. Shan’s complaint alleges serious misconduct within the tech giant’s ranks. His case brings to light claims of deep-rooted discrimination and fraud that not only affected his career but also deceived charitable donors and compromised the integrity of Google’s apprenticeship programs. This case underscores the importance of upholding ethical conduct within major corporations and protecting employees who call out unethical practices.

Leilei Shan’s tenure at Google was marked by exceptional performance and dedication. Having climbed the ranks over nearly 14 years to become a Senior Manager of Corporate Engineering at the company, his career trajectory took a nosedive following his complaints about unethical practices within Google’s apprenticeship program. According to Shan, the program was manipulated to favor the children of certain high-ranking executives at the expense of deserving candidates, under the guise of promoting diversity and inclusion.

Shan alleges he was coerced into showing “loyalty” and participating in unethical practices, which he steadfastly refused. His complaints to human resources about these practices were seemingly ignored, and his once stellar career at Google began to deteriorate rapidly. According to Bloomberg Law, “Shan says he complained to Google’s human resources department multiple times in summer 2023 about [a Google executive’s] demands of loyalty based on his race and her alleged bias against him for his age. The complaint says this unlawful bias meant that his performance was no longer measured by objective work indicators but by degree of loyalty.”

The Daily Journal further elaborates on the misuse of the charity Innovantre, where executives allegedly manipulated donations to benefit their own families under the guise of supporting diversity. “[The Google executive] also failed to clarify the nonprofit’s association with Google’s Apprentice Program, all the while collecting cash donations on Innovantre.org and Google’s internal charity donation website,” the article highlights, painting a troubling picture of deception at the expense of genuine philanthropic efforts.

This case not only reveals Google’s internal practices but also raises critical questions about the broader tech industry’s responsibility to maintain fairness and transparency. At ILG Legal Office, we are committed to advocating for corporate accountability and supporting our client through this challenging journey.

We will continue to provide information and updates on this case, so stay tuned to our website for new developments.

The recent Supreme Court decision in Murray v. UBS Securities, LLC clarified whistleblower laws in the United States under the Sarbanes-Oxley Act. The Court’s February 8, 2024 ruling addresses critical aspects of what whistleblowers must prove to establish retaliation claims. In this article, we will dissect this decision to highlight its implications for both employers and employees in California and beyond.

Case Background

Trevor Murray, the plaintiff, was a former employee of UBS Securities. Murray’s allegations centered around his claim that he was terminated as a direct result of whistleblowing activities. Specifically, he reported that two leaders of the UBS trading desk were engaging in practices he believed to be illegal and unethical. These reports, he argued, fell squarely under the protections afforded by the whistleblower provisions of the Sarbanes-Oxley Act, which are designed to shield employees who expose fraudulent activities or violations of SEC regulations. The central issue in his case was whether whistleblowers must prove that their employers acted with “retaliatory intent” when they faced adverse actions after reporting wrongdoing.

U.S. Supreme Court’s Decision

The Supreme Court unanimously reversed a Second Circuit decision that had introduced the requirement for whistleblowers to prove retaliatory intent by their employers. The Court ruled that the statutory language of the Sarbanes-Oxley Act does not include such a requirement. Instead, the Court emphasized that a whistleblower only needs to show that their protected activity was a “contributing factor” to the adverse employment action. This standard is intended to be more accommodating to whistleblowers, easing their burden of proof in retaliation cases.

Implications for Employment Practices

This ruling has significant implications for employment law cases involving the Sarbanes-Oxley Act:

1. Easier Burden of Proof for Whistleblowers: Whistleblowers do not need to demonstrate that their employer had retaliatory intent, which lowers the evidentiary barrier for proving retaliation claims.
2. Review of Corporate Policies: Companies must ensure that their whistleblower policies and practices are robust and clearly documented to prevent any discriminatory actions that could be perceived as retaliation.
3. Training and Awareness: Employers should conduct regular training sessions with management and employees about the rights of whistleblowers and the legal repercussions of violating these protections.

Conclusion

The Murray v. UBS Securities, LLC decision reaffirms the protective measures intended by the Sarbanes-Oxley Act for whistleblowers. It underscores the importance of a legal framework that supports employees in reporting wrongdoing without the fear of retaliation. At ILG Legal Office, we are dedicated to guiding our clients through these complex legal landscapes, ensuring that both employers and employees understand their rights and obligations under current laws.

Contact Us

For more detailed advice and legal support related to employment law and whistleblower protections, please contact ILG Legal Office. Stay informed and compliant with our expert legal guidance.

In a legal landscape where the preservation of attorney-client privilege is paramount, ILG Legal’s recent court victory underscores our commitment to defending this foundational principle of law. Our recent success on behalf of Kenneth Freedman against invasive discovery requests highlights the importance of protecting confidential legal communications.

The dispute originated from Plaintiff’s attempt to compel Mr. Freedman and his mostly retired firm to produce privileged documents and information pertaining to clients. Plaintiff’s demands were staggering in their scope: seeking privileged documents and information spanning over a decade. Plaintiff’s motion was based on the slender pretext that Mr. Freedman’s firm had once engaged a contract attorney who had also worked for Plaintiff’s firm. Complying with Plaintiff’s demands would effectively erode the attorney-client privilege that is vital to the practice of law.

Faced with this challenge, ILG Legal Office mounted a robust defense, emphasizing the sanctity of privileged communication and the baselessness of Plaintiff’s request. Our argument was vindicated in a ruling by the Superior Court of California, County of Santa Clara, which recognized the excessive and improper nature of the discovery requests.

The court granted, in part, ILG Legal’s motion for a protective, significantly curbing Plaintiff’s demands. The court found the number of discovery requests to be excessive and that the attempt to uncover the identity of certain clients posed serious concerns. The court mandated the production of only a minimal set of information within very narrow parameters, focusing on non-confidential client details and only for a short timeframe. This ruling protected the confidentiality of the Mr. Freedman’s attorney-client communications, thus preserving the integrity of attorney-client privilege.

This victory is not merely a win for Kenneth Freedman and ILG Legal, but a win for all legal professionals and their clients. It reaffirms the critical importance of attorney-client privilege as the bedrock of our legal system and demonstrates our firm’s diligent effort and unwavering dedication to protecting our clients’ rights and interests.

At ILG Legal Office, we are inspired by this outcome and remain dedicated to upholding the highest standards of legal practice. We extend our deepest gratitude to our legal team and our client, Kenneth Freedman, for their trust and resilience throughout this process. Together, we have helped ensure that the confidentiality of legal communications remains inviolable.

On January 11, 2024, in federal court, ILG Legal Office, PC helped secure approval of a $1.89 million
settlement fund on behalf of approximately 16,577 current and former employees. Stephen Noel Ilg
appeared along with lead counsel Justin Marquez of Wilshire Firm, to argue in support of the settlement
that will end litigation that spanned almost six (6) years. In February 2018, ILG Legal Office, PC filed a
class action claim in the Superior Court in Oakland, California which Bank of America removed to federal
court. Around the same time, a similar lawsuit was filed by Wilshire Law Firm. The two law firms joined
forces and helped navigate a series of battles with the banking giant, including motions to dismiss and
for summary judgment.

Bank of America will pay $1.5 million to resolve the claims and may pay up to $1.89 million depending
on whether the final number of applicable employee pay periods worked during the relevant time
period is higher than the estimate provided during negotiations.

After years of discovery, motion practice, and even appellate briefs, the parties negotiated a resolution
of all class action and PAGA claims. The $1.89 million settlement resolves claims of 16,577 workers, and
the group appeared to support the class settlement in that zero workers objected to the deal and only
six (6) workers opted out of the deal.

The Court praised the attorneys involved for their superb professionalism during the lengthy class
action’s history. In granting the attorney fee award, the Court approved Stephen Noel Ilg work to be
paid at the rate of $750 per hour based on a series of legal accomplishments in employment law,
particularly in employment cases.

The class action case alleged that Bank of America violated a series of employment rules, which the Bank
denied. More specifically, Plaintiffs claimed that the Bank owed workers money for failing to pay
minimum wages, failing to pay overtime wages, failing to provide meal periods, failing to authorize and
permit rest periods, failing to pay meal and rest premium payments at the correct rate of pay, failing to
timely pay final wages at termination, and failing to provide accurate itemized wage statements.
ILG Legal Office, PC thanks the Court for approving this excellent deal and applauds the Class
Representatives for their stellar work leading this complex case.

2023 Employment Trends: What You Need to Know

The employment landscape in the United States has gone through notable changes in 2023, vital for both employers and employees to understand. In August, the employment numbers hit a record high with over 161 million individuals employed. However, the overall employment rate experienced a slight dip to 60.20% in October from 60.40% in September. Furthermore, job openings increased to about 9.55 million by September’s end.

Implications for Employees and Employers

1. Understanding Employment Terms and Contracts: The rise in job openings means more people are entering new employment roles. For employees, it’s crucial to comprehend the terms of your employment and any applicable employment contracts. Employers, on the other hand, need to ensure their employment terms and contracts are clear, fair, and legally compliant. This mutual understanding can prevent future disputes and maintain a healthy workplace relationship.
2. Stable Yet Dynamic Job Market: Despite a steady unemployment rate, workplace challenges such as wrongful termination, discrimination, and harassment persist. Employees should be aware of their rights and seek legal counsel if they face such issues. Employers must be diligent in maintaining a fair and compliant workplace, understanding that preventive legal advice can safeguard against potential disputes.
3. Workplace Safety and Compliance: The previous year’s rise in workplace injuries and illnesses highlights the importance of workplace safety. Employers are responsible for providing a safe working environment and adhering to safety regulations. Employees should be aware of their rights regarding workplace safety and compensation in case of any injury or illness.
4. Adapting to Employment Rate Fluctuations: The slight fluctuation in employment rates signals the need for both employees and employers to be adaptable and informed. Employers should strategize for potential changes in the labor market, such as restructuring or downsizing, while ensuring compliance with employment laws. Employees, meanwhile, should stay informed about their rights and options during such transitions.

Conclusion

The employment trends in 2023 bring forth different considerations for employees and employers. From contract negotiations to maintaining a compliant and safe workplace, understanding these trends is crucial. At ILG Legal Office, we provide expert legal advice and support to both employers and employees, helping navigate the complexities of employment law. Whether you’re seeking to understand the terms of your employment, facing workplace issues, or needing guidance on legal compliance, our team is here to assist in fostering a balanced and legally sound employment landscape.

2024 is set to be a pivotal year for employment law changes in California. Whether you’re an employer or an employee, staying informed about the latest legal shifts is crucial. ILG Legal is here to guide you through the maze of new and updated laws affecting minimum wage, sick leave, reproductive rights, noncompetes, and more.

Minimum Wage: On the Rise for a Fairer Future

Starting in 2024, California’s minimum wage is set to increase to $16.00 per hour for all employers, regardless of size. This is an increase from California’s current minimum wage of $15.50 per hour and reflects California’s ongoing commitment to higher wage standards. Additionally, California Senate Bill 525 was signed into law by Governor Gavin Newsom on October 13, 2023, mandating an increase in the minimum wage for healthcare workers to $25 per hour by June 2026. This law also introduces a new salary threshold to determine exempt healthcare employees, who are not subject to overtime regulations. The legislation encompasses all healthcare workers across various settings, regardless of their employment status with the facility.

Impact on Overtime Exemption Test

The increase in the minimum wage in California also affects the minimum salary threshold for exempt employees. In California, to qualify for the overtime exemption, an employee must earn a minimum monthly salary equivalent to twice the state minimum wage for full-time employment. With the minimum wage rising to $16.00 per hour, the new minimum salary for exempt employees will be $5,546.67 per month (or $66,560 annually), up from the current threshold based on the $15.50 per hour minimum wage.

Additionally, California’s AB 1228 sets a $20 minimum wage specifically for workers in fast food establishments that are part of a national chain with more than 60 locations. The legislation defines these chains by their standardized branding, menu, and service models, which typically include ordering and paying before eating with limited table service. This wage increase aims to improve the earnings of fast-food workers in large, standardized restaurant chains across the state.

Sick Leave: Adapting to a Post-Pandemic World

The State of California has broadened the scope of paid sick leave with the passage of SB 616. This legislative move comes as a response to a wave of local Paid Sick Leave (PSL) mandates enacted by various cities across the state. On October 4, Governor Newsom approved SB 616, which enhances the Healthy Workplaces, Healthy Families Act of 2014 by introducing several significant changes. These amendments carry far-reaching consequences as they extend to nearly all workers in California who spend at least 30 days working within the state annually. Given the extensive coverage of this law, it’s crucial for employers to prepare for and adapt to these new requirements promptly.

SB 365 Ends Automatic Stay of Litigation During Appeals on Arbitration Orders

With the enactment of SB 365, the automatic suspension of litigation throughout the appeals process is a thing of the past. Governor Newsom has signed off on legislation stipulating that proceedings in California trial courts will no longer be put on hold during the appeal of an order that dismisses or rejects a petition to compel arbitration. Set to take effect on January 1, 2024, this new statute grants courts the authority to determine if a case should continue during the pendency of an appeal.

Compassionate Leave for Reproductive Loss: Understanding SB 848

California Senate Bill 848 acknowledges the profound impact of reproductive loss on employees and mandates compassionate leave to grieve. This legislation entitles employees to take time off for the loss of a pregnancy, providing them with the necessary space to recover emotionally and physically without the added stress of work obligations. SB 848 is a significant step towards recognizing reproductive loss as a valid reason for leave, reflecting a growing awareness of its effects on employees’ well-being.

California Strengthens Worker Mobility with Assembly Bill 1076 Banning Noncompete Agreements

California Assembly Bill 1076, signed into law on October 13, 2023, strengthens the state’s prohibitions against noncompete agreements in employment contracts. The bill amends Section 16600 of the Business and Professions Code to reflect the California Supreme Court’s decision in Edwards v. Arthur Anderson, effectively making it unfair competition to include or enforce noncompete clauses in employment agreements. This legislative action underlines California’s commitment to safeguarding the free movement and trade of workers, ensuring that employees can pursue opportunities in their field without being hindered by previous employment contracts.

California Enacts SB 699 to Void Noncompete Agreements

Senate Bill 699, signed by Governor Newsom on September 1, 2023, is set to reinforce California’s stance against noncompete agreements, bolstering the state’s public policy that supports employee mobility and open competition. Effective January 1, 2024, this law makes it illegal for employers to enter into or attempt to enforce noncompete agreements with employees, rendering such agreements void across the board in California. This includes noncompete contracts made outside of California, ensuring that all such agreements are unenforceable regardless of the location where the employee worked or where the agreement was signed. SB 699 also introduces a private right of action for employees, allowing them to seek legal remedies, including attorney fees, against employers who attempt to impose unlawful noncompete agreements.

Strengthening Employee Protections: California’s SB 497 Bolsters Anti-Retaliation and Equal Pay Measures

Effective January 1, 2024, California’s Senate Bill 497, known as the Equal Pay and Anti-Retaliation Protection Act, amends various sections of the California Labor Code to bolster protections for employees engaged in legally protected activities. The Act specifically aims to protect employees who file complaints, participate in investigations, or exercise their rights under labor laws from discrimination or adverse actions by employers. SB 497 introduces higher civil penalties of up to $10,000 per violation against employers who retaliate in such contexts. Furthermore, it reinforces the principles of equal pay for substantially similar work and safeguards employees from retaliation related to wage transparency—ensuring they can freely disclose, discuss, or inquire about wages without fear of employer retribution.

Staying Ahead of the Curve with ILG Legal

Navigating these changes can be complex, but ILG Legal is here to help. We offer expert legal advice and compliance strategies to ensure you’re ahead of the curve. Whether you’re revising company policies or seeking to understand your rights, our team is ready to assist.

The year 2024 brings significant changes to California’s employment laws, reflecting the state’s progressive values and its commitment to worker rights. From minimum wage increases to strengthening worker mobility, these changes underscore California’s role as a leader in employment law reform. Stay connected with ILG Legal for the latest insights and guidance in this dynamic legal landscape.

Disclaimer: This article is for informational purposes only and should not be considered as legal advice.

In a landmark move, California has recently signed a new bill that will significantly impact both employers and employees in the state. Effective January 1, 2024, the mandatory paid sick leave in California will be expanded from three days or twenty-four hours to five days or forty hours. This article will provide an overview of the new legislation, its implications, and what steps businesses should take to comply.

 

Key Changes in the New Bill

The new bill, set to take effect at the start of 2024, brings about the following key changes:

• Expansion of Paid Sick Leave: The mandatory paid sick leave will be increased from the current three days or twenty-four hours to five days or forty hours.
• Accrual Rates: The bill also addresses the rate at which employees accrue paid sick leave, offering more flexibility.
• Carry Over: Employees will be allowed to carry over unused sick leave to the next year, up to a certain limit.

These changes are implemented by Senate Bill 616 which amends Labor Code sections 245.5, 246, and 246.5. For a detailed understanding of the bill, you can refer to the official California Legislative Information website.

 

Implications for Employers

Employers need to be proactive in adapting to these changes. Here are some steps to consider:

• Update Policies: Review and update your company’s sick leave policies to align with the new regulations.
• Employee Training: Educate your employees about the changes to ensure smooth implementation.
• Record-Keeping: Maintain accurate records of sick leave to avoid any legal complications.

 

Implications for Employees

Employees stand to benefit significantly from this expansion:

• Increased Leave: More days off means better work-life balance and health.
• Flexibility: The new accrual rates offer greater flexibility in how you can use your sick leave.
• Reference the Statute: If your employer has not yet updated its policies, you may point management to the statutes referenced above, particularly Labor Code section 246.

 

How to Prepare for the Changes

• Review Current Policies: Both employers and employees should review their current sick leave policies to understand what changes need to be made.
• Consult Legal Advisors: Given the complexity of employment law, consulting a legal advisor is often beneficial.
• Stay Updated: Keep an eye on updates from official California government websites.

 

Conclusion

The expansion of mandatory paid sick leave in California is a significant step towards employee welfare. Both employers and employees need to be well-informed and prepared for these changes. Stay tuned for more updates on California employment law.

 

Disclaimer: This article is for informational purposes only and should not be considered as legal advice.

ILG Legal Office has recently filed a wrongful termination lawsuit on behalf of Cindy K. Hernandez against automaker Tesla in the Santa Clara County Superior Court. Ms. Hernandez, a former advisor at Tesla, has come forward with allegations of racial and age-related discrimination during her employment at the company. Legal news site law.com reported on the case here.

In her role at Tesla, Ms. Hernandez was responsible for guiding customers through showrooms, assisting with vehicle sales, and providing customer service. Despite her dedication and professionalism, she was subjected to multiple instances of harassment and discrimination from her manager and coworkers. Tesla employees made various comments about her age, including questions about her retirement plans and remarks about her continuing to work at her age.

The lawsuit also brings attention to the behavior of Ms. Hernandez’s direct manager, who made unprovoked and embarrassing statements in front of customers she was assisting. Furthermore, the manager also made inappropriate comments about Ms. Hernandez’s physical features and cultural background. Tesla’s general manager for North America, did not intervene during these incidents and even joined in the laughter, contributing to a hostile work environment.

In addition to the claims of racial and age-related discrimination, Ms. Hernandez also suffered unlawful retaliation. Tesla terminated her employment on false grounds of “stealing company property,” despite having received proper authorization from a manager to take a company car overnight. Ms. Hernandez is seeking a jury trial, penalties against Tesla, and various forms of damages and compensation.

Our team, led by attorney Stephen Ilg, is fully committed to representing Ms. Hernandez in this case. While the legal process is still ongoing, we are optimistic that this case will serve as a catalyst for positive change at the automaker, emphasizing the importance of fair treatment in the workplace for individuals of all ages and ethnicities.

We are steadfast in our commitment to justice and fair treatment in the workplace, and we look forward to keeping you updated on the progress of this important case. We are asking anyone with information about discrimination at Tesla to contact our office.

Arbitration agreements have found their way into the vast majority of employment contracts at high-profile companies, making arbitration a political hot topic. Although state and federal law are still pro-arbitration, ILG Legal Office’s current case involving Samsung Research America Inc. and Andrew Mo in Santa Clara County has shined a spotlight on how employees can still defeat such agreements to keep a dispute in a public courtroom. In this article, we’ll take a closer look at a recent court decision in the case and explore its implications for both employees and employers.

BACKGROUND OF THE CASE
Andrew Mo, a former employee of Samsung Research America Inc., filed a lawsuit against the company for discrimination, wrongful termination, and retaliation. Mo had left his senior position at Google to join Samsung as a senior director and principal engineer. During the hiring process, Mo asked for the arbitration clauses to be modified or removed from his employment contracts. Samsung insisted they were non-negotiable.

Mo later reported instances of racial discrimination within the company, specifically by Samsung Research America’s vice president. Around a month later, Mo was terminated with the stated reason of “role elimination.” Mo initiated the lawsuit, and Samsung sought to compel arbitration based on the clauses in Mo’s employment contract.

THE COURT’S DECISION
The court, presided over by Judge Evette D. Pennypacker, denied Samsung’s motion to compel arbitration. The judge found the arbitration agreement “unconscionably one-sided” and thus unenforceable. A significant point in the court’s decision was that the agreement allowed Samsung to obtain injunctive relief against Mo for a breach of the company’s confidentiality agreement without needing to prove actual damages. In contrast, if Mo was to seek relief for claims he had against Samsung, he would be forced into private arbitration.

In a Daily Journal article that reported on the pivotal ruling, Stephen N. Ilg, of ILG Legal Office PC, who represents Mo in the case, praised the court for carefully scrutinizing unfair arbitration agreements forced on workers like Andrew Mo. Ilg emphasized that the ruling demonstrated that courts would not simply rubber-stamp a motion to force a public lawsuit into private arbitration.

LEGAL IMPLICATIONS FOR EMPLOYEES AND EMPLOYERS

For Employees:

• Equal Footing: The court’s decision reinforces the principle that both parties in an employment relationship should be on as equal footing as possible when it comes to resolving disputes.
• Access to Judicial System: The ruling shows that clauses aiming to restrict employees’ access to the judicial system, while maintaining the employer’s ability to seek relief in court, could be deemed unenforceable.
• Negotiation Power: This case demonstrates the importance of negotiating, or at least attempting to negotiate, the terms of arbitration agreements before joining a company.

For Employers:

• Contract Scrutiny: Companies should carefully review their existing employment contracts to ensure that the arbitration clauses are fair and enforceable.
• Transparency: To minimize legal risks, employers should strive for transparency in their contracts and clearly explain all terms to prospective employees.
• Legal Preparedness: Employers need to be prepared for the possibility that courts may not enforce an arbitration clause, making them subject to potentially expensive and public litigation.

CONCLUSION
The recent Santa Clara County court ruling is a significant milestone in the ongoing debate about the fairness and enforceability of arbitration clauses in employment contracts. The ruling emphasizes the need for a balanced approach that ensures both employees and employers are treated fairly. It’s an instructive case for both employees considering their legal rights and employers reviewing their contractual obligations. For any issues involving arbitration agreements, contact an attorney at ILG Legal Office who is ready to help you.

Stephen Ilg Was Named a Top Employment Attorney in California by the LA & SF Daily Journal in its annual list published on June 29, 2022. Congratulations to owner Stephen Ilg! The LA/SF Daily Journal is the largest legal newspaper in California-the most populous U.S. State. Each year, the Daily Journal identifies the most accomplished attorneys in different practice areas and profiles them in a special supplement; this year Stephen Ilg was honored with the prestigious award for Labor and Employment. Thank you to all of ILG Legal’s clients who allowed us to fight for your rights which gave our team the chance to showcase its knowledge and skills.

Severance agreements are contracts between departing workers and their employers. This article will review basic terminology, strategy, and tactics applicable to employees and employers considering a severance agreement. The following are not trade secrets; rather, these are fundamental concepts that all effective employment attorneys—whether representing plaintiffs or defendants—do, or should, understand.

Terminology: “Severance agreement” is a contract between a worker and an employer. This contract is often called a severance agreement, severance package, or separation agreement. Regardless of which term is used, this contract is a form of settlement agreement. Almost every severance agreement in California includes the following two basic deal terms: (a) the employer pays money and (b) the worker gives up the right to file a lawsuit against the employer.  Many other deal terms may be included, but the core function of this contract is that the employer pays something to avoid a lawsuit.

Practical Context: In private practice (i.e., ignoring governmental positions), most departing workers do not receive any severance offer. The vast majority of separations ILG Legal Office, PC has observed, including workers who were forcibly terminated and workers who voluntarily departed, involve zero offers of any severance payment with a few caveats. First, some companies—particularly, sophisticated technology companies—have an internal custom whereby many, most or all employees are offered a severance package; not many companies fit this description, but if you work at a company known to have offered several people severance packages, you have a greater chance of receiving a severance offer. Second, certain high-level employees have employment contract terms guaranteeing the right to a severance package if certain conditions are met. Thus, if you are an employer considering terminating a worker without a severance package or a worker being terminated without receiving any severance offer, you are within what we would characterize as the most common form of employment separation.

Strategy: Our law firm ILG Legal Office, PC handles severance agreement negotiations for both employees and employers (aka workers and companies). As explained above, most separations do not involve any severance agreement; this article does not discuss the decision of offering a severance agreement or not offering one; the following discussion is specific to situations where the employer has decided to offer something.

The basic strategic consideration governing severance negotiations is as follows: the greater the risk to the employer of an employment-related lawsuit, the larger the severance amount that would be justified. Factors that tend to increase the amount of the severance payment include but are not limited to: (1) Strong employment claims, (2) Large potential damages from employment claims, (3) Employer’s desire to avoid litigation, and (4) Worker’s inclination to file a formal claim.

For instance, if a particular worker has (1) strong legal claims, (2) with large damages, (3) against an employer that fears lawsuits, and (4) if the worker is comfortable litigating a lawsuit, each of those factors would tend to increase the amount of the settlement. To state the obvious, this is not always the case; rather, the point is that in general the four factors mentioned above tend to increase a severance payment while the lack of any of the four characteristics referenced above would tend to decrease the expected value of a severance payment.

Tactics: A worker or employer considering a severance offer have the following basic options: (a) accept the existing offer, (b) reject the existing offer and negotiate without a lawyer, (c) reject the existing offer and negotiate with a lawyer, or (d) reject the existing offer and cease negotiations. This decision is complicated, and we cannot recommend any of these options as a general default; instead, each decision is unique. We suggest you contact an experienced law firm like ours; our initial consultations are free, so please call us at (415)580-2574 if you are considering a severance agreement, severance package, separation agreement or any other contract wherein the worker is releasing any rights to file a lawsuit in conjunction with departure from a job.

 

In a unanimous opinion, the California Supreme Court ruled that State and federal judges have been applying the wrong legal test to whistleblower employee claims. Stephen Noel Ilg, owner of ILG Legal Office, PC and a Professor of Law, authored an article on the topic which was published in the Los Angeles and San Francisco Daily Journal.  The article is available online at the following link: DailyJournal.  Our firm congratulates Ilg on this published article. We have received great feedback including compliments from mediators and a retired California Appellate Court justice.

The crux of the ruling in Lawson v. PPG Architectural Finishes, Inc., 2022 DJDAR 967 No. S266001, 2022 WL 244731 (Cal. Jan. 27, 2022) is that whistleblower employees never need to prove that the employer’s stated reason for termination is a sham, which is generally referred to as “pretext.” For decades, State and federal courts have required whistleblower employees to prove their employer is lying even though the California statute on the issue clearly states that the claim is governed by a different test.

By its terms, Labor Code section 1102.6 describes the applicable substantive standards and burdens of proof for both parties in a Section 1102.5 retaliation case: First, it must be “demonstrated by a preponderance of the evidence” that the employee’s protected whistleblowing was a “contributing factor” to an adverse employment action. Then, once the employee has made that necessary threshold showing, the employer bears “the burden of proof to demonstrate by clear and convincing evidence” that the alleged adverse employment action would have occurred “for legitimate, independent reasons” even if the employee had not engaged in protected whistleblowing activities.

The attorneys at ILG Legal Office, PC are on the cutting edge of legal developments. We thank the Los Angeles and San Francisco Daily Journal for showcasing an article by a member of our team. The full link to the article is: https://www.dailyjournal.com/articles/365880-ruling-ends-decades-of-improper-whistleblower-burden-shifting.

Class Action Lawsuit Filed Against Sony Interactive Entertainment, LLC for Gender Discrimination

On November 22, 2021, our law firm filed a class action and collective action lawsuit against Sony Interactive Entertainment, LLC alleging that females, including those who were designated female at birth and those who identify as female, suffer from systemic gender discrimination. Several media sources, including Forbes.com, are now covering the new case.  https://www.forbes.com/sites/lisakim/2021/11/23/former-sony-playstation-employee-alleges-gender-discrimination-in-lawsuit/?sh=3a3e8a4d6a79

Sony reports that forty-one percent (41%) of PlayStation owners are females (i.e., 41% of the owners of the two most recent consoles, the PS4 and PS5 consoles). Even though nearly half of PlayStation owners are females, a 2020 study revealed that Sony’s Executive Committee was 100% male. The report was prepared by “20-first Research” which analyzes “progress on gender balance in the top companies of a number of industries and countries, as well as across the Top 100 companies of the Fortune Global 500.” Sony received the worst possible rating, “Asleep” because Sony did not have any females in either Staff or Line leadership roles. There was no female representation at all on the Executive Committee.

Emma Majo seeks to represent a “California Class” and a “Nationwide Class” of individuals employed by Sony Interactive Entertainment, LLC who are either (a) female or (b) identify as female, pursuing claims under California and federal Equal Pay Act and California’s Fair Employment and Housing Act.

The lawsuit alleges that Sony discriminates against females by: (i) denying work opportunities to female employees on the basis of gender, (ii) paying females less than their male counterparts in base compensation, (iii) failing to investigate or respond to evidence of discrimination in the workplace against female employees, and (iv) otherwise exposing female employees to differential treatment.

When Emma Majo spoke up about the gender discrimination at Sony, she was terminated. Sony claimed it was terminating her because it was phasing out a video on demand department, but Majo was not even a part of that department. She was part of the Financial Asset Management Department and was only temporarily helping with video on demand. Her lawsuit alleges that Sony’s stated reason to terminate her was a pretext and in, fact, Sony simply wanted to get rid of a worker who spoke up about gender bias in the workplace.

The lawsuit will attempt to correct the gender imbalance and recover compensation for female employees, including those who identify as female, who were paid less than their male counterparts.

The case is Emma Majo v. Sony Interactive Entertainment, LLC, Case No. 3:21-cv-09054 in the U.S. District Court for the Northern District of California.

 

“Taliban” sounds different when spoken by someone who has lived in Afghanistan. I was born and raised in the U.S. and have heard the name “Taliban” countless times. But when I began volunteering with the PERS Equality Center and the Afghan Coalition, the same three syllables in “Taliban” took on new significance. Reading about the Taliban shutting females out of schools is one thing, but speaking to people whose family members have been shut of school, is another. Reading about kidnapping is one thing, but speaking to someone whose relative was held captive for months, is another. And murder noted in a headline is not the same as speaking to someone whose close relative was murdered in front of their home.

People can debate military strategy and whether withdrawal of the U.S. military from Afghanistan was too early, too late, or perfectly timed. But reasonable people cannot debate that there are scores of people in Afghanistan uniquely in need right now while the Taliban controls the country.

For anyone who believes that all people are created equal, any group that would systematically shut down education or job opportunities for approximately one-half the resident population has created an imbalance that must not go unchecked. Afghans have told me that the U.S. military provided tremendous support to Afghans for many years. The U.S. military’s time keeping peace in Afghanistan has ended. Regardless of how any American feels about the military’s withdrawal, it is the current reality which must be faced. I am eternally grateful to military service members including many of my family members and friends. But I encourage other Americans to do more than thank our service members. There are many living in Afghanistan who helped the U.S. military as translators, contractors or informal allies. These Afghans are part of our military team and are deserving of our thanks, and our help.

All females in Afghanistan are at risk of persecution as well as those who helped the U.S. or Afghan government. The U.S. government has taken steps to help these allies and other Afghans in danger, but more assistance is needed. I encourage anyone who has any time or money to spare to consider the imbalance growing in Afghanistan.

If you can make a monetary donation, consider helping on or before the Tuesday after Thanksgiving. The “Giving Tuesday” campaign will help our program raise funds for filing fees, translation services, continued staffing for humanitarian parole applications for Afghans in particular danger:  https://www.facebook.com/donate/1255255584912651/4584390584933046/. If you have time to volunteer, please reach out to me, and I will try to connect you with an appropriate organization. Attorneys can complete training and assist Afghans with humanitarian parole applications for those left behind.

Latina Equal Pay Day — the day when Latina pay catches up to that of white, non-Hispanic men from the previous year — is being observed on October 21, 2021.

More than 50 years after the passage of the Equal Pay Act of 1963, Latinas typically earn only 57 cents for every dollar earned by white, non-Hispanic men and must work nearly 23 months to earn what white men earn in 12 months.

Indeed, given that this is the last “Equal Pay Day” observance of the year, Latinas must typically work longer than …everyone. This disparity hurts not only Latinas, but also the families and communities they support. And it is unacceptable. We need to act now and let everyone know that we support #LatinaEqualPay.

Join me at a virtual summit on #LatinaEqualPay Day run by the Equal Rights Advocates. Let’s take the lead from low-paid essential workers as we rebuild our nation’s labor & care structures. Hosted by @equalrightsadv @mujerxsrising @ParentVoicesCA  Learn more/register at https://bit.ly/WeAreEssentialSummit.

We raised about $3,000.00 for an amazing local nonprofit, CASA of San Mateo which protects local foster children! Thanks to Andrea Kirk for collaborating with me. I was so happy to play a tiny role in such an amazing organization. If you want to donate, go to CASA’s website or, even better, apply to be a volunteer.

See on linkedin.com

 

Anissa Brown, a former Sally Beauty Supply sales associate, filed a lawsuit in federal court Wednesday against the company after a store manager admitted to racially profiling African Americans. The manager would signal workers whenever an African American customer entered the store. According to the lawsuit, Anissa Brown reported the racial profiling to HR and a regional manager on multiple occasions, but no action was taken.

Brown, an African American woman, alleges, in a complaint filed by ILG Legal Office, P.C. in the District Court for the Northern District of California, that she was retaliated against after reporting the store manager’s racial bias. Brown claims that African American customers would tell her that the manager was treating them differently and following them around the store. On one occasion, the store manager allegedly admitted to following an African American customer around the store because she suspected her of stealing merchandise, claiming that the customer was “putting items in her basket too fast.” In fact, the customer was a professional hairdresser who purchased hundreds of dollars’ worth of products.

The store manager’s bias was not limited just to customers. The manager assumed Anissa Brown was Hispanic; once she learned Brown was African American, Brown allegedly became a target for her prejudice. The manager would yell at and berate Brown to such an extent that customers and co-workers complained about the mistreatment. Brown also endured offensive comments, such as that she was “ghetto.”

Sally Beauty Supply did not discipline or terminate the manager even after Brown contacted HR and a regional manager multiple times. During one HR meeting, the store manager, after being directly asked by HR personnel, allegedly admitted to racially profiling African Americans. Brown claims to have also discovered that the manager was previously fired from the company for similar behavior but was then re-hired.

Brown alleges that her work hours were reduced and that she was temporarily removed from the work schedule after reporting the manager’s discriminatory actions. Brown seeks damages for discrimination and harassment, retaliation, constructive discharge, and emotional distress, as well as improved anti-discrimination training.

The case is Brown v. Sally Beauty Supply LLC, number 3:21-cv-01350 in the Northern District of California, and is assigned to Judge Donna Ryu. Brown is represented by Stephen Noel Ilg and George L. Lin of ILG Legal Office P.C (www.ilglegal.com).

Read the story on Yahoo! Finance: https://finance.yahoo.com/news/sally-beauty-supply-employs-manager-181700380.html

State and federal courts utilize several tests to analyze whether a worker qualifies as an employee. One of the more employee-friendly tests is labeled the “ABC” Test. The ABC Test rose to (more…)

Employee wins $17.2 million for lawsuit including wrongful termination and defamation claims. In King v. U.S. Bank Nat’l Ass’n, 52 Cal.App.5^th 728 (2020), Timothy King alleged he was wrongfully terminated, was defamed, and suffered other employment violations. He worked for U.S. Bank and earned positive performance reviews from 2007 to 2011. King supervised four people including Kim Thakur. Ms. Thakur complained about King to HR, alleging gender discrimination. Ms. Thakur and another of King’s subordinates reported to HR that King had instructed them to falsify expense reports and meeting schedules.

King sued U.S. Bank for defamation, wrongful termination in violation of public policy (citing Lab. Code, § 200 et seq.), and breach of the implied covenant of good faith and fair dealing. The jury found in favor of King on all causes of action. The jury awarded King $6 million in damages, consisting of $1 million for harm to his property, business, trade, profession, or occupation, $4 million for harm to his reputation, and $1 million for shame, mortification, or hurt feelings.  The jury also found the company breached the covenant of good faith and fair dealing because King had done all or substantially all items required by his employment contract, but the company terminated him to interfere with the benefits of the contract.

The jury also found that, as of the date of his termination, King had earned a bonus and U.S. Bank’s desire to deprive King of that bonus was a substantial motivating reason for the decision to terminate his employment. The jury awarded King $2,489,696 in damages, consisting of $1,035,430 for past lost earnings and $1,454,266 for future lost earnings.

“The question is not whether there was substantial evidence U.S. Bank terminated King solely because it wanted to deprive him of the bonus; the question is whether there was substantial evidence to find it was a reason that actually contributed to the termination. There was such evidence.”

“The jury could have inferred from the evidence regarding the questionable timing of King’s termination coupled with the conflicting testimony as to who made the decision to terminate King, the apparent rush to terminate him, and the failure to conduct a thorough and objective investigation that U.S. Bank desired to deprive King of his bonus and it was a reason that actually contributed to the termination.” The Court of Appeal denied the employer’s arguments but agreed with certain of the employee’s arguments. It noted that the company’s witnesses changed their story over time regarding which individuals decided to terminate King.”

“An employer’s failure to interview witnesses for potentially exculpatory information may evidence pretext. (Nazir v. United Airlines, Inc., supra, 178 Cal.App.4th at p. 280, 100 Cal.Rptr.3d 296.).” The unanimous opinion included the following conclusion: “The judgment is reversed and the matter remanded to the trial court with directions to: (1) reinstate the jury’s $1 million defamation award against U.S. Bank for harm to King’s property, business, trade, profession, or occupation; (2) reinstate the jury’s $4 million defamation award for harm to King’s reputation; and (3) modify the punitive damages award against U.S. Bank to $8,489,696. The judgment is affirmed as so modified. King shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (3) & (5).)”

Wins this large are rare, so employment attorneys and employees will be looking to the King case for years as a benchmark for wrongful termination claims and other employment lawsuits.

To fight increased food insecurity resulting from the Covid-19 pandemic, our law firm ILG Legal Office, PC recently organized a fundraiser and donated $1,500 to Give With Lily, a Bay Area non-profit that helps foster children, homeless youth, and local food banks. Here’s a link to an article that was published today. https://finance.yahoo.com/news/law-firm-goes-extra-mile-133300347.html “There are almost twice as many hungry children now as there were in 2018,” Mr. Ilg adds. “I thought 7,000 was pretty far for our team to ride and run, but we know we’ve still got a long way to go to help our neighbors in need.”

Most clients are who are unfamiliar with civil lawsuits believe them to be expedient, but there are numerous common delays, or waiting periods, within the life cycle of a civil lawsuit. Many of these delays are unavoidable, regardless of the actions of the opponent. The first waiting period begins with the pleading, composed of the complaint and summons, that initiate the civil lawsuit. Once the pleading has been filed with the court, several common delays are initiated. First, the attorney for the plaintiff has 60 days after the filing date to then file a proof of service of summons. Anyone but the plaintiff can personally serve the defendant; thus, a third party generally performs that role. Many process serving companies exist specifically for this purpose. Once the third party serves the defendant, they must send the attorney the proof of service, which states when and how the defendant has been served with the initiating documents. Only then can the attorney file the proof of service of summons. Then, once the summons and complaint have been served on the defendant, the plaintiff’s attorney is required to wait at least 11 (but often longer depending on the method of service) before serving the defendant with any discovery requests.

The discovery period, where parties request documents, send interrogatories, schedule depositions, and ask for admissions, often takes up the bulk of the life of a lawsuit. When opposing counsel requests any kind of written discovery, including document production, interrogatories, and admissions, you generally have 30 days to serve a response. However, if requests are served by mail, the deadline to serve a response to written discovery is 35 days. Furthermore, if opposing counsel finds your responses to be insufficient, which is often the case, they then have 45 days after your response is served to file a Motion to Compel Further Responses.

On the other hand, depositions are, in some ways, more expedient. First, opposing counsel must provide sufficient notice, which is mandated to be at least 10 days before the deposition date. While this sounds like it is faster than written discovery requests, the reality is the parties must discuss schedules in advance. Finding a date that works for all parties is sometimes challenging and slows down the process. However, after opposing counsel serves the notice, if you plan to object, this must be done at least 8 days before the deposition date if served by mail or 3 days if served personally. With the deadlines so close to one another, it is not only recommended but is generally required that parties meet and confer regarding the availability of all involved parties. After the deposition takes place, it can take several weeks to receive the official transcript. After it is received, the client has 30 days to sign the errata notice, which confirms that all information in the transcript is true and accurate.

The waiting periods for the next portion of a civil lawsuit, known as motions, varies depending on the court venue. If the case is filed in a California court, after securing the hearing date for the motion, the deadline to both file and serve the notice of motion is 16 court days before the hearing date, although a few motions have unique timelines. Then the opposing counsel must file and serve their opposition to the motion 9 court days before the hearing date. Finally, you must file and serve your reply in support of the motion within 5 court days of the hearing date.

With the different components that make up a civil lawsuit, it is expected that the lawsuit can run over the course of several years. Hearings for motions are often continued to a further date to give parties the opportunity to come to an agreement on the matter outside of the courtroom and with minimal judge supervision. Further, if the case is to settle before trial, clients believe that means the case will be closed rather quickly and a payout will be received quickly. However, if a case does result in a settlement, some cases requires several hearings before any money is paid. For instance, in a class action case, the judge will require a hearing for Motion for Preliminary Approval of the Settlement and a Final Fairness Hearing, to ensure that the terms of the settlement are fair to all parties. This process can take several months or even years, depending on the number of drafts of the Settlement Agreement.

What this means for plaintiffs: while your claims against your employer may be legitimate, it does necessarily equate to a quick and painless resolution. You need a trusted and committed attorney to guide you through a process that can take several years. Contact us at (415)580-2574 if you would like a free legal consultation about an employment law problem.

The Plaintiff in the case of Garcia v. Border Transportation Group, LLC, California Court of Appeal Case No. D072521, was a taxi cab driver and rented his taxi from the Defendant, Border Transportation Group. Garcia drove his taxi cab in Calexico and obtained a permit from the city that allowed him to drive his taxi cab for the Defendant. After Garcia left the company, Garcia became a named Plaintiff in a putative class action against the Defendant. The claims against the Defendant included wrongful termination, unpaid wages, failure to provide minimum wage, failure to pay overtime, failure to provide wage statements, failure to provide meal and rest breaks, waiting time penalties, and unfair competition.

The Defendant filed a Motion for Summary Judgment; in deciding on the Motion the Judge used the Borello test for determining whether the members of the class were employees or independent contractors. According to the Borello test, which has been California’s gold standard tool used to distinguish between employees and independent contractors since 1989, the Defendant, or company, has the burden of depicting the workers as independent contractors. The primary test of Borello “is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.”[1] In other words, the Judge needs to establish the company’s ability to exercise control over the work details of the workers. Borello standardized multiple factors that need to be met:

(a) whether the one performing services is engaged in a distinct occupation or business

(b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision

(c) the skill required in the particular occupation

(d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work

(e) the length of time for which the services are to be performed

(f) the method of payment, whether by the time of by the job

(g) whether or not the work is a part of the regular business of the principal

(h) whether or not the parties believe they are creating the relationship of employer-employee

Through the application of Borello, the Trial Judge granted the Defendant’s Motion for Summary Judgment, by finding in favor of the Defendant’s treatment of the class members as independent contractors.

The Plaintiff class appealed the decision and while the appeal was pending in court, the California Supreme Court issued an opinion that changed the test used to distinguish employees from independent contractors. Dynamex Operations West, Inc. v. Superior Court produced the ABC test, which places the burden yet again on the company to prove an independent contractor relationship. Under the ABC test, a worker will only be considered an independent contractor if each criterion is met:

(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

(c) that the worker is customarily engaged in an independently established trade, occupation, or  business of the same nature as the work performed

By applying the ABC test, the appellate court decided that the Motion for Summary Judgment should have been denied as to the claims in the Complaint regarding the Wage Orders because part (c) was not met; the company could not prove that the workers were engaged in an independently established trade of the same nature as the work performed. However, the appellate court did not address the non-wage claims regarding wrongful termination, waiting time penalties, and unfair competition. This places workers, or plaintiffs, in a precarious position, where they can be classified as an independent contractor for certain claims and an employee for others based on conflicting tests.

Businesses must be cautious about treating workers as independent contractors because failure to satisfy any one of three criterion for independent contractor status means the worker must be given all applicable rights of an employee.

[1] https://law.justia.com/cases/california/supreme-court/3d/48/341.html