SEPTEMBER  30, 2019
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In the course of a politically-charged frenzy to eliminate the misclassification of employees as independent contractors, the franchise business model has been trampled without respect by both the courts and the legislature in California, disrupting commercial relationships that have been a vital driver of the state’s economy for more than fifty years.  Only five years ago, the California Supreme Court acknowledged the vital importance of franchising to the California economy in generating “trillions of dollars in total sales,” “billions of dollars” of payroll and the “millions of people” franchising employs.  Patterson v. Domino’s Pizza.  More on Ninth Circuit Decision's Impact on Franchising Here >
On Sept. 18, California Gov. Gavin Newsom signed Assembly Bill 5 (AB5) into law. AB5, effective Jan. 1, 2020, seeks to codify and clarify a California Supreme Court case (Dynamex Operations West, Inc. v. Superior Court of Los Angeles), which dramatically changed the standard for determining whether workers in California should be classified as employees or as independent contractors. Specifically, the Dynamex court held there is a presumption that workers are employees, and placed the burden on an entity classifying an individual as an independent contractor to prove that such a classification is proper under a three-part “ABC” test. Under the ABC test, to establish that a worker is in fact an independent contractor, a hiring entity must prove: (A) the worker is free from the control and direction of the hirer in connection with the performance of the work More on the AB5 Update and Shakeup of the Gig Economy Here >
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In its final part 541 overtime rule, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) set the salary level or amount test at $684 per week/$35,568 per year for exempt executive, administrative, and professional employees of section 13(a)(1) of the Fair Labor Standards Act (FLSA). The total annual compensation test for a highly compensated employee is $107,432. The standard salary level test of $684 is comparable to the amount proposed earlier this year since the WHD used the same methodology as it applied in the notice of proposed rulemaking (NPRM). The total annual compensation level for highly compensated employees of $107,432 is lower than that proposed earlier this year in its NPRM More on the New Salary Threshold and Final Overtime Rule Here>
The list of states and cities implementing prohibitions on employer salary history inquiries continues to grow.
On June 10, 2019, Alabama enacted the Clarke-Figures Equal Pay Act (“CFEPA”), the state’s first pay equity law. The CFEPA prohibits an employer from refusing to interview, hire, promote, or employ an applicant for employment, or retaliate against an applicant for employment because the applicant refuses to disclose their wage history. Wage history is defined in the CFEPA as “the wages paid to an applicant for employment by the applicant’s current or former employer.” The CFEPA took effect on September 1, 2019. More on Salary History Bans Across the Country Here>
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