Decision: In Noe v. Superior Court of Los Angeles County, several vendors hired to sell food at various entertainment venues filed a wage and hour class action against AEG (the owner of the venues), Levy Premium Foodservice (the company AEG had contracted to provide food and beverage services at the venues) and four affiliated companies, and Canvas (the entity that had hired the vendors). The vendors brought several causes of action under California’s Labor Code, including an action pursuant to section 226.8 for being misclassified as independent contractors.
The Court of Appeal reversed the trial court’s decision that section 226.8 only applies to employers that make the actual classification decision (in this case, Canvas), and ruled that section 226.8 extends to a joint employer that has knowledge its employees have been misclassified by a co-employer. The Court of Appeal refused to extend section 226.8 liability to co-employers that have no knowledge of the misclassification because, unlike the employers with knowledge of the misclassification, employers without knowledge do not “engage” in the act of “voluntarily and knowingly” misclassifying as is required to be liable under the statute. The Court of Appeal also found, however, that there is no private right of action to enforce section 226.8 and on that ground affirmed the trial court’s summary adjudication of the section 226.8 cause of action.
Impact: Despite the Court of Appeal’s finding that no private right of action exists to enforce section 226.8, individuals or a class can enforce the statute through the Private Attorneys General Act, Labor Code section 2698, et seq. Thus, employers should be wary of their co-employers’ classification activities and take steps to remedy misclassifications of which they become aware, as a violation of section 226.8 does not require an affirmative act on the part of each employer, only knowledge.