Scopelitis

On Friday, January 20, the First Circuit reversed the lower court's denial to hear an employment classification suit.  At issue was an action brought against the state by the Massachusetts Delivery Association ("MDA").  The First Circuit ruled that although MDA is currently facing litigation in state court, this fact does not bar MDA from bringing a separate action against the state in federal court.

MDA members are facing lawsuits in state court brought by independent contractors who allege they were misclassified.  After MDA filed a separate suit in federal court, the lower court refused to take up the action, stating MDA was an alter ego of the defendants appearing in state court. Therefore, pursuant to the Younger doctrine, MDA was precluded from bringing an action.

In its opinion, the First Circuit's three-judge panel ruled that the lower court misapplied the Younger doctrine. The Younger doctrine bars federal courts from hearing cases brought by parties who are simultaneously facing claims in state court.   According to the First Circuit opinion, the Younger doctrine was intended to prevent interference among court proceedings, however, given that the federal suit would not interfere with the state proceeding, the First Circuit provided that the doctrine did not apply.  The First Circuit also stated given the uncertainty as to whether MDA is a party to the state proceeding, it would be unfair to preclude a separate federal action.

The National Labor Relations Board ("NLRB") ruled on January 3, 2012, that employers may not force employees to sign arbitration agreements that waive (prohibit) class actions and class arbitrations over issues involving pay and other working conditions.  The decision seeks to distinguish the Supreme Court's ruling in AT&T Mobility v. Concepcion last April, which provided that the Federal Arbitration Act ("FAA") preempts state laws and court decisions that invalidate bans on class arbitration. 

The Board found that the FAA did not override the National Labor Relations Act, which provides workers the right to unionize and take part in joint action.  Specifically, the NLRB ruled that employers who force their employees to sign, “as a condition of employment, an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, arbitral or judicial,” are engaging in an “unfair labor practice” in violation of the National Labor Relations Act.

The decision will affect trucking and other transportation carriers in at least two ways.  Unionized carriers may now face the prospect of class (fleetwide) arbitration of grievances that a collective bargaining agreement might previously have limited to individual arbitration proceedings.  Carriers will want to review the wording of the grievance provisions in their collective bargaining agreements.

For non-unionized carriers, the NLRB decision provides an added reason to hesitate before requiring employee-drivers or contractors to sign agreements to arbitrate disputes.  Transportation carriers already miss out on the preemptive effect of AT&T Mobility to the extent their arbitration agreements are deemed to be contracts with transportation workers, which are expressly exempted from the FAA, the statute on which that Supreme Court decision was based.  Now the NLRB decision adds a possible federal-law basis on which employee-drivers – or contractors successful in persuading a court to reclassify them as employee-drivers – may try to argue a right to use a carrier’s arbitration agreement to institute a class arbitration.
    
The Board did not ban agreements that require employees to arbitrate in order to settle workplace issues, but held that such agreements must provide a way for workers to bring class or collective claims in court or arbitration.

In the Board decision, D.R. Horton, Inc. and Michael Cuda, Case 12-CA-25764 (Jan. 3, 2012), the respondent-home builder was ordered to stop “maintaining a mandatory arbitration agreement that waives the right to maintain class or collective actions in all forums, whether arbitral or judicial.”

Effective January 3, 2012, the Federal Motor Carrier Safety Regulations (“FMCSR”) prohibited commercial drivers from using hand-held mobile phones while operating a commercial truck or bus. Violations of the rule can result in fines of up to $2,750 to drivers and $11,000 to motor carriers.  Habitually offending drivers of this new rule can be disqualified from operating a CMV. This ban can also create additional hurdles for accident liability claims.   

Motor carriers should act quickly to ensure compliance.  To assist with this process, the Firm has prepared sample notices for both employee and independent contractor drivers.  Both of the these form are available to our clients for a flat fee of $200.  The forms achieve the goals of providing ample notice to the drivers of this change in the law and memorializing the motor carrier’s commitment to the compliance.  Also, to the extent allowed by law, the employee driver form includes a reimbursement provision for situations where a motor carrier incurs a fine because of the employee driver’s non-compliance. The independent contractor form references the independent contractor agreement indemnity language for situations where a motor carrier incurs a fine because of the independent contractor’s non-compliance.

If you would like to obtain these form, please contact asmith@scopelitis.com.  Upon your request, both of these forms will be emailed to you.   

Scopelitis, Garvin, Light, Hanson & Feary
www.scopelitis.com
(317) 637-1777

A number of new California employment laws are set to take effect January 1, 2012. Many of these new laws will have a significant impact on businesses operating in California. The following is a summary of a few of the more notable laws taking effect in the New Year: 

Wage Theft Prevention Act

Effective January 1, 2012, California Labor Code 2810.5 will require that employers provide the following information, in writing, to new employees upon hire:

1.    The rate or rates of pay and the basis for pay, i.e., whether the employee will be paid by the hour, shift, day, week, salary, piece, commission, or otherwise. The rate information must also include overtime rates.

2.    Any allowances claimed as part of the minimum wage, including meal or lodging allowances.

3.    The regular payday designated by the employer.

4.    The name of the employer, including any "doing business as" names used by the employer.

5.    The physical address of the employer's main office or principal place of business. The mailing address must also be provided if it differs from the principal physical address.

6.    The telephone number of the employer.

7.    The name, address, and telephone number of the employer's workers' compensation insurance carrier.

8.    Any other information the Labor Commissioner deems material and necessary.

These requirements apply to all non-exempt, non-union employees, and the duty to disclose this information continues after hiring.  When any of the information listed in this statute changes, employers must notify employees in writing within seven calendar days of the change.  The California Labor Commissioner posted a template for the required notice on the California Department of Industrial Relations’ web site:  http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html
 

Retention of Payroll Records

California also changed the time frame that payroll records must be kept under Cal. Labor Code section 1174 from two to three years (we recommend four years because there is a four-year statute of limitations for many Labor Code violations).

Misclassification of Independent Contractors

California Senate Bill 459, signed into law by Governor Jerry Brown on October 9, 2011,

penalizes employers who willfully misclassify workers as independent contractors. The law defines “willful misclassification” as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.” The law makes it illegal to charge a willfully misclassified worker a fee or to make pay deductions where such a fee or deduction would have violated the law if the worker had not been misclassified. 

Employers in violation of the law are subject to civil penalties between $5,000 and $15,000 for each violation, in addition to any other penalties or fines permitted by law. Violators may also be ordered to display (either on the employer’s website or, if there is none, at every location where a violation occurred) a notice for an entire year advising, among other things, that (1) the employer has committed a serious violation of the law by engaging in the willful misclassification of employees; (2) the employer has changed its business practices in order to avoid committing further violations; and (3) any employee who believes that he or she is being misclassified as an independent contractor may contact the California Labor and Workforce Development Agency (“LWDA”).

Under other similar California statutes that prohibit “knowing,” “intentional,” and “voluntary” violations, courts have found that actions taken on the basis of a good faith belief in their legality do not give rise to liability. It is unclear whether this “good faith” defense will apply under the new misclassification law. Regardless, employers must be cautious when classifying employees as independent contractors, and must be able to explain and demonstrate the validity of the classification. 

Restriction on Use of Credit Checks

Starting in 2012, California employers may not, subject to certain exceptions, use consumer credit reports to evaluate candidates for employment. The use of credit reports to screen candidates for the following types of positions is not prohibited:

• Managerial positions covered by California’s executive exemption
• Positions involving regular access to certain personal financial, proprietary, or trade secret information
• Positions involving regular access to at least $10,000 of money belonging to the employer or its clients or customers
• Positions in which the applicant would be a signatory on the employer’s financial accounts or would have authority to transfer money or enter into financial agreements for the employer
• Positions for which credit information is required to be disclosed by law

Workers Compensation Notices

Among other amendments to California’s workers compensation laws, new legislation now requires that workers compensation notices posted by employers include the website address and contact information for employees to obtain further information about the workers compensation claims process.

These and several other new laws add additional layers of compliance for California employers already struggling to persevere in an extraordinarily difficult business climate. We recommend California employers take time to review their employment policies and practices to ensure compliance with California’s employment laws, both new and old. Questions should be directed to Jim Hanson, Chris McNatt, Bob Browning, and Adam Smedstad.

As alluded to in our previous post, the California Supreme Court now officially decided to delay its ruling in the case of Brinker Restaurant Corp. v. Superior Court, No. S166350 until specific supplemental briefing is submitted.  The Court is allowing both sides until January 3, 2011, to respond to an amicus curiae brief filed by the California Employment Law Council (“CELC”).  The CELC’s amicus brief addresses whether a ruling on the so-called “rolling 5” issue (see our prior post for details) will apply retroactively or only prospectively.  Each side will have 10 days in which to reply to the other side’s response.  The statutory 90-day clock will restart on January 13, 2012, giving the Court until April 12, 2012 to issue its decision.  Questions regarding the impact of the decision or California’s meal and rest break rules should be directed to Jim Hanson.

Employers waiting for the California Supreme Court to clarify California’s meal and rest break rules in the case of Brinker Restaurant Corp. v. Superior Court, No. S166350 may have to wait a little longer.  The case is expected to resolve the contentious question of whether California employers must ensure that employees take thirty-minute off-duty meal breaks or just make them available to employees.  Oral argument was held November 8, 2011.  Under the Supreme Court’s rules, a decision was expected by mid-February, 2012, 90 days after the argument.  On December 2, 2011, however, the Supreme Court agreed to accept additional briefing addressing whether a ruling on the so-called “rolling 5” issue will apply retroactively or only to future violations.  As a result of this additional briefing, it is possible, although uncertain at this time, that the Supreme Court could issue a decision as late as April, 2012, 90 days following the completion of this additional briefing. 

The “rolling 5” issue addresses the time meal breaks must be provided during a workday.  California law generally requires that employers provide employees a 30-minute off-duty meal break whenever they work five hours or more, and another 30-minute meal break where work shifts exceed 10 hours.  The “rolling 5” issue in Brinker is whether employees are entitled to one break during work shifts up to 10 hours long and a second break for shifts over 10 hours (the defendant’s position), or whether employees cannot work for more than five hours without a break (the “rolling 5” position advocated by the plaintiffs).  The Brinker plaintiffs contend that an employer must schedule meal breaks near the middle of shifts to avoid work periods in excess of five hours or pay the hour premium if an employee works more than 5 hours without a break. 

The Brinker plaintiffs’ position on the “rolling 5” issue would have a potentially significant impact on transportation providers operating in California.  Under the “rolling 5” theory, if a driver takes a meal break early in the shift, the driver would be entitled to another one five hours later and could conceivably be entitled to three in a 12-hour shift.  Incorporating these breaks into a driver’s day would be problematic and would, in our view, adversely impact the carrier’s operations and potentially conflict with the federal Hours of Service Rules and the Federal Aviation Administration Authorization Act (the “FAAAA”).  Indeed, as many of the Firm’s clients know, a federal district court in California recently ruled that California’s meal and rest break rules are preempted by the FAAAA as applied to motor carriers. See http://transportationblog.scopelitis.com/blog/transportation-blog/federal-district-court-finds-faaaa-preempts-california-meal-and-rest-break-rules.

We are following the Brinker case closely and will keep you apprised of developments.  In the meantime, while a ruling in Brinker could be delayed by this additional briefing, employers operating in California should not wait to adopt written policies advising employees of their meal and rest break rights under California law.  Employers should also post a copy of the applicable California Industrial Welfare Commission Wage Order (for transportation providers, IWC Wage Order No. 9) in the same place they post other standard employment notices.  Copies of Wage Order No. 9 and other wage orders can be obtained from the Firm.  Questions regarding Brinker or California’s meal and rest break rules in general should be directed to Jim Hanson.

Florida state lawmakers have proposed several bills intended to increase road safety by curbing a growing problem with distracted drivers.

Multiple bills have been filed that once again try to ban texting while driving and make it a secondary offense, meaning law enforcement would need another reason to pull someone over.  Similar efforts in Tallahassee have struggled in recent years because certain lawmakers have doubted the proposed rule’s effectiveness, and blocked passage.

If approved this time around, first offenses would be a non-moving violation. Subsequent offenses would be classified as moving violations. Accidents that result from the distraction would be a 6-point offense.

As truckers are aware, the federal government already prohibits texting while driving for commercial operators. At the state level, Florida is one of 15 states that have not acted to outlaw texting while driving for all vehicles.

In Michigan state lawmaker, Sen. Hoon-Yung Hopgood, D-Taylor, has introduced a bill that would prohibit vehicles in excess of 8,500 pounds from idling for more than 5 minutes per hour. While loading or unloading, idling would be allowed for up to 30 minutes in a 60-minute period.

Exemptions would include situations when vehicles are stuck in traffic or “operating a defroster, heater, or air conditioner, or during installation of equipment, solely to prevent a safety or health emergency and not part of the operator’s rest or sleep period.” Idling would also be permitted to power a medical device, such as a continuous positive airway pressure machine, or CPAP. The exclusion would not apply for vehicles equipped with an auxiliary power unit.

The bill does not include an exemption for extreme temperatures. It does, however, specify that auxiliary power units, gen sets or other idle-reduction technology are allowed.

Violators of the five-minute rule would face fines of up to $500. Owners or operators of locations where a truck is loading or unloading for longer than 30 minutes would face up to $150 fines.

The bill – SB819 – could be considered as early as this week in the Senate Transportation Committee.

Carriers should be aware that their drivers will continue to be required to keep a copy of their medical certificate with them for at least another year (in addition, carriers are required to keep a copy in their file and submit a third copy to the applicable state licensing agency). The medical certificate possession requirement was due to end on January 30, 2012, but the Federal Motor Carrier Safety Administration (“FMCSA”) says it must give states additional time to get an automated electronic tracking system in place. The planned system will be designed so that drivers can submit their certificate to a state licensing bureau, which will then add the applicable medical data to the Commercial Driver Licensing Information System database. Roadside enforcement officials will then have direct access to this database. Unfortunately, it seems many states will be unable to get their data together in time to meet the original 2012 deadline so the FMCSA has extended it until January 30, 2014.       

A joint motion filed on 11/28/2011 in the U.S. Court of Appeals for the District of Columbia stated that a new Hours of Service (“HOS”) rule will likely be issued before the end of the year.  The promulgation of the final rule has been delayed for over two years.  The rule will amend the limits on the amount of time commercial vehicle drivers can spend behind the wheel.  The existing HOS rules issued by the FMSCA were originally adopted in 2005 and have been the subject of multiple lawsuits.  Currently, the rule for property-carrying Commercial Motor Vehicle drivers (under 49 CFR Part 395) places a 11 hour day driving limit and a 60/70 hour driving limit over a period of 7/8 consecutive days.  Drivers may restart the 7/8 day consecutive period after taking 34 or more hours off duty.  The final rule is likely to substantially change these requirements.