Category Archives: California Labor Commission

MARCH 29, 2021 – IF YOU ARE THINKING ABOUT STARTING A NEW CORPORATION TO DISCHARGE A DEBT OR COURT JUDGMENT FROM A LABOR CODE VIOLATION, THINK AGAIN – CALIFORNIA JUST TIGHTENED THE RULES.

In 2020, the California Legislature enacted a series of employment reforms that may affect our clients’ businesses.  Of particular importance was AB 3075, which was signed by Governor Gavin Newsom on September 30, 2020, and effective as of January 1, 2021 as Labor Code § 200.3, which expands the applicability of the doctrine of successor liability.

In general, one business entity is not liable for the debts of another business entity. Successor liability, however, is an exception to the general rule and allows a creditor/plaintiff to recover an outstanding debt or legal judgment from the entity who is the “successor” of the entity liable for that debt or judgment.  Most often, this occurs when one entity purchases another entity and assumes all of its debts and judgments, or when two entities merge and form a new, larger entity.  The new law, AB 3075, codified into law as Labor Code § 200.3, expands on the concept of successor liability and its legislative purpose is specifically aimed at preventing business owners who have violated the Labor Code from escaping liability by shuttering one business and forming another. 

The new law provides that “a successor to any judgment debtor shall be liable for any wages, damages, and penalties owed to any of the judgment debtor’s former workforce pursuant to a final judgment.”  It further defines “successor” to apply in situations where any business that “[u]ses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor.” It also includes any business that “[e]mploys as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor.” In addition, it includes “a business in the same industry [that] has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor.

Furthermore, AB 3075 added Sections 1502, 2117, and 17702.09 to the California Corporations Code to require companies to attest in their statement of information filed with the California Secretary of State that no officer, director, or LLC member or manager “has an outstanding final judgment issued by the California Division of Labor Standards Enforcement or a court of law … for the violation of any wage order or provision of the Labor Code.”

The immediate effect of these laws is that the successor entity of any business entity that was dissolved with an outstanding Labor Code violation judgment or order is now liable for the prior entity’s debt, within the applicable statute of limitation.  Thus, if you had a business that ceased operations with an unresolved Labor Code violation judgment, and then the owner, the owner’s family, or the officers of that company started a new business in the same industry, with a substantially similar workforce, the new entity may now be liable for the obligations owed by dissolved entity.

As always, the best way to prevent Labor Code judgments is to actively prevent lawsuits from occurring in the first place by complying with the Labor Code and making sure that adequate documentation is being maintained for each employee.  If you think that you may be subjected to liability due to this new law, please contact Raimondo & Associates to discuss potential liability exposure and options for resolution.

OCTOBER 6, 2020 – DLSE THREATENS FARM LABOR CONTRACTORS WITH LICENSE REVOCATION

Raimondo & Associates has learned that the California Labor Commissioner’s Division of Labor Standards Enforcement (DLSE) has been sending this document to California Farm Labor Contractors via email. We believe that this is a violation of the FLCs’ due process rights and stand ready to assist when and where needed. It is imperative that all FLCs regularly check their email accounts that the DLSE has on file in order to catch these notices, which informs FLCs that they must complete and return the DLSE’s EO N-51-20 Covid-19 PSL Compliance Information Form within only five days or risk having the DLSE open an investigation to determine whether the business has violated any laws, and may face damages up to and including revocation of the FLC license. 

Raimondo & Associates believes that it is in a business’s interest to comply and provide the completed form to the DLSE. Should the form not be completed and returned within five days, the DLSE has threatened to open an investigation into the business to determine whether it is in compliance. We do not agree with the DLSE’s methods, however, we believe that allowing the DLSE to open an investigation into a business could potentially produce far more compliance issues that the DLSE would have discovered on its own. Therefore, our recommendation is for FLCs and other business to fill out and return the compliance form rather than risk the DLSE’s draconian measures. 

Given the continually changing legal landscape, we strongly encourage employers to reach out to Raimondo & Associates with questions regarding specific situations. We are closely monitoring these developments. Because of these frequent developments, and the need to adapt the general guidance below to specific circumstances, employers should consult counsel regarding specific circumstances. There are many nuances and fact-specific elements that make individualized legal counsel on these questions of critical importance.

Raimondo & Associates has developed templates for compliant IIPPs and for additional COVID-19 supplements in order to assist businesses with being in compliance. We have extensive experience with challenging the Labor Commissioner regarding FLC licensing issues, and we stand ready to do so again. 

CALIFORNIA LABOR COMMISSIONER TARGETS UBER AND LYFT IN INDEPENDENT CONTRACTOR DISPUTE

The California Labor Commissioner’s Office has today filed two separate lawsuits against Uber and Lyft, alleging that both companies have committed wage theft* due to their intentional misclassification of employees as independent contractors. 

The lawsuits come in the wake of the California Supreme Court’s 2018 Dynamex ruling that eviscerated California’s formerly flourishing independent contractor workforce. The Dynamex decision established the “ABC test” for determining whether a worker is an employee under various California labor laws. On January 1, 2020, Assembly Bill 5 took effect, codifying the Dynamex ABC test as applying to all California labor laws. Under the ABC test, workers can be independent contractors only if they are free from the hiring entity’s control, perform work outside of the hiring entity’s usual business, and engage in an independently established trade or occupation.

Uber and Lyft now face the possibility of having to provide backpay for regular, overtime, and holiday hours worked, missed meal and rest break premiums, and numerous penalties and premiums for other violations of the labor code. 

These cases could have a significant impact on the last vestiges of the independent contractor workforce in California. Given the continually changing legal landscape, we strongly encourage employers to reach out to Raimondo & Associates with questions regarding specific situations. We are closely monitoring these developments. Because of these frequent developments, and the need to adapt the general guidance below to specific circumstances, employers should consult counsel regarding specific circumstances. There are many nuances and fact-specific elements that make individualized legal counsel on these questions of critical importance.

*“Wage Theft” covers a variety of infractions that occur when workers do not receive their legally or contractually promised wages. Common forms of wage theft are (1) non-payment of overtime; (2) not giving workers their last paycheck after the worker leaves the job; (3) not paying for all hours worked; (4) not paying minimum wage; and (5) not paying a worker at all. This is not an exhaustive list and is intended only for demonstrative purposes.

COVID-19, RETURN TO WORK, AND WORKERS’ COMPENSATION

Given the continually changing legal landscape, we strongly encourage employers to reach out to Raimondo & Associates with questions regarding specific situations. We are closely monitoring these developments. Because of these frequent developments, and the need to adapt the general guidance below to specific circumstances, employers should consult counsel regarding specific circumstances.

At a general level, the legal rules and guidance we summarize below should not be applied in a manner that would prevent employers from taking reasonable, common-sense steps to protect the health and safety of employees, customers, vendors and their communities. There are many nuances and fact-specific elements that make individualized legal counsel on these questions of critical importance.

Q: Governor Newsom’s Executive Order Regarding COVID-19 and Workers’ Compensation Expired On July 5. Do We Proceed As We Have Been Or Do We Have To Make Any Changes? 

On July 24, Governor Newsom announced that he would be extending the executive orders that established COVID-19 paid sick leave and workers’ compensation for at-risk workers in California. However, Governor Newsom did not announce when he would release the executive order extending workers’ compensation for at-risk workers. Our firm is monitoring the executive and legislative updates and will notify you as soon as something has changed. In the interim, new COVID-19 claims will again be addressed under the previous workers’ compensation rules. 

Should an employee allege their COVID-19 diagnosis was the result of a work-related exposure, employers must continue to report claims. If the employee states the exposure was work-related, the individual should be provided with the DWC1 form. The claim should be reported to your carrier as soon as the DWC1 form is completed. The carrier will then evaluate the claim. Employers must continue to carefully document all claims. Carriers will again have 90 days to investigate a claim (under the EO they had 30 days).

Q: California’s Guidelines For COVID-19 Positive People To End Isolation Differs From The CDC’s New Guidelines. Who Do I Follow?

The California Department of Public Health has not updated its guidance to match the CDC’s newest guidance. For questions regarding the CDC’s updated guidance, please see our July 21 eBlast. The CDPH stated that its guidance references the CDC’s guidance, which means that the CDC’s generally more restrictive guidance controls. 

However, California’s current guidelines require that a person not leave isolation until at least three days have passed without fever without the use of fever-reducing medication. The CDC allows for people to end their COVID-19 isolation after at least 24 hours have passed since the last fever.

Given the differing standards, it is the best practice to follow the CDC’s guidelines in general, but for the no fever requirement it is best to follow California’s more strict 3-days rule. 

IS COVID-19 COVERED BY WORKERS’ COMPENSATION?

The ongoing COVID-19 pandemic is proving challenging for businesses in many ways, and the impact on the United States’ workers’ compensation systems could ultimately be among the most significant. Workers’ compensation is the largest premium segment in the U.S. commercial insurance market, mandated by law in 49 states. The pandemic holds the potential to bring higher costs and greater administrative burdens into the workers’ compensation process for many employers, while at the same time generating anxiety for injured employees, whether dealing with pandemic-related or other illnesses and injuries.

Workers’ Compensation Claims During the Pandemic

At the federal level, the Occupational Safety and Health Administration (OSHA) defines injuries and illnesses as “recordable” only if they are new, work-related cases that meet one or more of OSHA’s recording criteria. Recordable injuries or illnesses require specific actions by employers, and failure to carry out these actions can result in penalties.

Although OSHA exempts recording of the common cold and influenza, the agency has said that COVID-19 qualifies as recordable in cases where a worker is infected as a result of performing work-related duties. It is subject to the same rules and failure-to-record fines as other workplace injuries and illnesses. The determination of whether an infection is work-related is the employer’s responsibility. 

As of April 10, 2020, only employers in the health care industry, emergency response organizations and correctional institutions will be required to record COVID-19 cases. Other employers will be expected to implement good hygiene practices and record COVID-19 cases only if there is objective evidence that such cases may be work-related and the evidence was reasonably available to the employer. Employers should refamiliarize themselves with OSHA’s recordkeeping and reporting requirements.

The situation in the states is fluid. In Washington state, Governor Jay Inslee recently announced changes to the state’s workers’ compensation rules to provide coverage for health care workers and first responders who are quarantined following exposure to COVID-19. Under the clarified policy, the state’s Department of Labor and Industries, which oversees workers’ compensation insurance for employers, will provide immediate benefits to these workers during the time that they are quarantined. The benefits may include medical testing, treatment expenses if a worker becomes ill or injured and time-loss payments for those who cannot work if they are sick or quarantined, according to a statement.

North Dakota Governor Doug Burgum recently signed an executive order extending workers’ compensation coverage to first responders and health care providers who contract coronavirus on the job. The executive order provides up to 14 days of medical and wage replacement benefits for first responders and health care workers who are quarantined. If workers test positive for coronavirus and it is determined that they contracted the virus on the job, those employees are then eligible for full workers’ compensation benefits. 

Other states will, in all likelihood, address similar and other workers’ compensation issues as the pandemic continues. 

Determining Whether COVID-19 Cases Are Work-Related

As the pandemic continues, employers could face COVID-19-related workers’ compensation claims filed by employees. Although workers’ compensation statutes and case law vary by state, compensability generally requires that an illness or disease be “occupational.” This essentially means that the illness: 

-Arises out of and occurs in the course and scope of employment, which will normally be determined by whether an employee was benefitting the employer when exposed. 

-Is proven to be the result of a workplace exposure. 

-Is “peculiar” to the employee’s work, meaning that the disease is found exclusively among or presents greater risk for certain employees. 

It could become increasingly difficult to determine whether an employee has contracted COVID-19 in the workplace. Health care workers, first responders, airline and transportation workers and hospitality workers are among those with a higher likelihood of exposure. But health care workers, for example, may be infected by patients, coworkers, family members, neighbors and strangers, and, in turn, may infect each of these groups.

While many businesses have transitioned to remote working models to promote social distancing, others — particularly those deemed “essential” — cannot easily do so and may still be working in close quarters, which could mean a risk of exposure to the coronavirus. Concerns of public safety workers, first responders and medical professionals include the risk of direct contact with COVID-19 patients, which could lead to injuries that may be compensable under state workers’ compensation systems.

Claims Could Increase in Other Areas

Employers should also be readying for a potential increase in claims from factors other than COVID-19 exposure. Take telecommuting, for example. Employers can face challenges when employees are telecommuting, including a lack of oversight of work environments, potentially improper use of equipment and in-home distractions. The challenges may be compounded by the current pandemic, which has resulted in many individuals facing growing anxiety and mental stress, as well as sharing makeshift home workspaces — and attendant distractions — with spouses, children and pets.

Clear communication, education and transparency from employers about the workers’ compensation process will help ease anxiety from COVID-19 cases.

Then there is the economy at large. Long-term economic forecasts related to the pandemic are dire, and many businesses have already laid off or furloughed employees, as witnessed by the startling jump in claims for unemployment benefits. Lessons from the financial crisis and recession that began in 2008 suggest that these workers could seek to offset their loss of income by applying for workers’ compensation benefits — including, in some cases, filing fraudulent claims.

Finally, while there are currently widespread challenges for most businesses, some are hiring new employees to meet growing demand for specific products and services. This means that there are new hires operating in unfamiliar work environments. Some may have little time for orientation and safety training, making them more prone to workplace injuries.

Slowing Processes, Employee Recovery

Businesses should be ready for a slowdown in the pace at which the system handles new and existing workers’ compensation claims. Many cases are likely to remain open longer, as state workers’ compensation board offices have closed to the public. While some hearings are being conducted virtually, many are being postponed. The pandemic is also straining the availability of resources that are fundamental to the workers’ compensation system, including independent medical exams and field investigative services.

For injured employees, recoveries could be delayed as the result of physicians temporarily closing their offices and hospitals forcing cancellation or postponement of some routine appointments and elective surgeries. Even injured employees who are progressing in their recovery face delay. With businesses closing, either partially or completely, workers who were ready to return to work, perhaps on modified duty, may find themselves without a job. 

This all leaves employers, injured employees and the broader workers’ compensation system in a limbo of sorts. As claims remain open and injured workers go without medical treatment that will help them recover, they continue to collect benefits. Cases in litigation will generally remain unresolved until state workers’ compensation boards resume operations. And the longer that injured employees stay away from their workplaces, the more difficult their eventual return to gainful employment will be. 

Even when medical and claims resources become readily available again, doctors, claims professionals, workers’ compensation boards and others may struggle with their backlogs — further delaying claims resolutions and driving up costs.

Minimizing Disruption

There are ways to help minimize the disruption the pandemic causes to the workers’ compensation system.  

Prevention, of course, is one key. For businesses that actually increase hiring during the pandemic, proper safety training for new employees is essential. As other employees move and adapt to remote work situations, it’s important to share best practices, including ergonomic positioning to minimize stress and injury, along with guidance on how to reduce tripping hazards.

Telemedicine, meanwhile, can be a valuable tool in some cases during the pandemic, offering a way for some injured workers to keep appointments while following social distancing guidelines. Although not every state allowed for telemedicine use in workers’ compensation before the pandemic, some are easing restrictions. 

In preparing for claims that will inevitably arise, all parties — from employers to their third-party administrators to insurers — should develop clear, detailed plans to manage the influx in claims related to some aspect of the pandemic. In particular, they should be paying attention to the increased potential for fraudulent claims and for questions about the compensability of cases alleging workplace exposure to COVID-19.

It is also a good time to use analytics in managing claims. Artificial intelligence and other tools can allow businesses to identify potentially difficult or complex claims and prioritize them for early intervention. 

Finally, the workers’ compensation process can be difficult for injured workers in the best of times. Now, with questions about the economy and future job prospects, they may be especially anxious. Clear communication, education and transparency from employers about the workers’ compensation process will help ease some of that anxiety.

Given the daily changing legal landscape, we strongly encourage employers to reach out to Raimondo & Associates with questions regarding specific situations. We are closely monitoring these developments. Because of these frequent developments, and the need to adapt the general guidance below to specific circumstances, employers should consult counsel regarding specific circumstances.