Mark Wiletsky

by Mark Wiletsky

Question: When crafting a severance agreement, should you follow the guidelines of the state the employee resides/works in or the state where the company is incorporated? 

Answer: The answer depends on a number of factors.  Often, companies are incorporated in a state in which they have no presence or operations, e.g., Delaware.  Although courts will sometimes allow parties to select a law to govern agreements, including severance agreements, the employee may be able to challenge the agreement if it does not comply with the state in which he or she lives or works.  In fact, some states, such as California and Colorado, have certain laws that apply to workers within their state, regardless of what the agreement says. If the agreement is drafted to comply with the laws of the state of incorporation, but not the state in which the employee worked, the release might not be effective or enforceable.  Indeed, in the event of a dispute, it can be difficult to justify why the law in Delaware, for example, should apply to a worker in Colorado if the company has no operations in Delaware and the employee did not live or work there.  Therefore, the best practice is to review the laws of the states in which the employee lives or works, and where the company is headquartered, to ensure the agreement complies with the laws of both states.  If the laws conflict, consider drafting the agreement to comply with the more restrictive laws to ensure the agreement will be enforceable.

Kody Condos

by Kody Condos and Greg Saylin

On January 9, 2024, the U.S. Department of Labor (“DOL”) published its final rule defining the term “independent contractor” and setting forth the new test for determining independent contractor / employee status (the “Rule”). The DOL estimates that “there are 6.5 million small establishments or governments” relying on independent contractors that “could be affected by “ the new Rule.[1]

Greg Saylin

The Rule, effective March 11, 2024, differentiates an independent contractor from an employee if the worker is “as a matter of economic reality, in business for themselves,” meaning, the worker cannot be economically dependent on the potential employer for work.[2]  The “economic reality” does not focus on the amount of income earned by the worker, or whether the worker has other sources of income. Rather, the Rule applies the following six factors to determine economic independence:

1. “The worker’s opportunity for profit or loss;”
2. “Investments by the worker and the potential employer;”
3. “The degree of permanence of the relationship;”
4. “The nature and degree of the potential employer’s control over the work;”
5. “The extent to which the work is “integral” to the potential employer’s business;” and
6. “The worker’s skill or initiative.”

The DOL and courts are to utilize a “totality of the circumstances” approach in applying the test. And, while the DOL articulates only six factors, the Rule provides that other (unnamed) factors may also be relevant in any given case.[3]

The Factors, Explained

While some of the factors are reminiscent of prior guidance and other tests, the Rule deviates from precedent and provides important clarification on the factors to be applied.[4] It also deviates from its predecessor in some very important ways. Read more >>

Julie Hamilton

By Julie Hamilton

As we begin 2024, California has a new right for employees to take leave to grieve loss that went into effect with the new year.

Effective January 1, 2024, the state will require employers with five or more employees to provide eligible employees up to five days of leave following a reproductive loss, including failed adoption, surrogacy, or assisted reproduction. This comes one year exactly on the heels of a California law requiring employers to provide leave for employees to mourn the death of a family member.

If you have employees in California, you should prepare to comply with the new requirement and remain alert to the evolving bereavement-leave landscape. Read more >>

Leslie Perkins

by Leslie Perkins and Karina Sargsian

With the remote work model becoming increasingly prevalent and technology continuing to reshape the way people work, certain employment laws struggle to keep up with the evolving realities of the modern workforce.

One such law causing confusion as to the extent of its reach in the remote work era is the Worker Adjustment and Retraining Notification Act (“WARN Act”). At its basic core, the WARN Act requires covered employers to provide 60 days advance notice when, among other things, a mass layoff is on the horizon. (More on the specifics below).

Karina Sargsian

The WARN Act defines a mass layoff as an employment loss of a certain number of employees at a “single site of employment.” This raises the issue as to whether layoffs of remote employees trigger the WARN Act at all.

While the WARN Act does not specifically call out remote employees as part of its analysis, this does not mean that companies with remote employees are in the clear of the WARN Act’s reach.

Several courts have taken the position that remote workers are not an excepted class outside the purview of the WARN Act, rather the issue appears to be fact-specific and requires substantive analysis. Meaning, if a company gets sued for violating the WARN Act, it is not a defense to claim that the majority of its employees were remote employees and therefore they have not met the minimum number of employees required to trigger the WARN Act at a “single site of employment.” Read more >>

David Law

by David Law

Question: We’re a privately owned company with fewer than 100 employees. Do we have to follow the Worker Adjustment and Retraining Notification (WARN) Act regulations if we decide to conduct a temporary layoff in the near future? Read more >>

Ninth Circuit Upholds AB 51, More Litigation Anticipated

By Dora Lane

Dora Lane

For years, California has looked for ways to preclude employers from requiring that employment disputes be resolved through arbitration and/or placed obstacles to the enforcement of arbitration agreements. In yet another effort to do so, in 2019 the California Legislature enacted AB 51, which makes it unlawful for employers to require that, as a condition of employment, continued employment, or receipt of an employment-related benefit, any applicant or an employee waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act or the California Labor Code, “including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.” AB 51 also makes it unlawful to threaten, retaliate, terminate, or discriminate against an applicant or employee because they refuse to consent to such a waiver. Prevailing plaintiffs can obtain injunctive relief, other remedies, and attorney’s fees. Read more >>