California Corner: The Employee v. Contractor Saga Continues as Uber and Postmates Face First Defeat in Attempt to Enjoin AB5

Caroline Powell Donelan and Natalie Alameddine

The hopes of California gig economy companies to retain the flexibility to classify workers as independent contractors were dashed this week when a federal district court judge refused to enjoin Assembly Bill 5 (“AB5”), which codifies the “ABC” test for most independent contractor classifications.

Governor Gavin Newsom signed AB5 into law last fall, effecting a seismic change on California’s legal landscape. Effective January 1, 2020, the law makes it nearly impossible for companies to lawfully classify most workers as independent contractors (rather than employees). The bill expands on California Supreme Court’s three-prong “ABC” test from its 2018 Dynamex decision for determining how workers can be classified, which you can read about here. With certain limited statutory exceptions, AB5 provides that, to properly classify a worker as an independent contractor in California, an employer must demonstrate that the worker: (A) is free from the company’s control and direction; (B) performs work outside of the company’s usual course of business; and (C) is customarily engaged in independent work of the same nature as the work performed. There is no balancing, as all three factors must be met. Continue reading “California Corner: The Employee v. Contractor Saga Continues as Uber and Postmates Face First Defeat in Attempt to Enjoin AB5”

Some Highlights from the Recently Enacted SECURE Act, Part 4

Daniel L. Morgan

The final installment of this blog series discussing changes made by the Setting Every Community Up for Retirement Enhancement Act of 2020 (“the SECURE Act”) focuses on modifications to the required minimum distributions rules (“RMDs”).

Two of the most widely reported changes made by the SECURE Act relate to the requirements in the Tax Code that require individuals to receive annual RMDs.

72 Is the New 70½

The tax law generally requires people to begin receiving distributions from employer retirement plans and individual retirement accounts (“IRAs”) by the April 1st following the year in which they reach age 70½.[1] Under the SECURE Act, effective for people who attain age 70½ after December 31, 2019, age 70½ is replaced with age 72. Continue reading “Some Highlights from the Recently Enacted SECURE Act, Part 4”

NEWS FLASH: The Ban Is Back! Philadelphia Employers Can’t Ask About Salary, Wage, and Benefits History

Thomas J. Szymanski

Effective immediately, Philadelphia employers are prohibited from asking job applicants about their salary, wage, and benefits history.

As a bit of background, in 2016, the Philadelphia City Council passed an ordinance banning salary, wage, and benefits history inquiries by employers (and also barring employers from setting a new hire’s initial pay based on their salary history), which was signed into law in January 2017. However, the ban on salary and wage history inquiries has been on ice since April 30, 2018, when it was enjoined by the United States District Court for the Eastern District of Pennsylvania. Today, the U.S. Court of Appeals for the Third Circuit dissolved the district court’s injunction; therefore, Philadelphia employers must immediately stop asking job applicants about their salary, wage, and benefits history. The Third Circuit also upheld the lawfulness of the ordinance’s bar on using salary history to set initial pay.

Please contact a member of Blank Rome’s Labor & Employment practice group if you have any questions about compliance with Philadelphia’s salary, wage, and benefits ban or any other employment issues.

As We Predicted, Challenges to NY Reproductive Health Decision-Making Law Have Begun

Stephen E. Tisman

In a December 17, 2019, Blank Rome Workplace post, we described the law enacted in New York expanding “protected status” to cover employee decision-making regarding reproductive rights matters. (See blankromeworkplace.com/2019/12/17/new-york-expands-discrimination-protection-to-reproductive-health-decision-making/). We concluded with the prediction that:

The law will undoubtedly be challenged by an employer claiming that providing such coverage violates the employer’s religious beliefs (think Masterpiece Cakeshop v. Colorado Civil Rights Commission). The ultimate fate of this statute will be resolved under federal First Amendment law.

That challenge has begun. On January 31, 2020, a lawsuit was filed in federal district court seeking a declaration that the statute is unconstitutional and void, and for an injunction to bar enforcing it against the plaintiffs. Christopher T. Slattery, et al. v. Andrew M. Cuomo, et al., U.S.D.C., N.D.N.Y., Case No. 5:00-at-99999.

Stay tuned for developments.

PA Approves White Collar Salary Threshold Increases—Leaves FLSA in the Dust

Jason E. Reisman

Boom—take that, Pennsylvania employers!

As a result of Governor Wolf’s battle with the Pennsylvania Republican-controlled legislature being at an impasse over a potential state minimum wage increase, the Governor pressed the Commonwealth’s Independent Regulatory Review Commission (“IRRC”) to approve his administration’s previously proposed increase to the salary threshold for the so-called “white collar exemptions” under the Pennsylvania Minimum Wage Act (“PMWA”). Last week, the IRRC voted 3-2 to approve the proposed rule—which is the last regulatory step before the increases to the salary threshold would become effective (though it is unclear at this time when the rule will formally be effective, as we believe it first requires review and approval from the Attorney General).

Background

Governor Wolf first introduced the proposed salary threshold increase in the summer of 2018, after facing repeated rejections of his efforts to raise the Commonwealth’s minimum wage from the federal minimum of $7.25 per hour to at least $12 per hour. The proposed rule has had somewhat of a long and winding road to get to today—but, nonetheless, it now appears primed for implementation. Continue reading “PA Approves White Collar Salary Threshold Increases—Leaves FLSA in the Dust”

Breaking: California Grants Preliminarily Injunction of AB-51

Caroline Powell Donelan

UPDATE: Today, a federal court preliminarily enjoined the enforcement of AB-51 (California’s anti-arbitration law discussed here, here, and here) as it relates to arbitration agreements governed by the Federal Arbitration Association (“FAA”). We will get a detailed order from the court soon, but the minute order issued today is below. A great reminder to employers who wish to implement arbitration that the agreement should always expressly state it is governed by the FAA. Continue reading “Breaking: California Grants Preliminarily Injunction of AB-51”

Some Highlights from the Recently Enacted SECURE Act, Part 3

Daniel L. Morgan

This third installment of summaries of some of the key provisions of the Setting Every Community Up for Retirement Enhancement Act of 2020 (“the SECURE Act”) discusses an extension of the date for adopting a new employer retirement plan.

Under prior law, an employer that wanted to deduct a contribution to a tax-qualified retirement plan for a tax year had to adopt the plan by the last day of the year, but had up until the due date of the tax return for the year, including extensions, to make the contribution.

Effective for tax years beginning after December 31, 2019, the SECURE Act allows an employer to adopt a tax-qualified retirement plan for a tax year up until the due date, including extensions, of the tax return for the year. Continue reading “Some Highlights from the Recently Enacted SECURE Act, Part 3”