Cal-Peculiarities: How California Employment Law is Different 2022 Edition

©2022 Seyfarth Shaw LLP  www.seyfarth.com 2022 Cal-Peculiarities | 387 contractor to avoid employee status for that individual” if the individual is found not to be an independent contracto r. 63 There is no private right of action under Section 226.8 . 64 19.12 Dealing with Certain Labor Contractors A California business must not enter into an agreement for labor or services with certain contractors if the business knows or should know that the agreement fails to provide enough funds to allow the contractor to satisfy the applicable local, state, or federal labor laws or regulations. Contractors affected include construction, farm labor, garment, janitorial, security guard, and warehouse contractors . 65 A ny person or entity that breaches this obligation can be liable for the greater of actual damages or statutory penalties to workers who suffer injury from any labor law violation s. 66 The business must, upon request, give the Labor Commissioner a copy of the contractor agreement and other related documentation . 67 A claim brought under this statute (against airlines that had contracted with a security company) failed because the plaintiff had failed to allege that the airlines had knowingly underfunded the contracts . 68 Employers that use labor contractors are jointly liable with the labor contractor for paying wages to all workers whom the labor contractor supplies, and for the contractor’s failure to obtain valid workers’ compensation coverage . 69 1 Lab. Code § 2750.3 2 See , e.g., Bain v. Tax Reducers, Inc. , 219 Cal. App. 4th 110 (2013) (employee misclassified as independent contractor entitled to minimum wages, reimbursement of business expenses, and waiting-time penalties for failure to pay timely termination wages), rev. denied and ordered not to be officially published , No. S213850 (Cal. Dec 11, 2013). 3 Lab. Code § 3357 (“Any person rendering service for another, other than as an independent contractor, or unless expressly excluded herein, is presumed to be an employee.”) See also Lab. Code § 5705(a) (employer has burden to prove “affirmative defense” that “injured person claiming to be an employee was an independent contractor”); S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations , 48 Cal. 3d 341, 349 (1989) (“One seeking to avoid [workers’ compensation] liability has the burden of proving that persons whose services he has retained are independent contractors rather than employees.”); Antelope Valley Press v. Poizner , 162 Cal. App. 4th 839, 855 (2008) (for purposes of workers’ compensation insurance, persons who delivered newspapers to daily subscribers were employees of the publisher, not independent contractors, where publisher maintained significant supervision over the carriers, controlled the price paid by subscribers, based payment for carriers on the number of papers delivered per day, supplied materials and facilities the carriers used, did not hire the carriers to achieve a specific result attainable within a finite period, and was better suited than the carriers were to distribute the cost of on- the-job injuries as a business expense). 4 See , e.g., Grant v. Woods, 71 Cal. App. 3d 647, 652, 654 (1977) (focusing on whether individual was employee “for purposes of the Unemployment Insurance Act” and demanding “[c]lear evidence … to defeat the beneficent purposes of the legislature established in the [Unemployment Insurance] code”). 5 See Santa Cruz Transp., Inc. v. Unemployment Ins. Appeals Bd. , 235 Cal. App. 3d 1363, 1367 (1991) (“The burden of establishing an independent contractor relationship is upon the party attacking the determination of employment.”). 6 Lab. Code § 2750.5 provides in part: “There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor.” See also Blackwell v. Vasilas , 244 Cal. App. 4th 160, 162, 172-73 (2016) (reversing summary judgment for property owner/hirer upon, holding that to establish independent contractor status of stucco contractor, in addition to presenting evidence of the requisite factors to determine said status under Labor Code section 2750.5(a), (b) and (c), property owner/hirer also was required to present evidence that stucco contractor was licensed, or alternatively, that the services performed by the stucco contractor did not require a license). 7 www.dir.ca.gov/dlse/FAQ_independentcontractor.htm ( visited May. 26, 2022) (“In handling a matter where employment status is an issue, that is, employee or independent contractor, DLSE starts with the presumption that the worker is an employee.”). For this global proposition the DLSE cites only Labor Code section 3357, which applies in workers’ compensation cases. The Court of Appeal in Lujan v. Minagar , 124 Cal. App. 4th 1040 (2004), however, stated more broadly, in a retaliatory dismissal suit alleging a violation of Labor Code section 6310, that “[t]here is a rebuttable presumption that one who furnishes services for an employer is an employee.” Id. at 1048. 8 In Narayan v. EGL, Inc. , 616 F.3d 895, 898-99, 904 (9th Cir. 2010), where delivery drivers classified as independent contractors sued for Labor Code benefits, the Ninth Circuit reversed a summary judgment that the trial court had granted to the defendant. The Ninth Circuit stated that California law rather than Texas law applied, and that, under California law, “once a plaintiff comes forward with evidence that he provided services for an employer, the employee has established a prima facie case that the relationship was one of