Whitlach v. Premier Valley, Inc.
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Plaintiff pursued a claim under the Labor Code Private Attorney General Act of 2004 against Defendants Premier Valley, Inc. (doing business as Century 21 MM) and Century 21 Real Estate LLC, to enforce civil penalties for violations of the Labor Code. The trial court sustained Defendants’ demurrer to the operative complaint without leave to amend. Plaintiff appealed. The appeal involved issues of statutory interpretation with regard to the following question: What is the applicable test or governing standard for determining whether a real estate salesperson is an “employee” or an “independent contractor” for purposes of the Labor Code’s wage and hour provisions? The resolution of this question turned on interpreting recently enacted Labor Code section 2778, subdivision (c)(1), and other provisions incorporated therein.
The Fifth Appellate District affirmed the trial court’s judgment. The court concluded that the applicable test for the purpose at hand is the test set forth in Unemployment Insurance Code sections 650 and 13004.1, as incorporated in Business and Professions Code section 10032, subdivision (b), which is itself incorporated in Labor Code section 2778, subdivision (c)(1). The trial court reached the same conclusion and applied the correct test in ruling on the Defendants’ demurrer.
The court held that under Labor Code Section 2778(c)(1), Plaintiff is an Independent Contractor as a matter of law. Further, the court held that Labor Code Section 2778(c)(1) is constitutional. Finally, the court found that Plaintiff’s separate employment agreement for his sales manager position is not relevant for purposes of his representative PAGA cause of action.
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