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Abdulaziz, Grossbart & Rudman Newsletter
Spring 2018

We hope that you enjoy this edition of our Newsletter.
Remember, if there is anything that you would like to see in the future, please let us know.
The Staff at
Abdulaziz, Grossbart & Rudman

The Western Roofing Expo will be held at the Paris Las Vegas Hotel & Casino, in Law Vegas, Nevada from June 10, 2018, through June 12, 2018.

Ken Grossbart will be speaking at the Western Roofing Expo on Tuesday, June 12, 2018, from 10:15 a.m. to 11:30 a.m. in the Bordeaux breakout room. Come learn all about Contractor Licensing Law and its Effect on Your Business.

For more information about the Western Roofing Expo, please visit here.
Independent Contractors vs. Employees

In past articles, we have written regarding the importance of classifying those persons who worked on your projects. Employees vs. independent contractors.
Although our office has written on this subject before, I recently read an article by our colleague, Phil Vermeulen of the Contractors Licensing Center in Sacramento, who also wrote on the topic.
It is a very common practice for contractors to classify their workers as "independent contractors" when in reality they would be considered to be employees. This policy is done primarily to avoid the cost of workers' compensation and overtime pay that would be due and owing to workers classified as employees. As Phil points out in his article, the Department of Industrial Relations ("DIR") has strongly cautioned employers to be very careful with this dangerous practice. We reprint the following from DIR:

"A federal court judge has sided with California Labor Commissioner, Julie A. Su, issuing a judgment in favor of five port and rail truck drivers against SPO Cartage Inc. The ruling awards the drivers reimbursement for expenses and unlawful deductions in the amount of $958,660 plus attorneys fees and costs.
The Labor Commissioner previously issued awards to the five drivers following hearings that found they had been misclassified as independent contractors. XPO Cartage appealed the five decisions in Superior Court and the case was removed to Federal Court, where attorneys for the Labor Commissioner defended the decisions on behalf of the drivers. After a four-day bench trial and post-trial briefing, U.S. District Court Judge William Keller ruled that all five drivers were misclassified as independent contractors and were entitled to reimbursement for expenses and unlawful deductions.
State courts have also upheld the Labor Commissioner's awards in misclassification cases in many other professions, particularly in construction, so we cannot emphasize enough, take heed!!
All employers are urged to be aware of this important decision and the myriad consequences of misclassification of employees including:
  • Stop orders and penalty assessments pursuant to Labor Code section 3710.1;
  • Liability for overtime premium, meal period pay, and other remedies available to employees under the Labor Code and Orders of the Industrial Welfare Commission;
  • Exposure for tort liability for injuries suffered by employees when workers' compensation insurance is not secured (Labor Code section 3706);
  • Exposure for unfair business practices (Business & Professions Code section 17200);
  • Tax liability penalties; and
  • Criminal liability (Labor Code section 3700.5)."
Although the reprint from the DIR deals exclusively with a California business, the points raised would appear to be equally applicable to those businesses that operate outside of California. All businesses that are presently or are considering using independent contractors to perform work should do so with caution and not before seeking qualified legal advice.

How does a tree feel every year on the first day of spring?

Incorporating One Agreement Into Another

It is not unusual to have a contract between parties where one contract incorporates the terms of another contact or document. You often times see this in the construction industry. For example a general contractor will enter into a subcontract agreement with a subcontractor. In the subcontract agreement, the prime contract between owner and general contractor will be referred to in the subcontract agreement where the prime contract is incorporated into the subcontract agreement. A recent appellate court case addressed this issue and found that if you are going to incorporate one agreement into another agreement, the reference must be clear and unequivocal.
The facts of the recent appellate court case found that Oldcastle a manufacture entered into a dealer agreement with All Masonry & Landscape Supply (Masonry). The date of the dealer agreement was 2001. In 2010, Masonry updated its credit information with Oldcastle. The 2010 credit application contained a clause stating that the 2010 document constituted the entire agreement between the parties. In other words, the 2001 agreement was not only not incorporated into the 2010 agreement but was not even referenced. Masonry later sued Oldcastle for breach of the 2001 agreement. Oldcastle was the prevailing party in the lawsuit and subsequently filed a motion to recover attorney fees pursuant to the 2010 agreement, which contained an attorney's fees clause. The trial court granted Oldcastle's motion for attorney's fees and Masonry appealed claiming that the 2010 document has no bearing on the 2001 agreement.
Despite the trial court's ruling that Oldcastle is entitled to attorney's fees, the Appellate Court reversed the trial court's ruling. The Appellate Court stated that for the terms of one document to be incorporated into another document, the reference must be clear and unequivocal. In these set of facts, the court concluded that the two agreements did not show any type of intention to be incorporated into each other and since the lawsuit was based upon the 2001 agreement which did not contain an attorney's fees clause, Oldcastle as the prevailing party was not entitled to recover attorney's fees.
The lesson learned from this case is that if you intend to incorporate one or more documents into another document, your reference to incorporating documents must be clear and unequivocal. Failure to do so may preclude you from being able to take the benefits from an older agreement into your new agreement.
I am skeptical about hiring a carpenter to make my furniture...
but I'm sure it woodwork.
There are Exceptions to the General Rule That One is Not Liable for Injuries to Their Independent Contractor

About 25 years ago, in a case called Privette v. Superior Court ("Privette"), the California Supreme Court set forth a rule, which generally prohibited an independent contractor or its employees from suing the hirer of the contractor for workplace injuries. This rule has evolved over the years to have certain exceptions, which were recently highlighted in a recent Court of Appeal decision, Gonzalez v. Mathis ("Gonzalez"). In Gonzalez, an independent contractor who had climbed upon a roof to supervise the cleaning a skylight fell off of a ledge used for access to the roof, and then sued the homeowner. The housekeeper of John Mathis ("Mathis") hired Gonzalez, who was an independent contractor, to clean a skylight which was difficult to access. The skylight covered an indoor pool and protruded through a flat roof. The skylight was surrounded on one side by an exposed two foot ledge and the other side by a parapet wall to hide piping and mechanical equipment positioned next to the skylight. Gonzalez and his workers always utilized a ladder near the parapet to access the roof and clean the skylight.
One day while Gonzalez' workers were cleaning the skylight, the housekeeper noticed that water was leaking in through the skylight and instructed Gonzalez to go tell his employees to use less water. Gonzalez accessed the roof via the ladder, spoke with his employees, and used the small exposed ledge to get back to the ladder; however, he lost his footing and fell off the roof. This accident caused Gonzalez to file a negligence action against Mathis. Gonzalez initially contended that "loose rocks, pebbles and sand on the roof of the property" constituted a "dangerous condition," thus causing Gonzalez to fall from the roof. He later claimed that the construction of the parapet wall forced persons who needed access to the skylight to walk along the dangerous ledge which had no safety railing; secondly, he contended the shingles were slippery as they were worn; lastly, Gonzalez claimed that the roof lacked tie-off points that would enable workers to use safety devices. In turn, Mathis argued that Gonzalez was aware of the dangerous conditions on the roof and could have taken preventative safety measures such as utilizing the inside of the wall near the parapet to get to and from the ladder.
Mathis moved for Summary Judgment, which is a pre-trial motion to have judgment entered, arguing there were no disputed facts and as a matter of law Mathis could not be held liable under the rule set forth in Privette. This type of motion cannot be granted if there are any disputed facts that the "trier of fact" (either a court or jury) might disagree upon. Mathis argued that there are only two exceptions to the Privette rule: (1) when the hirer exercised control over the contractors' work in a manner that had contributed to the injury and (2) when the hirer failed to warn the contractor of concealed hazards on the premises. Mathis argued that neither exception applied to Gonzalez because he was not told how to clean the skylight and because Gonzalez had previously performed services to the property and knew of the dangerous conditions on the roof. The trial court granted Mathis' Motion for Summary Judgment.
On appeal, Gonzalez argued that there were triable issues of fact with regard to both Privette exceptions. He argued that Mathis "retained control over the worksite" since the housekeeper instructed him to complete specific cleaning tasks in a specific order as well as ordering him to go tell his employees, who were on the roof, to use less water. As to the second exception, Gonzalez argued that there were triable issues of fact whether Mathis was liable under the hazardous condition exception, which was determined in yet another Court decision, which held that hirer liability existed for concealed hazards or open or known hazards that the contractor could not have remedied through reasonable safety precautions. Gonzalez argued that the second exception applied since he claimed he had to use the exposed ledge to walk over to the ladder since he was unable to walk along the inside of the parapet wall due to the equipment. The Court of Appeal found there was a triable issue of fact whether Gonzalez "could have reasonably" utilized the inside of the wall for access, and therefore it reversed the judgment. In other words, this case was sent back to the trial court to be heard, throwing out the Summary Judgment.
You can protect yourself and your company by being cautious on jobsites with dangerous conditions, maintaining your workers compensation insurance in case an accident does happen, and if an accident does occur, remember that there are exceptions to the Privette rule.

How does a
build stairs?

He thinks one step ahead.
Abdulaziz, Grossbart & Rudman
provides this information as a service to its friends and clients. This Newsletter is of a general nature and is not intended to be a substitute for legal advice. This Newsletter does not establish an attorney-client relationship with the reader. Since laws are ever changing, please contact an attorney before using any of the information contained within this Newsletter.
Abdulaziz, Grossbart & Rudman
6454 Coldwater Canyon Ave.
North Hollywood, California 91606
(818) 760-2000; (818) 760-3908 (fax)
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