The Gig Economy is Here to Stay: Minimizing Wage and Hour Liability and Litigation Risks for Your Firm

Speaker Firms and Organization:
Fisher & Phillips
Christopher M. Ahearn
Of Counsel
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Presented By:
September 30, 2016
1
Partner Firms:
Ballard Rosenberg Golper & Savitt, LLP
Jeffrey P. Fuchsman
Partner
Richard S. Rosenberg
Partner
Berkeley Research Group
Elizabeth Arnold
Director

September 30, 2016
2
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Partner Firms:
September 30, 2016
6
For the past 30 years, Ballard Rosenberg Golper &
Savitt, LLP has been providing employers throughout
the U.S. with labor and employment law advice and
representation. The firm engages exclusively in the
practice of labor and employment law on behalf of
employers and management. We advise our clients
on formulating and implementing labor and employee
relations policies to achieve desired goals without
resort to adversary proceedings. Our objective is to
help clients avoid problems, rather than merely react
to crises. When the only option is litigation, we have a
winning track record before federal and state courts
(over 100 jury victories), and the administrative
agencies which enforce federal, state and local
employment laws. And, we have had the privilege of
making very favorable law for our employer clients
and the employer community . Our primary office is in
Los Angeles, CA, and we have satellite offices in
New York, NY, and Charlotte, NC.
We are national and local, with attorneys admitted in
just about every U.S. jurisdiction. We represent a
wide range of public and private employers. Our
clients include employers in the agriculture,
automotive manufacturing, automobile dealership,
banking, broadcasting, casino and gaming,
construction, health care, hospitality, insurance, legal
and professional services, manufacturing, mining,
real estate, retail, technology, transportation, and
wholesale and distribution industries, as well as state
and local government entities, non-profit
organizations, schools, colleges and universities.
Berkeley Research Group is a leading global
strategic advisory and expert consulting firm that
provides independent advice, data analytics,
authoritative studies, expert testimony, investigations,
and regulatory and dispute consulting to Fortune 500
corporations, financial institutions, government
agencies, major law firms, and regulatory bodies
around the world.
BRG experts and consultants combine intellectual
rigor with practical, real-world experience and an in-
depth understanding of industries and markets. Their
expertise spans economics and finance, data
analytics and statistics, and public policy in many of
the major sectors of our economy, including
healthcare, banking, information technology, energy,
construction, and real estate.
BRG is headquartered in Emeryville, California, with
offices across the United States and in Asia,
Australia, Canada, Latin America, the Middle East,
and the United Kingdom.

Brief Speaker Bios:
Richard began his career as a workplace lawyer in 1977 after obtaining degrees from Cornell University’s School of Industrial & Labor
Relations and the Santa Clara University law school. Richard has spent his entire career assisting management defend and risk
manage workplace related legal matters and proposed personnel transactions. His experience in the trenches enables Richard to
provide management with a clear-eyed assessment and strategic options. Richard’s style is one which motivates his clients and
adversaries to work cooperatively to find creative solutions to the toughest workplace challenges. His reputation as a formidable
opponent and labor law strategist who is both fair and trustworthy has resulted in peers naming him to the list of Southern California
Super Lawyers every year since the inception of that honor and a listing in Best Lawyers in America since 2009.
September 30, 2016
7
Chris is Of Counsel in the firm's Irvine office. He has represented employers in litigation matters for nearly all of his legal career. He
has represented employers in matters before state and federal courts in California, in arbitration, and before the Division of Labor
Standards enforcement, the Equal Opportunity Employment Commission, the California Department of Fair Employment and Housing,
and the Employment Development Department. Chris has significant experience in complex multi-party and class action claims, and
his cases have included high-profile matters with substantial media coverage. Chris has also represented employers in numerous
claims brought under the California Labor Code Private Attorneys General Act of 2004 (PAGA).

Brief Speaker Bios:
Jeffrey P. Fuchsman
Jeffrey has been practicing labor and employment law since 1982. He joined Ballard Rosenberg in 1988 and he heads up the firm’s
wage-hour practice. Jeffrey also represents employers in a wide range of labor and employment matters, and related litigation,
including individual and class action wage and hour lawsuits, wrongful termination, discrimination, and sexual harassment cases. In
addition to his litigation practice, Jeff counsels companies on day-to-day employment law issues, including wage and hour, family and
medical leave, drug testing, investigations, employee discipline, and terminations. He has also lectured and authored articles on
various labor and employment law topics, including mandatory arbitration, wage and hour compliance, punitive damages, social
networking, and discrimination. As a litigator, he regularly appears in state and federal courts throughout California, and has argued
cases before the California Court of Appeal and the U.S. Court of Appeals for the Ninth Circuit.
September 30, 2016
8
Elizabeth Arnold
Elizabeth Arnold has 15 years of experience advising clients on issues related to wage and hour compliance. She consults with
leading law firms and companies nationwide on state and federal class action wage and hour litigation cases across industries ranging
from retail and beverage delivery to meat processing and gaming.
Ms. Arnold consults with clients to develop and implement research methodologies that address complex legal compliance issues,
including misclassification (i.e., exempt vs. non‐ exempt employees, independent contractor), donning and doffing, off‐the‐clock work,
missed meal and rest breaks, and tip pooling. She utilizes research methodologies that include the use of statistical sampling and
large‐scale data collection using interview, questionnaire, and observation techniques.
► For more information about the speakers, you can visit: https://theknowledgegroup.org/event-homepage/?event_id=1667

The concept of the on-demand workforce or gig economy is not a novel concept, but the ubiquity of smartphones
and mobile applications has driven this rapidly evolving trend. Estimates vary, but one survey says that more than
50 millions of American workers entered the gig economy workforce in 2015 and it is more likely to boost in the
next few years to come.
On this type of workforce, workers operate as independent contractors wherein they enjoy the freedom of working
on their own schedule but are not provided with the same benefits similar to that of a traditional employee. In
return, companies that use this platform draw savings by reducing employee-related expenses such as payroll
taxes and employment benefits.
However, along with the upsurge of gig economy comes the rise of lawsuits filed against companies by workers
alleging violations of federal and state labor laws. The question whether gig workers fall in the classification of
employees or independent contractors often arise, but courts litigating related cases have varying opinions that
make the gig economy even more confusing. Companies should take this and other issues on gig economy into
heedful account to avoid unnecessary future lawsuits.
…
September 30, 2016
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In a two-hour LIVE Webcast, a panel of thought leaders and practitioners assembled by The Knowledge Group
will discuss the significant and latest issues on gig economy specifically on wage and hour liability and litigation
risks. Speakers will identify potential liability issues and provide strategies to avoid and minimize liability and
potential claims.
Key issues that will be covered in this course are:
• The Pros and Cons of Gig Economy
• Identifying "Employees" and "Independent Contractors"
• DOL Actions on Gig Economy-related Issues
• Recent Litigations Against On-Demand Companies
• Best Practices to Avoid Liability Issues and Potential Claims
September 30, 2016
10

Featured Speakers:
September 30, 2016
11
SEGMENT 1:
Partner
SEGMENT 2:
Of Counsel
Fisher & Phillips
SEGMENT 4:
Elizabeth Arnold
Director
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

Introduction
Richard began his career as a workplace lawyer in 1977 after obtaining degrees from Cornell University’s School of Industrial &
Labor Relations and the Santa Clara University law school. Richard has spent his entire career assisting management defend
and risk manage workplace related legal matters and proposed personnel transactions. His experience in the trenches enables
Richard to provide management with a clear-eyed assessment and strategic options. Richard’s style is one which motivates his
clients and adversaries to work cooperatively to find creative solutions to the toughest workplace challenges. His reputation as a
formidable opponent and labor law strategist who is both fair and trustworthy has resulted in peers naming him to the list
of Southern California Super Lawyers every year since the inception of that honor and a listing in Best Lawyers in America since
2009. Recognized as one of the state’s leading experts of workplace law, with a special emphasis on wage-hour law, Richard has
lectured extensively for bar associations, trade organizations and management groups throughout the United States to
thousands of lawyers, human resources professionals, business executives and management personnel. Richard has also
published over 75 articles and legal commentaries in numerous trade publications and legal journals and is the creator and
principal author of the firm’s widely read e-bulletin Compliance Matters. Richard is a recognized expert in wage hour law, having
co-authored the chapter on wage-hour law in the widely read treatise Advising California Employers (CEB) and the chapters on
the Payment of Wages and Overtime, in the treatise California Wage and Hour Law: Compliance and Litigation (CEB)
September 30, 2016
12
SEGMENT 1:
Partner

The “Gig” Economy
• What is It?
• Where is it?
• How prevalent is it?
• Is the trend likely to continue?
• How traditional labor law rules and regulations apply to the gig economy
September 30, 2016
13
SEGMENT 1:
Partner

“Gigsters”
• People who make a living working without any formal employment agreement
• Often work a series of temporary engagements, but that’s not always the case
• Typically treated as so-called “independent contractors”, though few of them have any of the attributes
of a business owner
• Don’t enjoy any of the many benefits and protections which lawmakers (and Courts) have provided to
traditional “employees”
September 30, 2016
14
SEGMENT 1:
Partner

Human Capital Trends
• Deloitte Consulting reports that:
– More than 1 in 3 US workers are “freelancers”—a figure expected to grow to 40 percent by
2020.
– 51% of executives in its global survey say they plan to increase the use of contingent workers in
the next 3 to 5 years.
• Is the genie out of the bottle?
September 30, 2016
15
SEGMENT 1:
Partner

It’s Not Just Airbnb and Uber
• Airbnb and Uber embody this trend, but business leaders report that companies in all sectors are
increasingly tapping into freelance workers as a regular part of their workforces.
• Key motivators:
– Cost reduction
– Lack of available of talent
– Demand for flexibility by contingent workers
– Tech enabled competition
September 30, 2016
16
SEGMENT 1:
Partner

Tech-enabled Competition
• Technology-enabled talent markets, operating through new technology assisted platforms, are
offering new sources of competition for their labor.
• Some examples:
– Uber and Lyft (transportation-for-hire services)
– Topcoder (programming)
– Handy, Angie’s List, Thumbtack (household repair projects)
– Tongal (ads and videos)
– Hourlynerd (consulting projects)
– Postmates (restaurant food delivery)
– Amazon now (everything!)
September 30, 2016
17
SEGMENT 1:
Partner

Key Labor Law Questions
• How does the “gig” model fit into workplace laws and regulations that were specifically written to
govern traditional employer-employee relationships?
• Should it?
• Must the laws adapt to the new business models or should we be content trying to fit the square peg
into the round hole?
September 30, 2016
18
SEGMENT 1:
Partner

Employment Laws
• Many of federal, state and local laws protect various aspects of the employment relationship
• Dozens of government watchdog agencies enforce these laws
• P.I. lawyers love the fact that courts hold “employers” legally responsible for the harm caused to third
parties by their “employees”
September 30, 2016
19
SEGMENT 1:
Partner

What’s The Big Deal?
• Governments losing billions in tax revenue
• Plaintiff’s lawyers see huge potential recoveries
• Gig engagers enjoy a significant competitive edge over organizations that engage workers as
employees:
– No workers’ compensation insurance costs
– No employee benefits costs
– No payroll tax costs
– No “labor law” legal compliance costs
– Lower labor costs overall
September 30, 2016
20
SEGMENT 1:
Partner

CA Labor Code Gotcha’s
• Section 226.8:
– fines of 5K-25K if “willfully” misclassify a worker as an IC
– Prohibits pay deductions that couldn't charge EE’s
– Public shaming: ER must post notice of violations on website in area that public can see
(including potential plaintiffs and their lawyers)
•
September 30, 2016
21
SEGMENT 1:
Partner

CA Labor Code Gotcha’s
• Section 2753:
– Advisors who recommend that workers be classified as IC’s can be liable along with their clients
if they are wrong (like CPA’s)
– Layers exempted if giving “legal advice”
September 30, 2016
22
SEGMENT 1:
Partner

How Claims Arise?
• Government audits
• Workers’ compensation claims
• Individual or “class” type lawsuits
• Union organizing
• Agency charges or investigations
• Third party claims for personal injuries
• Lawsuits by competitors burdened with following the rules
September 30, 2016
23
SEGMENT 1:
Partner

Who Is An Independent Contactor?
• Unfortunately, it depends who (which agency or court) you ask
• Major players:
– U.S. Dept. of Labor (has declared war on the IC’s)
– IRS
– NLRB
– Federal Courts
– State regulators and Courts
September 30, 2016
24
SEGMENT 1:
Partner

Key Issues:
• Is the gig worker truly an independent business person?
• What facts should you assess when making that determination?
• The burden of proof lies with the engager
• Government agencies and courts inclined to rule that it’s employment
• DOL says almost all workers are really “employees”.
September 30, 2016
25
SEGMENT 1:
Partner

Huge Risk Of Misclassifying Gigsters
• Inherently risky to classify any worker as an independent contractor because:
– There is no uniformly followed standard to assess the bona-fides of the relationship
– Different agencies and courts use their own formulae
– As a result, a ruling in your favor by one agency or court is not necessarily binding on another
– Contracts aren’t worth the paper they are written on if the relationship doesn’t pass muster
September 30, 2016
26
SEGMENT 1:
Partner

DOL View:
• Is the gigster’s work integral to the business?
• Does the gigster’s managerial skill affect her opportunity for a profit or loss?
• How does the gigster’s relative investment compare to the that of the engaging entity?
• Does the work require special skills and initiative of the gigster?
• Is the relationship permanent or indefinite?
• What is the nature and degree of the engager’s control over the method, manner and means by which
the gigster does the work?
September 30, 2016
27
SEGMENT 1:
Partner

CA EDD Worksheet
• It’s on their website (Form DE 38 Rev. 4 (1-16)
• Analysis is very revealing!
• Help direct you to an “answer”, but it does reveal their bent (that most workers ARE employees)
September 30, 2016
28
SEGMENT 1:
Partner

EDD’s Checklist
• 1. Do you instruct or supervise the person while s/he is working?
• 2. Can the worker quit or be fired at any time?
• 3. Is the work being performed part of your regular business?
• 4. Does the worker have a separately established business?
• 5. Is the worker free to make business decisions which affect his or her ability to make a profit from
the work?
• 6. Does the individual have a substantial investment in their job which would subject the worker to a
substantial financial risk of loss?
• 7. Do you have employees who do the same type of work?
• 8. Does the business furnish the worker with any tools or supplies used to perform the work?
• 9. Is the work considered unskilled or semiskilled labor?
• 10. Do you provide training to the worker?
• 11. Is the worker paid a fixed salary, an hourly wage or on a piece rate?
• 12. Did the worker previously perform the same or similar work for you as an employee?
• 13. Does the worker believe s/he is an employee?
September 30, 2016
29
SEGMENT 1:
Partner

California's View (Borello)
• Key factor: the right to control where, when and how the work is to be done.
• Secondary factors:
– Whether the person is engaged in an occupation distinct from the business of the engager?
– Whether the gigster’s services are part of the engager’s regular work?
– Does the gigster supply her own tools and instrumentalities?
– The gigster’s investment in the equipment/materials needed to do the work
– Does the service require a special skill not possessed by the engager?
– Is this kind of work typically done without supervision by an independent business owner?
September 30, 2016
30
SEGMENT 1:
Partner

More Borello Factors
– Gigster’s opportunity for real profit and loss
– Length of time of the engagement
– The degree of permanence of the relationship
– The method of payment (by the hour r the job?)
– The intent of the parties, as evidenced by a written agreement
September 30, 2016
31
SEGMENT 1:
Partner

Call Your Labor Lawyer When….
• A gigster files a claim for state UI/SDI benefits
• A gigster gets injured while working for you
• A gigster injures a third party while working for you
• A gigster makes a wage/benefit claim at a state or federal agency
• You receive an audit letter from the government
• The long term engagement of a gigster
September 30, 2016
32
SEGMENT 1:
Partner

Introduction
Chris is Of Counsel in the firm's Irvine office. He has represented employers in litigation matters for nearly all of his legal
career. He has represented employers in matters before state and federal courts in California, in arbitration, and before the
Division of Labor Standards enforcement, the Equal Opportunity Employment Commission, the California Department of
Fair Employment and Housing, and the Employment Development Department. Chris has significant experience in complex
multi-party and class action claims, and his cases have included high-profile matters with substantial media coverage. Chris
has also represented employers in numerous claims brought under the California Labor Code Private Attorneys General Act
of 2004 (PAGA).
Chris’s practice also focuses on shielding employers from liability by providing advice and counsel in multiple areas of
California employment law, including California wage and hour matters, discipline and termination, and employment policies
and procedures.
September 30, 2016
33
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends - O’Connor v. Uber
• Misclassification case.
• Northern District of California
• “Gratuities” / Cal. Lab. Code § 351
• Expense Reimbursement / Cal. Lab. Code § 351
• Uber loses initial motion to dismiss
• Initial dispute regarding scope of class (California vs. Nationwide)
September 30, 2016
34
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – O’Connor v. Uber
• Summary Judgment – Uber’s Arguments (not a transportation business, drivers provide no service to
Uber, no substantial control over drivers)
• Summary Judgment – Plaintiffs’ Arguments (right to control while on platform, drivers provide a benefit
and service to Uber, Uber is a transportation company)
• Result – Court denies motions, case will ultimately be tried to a jury.
September 30, 2016
35
SEGMENT 2:
Of Counsel
Fisher & Phillips

• Class Certification – September 2015 Order certifying class of all CA drivers, but excluding:
– Drivers who signed arbitration agreements implemented in June 2014 containing a Court-
ordered “opt out” clause.
– Drivers who drove for third-party transportation companies.
• Court not persuaded by Uber’s arguments regarding 17 versions of driver agreement, and 400
declarations from drivers satisfied with business model.
September 30, 2016
36
SEGMENT 2:
Of Counsel
Fisher & Phillips

• December 2015 Class Certification Ruling:
– Court reverses prior ruling excluding drivers who signed arbitration agreements, based on non-
severable unlawful “PAGA” waiver.
– What is a “PAGA” waiver / Iskanian v. CLS Transportation Los Angeles (Calif. Supreme Ct.)
– Court rejected Uber’s suggested modifications to arbitration agreement, saying that the “PAGA”
waiver was inextricably linked to the rest of the agreement and could not be disregarded.
– Appeal to 9th Circuit.
September 30, 2016
37
SEGMENT 2:
Of Counsel
Fisher & Phillips

• Tentative Settlement – up to $100 million ($84 million + $16 million if Uber goes public)
• Included both CA and MA drivers
• Up to $8,000 per driver, depending on miles driven
• Drivers to remain as independent contractors
• Uber to notify riders that tips are not included in fares
• Driver objections
• August 2016 – Court rejects settlement
September 30, 2016
38
SEGMENT 2:
Of Counsel
Fisher & Phillips

• September 2016 Mohamed case (Ninth Circuit) – reversal of court’s prior ruling in companion case
that arbitration agreements not enforceable
• If applied to Uber case, could reduce size of class from 240,000 to 8,000
• Possible revision of settlement / resolution of primary issues unlikely
September 30, 2016
39
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – Mohamed v. Uber
• Background and consumer credit checks
• Complaints of misconduct by some drivers led Uber to step up its screening in 2014 (in 2014, sued by
District Attorneys in California regarding lack of background checks)
• Includes county, federal and multi-state criminal checks.
• Plaintiff claims he did not receive notice and a copy of the report until after his application was
rejected (and thus, no opportunity to contest the report), in violation of FCRA
• Content of report – improperly included extraneous information
• Arbitration ruling – Ninth Circuit rules in favor of arbitration
September 30, 2016
40
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – Berwick v. Uber
• Claim by driver before California DLSE or “Labor Commissioner”
• In June 2015, DLSE found driver was an employee based on control factors such as background
checks, measuring of drivers against passenger feedback, setting fares, and requirement to accept
percentage of ride requests
• DLSE also found that drivers’ services are central to Uber’s business, which is transportation
• Contrasts with earlier 2012 decision.
September 30, 2016
41
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – Cobarruviaz v. Maplebear, Inc.
• Maplebear is a “dba” of Instacart
• Also an employee misclassification claim, included claims under FLSA and other state laws such as
New York and Colorado
• In a November 2015 ruling, Judge Chen (same judge as in O’Connor) enforced Instacart’s arbitration
agreement, including allowing the “PAGA” waiver to be severed
• “PAGA” claims to proceed in court after individual arbitration
• Instacart now offering limited part-time employee option to workers (acknowledging need for training
in more complex task of selecting grocery items)
September 30, 2016
42
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – Selden v. Airbnb
• Class-action race discrimination claim federal court in District of Columbia, filed in May 2016
• Plaintiff, an African-American, alleges he was rejected for accommodations when using his own
profile, but accepted when using fake white profiles
• Allegation that Airbnb’s design of having a profile with photographs and other demographic info is a
design flaw that leads to discrimination
• Many gig economy companies link to social media information
September 30, 2016
43
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – Personal Injury
• In 2015, Uber settled lawsuit by family of 6-year old girl struck and killed by an Uber driver in San
Francisco
• In May 2016, a federal judge in San Francisco permitted lawsuit against Uber to proceed, by women
alleging they were sexually assaulted by drivers
• Lawsuits may assert “vicarious liability”, based on the allegation that the drivers are Uber employees
• Issues can arise where gig workers in “waiting” mode and not actively on a run/with a rider
• Insurance – many driver policies do not cover “commercial” activity
• Emergence of state and local requirements for gig companies to carry insurance
September 30, 2016
44
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – US Dept. of Labor June 2015 Memorandum
• Misclassification complaints to DOL by workers is on the rise
• DOL has entered into a “memorandum of understanding” with IRS regarding joint enforcement
• FLSA defines “employ” broadly as including to “suffer or permit to work”
• “Economic Realities” test (focused on economic dependence) should be broadly interpreted
consistent with the “suffer or permit” standard
September 30, 2016
45
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – Dynamex v. Superior Court
• Delivery drivers were re-classified from employees to independent contractors
• Allegedly, all job requirements remained the same
• In ruling on class certification, Court relied on the “suffer or permit” definition of employee contained in
California’s IWC Wage Orders
• Dynamex argues that the common-law control test, which was used in Uber and other
misclassification cases, is the proper test
• California Supreme Court to hear issue, could broadly expand definition of “employee”
September 30, 2016
46
SEGMENT 2:
Of Counsel
Fisher & Phillips

Litigation Trends – Chamber of Commerce v. City of Seattle
• Federal lawsuit brought by U.S. Chamber, challenging Seattle ordinance that would allow gig workers
to collectively bargain over working conditions
• Chamber argued that the ordinance is preempted by the National Labor Relations Act
• Court dismissed lawsuit, ruling that the Chamber had no “standing” and no one had been injured
because no actual organizing had yet taken place
• Similar bill pending in CA legislature (AB 1727), would include allowing drivers to negotiate rider fees
and other items
September 30, 2016
47
SEGMENT 2:
Of Counsel
Fisher & Phillips

New Legislation – Ideas
• Create “third category” of workers (workers who use platforms as intermediaries to connect with
consumers) to whom only certain labor laws would apply (such as anti-discrimination, payroll tax) and
who could be pooled for benefits
• Amend existing statutes to refine definition of “employee” with more clearly defined criteria
• Specifically exempt platform-based workers from employment laws, either permanently or temporarily
while other options are explored
September 30, 2016
48
SEGMENT 2:
Of Counsel
Fisher & Phillips

Introduction
Jeffrey has been practicing labor and employment law since 1982. He joined Ballard Rosenberg in 1988 and he heads up
the firm’s wage-hour practice. Jeffrey also represents employers in a wide range of labor and employment matters, and
related litigation, including individual and class action wage and hour lawsuits, wrongful termination, discrimination, and
sexual harassment cases. In addition to his litigation practice, Jeff counsels companies on day-to-day employment law
issues, including wage and hour, family and medical leave, drug testing, investigations, employee discipline, and
terminations. He has also lectured and authored articles on various labor and employment law topics, including mandatory
arbitration, wage and hour compliance, punitive damages, social networking, and discrimination. As a litigator, he regularly
appears in state and federal courts throughout California, and has argued cases before the California Court of Appeal and
the U.S. Court of Appeals for the Ninth Circuit. He was also co-counsel for the employer in a landmark case before the
California Supreme Court on constructive discharge, Turner v. Anheuser-Busch, Inc. Jeffrey has particular expertise
defending employers in wage and hour class actions. He has represented some of the nation’s leading companies in such
matters. Jeff co-authored the chapter on wage-hour law in the widely read treatise Advising California Employers (CEB) and
chapters on the Payment of Wages and Overtime, in the treatise California Wage and Hour Law: Compliance and
Litigation (CEB).
September 30, 2016
49
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

NON-COMPLIANCE RISKS
• Class, collective and representative lawsuits
 Compensable work hours
 Minimum wage
 Overtime
 Piece rate
 Meal and rest breaks
 Tips and service charges
 Expense reimbursement
 Record keeping
September 30, 2016
50
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

CLASS ACTIONS
• Class action lawsuits
 Uber: $100M settlement rejected by Judge as insufficient
 Lyft: $27M settlement preliminary approved
• Collective “opt in” actions under FLSA
• Representative “PAGA” lawsuits
 Class certification not required
 Class action waivers not permitted
 Up to $200 per employee per pay period + attorney’s fees
September 30, 2016
51
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

COMPENSABLE WORK HOURS
• All hours under employer’s control
• “Suffered or permitted”
• On-call
 waiting to work or waiting is work
 “controlled” vs. “uncontrolled “ standby
• Travel time vs. commuting
• Sending or receiving phone calls, emails, and texts
• Completing paperwork or synching computer
• Time clock “rounding”
• “De minimis” doctrine
September 30, 2016
52
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

MINIMUM WAGE
• Must pay the higher of federal, state or local ordinance for all compensable work hours if employees
• Federal: currently $7.25 but push to increase up to $15
• State: states like CA (currently $10) have approved minimum wage increases to $15 by 2022
• Local: some cities and counties (e.g., LA, SF, SD) have enacted “living wage” ordinances with a
faster timetable to $15; industry-specific ordinances covering large hotels or government contractors
already require $15+/hour
• Significant penalties for non-compliance (double damages)
September 30, 2016
53
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

OVERTIME
• Exempt vs. non-exempt
• Salary + Duties
• Salary is a fixed amount regardless of quantity or quality of work
 New federal salary requirement of $47,476 effective 12/1/16
 State law requirements: CA salary must be at least twice minimum wage; CA salary exceeds
federal salary when minimum wage is $12 effective 1/1/19
• Duties test: “white collar” (executive, administrative, professional)
 “primary” duties are exempt
 must be over 50 % in CA
• Other exemptions: commission sales, outside sales, computer professionals
• “Regular rate” issues
 bonus, commission, service charges included when calculating overtime
• Penalties for non-compliance
September 30, 2016
54
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

PIECE RATE
• Compensation based on completion of task
• Under FLSA permissible if earnings for work week average out to at least minimum wage
• CA requires minimum wage for every hour worked; averaging not permissible
 Must be separately paid minimum wage for “non productive time”
 Rest breaks must be based on average earnings if higher than minimum wage
September 30, 2016
55
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

MEAL AND REST BREAKS
• Must allow employees to take an unpaid 30-minute, duty-free, uninterrupted meal break before the
end of the 5th hour if shift is more than five hours but employee can waive if shift is not more than six
hours
• Second unpaid meal break must be allowed before the end of the 10th hour if shift is more than 10
hours but employee can waive if shift is not more than 12 hours
• 10-minute paid rest breaks required for every four hours worked or “major fraction” if shift is over 3 ½
hours
• One hour of pay per day penalty for each meal or rest break violation, or two hours per day if both
meal and rest break violations
September 30, 2016
56
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

GRATUITIES AND SERVICE CHARGES
• A tip is a voluntary payment left by customer and belongs 100 % to the employee(s)
• A service charge is a mandatory charge added to customer’s bill
 Service charges belong to the “house” and can be retained or shared with employees in
employer’s discretion
• Tips do not affect employee’s regular rate for calculating overtime but service charges are wages and
must be included in the regular rate
• “Tip credit” of up to $5.12/hour can be applied to satisfy minimum wage under FLSA but not in CA
• Tip pooling arrangements
September 30, 2016
57
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

EXPENSE REIMBURSEMENT
• Under FLSA, only an issue if employee is paid less than minimum wage after expenses
• CA requires reimbursement for all business expenses for exempt and non-exempt employees
• Business use of personal auto must be reimbursed at IRS mileage rate (now $.54/mile)
 DLSE found Uber liable for mileage reimbursement
• Must reimburse for reasonable business use of personal cell phones, data plan, and internet
• Tools, equipment and uniforms
September 30, 2016
58
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

RECORD KEEPING
• Must keep accurate records of work hours
 Including beginning and end of work day and meal breaks
• Pay stubs
 statute requires nine categories of information including inclusive dates of pay period, all rates in
effect and hours worked at each rate, deductions, accrued sick pay, legal name and address of
employer, last four digits of SSN or employee ID
• Prudent to keep time and pay records for at least four years
• Must make available to employees if requested
• Failure to keep accurate time records puts burden on employer to disprove claim
• Penalties for non-compliance
September 30, 2016
59
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

Introduction
Elizabeth Arnold has more than 15 years of experience advising clients on issues related to wage and hour compliance. She
consults with leading law firms and companies nationwide on state and federal class action wage and hour litigation cases
across industries ranging from retail and beverage delivery to meat processing and gaming.
Ms. Arnold consults with clients to develop and implement research methodologies that address complex legal compliance
issues, including misclassification (i.e., exempt vs. non‐ exempt employees, independent contractor), donning and doffing,
off‐the‐clock work, missed meal and rest breaks, and tip pooling. She utilizes research methodologies that include the use of
statistical sampling and large‐scale data collection using interview, questionnaire, and observation techniques.
Ms. Arnold has advised clients on more than 150 cases in the wage and hour area of employment law. Her engagements
often include national projects to determine the tasks and responsibilities of employees and to assess whether the work they
perform is sufficiently similar to determine their appropriate status on a group basis under the executive, administrative,
professional, and/or outside sales exemptions. Clients have used results from her studies at multiple stages of litigation,
including mediation, class certification, and merit evaluation.
September 30, 2016
60
SEGMENT 4:
Elizabeth Arnold
Director

Collecting Systematic Data to Evaluate Liability Issues and Potential Claims
• As previously discussed, there are multiple components to determining
whether IC classification is appropriate.
• I will describe some methods we use to collect data relevant to
determining the appropriate classification of workers.
• Substantive data collection is often useful
• Findings can be used in both pre-litigation (preventative) and litigation
context
September 30, 2016
61
SEGMENT 4:
Elizabeth Arnold
Director

Multisource Data Collection
September 30, 2016
62
SEGMENT 4:
Elizabeth Arnold
Director
1. Workers
• To identify work being performed
• To determine the nature, frequency, and context
in which workers are interfacing with the company
2. Company points of contact
• To determine the nature, frequency and
context in which interaction with worker occurs
3. Company management
• To determine the nature, frequency and context in which interaction are
intended to occur
• To learn about the operations of the business and how workers fit in and
contribute
The Company
Point of
Contact
Employees
of Company
Workers
(Independent
Contractors)

Primary Methods of Data Collection
September 30, 2016
63
SEGMENT 4:
Elizabeth Arnold
Director
1. Observational studies
• Shadow workers and document tasks performed
2. Surveys and Questionnaires
• Paper and pencil, online
3. Structured Interviews
• In-person, online
• In some situations, methods can be used together for most
comprehensive data. Data collected from multiple sources using
different methods can result in highly defensible and compelling
evidence

Case Study: Truck Drivers*
September 30, 2016
64
SEGMENT 4:
Elizabeth Arnold
Director
• BRG conducted comprehensive study of Truck Drivers to evaluate IC
status
• Methodology used can be applied to a wide range of jobs in the gig
economy
• Data collection included:
1. Observations of Truck Drivers
2. Interviews with Truck Drivers
3. Interviews with employees
• Points of contact employees who interface with Truck Drivers
• Management to provide organizational and operational overview
*The following case study is for illustration purposes only. Responses have been modified and are not intended to reflect
any specific company or employees.

Truck Driver Observations
September 30, 2016
65
SEGMENT 4:
Elizabeth Arnold
Director
Task
Start
Task
End
Allocated
Time
Task Station Code
6:31:30 6:39:20 0:07:50 Check fuel in truck. 1
6:39:20 6:42:10 0:02:50 Talk to drivers regarding fuel card. 1
6:42:10 6:43:50 0:01:40 Retrieve scanner from office. 1
6:43:50 6:47:20 0:03:30 Read [disputed delivery form]. 1
6:47:20 6:49:20 0:02:00 Wait for Package Coordinator. 1
6:49:20 6:51:10 0:01:50 Talk to Package Coordinator regarding package
delivered that customer said was not delivered.
1 1
6:51:10 6:53:40 0:02:30 Walk to truck to get water bottle. 1
6:53:40 6:55:50 0:02:10 Walk to Restroom [to fill up water bottle]. 1 3
6:55:50 6:59:20 0:03:30 Talk to Package Coordinator to tell her the missing
package had been delivered.
1 1
6:59:20 7:00:20 0:01:00 Log into scanner. 1
7:00:20 7:01:50 0:01:30 Scan ID badge and enter information in scanner to
end route and close the day.
0
• Conducted full-shift observations.
• Sample page from one Truck Driver observation record. Includes detailed list
of tasks performed, including interaction with others.

Truck Driver Observation Results
September 30, 2016
66
SEGMENT 4:
Elizabeth Arnold
Director
• Showed low frequency and minimal time spent interacting with point of
contact employees.
• Example results from 4 Truck Driver observations:
Observation
Number
Total
Observation
Time
Frequency of
Interactions with
Company ABC
Total Time
Spent
Interacting with
Company ABC
Percent of work
day interacting
with Company
ABC
1 9:41:00 6 0:07:00 1.3%
2 11:33:00 2 0:03:00 0.5%
3 8:21:00 1 0:04:00 0.9%
4 8:20:00 3 0:10:00 2.1%
Average 9:28:45 3 0:06:00 1.2%
Analysis of Truck Driver Time Spent Interacting with Company ABC

Truck Driver Interviews
September 30, 2016
67
SEGMENT 4:
Elizabeth Arnold
Director
• The categories of questions we asked Truck Drivers included:
– Truck Driver background
(e.g., special skills,
qualifications other
concurrent jobs/work)
– Scheduling process
– Compensation
– Work performed
– Work load
– Physical appearance
rules/guidelines
– Truck Driver
hiring/onboarding
– Training
– Company ABC and Truck
Driver interactions
– Truck Driver performance

Truck Driver Interviews: Sample Questions and Responses
September 30, 2016
68
SEGMENT 4:
Elizabeth Arnold
Director
• Q. Who determines the order and timing of your pick-ups and
deliveries?
• A. “Company ABC. We have to do it in a window of time”
• A. “I do…”
• A. “I determine order and timing…”
• Q. What types of communications does Company ABC send to you?
• A. “Handouts about safety. And usually a phone call or text if a truck is late
in the morning to drop off crates at the warehouse.”
• A. “Sometimes things will come across the scanner. I don’t even know what
they are, but sometimes its on the customers.”
• A. “Safety meetings”

Truck Driver Interviews: Sample Questions and Responses
September 30, 2016
69
SEGMENT 4:
Elizabeth Arnold
Director
• Q. For what purposes do you interact with Company ABC employees?
• A. “If a customer has a question. If I have a question about a delivery or
pick-up.”
• A. “Just to say hi, address corrections, damaged boxes, customer
concerns…”
• A. “I interact with the assistant to make sure he’s loading things where I
want them…”
• Q. What information are you expected to report to Company ABC?
• A. “Accidents and injuries. Like being injured on the job”
• A. “Accidents, negative customer interactions, but I don’t know if that’s
expected, I just do it…”
• A. “Accident. Anything out of the ordinary.”

Truck Drivers: Employee Interviews- Sample Questions & Responses
September 30, 2016
70
SEGMENT 4:
Elizabeth Arnold
Director
• The topics of questions we asked employee points of contact paralleled
the questions we asked drivers.
• Q. Are there any guidelines Company ABC has for the hours that Truck
Drivers must work?
• A. “No, I don’t think so.”
• A. “None. Customer may have some guidelines for pickups but they can
arrive and leave when they want.”
• A. “Other than the limitations that are set forth by the DOT, its not anything
that I’m involved in.”

September 30, 2016
71
SEGMENT 4:
Elizabeth Arnold
Director
• Q. For what reasons do you contact a Truck Driver?
• A. “If we have a customer who calls and wants pick-up…”
• A. “Try not to do that, but might call if a customer has a request…”
• A. “It would be whenever we get a customer service email with regards to a
delivery…”
• Q. For what reasons would a Truck Driver contact other Company ABC
employees?
• A. “Truck Driver might call Company ABC if they have a bad address…”
• A. “Address corrections, directions, any info they need for customer…”
• A. “If their scanner crashes or they are having trouble with it”

September 30, 2016
72
SEGMENT 4:
Elizabeth Arnold
Director
• The topics of questions we asked company management employees
included parallel questions to the Truck Drivers and point of contact
employees.
• In addition, we asked questions regarding:
– Operations of the business
– Role Truck Drivers play
– Intended nature of interaction between Truck Drivers and company
• Q. Does Company ABC track Truck Drivers’ work progress?
• A. “We can see in the system if a truck driver is scanning a lot of closures or
a lot of address corrections…”
• A. “We track service, meaning how many crates are delivered…”
• A. “Not at all”

September 30, 2016
73
SEGMENT 4:
Elizabeth Arnold
Director
• Q. When they are in the warehouse, what are some reasons other
Company ABC employees interact with Truck Drivers?
• A. “My employees interact with them…to make sure that crates get onto
trucks…”
• A. “Truck drivers go to the check-out window and receive scanner and
battery and papers…”
• A. “If their truck position got moved, or if there is a new assistant, or to let
them know about day to day things…”
• Q. What training does Company ABC provide to drivers?
• A. “None, we provide a safety information guide but that’s it..…”
• A. “None that I can think of.”
• A. “We will train them on how to use their scanners..”

September 30, 2016
74
SEGMENT 4:
Elizabeth Arnold
Director
• Q. Are there any guidelines Company ABC has for hours that Truck
Drivers must work?
• A. “No, we don’t dictate hours…”
• A. “The only regulation for drivers are the DOT regulations…”
• A. “No, there are hours of service guidelines mandated by the DOT…”
• Q. Q. What truck driver records does Company ABC maintain?
• A. “We maintain general qualifications file…”
• A. “DOT file, the truck drivers name is on other documents, like their daily
settlement…”
• A. “We are required to keep inspection reports for DOT”

Case Study of Truck Drivers Results Summary
September 30, 2016
75
SEGMENT 4:
Elizabeth Arnold
Director
• Study provided client with comprehensive understanding of:
• The work drivers are performing, how, when and the nature of any
interaction drivers have with Company ABC.
• The role Truck Drivers play in Company ABC’s operations.
• Relevant secondary factors (e.g., equipment workers purchase and use)
• Company was able to make informed decisions regarding how to
proceed and minimize risk

Managing Wage and Hour Compliance
September 30, 2016
76
SEGMENT 4:
Elizabeth Arnold
Director
These methods are also applicable to other wage and hour issues, such
as:
•Exempt/non-exempt misclassification
•Off-the-clock (compensable work)
•Meal and rest breaks
•Donning and doffing
•Tip pooling/ “Tippable” work

September 30, 2016
77
Contact Info:
Partner
Ballard Rosenberg Golper &
Savitt, LLP
E: rrosenberg@brgslaw.com
T: 818-508-3702
Jeffrey P. Fuchsman
Partner
Ballard Rosenberg Golper &
Savitt, LLP
E: jfuchsman@brgslaw.com
T: 818-508-3730
Of Counsel
Fisher & Phillips
E: cahearn@laborlawyers.com
T: (949) 798-2120
Elizabeth Arnold
Director
E: earnold@thinkbrg.com
T: 510.874.5964

► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type
your question in the box that appears and click send.
► Questions will be answered in the order they are received.
Q&A:
September 30, 2016
78
SEGMENT 1:
Partner
SEGMENT 2:
Of Counsel
Fisher & Phillips
SEGMENT 4:
Elizabeth Arnold
Director
SEGMENT 3:
Jeffrey P. Fuchsman
Partner

September 30, 2016
79
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The Gig Economy is Here to Stay: Minimizing Wage and Hour Liability and Litigation Risks for Your Firm

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