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LLCs Can Make Property Owners Virtually Anonymous

March 1, 2021 By Israel Samuels LLP Leave a Comment

Many California real property owners take title to properties in the name of a California or California registered limited liability company. Owning real property through an LLC can provide some asset protection, limited liability protection and tax benefits as compared to direct personal ownership. It is also relatively easy and convenient for a family living trust to hold an LLC ownership interest making LLC ownership of real property very useful for estate planning purposes.

By utilizing an LLC, property owners can also achieve some level of anonymity regarding their ownership of the property. When the LLC is the owner, the grant deed provides title to an LLC and not to any individual owners. When the grant deed is recorded after closing, the publicly recorded deed only reflects that the property is owned by an LLC. The individual owners of the LLC remain anonymous.

Anonymity can break down after formation of the LLC when the LLC Statement of Information (Form LLC-12) is filed with the Secretary of State. Item 5 of Form LLC-12 requires the manager or members to be listed and item 6 requires an agent for service of process to be listed. If the LLC owners list themselves in items 5 or 6, since the Statement of Information form is a public document, anonymity could be compromised.

To assure anonymity, the LLC can hire professional nominee managers to list in item 5 and may hire corporate agents, or their attorney, for service of process to list in item 6 thereby removing any obvious link between the property, the LLC and the individual owners. Alternatively, if the owners control other business entities or wish to form special purpose entities, those business entities can also be appointed manager and listed in item 5. When using a business entity as a manager, owners must also avoid disclosing details about the manager entity which could link them to the real property in question to maintain anonymity.

Investors and others wishing to avail themselves of the benefits of owning real property via an LLC should work with experienced counsel to structure the LLC and plan the formation to i) confirm the objective needed to use an LLC to acquire the real property, ii) achieve the appropriate degree of confidentiality or anonymity in public filings, and iii) avoid any inadvertent disclosure after closing.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.

Some Employers Need to Reevaluate Expense Reimbursement Procedures

February 22, 2021 By Israel Samuels LLP Leave a Comment

Recently, the Ninth Circuit Court of Appeals held that an employer’s per diem expense reimbursement payments functioned as compensation for work rather than business expense reimbursements. Therefore, the employer was required to factor those per diem payments into employees’ “regular rate of pay.” An employee’s regular rate of pay is used to calculate overtime under Federal and California State law. It is also used to calculate double-time, sick leave,

In Clarke v. AMN Services, AMN, a healthcare staffing company placed hourly-paid clinicians on short-term assignments. Each week AMN paid traveling clinicians a per diem amount to reimburse them for the cost of meals, incidentals, and housing while working over 50 miles away from their homes. AMN did not report these payments as wages and classified them as tax-exempt.

To calculate the per diem payment, AMN looked at a number of different factors including the extent to which clinicians worked their scheduled shifts. Under the per diem policy, the payments could decrease if clinicians worked less than their scheduled shifts, and work hours in excess of those scheduled could be “banked” and used to “offset” missed or incomplete shifts. AMN also provided “local” clinicians per diem payments under the same policy, but such payments were reported as taxable wages.

The Ninth Circuit determined that these characteristics indicate that the per diem payments were functionally compensation for hours worked, and not expense reimbursements. The court relied heavily on AMN’s decision to pay both local and traveling clinicians under the same per diem policy but treat payments to local clinicians as wages. The Court also noted that “AMN offers no explanation for why ‘banked hours’ should effect” per diem payments, and found “the only reason to consider ‘banked hours’ in calculating” per diems is to compensate clinicians for hours worked.

The process of submitting, reviewing and processing expense reimbursements is cumbersome. It also can be a fertile area of labor law liability. Generally, an employer must reimburse an employee when it knows or had reason to know the employee incurred a necessary business expense. Thus, employers may be obligated to reimburse employees even if they do not actually request reimbursement. Consequently, some employers adopt a flat-sum reimbursement policy in which the amounts paid are at least partially fixed, such as AMN’s per diem policy. These payments are often issued automatically, without obtaining documentation of the expenses from employees.

The Clarke case should be of concern to employers with business expense policies that include flat-sum or automatic reimbursement payments. The employer may incur substantial liability if reimbursement payments, in whole or in part, are deemed to function as wages that must be factored into the regular rate of pay. Employees are likely to argue such payments were actually “wages” and claim they were not properly reimbursed for their business expenses. A careful legal review of an employer’s flat-sum or automatic reimbursement policies and procedures is in order to assure the dangers illustrated in the Clarke decision are not present.

Be Careful If an Employee Complains About COVID Safety Measures

February 15, 2021 By Israel Samuels LLP Leave a Comment

Recently the California Labor Commissioner issued a $125,913 fine against a McDonald’s franchisee for retaliating against its former employee who allegedly complained about COVID safety issues before being terminated. According to the record, the Labor Commissioner named the franchisee, its owner, and its Human Resources Officer as jointly and severally liable and ordered reinstatement of the employees. The fines were for lost wages, interest, Labor Code 98.6 retaliation penalties, and 1102.5 retaliation penalties. Labor Code 98.6 precludes employers from retaliation against employees due to the employee’s complaint about working conditions and against employees who make complaints to government agencies. The McDonald’s franchisee claimed the employee had been terminated for job abandonment. The restaurant and its owners must now comply with the orders, appeal the citation to challenge the decision and the authority of the California Labor Commissioner, or reaching settle the matter. The resolution of the claims and the incurred cost of defense may actually exceed the cost of compliance.

Employers should consult their counsel before disciplining or terminating employees who make claims, even if unfounded, relating to COVID concerns or workplace safety.

Communications Copied to Legal Counsel Do Not, Necessarily, Make The Communications Privileged

February 8, 2021 By Israel Samuels LLP Leave a Comment

Today, business employees can easily copy an in-house lawyer on emails where the primary recipient is a non-lawyer. This creates privilege issues for in-house lawyers since courts will question whether the email copied to a lawyer was truly seeking legal advice.

Emails between two non-lawyer employees that are copied to in-house counsel are dual purpose communications. An employee who merely copies an in-house attorney on an email to a non-lawyer does not automatically render the email privileged. Courts will first determine whether primary purpose of the copy sent to the attorney was to secure or dispense legal advice.

An email sent to counsel as a “cc” or secondary recipient decreases the chances of it being found to be privileged. However, sending an email to counsel as the primary recipient increases the chances that it will be found to be related to legal advice and, therefore, privileged.

Some courts have ruled that “cc’ing” an in-house attorney on employee-to-employee communications ipso facto means that the communication’s purpose could not be for legal advice. Other courts do not take this approach. However, the party asserting privilege over dual-purpose emails copying in-house counsel must prove that the communication’s primary purpose was related to legal advice.

Employers should train their employees that copying in-house lawyers on an email does not immunize the emails from discovery. Employees should copy in-house lawyers if they believe it is necessary to seek the participation of the lawyer, they should mark the email as “privileged and confidential,” limit dissemination and specifically ask the attorney for a response.

Lawyers who receive unsolicited cc and bcc emails should take the initiative and respond by stating that they understand the employee sent the email for legal advice purposes. A privilege-related response can often remedy the initial failure of the employee to seek legal advice by the cc to legal counsel. If challenged in court, the in-house lawyer must prove via sworn testimony that she or he received the email communication for the primary purpose of rendering legal advice. Thus, employees can make counsel’s effort easier by actually asking the attorney for legal advice in copied communications.

If you, as an employer, have employees cc’ing the company’s legal counsel, it is imperative to discuss with legal counsel steps to take to increase the likelihood that such communications will be considered privileged and confidential.

Remote Work Messes with Tax Nexus and Withholding Requirements

February 1, 2021 By Israel Samuels LLP Leave a Comment

Many employers now have employees who have shifted from working in the employer’s office to working remotely from home as a result of the COVID-19 pandemic. When the employer’s office is located in one state and the employee now works from home in a different state has state tax implications, including creating tax nexus between an employer and a state (which would subject the employer to the state’s income and sales tax regimes) and requiring an employer to withhold state income taxes from compensation paid to such employee.

The states’ responses to dealing with employees working remotely have not been uniform. Most states have not provided any guidance. Many states that have provided guidance have adopted the position that a change in working location due to the COVID-19 pandemic will be ignored, although some of these states have not addressed the issue for both tax nexus and employment tax withholding.

Most states consider a company to have nexus in the state for purposes of all state taxes imposed (e.g., income, sales, and employment) if the company has employees working in the state. Prior to the COVID-19 pandemic, many states asserted nexus over employers due to the presence of a single home-office employee in the state. As a result of the pandemic, employees of many companies have shifted from working at an office in one state to working at home in another state. For employees who live in one state but work in another, many employers, for the first time, have employees performing significant work in a new state. Although states could assert nexus over companies who now have an in-state physical presence there due to employees working from home due to the COVID-19 pandemic, many states, including California, have advised that they will not assert nexus over a company solely due to such a connection with the state. In some states, such as Massachusetts, New Jersey, Pennsylvania and South Carolina, the decision not to tax out of state companies that now have employees in their state working at home is limited to the length of the pandemic state of emergency or will expire on a certain date unless extended.

With regard to employment taxes and tax withholding obligations, an employee’s wages for the performance of personal services are governed by the state where the work is performed for purposes of state individual income tax and related payroll withholding purposes. For remote employees this generally means that payroll withholding is due to the state from which they work remotely, regardless of the location of the employer. However, certain states and cities impose the “convenience of the employer” test (i.e., Connecticut, Delaware, Nebraska, New York State, and Pennsylvania) under which the wages of remote workers are still sourced to the employer’s location unless the employee can demonstrate that the remote working arrangement was done for the employer’s necessity, rather than the employee’s convenience. No states with the “convenience of the employer” test have provided guidance regarding this issue with respect to the pandemic.

Some of the states that have provided guidance include:
California
The wages of employees who typically perform services in another state for an employer located outside of California will not be subject to Unemployment Insurance (“UI”) tax, Employment Training Tax (“ETT”), and Disability Insurance (“DI”) withholdings if those employees are temporarily performing services within California due to the COVID-19 pandemic. If a worker remains in California performing services after state or federal public health officials have ended stay-at-home orders and the worker could have resumed working at their normal work location outside California, the worker and the employer will be considered subject to California employment tax laws.

Illinois
Out-of-state employers must withhold employees’ Illinois income tax after the employee has worked at home in Illinois for at least 30 days.

Massachusetts
A resident employee who, immediately prior to the Massachusetts COVID-19 state of emergency was an employee engaged in performing services from a location outside of Massachusetts, and who began performing such services in Massachusetts due to a state’s COVID-19 state of emergency or other pandemic-related circumstance, will be eligible for a credit for taxes paid to that other state. In addition, the employer of such an employee is not obligated to withhold Massachusetts income tax for the employee to the extent that the employer is required to withhold income tax with respect to the employee in such other state.

New Jersey
New Jersey sourcing rules dictate that income is sourced based on where the service or employment is performed based on a day’s method of allocation. However, during the temporary period of the COVID‑19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employer’s jurisdiction.

New York
Under current law, employee taxation and withholding depends on where the “primary office” of the employee is located. The “convenience-of-the-employer” rule provides that an employer operating in New York must withhold New York State income tax from wages paid to an employee whose primary work location is in New York State if (1) the employee spent at least one day during the year in New York; and (2) the employee is working from home outside New York for the employee’s own convenience. New York recently released guidance which does not view the COVID-19 pandemic as creating a situation that should alter current law. Thus, an employee whose principal office is in New York State but who is working outside of the state during the pandemic generally will remain subject to New York State income tax, and the employer should generally continue to withhold New York State tax from the employee’s compensation.

Pennsylvania
If an employee is working from home temporarily due to the COVID-19 pandemic, the state does not consider that as a change to the sourcing of the employee’s compensation. For non-residents who were working in Pennsylvania before the pandemic, their compensation would remain Pennsylvania sourced income for all tax purposes, including employer withholding and three-factor business income apportionment purposes for S Corporations, partnerships and individuals. Conversely, for Pennsylvania residents who were working out-of-state before the pandemic, their compensation would remain sourced to the other state and they would still be able to claim a resident credit for tax paid to the other state on the compensation.

South Carolina
Until June 30, 2021, an out-of-state business is not subject to South Carolina’s withholding requirement solely due to the shift of employees working on the employer’s premises outside of South Carolina to remote working from South Carolina. Accordingly, the wages of a South Carolina resident employee temporarily working remotely from South Carolina instead of their normal out-of-state business location are not subject to South Carolina withholding if the employer is withholding income taxes on behalf of the other state.

Employers should contact their attorneys to assess the tax laws and any special pandemic rules for the jurisdictions where their employees are remotely working to determine their potential nexus risk and applicable withholding requirements.

DIR’s Cal/OSHA COVID-19 Standards Guidance

January 25, 2021 By Israel Samuels LLP Leave a Comment

On January 8, 2021, the Department of Industrial Relations (DIR) issued guidance on Cal/OSHA’s Emergency Temporary COVID-19 Standards (ETS) in response to frequently asked questions (FAQs):

Cal/OSHA’s ETS, effective November 30, 2020, require that employers exclude from the workplace employees with COVID-19 and employees with COVID-19 exposure until certain return-to-work criteria are satisfied. The ETS also require that employers continue to pay COVID-19 cases and employees with exposure their regular wages (exclusion pay) and continue their benefits while the employees are excluded from the workplace, with certain exceptions. For example, an employer is not obligated to pay exclusion pay where the employer can demonstrate the employee contracted COVID-19 or was exposed off the job.
The FAQs clarify that employers are not obligated to pay exclusion pay when the COVID-19 case or employee with exposure is too ill to work due to the disease. However, the employee may be eligible for Workers’ Compensation or State Disability Insurance benefits.

Extended absences may result in a cessation of exclusion pay under the FAQs since the DIR advises “If an employee is out of work for more than a standard quarantine period based on a single exposure or positive test, but still does not meet the regulation’s requirements to return to work, that extended quarantine period may be an indication that the employee is not able and available to work due to illness.”

The FAQs state an employee receiving temporary disability benefits during the time the employee is excluded from the workplace under the ETS, indicates that the employee is not “able and available to work” and, for that reason, not entitled to receive exclusion pay.

The DIR announced by the FAQs that, through February 1, 2021, Cal/OSHA “will cite but not assess monetary penalties” for violations of the ETS. However, Cal/OSHA will not withhold monetary penalties where an employer fails to correct a violation of the ETS Cal/OSHA identifies, in the case of imminent hazards or where the employer’s violation of the ETS is also a violation of a Cal/OSHA standard that was in effect before the ETS became effective.

The ETS require that employers offer COVID-19 testing “at no cost” to employees with potential COVID-19 exposure from the workplace. In the FAQs, the DIR takes the position that, in addition to paying the employees’ wages for the “their time to get tested, as well as travel time to and from the testing site,” employers must reimburse employees for “travel costs to the testing site (e.g., mileage or public transportation costs).”

The ETS mandate that employers exclude from the workplace employees with COVID-19 exposure for 14 days from their last known exposure to a COVID-19 case. The FAQs, however, recognize that employers may allow asymptomatic employees with exposure to return to the workplace after 10 days from their last known exposure to a COVID-19 case. The reduced exclusion period is a consequence of an Executive Order by Governor Gavin Newsom and guidance from the California Department of Public Health, each issued on December 14, 2020.

As to the application of the ETS to employees who have been vaccinated for COVID-19, the DIR states: “For now, all prevention measures [in the ETS] must continue to be implemented. The impact of vaccines will likely be addressed in a future revision to the ETS.”

This is a developing area of law in California and, as a result, should any employee be diagnosed with COVID-19 one of the first call the employer should make is to qualified legal counsel.

Real Estate Buyers Who Renege Due to The Pandemic

January 18, 2021 By Israel Samuels LLP Leave a Comment

Due to COVID-19, many real estate buyers who have recently entered into real property purchase contracts are unwilling or unable to complete the transaction. Reneging buyers have thousands of dollars at risk since earnest money deposits typically equal liquidated damages under the purchase contract should the buyer breach the contract.

Liquidated damages provisions in real estate purchase agreements are regulated by California Civil Code section 1675. They are presumed valid if they do not exceed 3% of the purchase price. Liquidated damages above 3% of the purchase price are rebuttably presumed invalid. The burden shifts to the seller to prove that the higher liquidated damages amount is reasonable given the circumstances. In addition, there is protection built-in for buyers to avoid the potential for the seller to “double dip”. Further, under the Section, if a seller is able to sell within 6 months of the buyer’s breach, the subsequent sale can be considered in determining if the liquidated damages are reasonable. The buyer may be able to recover all or some of their liquidated damages if the actual damages suffered by the seller are less than the amount of the deposit or liquidated damages amount, such as when the property re-sells for the same or close to same amount as called for in the breached contract. Thus, valid liquidated damages provisions cap the breaching buyer’s loss for breach and limit the amount of seller’s recovery as a result of the breach.

California Civil Code section 1511 allows for an excuse to performance on a contract due to “acts of god,” and codifies what is commonly known as the “force majeure” defense. It states in relevant part that:

“The want of performance of an obligation, or of an offer of performance, in whole or in part, or any delay therein, is excused by the following causes, to the extent to which they operate… when it is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States, unless the parties have expressly agreed to the contrary…”

Many contracts have specific clauses that deal with the potential of an “act of god,” however the commonly used residential purchase contracts in California contain no such clause. Therefore, most buyers must look beyond the contract to Section 1511 to determine whether the pandemic constitutes an excuse for non-performance by a buyer.

The pandemic may be an uncontrollable “irresistible” and “superhuman” event completely outside of a buyer’s control. However, it is uncertain whether Civil Code section 1511 applies. California Courts have yet to rule on whether the pandemic meets this legal standard. There are many reasons why closing might be delayed or deemed impossible. Not all of them are covered by section 1511. A buyer’s delay due to concerns about personal safety, the lack of an appraisal, an inability to complete repairs, or even the sudden and unforeseen lack of funding due to a stock market crash, do not automatically excuse performance under Civil Code section 1511.

Despite the paucity of guidance on the application of section 1511 to the pandemic there is a bit of precedent for the applicability of the “force majeure” defense. The 2003 California Court of Appeals case of Timney v. Lin, arose out of the September 11, 2001 terrorist attacks. In that case, there was a delay in the recording of a quitclaim deed due to the events of September 11. The court ruled that the forfeiture of the appellants’ deposit was illegal and invalid because: 1) the time delay by the Buyers which triggered the potential forfeiture of the deposit was deemed to be slight by the court (three weeks); 2) the delay was not the fault of the buyers (but due to the events of September 11); and, 3) the sellers suffered no clearly cognizable damages. The case, however, only dealt with delayed performance, not contract termination. Consequently, the case does not directly apply to many of the contract situations that have arisen due to the pandemic. Buyers must prove that the pandemic is the proximate cause of their non-performance. Voluntary human behavior usually will not suffice.

California law also provides for the frustration of purpose defense to non-performance of a contract. Frustration of purpose can be invoked when the following conditions are met:

Performance on the contract remains possible;
The fundamental reason of both parties for entering into the contract has been frustrated by an unanticipated circumstance; and
That circumstance substantially destroys the value of performance by the party standing on the contract.

Additionally, the frustration must be so severe that it is not considered within the risks that were assumed under the contract.

The frustration of purpose defense requires that a supervising or intervening event destroy the main purpose of the contract. Generally, this defense requires the object [of the contract] be so completely the basis of the contract that the parties understand without it the transaction would make little sense.

Buyers not able to rely on “force majeure” or frustration of purpose defenses, may still be able to prove impossibility if the facts warrant it. Impossibility as a breach of contract defense requires 1) an unforeseen event 2) outside the parties’ control that 3) renders performance impossible or impracticable. Thus. “a condition in a contract, the fulfillment of which is impossible or unlawful …, or which is repugnant to the nature of the interest created by the contract, is void.” California Civil Code section 1441.

Impossibility must relate to something that must be done under the contract, such as completing the transaction to purchase the property by recordation by a certain date but the County Recorder is unable to record documents on that date. It does not relate to the buyer’s ability to complete the transaction. If it is possible to perform the act contemplated by the contract, then impossibility is not a defense absent “extreme and unreasonable difficulty, expense, injury or loss.” If such extreme and unreasonable difficulty can be shown, performance may be excused as impracticable.

California’s shelter in place and regional stay-at-home orders provide some support for the impracticability defense because all non-essential businesses have been shuttered leading to widespread economic effects. However, real estate services have been deemed essential and it is still possible to complete real estate transactions.

California courts tend to hold parties to what they agree to in a contract absent exceptional circumstances. Therefore, each of these defenses is narrow and reserved for extreme hardship. The extent to which any of these defenses will be successful depends on the specific circumstances surrounding each transaction. If you are a buyer trying to cancel a real estate purchase agreement, or you are a seller who has a buyer claiming one or more of these defenses, you should immediately seek advice from qualified legal counsel.

Many Truck Drivers Get A Reprieve from California Break Rules

January 11, 2021 By Israel Samuels LLP Leave a Comment

The Ninth Circuit Court of Appeals recently upheld the Federal Motor Carrier Safety Administration’s (FMCSA) determination that federal law preempts California’s meal and rest break requirements as to drivers of property-carrying commercial motor vehicles (CMVs), subject to the FMCSA’s hours of service (HOS) regulations.

On December 21, 2018, the FMCSA issued a Determination of Preemption, finding that California’s break rules are subject to the Secretary of Transportation’s authority to review and preempt state laws and regulations on CMV safety.

The Court held that, because California’s rules are additional to or are more stringent than the HOS regulations, they were subject to preemption since they (1) have no safety benefit, (2) are incompatible with the HOS regulations, and/or (3) cause an unreasonable burden on interstate commerce. Thus concluded, California may no longer enforce its break rules with respect to property carrying CMV drivers subject to the FMCSA’s HOS rules.

Many California truckers and drivers remain subject to the state’s break rules. Although the FMCSA’s HOS regulations, and thus the preemption decision, will apply to any person who operates a CMV, companies must confirm that drivers are operating a vehicle that meets the detailed definition of a CMV.

A CMV is defined as “a self-propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property” depending on the vehicle’s weight or weight rating, number of potential passengers, or the type of property it is used to transport. A critical factor is whether the vehicle is used “in interstate commerce,” which includes “trade, traffic, or transportation … between two places in a State as part of trade, traffic, or transportation originating or terminating outside the State or the United States.” This definition includes the intrastate transport of goods in “the flow of interstate commerce,” which may be interpreted broadly.

Before ignoring California’s break rules for truck drivers, companies should evaluate drivers’ routes and shipments to confirm that they are transporting property in interstate commerce. This likely will require the advice of legal counsel. It is the employer’s burden to establish the FMCSA preemption defense in any related litigation.

Note, this holding may be short-lived. The decision may still be overruled through en banc review by the Ninth Circuit or on petition to the Supreme Court. Additionally, it is possible that the FMCSA reverses course under President Biden’s nominated Secretary of Transportation, Pete Buttigieg.

A-B-C Test for Independent Contractor Status Is Retroactive

January 4, 2021 By Israel Samuels LLP Leave a Comment

In April 2018, the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court changed the way in which courts differentiated between an independent contractor and employee in California with regard to wage orders. On January 14, 2021, in Vasquez v. Jan-Pro Franchising, Inc., the California Supreme Court held the A-B-C independent contractor test (the A-B-C test) is retroactive.

In Dynamex, the Court overruled and replaced twenty years of precedent stemming from its 1989 decision in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, where the Court had adopted a common law test to determine independent contractor status. The new three-part test requires the worker to meet all of the following conditions to be considered an independent contractor:
(A) be free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
(B) perform work that is outside the usual course of the hiring entity’s business; and
©) customarily be engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Under Dynamex there is a presumption that workers are employees, and the burden falls on the hiring entity to meet each of the three prongs to show that a worker is an independent contractor.

Following the Dynamex decision employers, courts and attorneys have struggled to determine whether the California Supreme Court meant for the A-B-C test to be applied retroactively to independent contractor status prior to the Dynamex decision. In Vasquez, the California Supreme Court characterized the Dynamex decision as resolving/interpreting an open legal issue, whether the Wage Order’s “suffer or permit to work” definition should be used to determine whether a worker qualified as an employee or an independent contractor and, therefore, ruled the A-B-C Test applies retroactively to wage orders.

Vasquez is a difficult blow for employers, gig workers and small business owners who previously enjoyed greater flexibility to design the terms of their commercial relationship. The statute of limitations for misclassification cases is four years. Thus, if a business hired workers it classified as independent contractors prior to the Dynamex decision that under the A-B-C Test would have been considered employees, such independent contractors now can bring misclassification actions.

If you are a business owner who hired independent contractors prior to the Dynamex decision that should have been classified as employees upon application of the A-B-C Test, contact your legal counsel to discuss strategies to minimize your company’s exposure to these claims.

Happy Holidays! Stay Safe and Have a Happy New Year!

December 31, 2020 By Israel Samuels LLP Leave a Comment

We at Israel & Samuels, LLP wish you healthy and Happy Holidays. Stay safe – your vaccine is on its way. We hope to hear from you, and be with you, in the New Year.