New California Employment Laws That The Sports & Fitness Industry Should Know

PROVIDED BY JOHN GIOVANNONE, CAROTHERS DISANTE & FREUDENBERGER LLP

Are your employment practices in shape for 2020?

As industry veterans know too well, sports and fitness employers face more than their fair share of unique legal challenges in California. For example, while coaches and trainers often thrive in an entrepreneurial environment, and despise the notion of being labeled “employees,” this sentiment creates a conflict for companies balancing compliance against talent acquisition. Separately, the line between employees’ personal and professional lives often blurs as a byproduct of an industry that thrives on being fun — but when people stop having fun, lawsuits often follow. Recent developments in California will only increase employment litigation and make navigating the legal landscape more tumultuous in 2020.

Independent Contractor Designation Fraught With Peril.

Last year’s Dynamex decision held that workers are employees, unless their company can establish that they (A) provide services outside the company’s control (even if power to control is unexercised); (B) are performing a task outside the company’s normal business; and (C) have demonstrated a decision to go into business for themselves. Despite the outcry in response to this “ABC Test” from both companies and workers, California doubled down with a bill expanding the scope of the test beyond the wage orders to the entire Labor and Unemployment Code (with limited exceptions). This legislation only continues a growing trend of limiting the viability of independent contractor designations in California. (AB 5)

Outlawing Arbitration Agreements?

Many companies have been entering into mandatory arbitration agreements (often with class action waivers) with new hires and contractors. However, California recently passed legislation making it unlawful to require employees (including misclassified contractors) to agree to arbitrate employment disputes as a condition of employment. Fortunately for most companies, the new law (effective January 2020) contains an exception providing that it does not “invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act” (FAA). This provision will likely give rise to litigation concerning whether an employer is engaged in interstate commerce — a pivotal factor in determining whether the employer’s arbitration agreement is covered by the FAA. (AB 51)

Additional New(ish) California Laws Facing the Industry.

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About the Author:

John R. Giovannone is a Partner in the Los Angeles office of Carothers DiSante & Freudenberger LLP, a California-based labor and employment defense law firm with offices throughout the state. John’s practice focuses on representing employers in the full range of employment law matters, from single plaintiff to class-based wage/hour, contract, discrimination, harassment, and licensing litigation, and including traditional labor proceedings as well. He has significant experience defending companies with workforces in California in the sports and fitness industry. He can be reached via email at jgiovannone@cdflaborlaw.com or by phone at (213) 612–6300.

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SFIA is the leading global trade association in the sports & fitness industry. SFIA is the #1 source for sport & fitness research. More info at www.sfia.org.

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