March 10 Labor & Employment Law Update

Written by: Crystal M. O'Brien, Esq.

California Update: California Examines Who Is An Independent Contractor

In Lara v. Workers’ Comp. Appeals Board (February 25, 2010) (__ Cal.App. __), the Court considered whether a gardener, hired to twice prune bushes for a diner, was entitled to workers’ compensation benefits when he hurt himself on the job.  Looking to what are commonly called the Borello factors for identifying whether a worker is truly in control of their work and not entirely subject to the control, direction, and will of an employer, the Lara court found the gardener was an independent contractor.  What Division Three of the California Court of Appeal did for labor and employment law was to also clarify that employers can rely on the Borello factors and when they hire workers for projects, they need to assure workers are insured and protected from harming themselves --- but this is not at the direct expense of employers.  This news is positive for small employers who cannot always afford employees to perform short-term projects.  The news is also positive in that experienced skilled labors/experts who can bid for work at competitive rates can land steady work where ordinarily businesses might be hesitant to hire independent contractors out of fear they will be at risk for legal liabilities like workers’ compensation claims. 

To read more about this interesting decision, click here. 

Federal Update: U.S. Supreme Court Holds “Nerve Center” Approach Is Superior

In Hertz Corp v. Friend (February 23, 2010) (__ U.S. __, ___ Sup. Ct. ___) the U.S. Supreme Court held that employees of Hertz with wage and hour claims were entitled to the benefits of California’s laws, favoring employees bringing claims against their employer under Public Attorney General theories.  In Hertz, the employer attempted to clarify that in the 44 states it operates, its corporate location in California merely served as a mail drop station.  Thus the Citizens of California, or employees impacted by wage and hour practices, could not sue Hertz for claims against it led by its employees.  However, the Supreme Court on appeal concluded that Hertz’s defense argument was not correct. 

Relying on declarations from Hertz managers around the country, the Court determined that Hertz’s California location was in fact the “nerve center” of corporate activities.  The theory suggests that much like the brain is to the human body, the “nerve center” of a business directs and leads corporate practices by sending out instructions and policies for managing employees that result in uniform application.  Based on that finding, the Court directed Hertz and wage and hour claimants to a 9th Circuit district court for hearing the matter and applying California law to resolve issues. 

To read more, click here.

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