Are Directors Employees And Are Their Homes Their "Workplaces"?

Allen Matkins

Allen Matkins

Over the years, I have devoted several posts to the question of whether corporate directors are employees:

  • Is A Corporate Director An Employee Subject To Workers' Compensation?
  • Has California Made Directors Employees?
  • Do Directors Avoid Employee Status Under AB 5?
  • Is A Director An Employee? The SEC Has Some Contradictory Answers.

There are potentially a number of ramifications to classifying a board member as employee, including whether the corporation may be entitled to obtain a workplace violence restraining order petition pursuant to Section 527.8 of the California Code of Civil Procedure. That statute defines "employee" specifically to include "the members of boards of directors of private, public, and quasi-public corporations and elected and appointed public officers". For an example of the potential applicability of Section 527.8 to directors, see this opinion issued yesterday by the Fourth District Court of Appeal: North Coast Village Condominium Ass'n. v. Phillips, 2023 WL 5423634.

The North Coast case involved a director of a nonprofit corporation and a director who worked at home. Section 527.8 authorizes an employer to obtain a restraining order when an "employee has suffered unlawful violence or a credible threat of violence from any individual, that can reasonably be construed to be carried out or to have been carried out at the workplace". The Court of Appeal disclaimed the adoption of any bright line test for when a director's home constitutes a "workplace":

In a day and age when a large portion of the workforce works from home, the line between the workplace and home has become increasingly blurred. The boundary also is not clear regarding the trial court's other distinction between whether Anderson [the director] was acting as an employee at the relevant times or not. Now that many employees have the ability to work from anywhere and even on their phones, employees may alternate between handling personal and work matters throughout the day and night and follow a less defined work schedule than in the past. As a result, the distinction between when someone is and is not functioning as an employee may not always be abundantly clear. To be sure, the trial judge faced the difficult exercise of trying to apply section 527.8 in this context. And this opinion should not be read to unequivocally hold that section 527.8 applies to all actions involving board members or employees who live at their workplace and maintain irregular hours. Ultimately, how this statute is applied in an evolving work environment likely is an issue the legislature will need to revisit. We conclude only that the limitations imposed by the trial court in this case are not supported by the language or history of the statute.

(emphasis added).

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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