Tag Archives: ab5

What CCPA Press Release SHOULD Say

On Jan. 1, 2020, the California Consumer Privacy Act of 2018 (CCPA) is in effect. So, too, is the law governing so-called data brokers. To understand the CCPA, it is sometimes important to suspend belief. What follows is a parody, a form of communicating that seems particularly appropriate for the CCPA and its $55 billion compliance price tag.

California Attorney General Announces Issuance of Subpoenas Over Privacy Law Violations

Feb. 1, 2020

SACRAMENTO – The California Department of Justice today announced that North Pole Enterprises, LLC, dba “Santa Claus” has been issued an investigative subpoena to address concerns over widespread misuse and improper collection of personal information. The potential numerous violations of the California Consumer Privacy Act of 2018 (CCPA) include:

Improper collection of biometric data. Santa Claus is alleged to know when consumers are sleeping and when they are awake. When this biometric data, as defined in Civil Code § 1798.140(b) to include, “an individual’s physiological, biological or behavioral characteristics” is collected, upon information and belief, Santa Claus has shown a pattern and practice of failing to inform consumers as to the categories of personal information to be collected and the purposes for which the categories of personal information shall be used as required by Civil Code § 1798.100(b).

The violations of this part of the CCPA may also extend to biometric information indicating when California consumers are naughty or nice, are bad or good or are pouting or crying.

Improper collection of geolocation data. Santa Claus delivers gifts on Christmas Eve to consumers throughout California. To do this, Santa Claus has developed a comprehensive data base of consumers’ residential locations. This is within the definition of “personal information” as defined in Civil Code § 1798.140(o)(1)(G). Santa Claus obtains this personal information through soliciting and receiving “Christmas Lists” from California consumers, which generally contain attestations that the consumer has been “nice,” which is, and noted above, also biometric information.

See also: Vast Implications of the CCPA  

To the extent these lists and the personal information contained therein are generated by traffic through the Santa Claus website, upon information and belief there are no posted online privacy policies to advise consumers of their rights under the CCPA. This is a violation of Civil Code § 1798.130(a)(5).

Failure to provide notice of right to opt out. The gifts Santa Claus delivers on Christmas Eve are allegedly crafted in a workshop at the North Pole. Upon information and belief, the workshop is a cooperative corporation, “Santa’s Co-op Workshop” (SCW), located just outside Alturas in Humboldt County. As such, Santa Claus is selling personal information, as defined in Civil Code § 1798.140(t), to a third party without giving California consumers notice of their rights to opt out of the sale of their personal information. This is a violation of Civil Code § 1798.120 and Civil Code § 1798.130.

In addition, if Santa Claus is selling the personal information of California consumers to third parties, it is acting as a data broker and as such has failed to register with the Department of Justice as required by Civil Code § 1798.99.82.

To the extent Santa Claus is selling the personal information of minors to third parties, additional violations of the CCPA may have taken place. The Department of Justice reserves the right to revise its charges once there is compliance with the subpoena.

It should be noted that there is an allegation by the members of SCW that they are operating exclusively for and under the control of Santa Claus and as such are employees of Santa Claus per Assembly Bill 5 (Gonzalez). (See: “Potential Labor Law Violations”, below)

Denial of goods or services. Upon information and belief, Santa Claus may be engaged in a pattern of discrimination against California consumers who have not attested to being “nice” in their Christmas Lists as noted above. If Santa Claus is discriminating against California consumers because they have exercised their right not to disclose personal information, this may be a violation of Civil Code § 1798.125.

Potential labor law violations. Upon information and belief, SCW may not be a bona fide business, as that term is used in Labor Code § 2750.3(e). As such, per the Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903, and Assembly Bill 5 (Gonzalez), the Division of Labor Standards Enforcement (DLSE) has opened a concurrent investigation of Santa Claus for possible wage and hour violations and failure to maintain workers’ compensation insurance.

See also: How CCPA Will—and Won’t—Hit Insurance  

California takes its consumers’ privacy seriously, as it does the violations of its laws protecting workers. Potential penalties under the CCPA, if not cured, could reach $2,500 per violation. Because each California resident has had its personal information collected by Santa Claus, total penalties could be as high as $100 billion, assuming no violations were intentional.

We will keep you informed as events develop.

Implications of Ruling on Gig Workers

What is remarkable about the debate over California Assembly Bill 5 (Gonzales) is how unremarkable the issues actually are in the debate over the Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903.

Of course, as has been well-documented, the Dynamex holding and AB 5 could disrupt the digital platform “gig” economy, and misclassification of employees as independent contractors is a vitally important issue. It has serious implications for the fundamental fairness of how businesses compete with one another and how we value and protect workers on whose endeavors our entire economy depends.

But the debate, while appearing in the digital marketplace as its latest forum, is multi-generational.

The Dynamex decision is the current law of California as it relates to classification (employee or independent contractor) disputes over wage and hour obligations of California employers. AB 5 is intended to codify this decision not only for wage and hour determinations but also for unemployment insurance obligations and workers’ compensation coverage. This legislative process has led to chaos, with a host of employers asking for dispensation from the “ABC” test borrowed from Massachusetts (and used in Illinois and New Jersey, among other states), arguing that the test should not really apply to, among others, dog groomers, hairdressers, real estate agents, truckers and insurance producers. The list goes on and on. The queue is as long as it was in Casablanca when desperate people were seeking exit visas at any cost from Rick’s Café Américain.

But Dynamex isn’t the product of the California Supreme Court sitting down together over lattes one afternoon and deciding, “Well, let’s change the law on classification disputes involving independent contractors and see what happens.” It was a final decision in which the trial court and the court of appeal used existing tests for independent contractor status to arrive at the conclusion that Dynamex workers were, in fact, employees. In other words, even though imposing the now infamous “ABC” test in California, the Supreme Court affirmed the decision of the court of appeal.
It is unfortunate, but not surprising, that Dynamex is being divorced from its facts in the current, overheated debate in Sacramento.

Perhaps the most important part of the court’s lengthy decision is found in this part of the factual record:

“Prior to 2004, Dynamex classified its California drivers as employees and compensated them pursuant to this state’s wage and hour laws. In 2004, Dynamex converted all of its drivers to independent contractors after management concluded that such a conversion would generate economic savings for the company.” Dynamex, 4 Cal.5th 917, emphasis added.

There is simply no test for classification status that would not be triggered by this action. And indeed it was, in the lower courts invoking both Martinez v. Combs (2010), 49 Cal.4th 35 and the now iconic decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 256 Cal.Rptr. 543, 769 P.2d 399.

That leaves us with the question – how to address the misclassification of a workforce while preserving the ability and prerogative of an individual worker as a sole proprietor to offer his or her skills to businesses that need such services on an ad hoc or project basis while not displacing work that would normally be done by an employee.

See also: Keys to California’s Consumer Privacy Act  

It is a question for the court – because the legislature could not resolve it – to clarify the comment:

“As explained, in light of its history and purpose, we conclude that the wage order’s suffer or permit to work definition must be interpreted broadly to treat as ’employees,’ and thereby provide the wage order’s protection to, all workers who would ordinarily be viewed as working in the hiring business.” Dynamex, 4 Cal. 5th at 916, emphasis in original.

This is the “B” part of the test adopted in Dynamex that is causing millions of dollars to be spent lobbying in Sacramento and may result in tens of millions being spent in a costly ballot measure in 2020.
This is also the core issue left unresolved by AB 5. What AB 5 does in its present state, however, is to accelerate the path to the Supreme Court for it to address the ABC test in a broader context than the facts presented in Dynamex. It can be argued that the legislature is doing little more than asking, ultimately, for the court to refine its application consistent with the public policy objectives articulated in that decision. However, the complex rules now in AB 5 will cause both employers and workers considerable grief in coming years.