Western Electrical Contractors Association, Inc.

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Labor, Business & Employment Law Update

Thursday, December 27, 2018

Insurers should prepare for high volume and high cost over the next decade. Because nothing says recovery like a lawsuit, after devastating wildfires throughout California in recent years, a flurry of reconstruction will create an increase in construction-defect claims affecting the liability-insurance market for years to come. More
Proposed IRS Regulations Affecting 401(k) and 403(b) Plans. Paul Hamburger, co-chair of Proskauer's Employee Benefits & Executive Compensation Group, and associate Steven Einhorn discuss the recently proposed IRS regulations addressing the hardship withdrawal rules affecting 401(k) and 403(b) plans. They discuss challenging questions employers and administrators face as they work through the new requirements, which include the elimination of the six-month contribution suspension for participants who take a hardship withdrawal and how many plans will need to be amended as a result of these new proposed regulations. More
California Snapshot: Seven questions employers should ask in 2019 If you have the right answers, you may survive 2019.  More
Cutting Employee Hours to Avoid ACA Requirements Costs Employer $7.4 MillionIn response to the Affordable Care Act's (ACA) 30-hour threshold for employee coverage, many employers, including retailers and restaurants, considered cutting employee hours to avoid offering health insurance. At that time, legal advisors cautioned that changing employee schedules to reduce the number of full-time employees and avoid ACA liability might violate the Employee Retirement Income Security Act (ERISA). Dave & Buster's' recent $7.4 million proposed settlement with a class of employees whose hours were cut should serve as a cautionary reminder to employers who have cut or who are considering cutting employee hours to avoid the ACA employer mandate. Employers should be aware that additional litigation is likely.  More
Under ERISA, Ignorance Is Bliss in the 9th Circuit. In Sulyma v. Intel Corporation Investment Policy Committee, the 9th Circuit Court of Appeals recently held that having access to documents disclosing an alleged breach of fiduciary duty is not sufficient to trigger the three-year statute of limitations under the Employee Retirement Income Security Act (ERISA) if the plaintiff does not have actual knowledge of the alleged breach. The takeaway is that the 9th Circuit's decision will make it more difficult for defendants to prove that a participant had actual knowledge of an alleged breach of fiduciary duty sufficient to trigger the three-year statute of limitations. Participants, in effect, can simply deny that they read or understood disclosures that were sent to them, regardless of the nature or substance of those disclosures. For purposes of ERISA's statute of limitations, ignorance truly appears to be bliss, at least in the 9th Circuit. More
And the Waiting Continues ... NLRB Extends Comment Period on Joint Employer Rule Once Again In September 2018, the NLRB released its new proposed rule regarding the joint employer standard. The NLRB extended the comment period twice since the release of the new proposed rule. Comments are now due on or before January 14, 2019. The number of comments submitted is 25,543 and counting.

California appellate court rules that Dynamex test applies only to wage order claims A California appellate court has ruled that the California Supreme Court's recent decision in Dynamex Operations West, Inc v Superior Court, which established a new test for determining whether to classify workers as independent contractors, is limited to claims under the Industrial Welfare Commission's wage orders. In Garcia v Border Transportation Group, LLC, the plaintiff taxi driver sued the defendant taxi company alleging various wage and hour claims under the California Labor Code and California's Industrial Welfare Commission (IWC) Wage Order 9. The trial court dismissed the plaintiff's claims, concluding that the plaintiff was an independent contractor who simply leased a taxi from the defendant. After the California Supreme Court's employee-friendly decision in Dynamex, there has been some uncertainty about whether the Dynamex test applies to Labor Code claims as well as wage order claims. The Court of Appeal's decision in Garcia suggests that Dynamex may have a more limited impact than employers initially feared. Of course this distinction may disappear when the California Legislature takes up AB 5 (Gonzalez D-San Diego) that states the intent of the Legislature to include provisions within this bill would codify the decision in the Dynamex case and clarify its application--and by clarify she means to have it apply generally to any challenge to status of employment.