Owner-Operated Businesses With No Employees May Be Surprised By Recent Cal AG Opinion


UPDATE: The Sacramento Bee, E-cigarettes face restrictions as cities update smoking ordinances (Mar. 10, 2014)

Recently, the California Office of the Attorney General (“AG”) issued its Opinion No. 12-901 (Dec. 20, 2013), answering the question: “Under what circumstances does an owner-operated business with no employees nevertheless constitute a ‘place of employment’ under Labor Code section 6404.5, which prohibits smoking in a workplace?” Section 6404.5 provides, in relevant part: “No employer shall knowingly or intentionally permit, and no person shall engage in, the smoking of tobacco products in an enclosed space at a place of employment.”


The AG confirmed that “[a]n owner-operated business with no employees nevertheless constitutes a ‘place of employment’ under [S]ection 6404.5 when employment of any kind is carried on at the business location — that is, even when such employment is carried on by persons who are employed by someone other than the business owner.” As a result, “if employment is being carried on in an owner-operated business, then the owner-operator and all other persons are forbidden from smoking in any enclosed space therein, whether or not the owner-operator is the direct employer of those carrying on the employment.”

In its analysis, it noted that the term “employee” means “every person who is required or directed by any employer to engage in any employment or to go to work or be at any time in any place of employment” (Cal. Labor § 6304.1(a)) and the term “employer” uses the same broad definition used in the workers’ compensation context, i.e., “[e]very person including any public service corporation, which has any natural person in service” (Cal. Labor Code § 6304). Like these terms, the phrase “place of employment” is broadly defined and means “any place, and the premises appurtenant thereto, where employment is carried on … ” Cal. Labor § 6303(a).

Applying these definitions, the AG first found that “where, for example, a business owner-operator performs all of his or her own services–without utilizing the services or assistance of any compensated employees on any occasion–that owner-operator would fall outside the definition of ’employer’ because he or she does not have ‘any natural person in service,’ and that business location would similarly fall outside the definition of “place of employment” because no “employment is carried on” there. Under these narrow circumstances, then, the Section 6404.5 smoking prohibition would not apply.

It went on, however, to consider whether individuals directly employed by someone else may be carrying out their employment on the owner-operator’s premises. The AG noted that the Occupational Safety and Health Appeals Board (“OSHA”) previously ruled that both primary and secondary employers must provide a safe workplace to the employees, relying on California Labor Code § 6400 which requires that “[e]very employer shall furnish employment and a place of employment that is safe and healthful for the employees therein,” citing In the Matter of the Appeal of: Labor Ready, Inc., Employer, 2001 WL 575152 (Cal. O.S.H.A., May 11, 2001); In the Matter of the Appeal of: Strategic Outsourcing, Inc., Employer, 2011 WL 5016849, at 3 (Cal. O.S.H.A., Sept. 16, 2011); see also In The Matter of the Appeal of: Kelly Services, Employer, 2011 WL 2881536 (Cal. O.S.H.A., June 15, 2011), at 2. It was persuaded that, for purposes of Section 6404.5, “the owner-operator of a particular business need not be the primary employer of persons working on the business premises for those premises to be characterized as a ‘place of employment.’ It is enough that the business location is a ‘place . . . where employment is carried on,’ even if the workers are directly employed by someone else and only secondarily employed by the owner-operator.”

Other Sources: O.S.H.A.
Photo: Fried Dough, Taken December 3, 2011 – Creative Commons