Tag: 2024 News

Governor Gavin Newsom signed Senate Bill 988, the Freelance Worker Protection Act (FWPA), into law on September 28, 2024. Codified at California Business & Professions Code Section 18100 et seq., the FWPA imposes requirements on individuals and companies that hire freelance workers for specified “professional services.” The companies that use freelance workers are required to comply with this new law starting January 1st.

The law is applicable to a “hiring party” which means a person or organization in the State of California that retains a freelance worker to provide professional services, with certain limited excepts such as the United States or State of California or any foreign government.

Among other mandates, whenever a hiring party retains the services of a freelance worker, the contract between the hiring party and the freelance worker shall be in writing. The hiring party shall furnish a signed copy of the written contract, either physically or electronically, to the freelance worker. The hiring party shall retain the contract for no less than four years.

Certain time limits are specified for making payment. Except as otherwise provided by law, a hiring party shall pay a freelance worker the compensation specified by a contract for professional services on or before the date compensation is due pursuant to the contract. If the contract does not specify when the hiring party shall pay, no later than 30 days after the completion of the freelance worker’s services under the contract.

An aggrieved freelance worker or a public prosecutor may bring a civil action to enforce this new law. A prevailing plaintiff in an action alleging a violation of this law is entitled to reasonable attorney’s fees and costs, injunctive relief, and any other remedies deemed appropriate by the court.

The Legislative Analysis that discussed this new law claimed that “for several decades, the employer-employee relationship was put under pressure due to the increased use of independent contractors and the misclassification of employees. The issue culminated with a 2018 Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. Under Dynamex, the test for whether a worker is an independent contractor or an employee was simplified to a three-prong test.”

“Freelance workers contribute essential services to our homes and businesses and are one of the fastest growing sectors of the workforce. As noted above, because freelance workers are not employees but independent contractors, they typically do not receive the same protections against wage theft. Efforts to enact laws protecting freelance workers have begun to pass in several states and localities.”

Indeed freelance workers in the City of Los Angeles received more protections with the Los Angeles City Council’s adoption on February 24, 2023 of Ordinance 187782 which was intended to protect the Freelance industry. The City of Los Angeles law became effective on July 1, 2023 and Los Angeles hirers must now comply with the provisions of this ordinance as well as state and federal and any other local ordinance that might cover the hiring.

In 2017, New York City was the first to pass a law, the “Freelance Isn’t Free Act,” which made significant changes to entities utilizing independent contractors for projects costing $800 or more. Specifically, the law requires a written contract, timely and full payment, and protection from retaliation. The law also establishes penalties for violations of these rights, including statutory damages, double damages, injunctive relief, and attorney’s fees.

In 2023, Illinois enacted similar protections by adopting the “Freelance Worker Protection Act,” to take effect July 1, 2024.

Back in 2012, a blistering study titled “Rogue Rehabs: State failed to police drug and alcohol homes, with deadly results” took no prisoners. It was done by the California Senate Office of Oversight and Outcomes and the department overseeing addiction treatment was dismantled in its wake — and DHCS was born. To, like, fix things. Perhaps it’s time to examine how well that’s worked out?

The State Auditor released a long-awaited study on how California regulates its (fraud-prone) addiction treatment industry. It confirmed that there are serious issues, and that Orange County in particular and Southern California in general are the epicenters, and that there are steps lawmakers can and should take to make things better.

While the audit didn’t mention the many federal prosecutions for body brokering and insurance fraud currently underway in O.C. and L.A., it did back up some general assertions. Key Findings of the State Auditor:

– – There were approximately 500 small facilities in California in 2023, and we identified groupings of such facilities in specific geographic areas throughout the State. For example, we found several small facilities with the same owner located next door to or across the street from each other in residential neighborhoods in Orange County and in San Diego County.
– – State law mandates that small facilities must be considered a residential use of property for purposes of any zoning ordinance. Because local authorities may use zoning requirements to regulate facilities serving more than six residents (large facilities) more strictly than small facilities, some facility operators may avoid certain zoning regulations by intentionally grouping small facilities in the same geographic area instead of establishing one large facility.
– – Although required to assign a complaint to an investigator within 10 days, Health Care Services frequently does not assign complaints on time. The audit found that it took Health Care Services an average of 183 days to assign the complaints when it did not meet its 10-day required time frame.
– – The department’s internal guidelines generally identify that investigative reports must be submitted by the analyst to a supervisor within 30 to 60 days. However, the audit found that it took Health Care Services analysts nearly one year on average to submit investigative reports for low – and medium – priority complaints.
– – Health Care Services completed high – priority investigations, such as those relating to resident deaths, within an average of less than three months but still did not meet its guidelines.
– – Health Care Services did not always conduct site visits when investigating unlicensed facilities and did not always follow up after completing investigations of unlicensed facilities that were unlawfully advertising or providing services to ensure that they ceased doing so.

For Sen. Tom Umberg, D-Santa Ana, the audit confirms what he and other lawmakers have been saying for years: DHCS is seriously under-sourced, takes forever to investigate complaints, can’t do frequent-enough inspections or enforce the laws.

The Auditor had recommendations to improve oversight. “Legislature could potentially change state law if these facility concentrations are not consistent with the law’s intent, which we believe was to integrate residents of these facilities into the communities and to provide for sufficient numbers and types of treatment services to meet local needs.”

The auditor also recommended that DHCS fill its vacant positions, improve the timeliness of inspections and complaint investigations, do additional site visits and follow up with unlicensed facilities to ensure they stop providing or advertising services beyond their reach.

“We have a road map here,” said Assemblymember Diane Dixon, R-Newport Beach, who requested the audit more than a year ago. “It confirms key concerns that are now validated by third-party analysis: Investigations take too long, sometimes don’t even happen, and there can be infrequent follow-up. It will help us shape legislation based on these facts.”

Dixon quickly assembled lawmakers after the report to push the governor and Department of Health Care Services (DHCS) Director Michelle Baass for greater accountability and an increase in the number of inspectors. “We’re coming together for solutions,” she said. “We want people to get well.”

In its response, Baass said the department is already implementing many of the auditor’s recommendations and “is committed to robust oversight of residential treatment facilities to ensure Californians receive safe and high-quality care.” According to the Audit Report “Health Care Services agreed with our findings and, in some cases, has already begun implementing the recommendations that we directed to it.”

The U.S. Department of Transportation (DOT) announced a $50 million penalty against American Airlines for numerous serious violations of the laws protecting airline passengers with disabilities between 2019 and 2023. DOT’s investigation into American Airlines uncovered cases of unsafe physical assistance that at times resulted in injuries and undignified treatment of wheelchair users, in addition to repeated failures to provide prompt wheelchair assistance. American also mishandled thousands of wheelchairs by damaging them or delaying their return, leaving travelers without the device they need for mobility.

DOT regulations require airlines to timely return wheelchairs and other mobility devices in the condition in which they were received and to provide passengers with disabilities prompt assistance to get on and off aircraft including moving within the airport. The Department also considers violations of these regulations for those traveling on domestic flights to be a failure to provide safe and adequate service. In July 2022, DOT published the first-ever Airline Passengers with Disabilities Bill of Rights to help travelers understand what they’re entitled to when they fly.

In its investigation of American Airlines, DOT reviewed complaints against the airline involving allegations of inadequate wheelchair assistance, including three formal complaints filed by Paralyzed Veterans of America alleging similar issues. DOT also investigated American’s handling of wheelchairs between 2019 and 2023, including an incident captured on video at the Miami International Airport of American’s personnel mishandling a wheelchair by dropping it down a baggage ramp. American had been one of the worst performers among U.S. airlines in terms of both the total number of wheelchairs and scooters mishandling claims and the rate of mishandling claims, and DOT’s investigation revealed a significant number of violations.

These problems are not unique to American Airlines, and allegations of wheelchair mishandling and inadequate wheelchair assistance are far too common. DOT has active investigations into similar violations at other U.S. airlines. Today’s enforcement action is 25 times larger than DOT’s previous largest airline penalty for violations of disability protections and sets a new precedent for how DOT will enforce against such violations going forward.

The U.S. Department of Justice’s Civil Rights Division provided valuable assistance and advice to DOT during the negotiation of this penalty

As part of the $50 million penalty, American Airlines will be required to pay a $25 million fine to the U.S. Treasury. In addition, American Airlines will be credited $25 million towards the total penalty for investments in equipment to reduce incidents of wheelchair damage, investments in a systemwide wheelchair tagging system to reduce incidents of wheelchair delay, deployment of hub control center employees to coordinate wheelchair handling on a systemwide basis at large airports, and compensation for affected passengers during the timeframe covered by DOT’s investigation. If these expenditures are not made, the additional $25 million will be paid as a fine to the U.S. Treasury.

DOT has sought higher penalties that go beyond the cost of doing business to better hold airlines accountable for the mistreatment of passengers and change airline behavior. Between 1996 and 2020, DOT collectively issued $71 million in total penalties against airlines for consumer protection and civil rights violations. During the current Administration, DOT has tripled that amount, issuing nearly $225 million in penalties, including the following:

– – DOT’s largest ever airline penalty: $140 million against Southwest Airlines for its 2022 meltdown during Winter Storm Elliot.
– – DOT’s largest airline penalty for religious discrimination: $4 million against Lufthansa for denying boarding to 128 Jewish passengers.
– – DOT’s largest airline penalty for extreme tarmac delays: $4.1 million against American Airlines for dozens of instances where passengers were kept on the tarmac for 3+ hours.

DOT claims it has also taken historic action to improve transportation for people with disabilities in air travel.

– – Published the Airline Passengers with Disabilities Bill of Rights, which describes the fundamental rights of air travelers with disabilities under the Air Carrier Access Act and its implementing regulation.
– – Established a final rule on accessible lavatories on aircraft, requiring airlines to make lavatories on new single-aisle aircraft large enough to permit a passenger with a disability and an attendant to approach, enter, and maneuver within as necessary to use the aircraft lavatory.
– – Funded accessibility improvements at airports through the Bipartisan Infrastructure Law Airport Terminals Program. Nearly 150 projects funded under this program are improving airport terminal access for people with disabilities and ensuring compliance with the Americans with Disabilities Act.
– – Proposed a new rule to ensure safe and dignified accommodations for air travelers with disabilities using wheelchairs. The proposed rule would set new standards for assistance, mandate enhanced training for airline employees and contractors who physically assist passengers with disabilities and handle passengers’ wheelchairs, and outline actions that airlines must take to protect passengers when a wheelchair is damaged during transport. DOT is currently working towards issuing a final rule.

Plaintiffs Azeem Bath, Megan Roberts, and Makisha Bomar are hourly paid, non-exempt employees who work at an adult state prison. Bath is a dental hygienist, Roberts and Bomar are dental assistants, and they all are currently assigned to the California Medical Facility.

The parties agree that plaintiffs’ union and the State of California entered a memorandum of understanding governing the terms and conditions of plaintiffs’ employment and that the MOU incorporates the Fair Labor Standards Act of 1938 (FLSA), as amended by the Portal-to-Portal Act (29 U.S.C. § 251 et seq.). Plaintiffs further acknowledge that it is the FLSA that “determine[s] whether activities performed by Plaintiffs are compensable.”

In November 2022, plaintiffs filed a first amended complaint against the State of California, California Department of Correction and Rehabilitation (CDCR), California Correctional Health Care Services, and California Department of Human Resources (CalHR) styled as a class action.

They asserted four causes of action: (1) failure to pay California minimum wage in violation of Labor Code sections 1182.11, 1182.12. and 1194, (2) failure to pay overtime wages in violation of section 1194, (3) failure to pay wages and/or overtime in breach of common law contractual obligations, and (4) failure to pay wages in violation of section 222.

Plaintiffs alleged, “a principal activity [of their employment and that of all class members] is to provide safety and security for all prison occupants.” They continued, “California Prisons present multiple dangers and safety concerns that are not present in the average workplace,” and given the risks, plaintiffs (and putative class members) “are specially employed to focus on and promote the security and safety of staff, visitors, and inmates.”

Plaintiffs alleged the uncompensated “Pre-Shift Work” that they and other class members perform compromises the following five activities: (1) “The Security Checkpoint” – at the front gate of a prison, presenting their identification cards to security officers and opening their bags for visual inspections; (2) “The First Sally Port” – walking to a sally port, waiting to enter, and then waiting for the guard to open the gate; (3) “Collecting Work Specific Tools and Equipment” – walking to an administrative building, picking up an alarm device and, if necessary, keys; (4) “The Control Sally Port” – “proceed[ing] to a second sally port to enter the mainline prison premises” and, again, showing their identification cards; and (5) “Walking to the Department and Signing In” -walking to their assignment area. When they arrive at their assignment area, they sign in “by reporting the precise time they arrive.” According to plaintiffs, these preshift activities generally take 10 to 15 minutes and sometimes take 20 minutes, and their “Post-Shift Work” involves “many of the same activities and functions . . . but in reverse” and takes a similar amount of time.

Defendants filed a demurrer to the first amended complaint. On April 21, 2023, the trial court issued a written ruling sustaining the demurrer to plaintiffs’ first amended complaint without leave to amend on the ground these activities are not compensable under the Portal-to-Portal Act of the Fair Labor Standards Act. After judgment was entered, plaintiffs appealed.

The Court of Appeal affirmed in part and reversed in part in the published case of Bath et al. v. State of Cal. et al. -A167908 (October 2024.)

Plaintiffs contend they have alleged viable wage claims and the trial court improperly decided a disputed question of fact in ruling on the demurrer. Defendants respond that the trial court did not err, and, in any event, the judgment may be affirmed on alternative grounds they raised in their demurrer. Specifically, defendants argue the MOU governing the terms and conditions of plaintiffs’ employment precludes their claims; plaintiffs’ statutory claims fail because the statutes at issue do not apply to government employers; the claims are all subject to dismissal because plaintiffs failed to exhaust their contractual remedies (grievance and arbitration procedures in the MOU); and the claims are all barred by the applicable statute of limitations.

The Court of Appeal concluded defendants’ demurrer was well taken as to plaintiffs’ statutory claims, but plaintiffs have stated a claim for breach of contract. It further concluded that defendants’ affirmative defense of failure to exhaust contractual remedies cannot be resolved in a demurrer and plaintiffs’ contract claim is not time barred.

The demurrer was reversed as to plaintiffs’ third cause of action for “failure to pay regular wages and/or overtime in breach of common law contractual obligations” and was affirmed as to the first, second, and fourth causes of action. The judgment was reversed, and the matter was remanded for further proceedings consistent with this opinion.

In 1975, the Legislature enacted the Knox-Keene Act, which provides the legal framework for the regulation of California’s individual and group health care [service] plans. Effective January 1, 2016, the Legislature enacted Health and Safety Code section 1367.27, which requires health care service plans to, among other things, maintain and update accurate provider directories (PDs). (Stats. 2015, Reg. Sess. 2014- 2015, ch. 649, § 2.)

The plaintiff, the People of the State of California, acting by and through Mara W. Elliott, the San Diego City Attorney, filed a complaint against Kaiser Foundation Health Plan, Inc.

Citing section 1367.27, the complaint alleged that health insurance companies are required to publish, maintain, and update accurate provider directories (PDs), setting forth information regarding a health plan’s providers (e.g., location, contact information, specialty, etc.). In particular, the People alleged that Kaiser failed to maintain and update accurate PDs for its health plans, as required by Health and Safety Code section 1367.27.

The complaint sought the following relief: (1) civil penalties pursuant to Business and Professions Code sections 17206, 17206.1, subdivision (a)(1), and 17536; (2) restitution; and (3) provisional and final remedies against Kaiser, including, without limitation, “an injunction prohibiting [Kaiser] from continuing [its] unlawful, unfair, and fraudulent activities, and discontinue [its] false and misleading advertising.”

Kaiser filed a motion for summary judgment. In support of its motion, Kaiser argued that there were no triable issues of material fact and it was entitled to judgment as a matter of law because the trial court should abstain from adjudicating the action. It submitted a separate statement of undisputed material facts, along with various declarations and exhibits and a request for judicial notice, in support of its motion.

In their opposition papers, the People argued that the court should not abstain from adjudicating their action because, among other things, Kaiser’s violations of section 1367.27 and other statutes provide predicates for their UCL cause of action and the UCL contemplates co-enforcement by the People and administrative agencies. In reply, Kaiser reasserted its original arguments in support of its motion.

The trial court, after hearing arguments of counsel, issued a minute order granting Kaiser’s motion for summary judgment based solely on the exercise of its discretion to abstain from adjudicating the People’s action. The court entered a judgment in favor of Kaiser. The People timely filed a notice of appeal challenging the judgment.

The Attorney General for the State of California has filed an amicus curiae brief in support of the People. The that the California Department of Managed Health Care has filed an amicus curiae brief in support of neither party, and the California Association of Health Plans has filed an amicus curiae brief in support of Kaiser. The People and Kaiser have filed answers to the amicus curiae briefs.

The Court of Appeal concluded that the trial court abused its discretion by applying the doctrine of judicial abstention. Accordingly, it reversed the judgment and remand the matter in the published case of People. ex rel. Elliott v. Kaiser Foundation Health Plan -D081262 (October 2024)

Under the doctrine of judicial abstention, a trial court has discretion to abstain from adjudicating an action if: (1) ” ‘ “granting the requested relief would require a trial court to assume the functions of an administrative agency, or to interfere with the functions of an administrative agency” ‘ “; (2) the action ” ‘ “involves determining complex economic policy, which is best handled by the Legislature or an administrative agency” ‘ “; or (3) ” ‘ “granting injunctive relief would be unnecessarily burdensome for the trial court to monitor and enforce given the availability of more effective means of redress.” ‘ ” (Hambrick, supra, 238 Cal.App.4th at pp. 147 – 148, quoting Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 496 (Arce); Blue Cross of California, Inc. v. Superior Court (2009) 180 Cal.App.4th 138, 157 (Blue Cross).)

The Court of Appeal concluded that “[A]bstention is not appropriate where resolution of the issues involves solely the judicial function of resolving questions of law based on facts before the court.” (Hambrick, supra, 238 Cal.App.4th at p. 152.) In this case, the People’s complaint requests that the trial court simply apply section 1367.27’s clear requirements for PD accuracy to the facts alleged and proven at trial, which the People argue will show Kaiser’s violation of its statutory obligations regarding PD accuracy and thus the “unlawful” prong of their UCL cause of action. Therefore, their complaint merely requests that the trial court “perform an ordinary judicial function.” (Blue Cross, supra, 180 Cal.App.4th at p. 157.) Abstention is not appropriate in these circumstances. (Hambrick, at p. 152.)