Tag: 2019 News

Gov. Newsom signed AB 5 – what he called a landmark bill for workers.

AB 5 will codify a state Supreme Court Dynamax ruling last year that simplified the test for when a worker should be classified as an employee and therefore be entitled to a minimum wage, health benefits and other protections. The contentious legislation is expected to affect ride-hailing giants Uber and Lyft, plus a host of other companies that use independent contractors.

“The hollowing out of our middle class has been 40 years in the making, and the need to create lasting economic security for our workforce demands action,” said Newsom, who had previously voiced support for the bill, in his signing letter. “Assembly Bill 5 is an important step.”

A defiant Uber said last week that it is “no stranger to legal battles” and believes it can pass the test imposed by the courts and AB 5: that a worker is an independent contractor when he or she is free from control by a company; when the worker’s duties are outside the usual course of the company’s business; and when the worker is “customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.”

Uber said it does not plan to classify its drivers as employees when the bill becomes law in January. The San Francisco ride-hailing company, which has offered concessions short of classifying drivers as employees and has been negotiating with labor leaders and the governor, said through a spokesman Wednesday that “California is missing a real opportunity to lead the nation by improving the quality, security and dignity of independent work.”

But the bill’s author, Assemblywoman Lorena Gonzalez, D-San Diego, said in an interview, “If Uber thinks they’re so strong and powerful that they’re just going to ignore the law, that’s the reason we put the local enforcement clause in the bill.” AB 5 includes a provision empowering cities with populations over 750,000 to prosecute companies that continue to misclassify their workers.

Uber, Lyft and food delivery startup DoorDash have put $90 million into a fund for a campaign that would bring the issue to voters.

Representatives for Lyft and DoorDash said Wednesday they were encouraged Newsom indicated he would keep talking with business and labor in an effort to “preserve flexibility and innovation.”

But both companies also mentioned the possibility of putting the issue on the ballot. In addition, Lyft has warned that it wouldn’t need as many drivers and pointed to a recent study that says hundreds of thousands of drivers in the state could lose their ability to drive for the company if it is forced to classify them as employees.

The Orange County Register points out that one professor thinks ride-hailing drivers might see a smaller paycheck.

“This is yet to be seen but it is a possible argument because the incentives and reward system will be restructured to account for employee status,” said Orly Lobel, director of the Program on Employment and Labor Law at the University of San Diego.

Other workers, such as doctors, hairdressers and real estate agents, have secured exemptions from the bill. Newspaper publishers who use contract delivery workers got a one-year delay for compliance. But those in the trucking and music industries, among others, have also complained about the bill.

The Workers’ Compensation Insurance Rating Bureau of California has released its quarterly update on California statewide insurer experience valued as of June 30, 2019.

Highlights of the report include:

— California written premium through the second calendar quarter of 2019 is 7 percent below the same period for 2018, suggesting that the 2019 premium decrease will also be significant. This is the third consecutive year of premium decreases.
— The average charged rate for the first six months of 2019 is 10 percent below that for 2018 and 32 percent below the peak in 2014. The WCIRB recently proposed a further 5% decrease in advisory pure premium rates for January 1, 2020.
— The WCIRB projects the ultimate accident year loss ratio for 2018 to be four points above that for accident year 2017, driven by higher claim severities for 2018 and lower premium rates.
— The 90 percent combined loss and expense ratio projected for accident year 2018 represents the sixth consecutive year of combined ratios below 100 percent. Combined ratios below 100 percent are one indicator of a healthy workers’ compensation system.
— The ratio for the percent of open indemnity claims closed in the next year increased in each of the last six years and in 2019 is the highest ratio since 1999.
— Cumulative trauma (CT) claim rates continue to increase in accident year 2017, and the ratio of CT claims to all indemnity claims has increased by more than 80 percent since accident year 2005.
— The projected total loss and allocated loss adjustment expense claim severity for accident year 2018 is 5 percent higher than that for accident year 2017, following several years of modest declines in claim severities.
— Medical service costs per claim decreased 17% from 2012 to 2015, primarily driven by a 23% decrease in the number of transactions per claim. Overall medical cost levels have been relatively flat since 2015.
— Pharmaceutical costs per claim decreased 80% from 2012 to 2018. These reductions have been driven by SB 863’s independent medical review and independent bill review, reduced utilization of opioids, changes to Medi-Cal reimbursement rates and the new drug formulary.
— The number of liens filed in the first two quarters of 2019 are more than 60% below pre-SB 1160 and AB 1244 levels.

The full report is available in the Research section of the WCIRB website and linked below:

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.”