Author: WorkCompAcademy

San Diego City Attorney Mara Elliott has filed a lawsuit against grocery delivery company Instacart, alleging the tech giant has misclassified its employees as independent contractors.

The suit comes three days after new legislation, called Assembly Bill 5, cleared the California Legislature, spurring panic among gig economy giants such as Uber and Lyft. The bill is now on its way to the desk of Gov. Gavin Newsom, who has previously pledged his support. Should the bill be signed into law, it would prevent many companies from classifying their workers as independent contractors rather than employees.

According to the report in the San Diego Tribune, Elliott’s lawsuit is asking for Instacart’s workers to receive compensation retroactively, including payment for things like minimum wage, overtime pay, meal breaks and expense reimbursement. The suit also alleges Instacart evaded paying workers compensation and unemployment insurance, along with state and federal payroll taxes.

Instacart did not respond to a request for comment by publication time.

San Francisco-based Instacart is a grocery delivery service that operates nationally and has a presence in San Diego. Its app allows customers to place grocery orders online, which are then purchased and delivered by a “shopper” who drives the order directly to their home.

The suit alleges that Instacart shoppers do not qualify as independent contractors under a 2018 California Supreme Court decision (Dynamex Operations West, Inc. v. Superior Court). It’s the Dynamex case that spurred AB 5 to move its way through the state legislature this year, sponsored by San Diego Democrat Lorena Gonzalez.

Procopio law partner Tyler Paetkau, who practices employment law, said AB 5 would change the game entirely for companies hiring contract workers. Employers used to have a lot of wiggle room to classify workers as independent contractors. This new bill now tightens the definition of an independent contractor. The most notable difference is that employers cannot use contractors unless the person’s work is “outside the normal business activities” of the hiring company.

Elliott’s suit alleges Instacart does not meet the criteria outlined in Dynamex, which AB 5 mirrors.

“Shoppers perform work that is directly within the course of Instacart’s business model, including ‘groceries delivered in as little as one hour,’” stated a City Attorney’s Office news release. “Shoppers are essential to providing the core service the company offers.”

Proponents of AB 5 say the legislation will improve labor conditions for gig economy workers, forcing companies to offer benefits and protections that a normal employee would be granted – such as minimum wage, paid sick days and health insurance benefits. Opponents say the bill invokes outdated views of “employment,” hampering the millions of Californians who want flexible work.

Lawsuits seeking retroactive restitution could be a major challenge for companies throughout the state, Paetkau said, especially small businesses that have adopted the gig economy model popularized by Uber and Lyft.

“A lot of these companies are startups,” Paetkau said. “They have some funding but limited resources. The worst thing that can happen to them is a lawsuit or claim. Especially involving multiple workers. This could wipe them out.”

The Orange County Register reports that county officials say they will stand behind their sheriff’s deputies who are injured while trying to help others, even when they’re off duty and out of state. County supervisors voted Sept. 10, to extend workers compensation benefits to sworn employees who were hurt during the 2017 mass shooting at the Route 91 Harvest Festival in Las Vegas, and to county law enforcement caught up in future domestic terrorism events who use their training to protect civilians or assist local first responders.

Off-duty officers from several Southern California communities were attending the Las Vegas concert when a gunman fired on the crowd. Some were shot or received other injuries while leading people to safety, helping secure the area and providing others aid.

Orange County rejected workers comp claims filed by four of its deputies who were hurt, because California law at the time specifically referred to peace-keeping activities “anywhere in this state,” but did not mention actions outside the state’s boundaries.

A bill from Assemblyman Tom Daly, D-Anaheim, that passed in 2018 clarified the law so that California peace officers injured off duty while responding to out-of-state crimes and life-threatening emergencies can collect public injury benefits. Now, Orange County has enshrined in its own policies that officers in good standing hurt in the Las Vegas shooting or such future incidents are eligible for workers compensation.

The new policy’s cost to county taxpayers is unknown because it will depend on how many claims are filed and what benefits are awarded.

Deputy Mark Seamans, hit by gunfire, was among the Orange County deputies whose claims were initially rejected. As Seamans told a reporter shortly after the incident, he never stopped to worry about his own safety while pulling people out of harm’s way. “The switch turned on, and it became everything we train for,” he said at the time.

The county’s new policy doesn’t guarantee off-duty deputies’ claims will be paid, only that they’ll be considered even if the incident takes place in another state. The policy would not apply to claims of psychological injury or events outside the U.S. On Wednesday, a county spokeswoman said two claims by officers who were shot in Las Vegas are due to be approved.

Since Daly’s bill passed last year, San Bernardino County accepted a claim from one deputy injured at the Route 91 festival, county spokeswoman Felisa Cardona said. California Peace Officers Association spokesman Shaun Rundle said he wasn’t aware of other agencies making policy changes as Orange County did.

Puni Pa’u suffered an admitted injury while working for the Department of Forestry. His PTP requested authorization for radio frequency ablation, a type of medical treatment, for an accepted injury to his back. The RFA was was received by EK Health on March 12, 2018, a Monday. EK Health denied the request for treatment on March 19, 2018, also a Monday.

Applicant made a second request for the same treatment; this request was received on April 16, 2018, a Monday, and denied on April 23, 2018, also a Monday.

Applicant filed a Declaration of Readiness to Proceed, alleging that both UR denials were late, and therefore that the WCAB had jurisdiction to award him the medical care he sought.

The core of the parties’ dispute was over whether defendant had complied with the requirement to render a decision within “five working days,” as mandated by Labor Code section 4610. The WCJ found in pertinent part that defendant timely denied applicant’s requests for treatment via Utilization Review (UR). The WCJ concluded that the UR denials were timely because Saturdays and Sundays are not working days under the meaning of the Labor Code section 4610.

Applicant contends on reconsideration that the UR denials were untimely because Saturday is a working day for purposes of Labor Code section 4610, and therefore that the Workers’ Compensation Appeals Board (WCAB) has jurisdiction over the dispute and that the WCJ should have awarded applicant the requested treatment.

The WCAB affirmed the conclusion of the WCJ in the Significant Panel Decision of Puni Pa’u v Department of Forestry.

“Although Saturday is a business day under Civil Code section 9, it is not a working day under Labor Code section 4610, because Labor Code section 4610 does not incorporate the definition of business day found in Civil Code section 9. Applying the principles of statutory interpretation, we determine that the phrase “working day” found in Labor Code section 4610 does not include Saturdays based upon its standard modern usage, as reflected in dictionary definitions, statutory and regulatory enactments, and judicial decisions. Moreover, even if Saturday were a working day, the UR decisions in this case would still be timely based upon Code of Civil Procedure section 12a, which extends the deadline for performance of acts that fall due on a Saturday.”

The state Senate voted in favor of the bill – dubbed Assembly Bill 5 (AB5) – that would ensure gig economy workers in companies like Uber, Lyft, and DoorDash are entitled to minimum wage, workers‘ compensation, and other benefits.

The contentious bill was passed in a 29 to 11 vote as the legislative session was about to end for the year. AB5 had passed the State Assembly on May 29 with a 53-11 vote. It is expected to be signed by California Governor Gavin Newsom, and will go into effect starting January 1, 2020.

The business models of these companies are already under severe strain. Although the extent to which AB5 could impact these platforms is unknown, it’s expected to drive their labor costs up by 30 percent, according to a report by San Francisco Chronicle.

Last month, Uber reported a record second quarter loss of $5.2 billion, its largest ever quarterly loss. The company laid off 435 employees across its engineering and product teams yesterday, on top of the 400 marketing team employees who were handed pink slips in late July in an attempt to cut costs.

Litigation is now likely to follow passage of the new law. Uber said Wednesday that it was confident that its drivers will retain their independent status when the measure goes into effect on Jan. 1. “Several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces,” said Tony West, Uber’s chief legal officer. He added that the company was “no stranger to legal battles.”

California has at least one million workers who work as contractors and are likely to be affected by the measure, including nail salon workers, janitors and construction workers. Unlike contractors, employees are covered by minimum-wage and overtime laws. Businesses must also contribute to unemployment insurance and workers’ compensation funds on their employees’ behalf.

In California, religious groups said they feared that small churches and synagogues would not be able to afford making pastors and rabbis employees. Winemakers and franchise owners said they were worried they could be ensnared by the law, too.

Historically, if workers thought they had been misclassified as a contractor, it was up to them to fight the classification in court. But the bill allows cities to sue companies that don’t comply.

San Francisco’s city attorney, Dennis Herrera, has indicated that he may take action. “Ensuring workers are treated fairly is one of the trademarks of this office,” he said in a statement.

And California may be only the beginning, as lawmakers elsewhere, including New York, move to embrace such policies. Legislators in Oregon and Washington State said they believed that California’s approval gave new momentum to similar bills that they had drafted.

Both Politico and now the Los Angeles Times report concerns about California’s state insurance commissioner who has stuck taxpayers with thousands of dollars in bills to cover the cost of renting an apartment in Sacramento while he maintains his primary residence in Los Angeles – a break from other statewide elected officials that is alarming ethics watchdogs.

And Lara’s decision to file for rental reimbursement breaks precedent with two previous insurance commissioners. Republican Steve Poizner, who is from the Bay Area, did not charge living expenses to the state during his tenure as insurance commissioner. Neither did Democrat Dave Jones, though he did not have to commute far as a Sacramento resident.

Gov. Arnold Schwarzenegger, whose main residence was in Southern California, lived at the Hyatt Regency while in Sacramento but had his expenses paid by an outside foundation. Gov. Gavin Newsom, a former San Francisco mayor, recently moved from the Bay Area to a Sacramento suburb with his family at his own expense.

The revelation could add another headache for Commissioner Ricardo Lara, who is already under scrutiny for his campaign fundraising and perceived coziness with the insurance industry.

The Sacramento Bee claims the California’s top regulator of insurance companies sought campaign contributions from the industry and partied with one of its lobbyists after winning his election last year, according to records and social media posts obtained by The Sacramento Bee.

Three months after taking office, Insurance Commissioner Ricardo Lara scheduled a March 12 lunch with insurance company executives with a pending matter before his department.

A memo to the commissioner said the meeting had a specific purpose: “Relationship building” for his re-election campaign.

Executives “will be joining you for a relationship-building lunch in support of your Ricardo Lara for Insurance Commissioner 2022 campaign,” fundraising consultant Dan Weitzman wrote in the memo.

Lara had pledged not to take money from the insurance industry as he ran for the post last year.

Weeks following the lunch, he broke his promise. In April, he accepted more than $50,000 in campaign donations from insurance representatives and their spouses. Some of the money came from out-of-state donors who have ties to one of the companies scheduled to be represented at the lunch.

Social media posts shared with The Bee show Lara also counts insurance lobbyists among his friends. The former state lawmaker partied with a Farmers Insurance lobbyist in London on New Year’s Eve just a week before his inauguration.

And the San Francisco Chronicle characterizes his apology about the contribution ethical problems and blame shifting on his staff as “underwhelming.”