Pink Floyd or The Who?: NLRB Extends Deadline for Public Input on Important Misclassification Decision

pf photo 1 for nlrb post velox

Roger Waters & the boys, smiling pretty for the camera

Pink Floyd or The Who? Tough call for me, but I generally go with Pink Floyd, unless we’re listening to Tommy. Songs from both bands came to mind last week as I read the NLRB’s update on an important issue relating to independent contractor misclassification.

Who Are You (The Who, 1978)? In this post, we discussed a 2017 ruling, in which an ALJ found that the misclassification of independent contractors, by itself, is a violation of the federal labor law. This decision rejected the pickup basketball rule, “no harm, no foul.” Misclassification was deemed to be an unfair labor practice.

Join Together (The Who, 1990). The full Board then decided to reconsider that decision and invited public input on the question. Non-parties were asked to submit briefs to assist the Board in making its decision. Trade associations and labor groups are filing briefs on both sides of the issue.

Wish You Were Here (Pink Floyd, 1975). The Board temporarily lost its 3-2 Republican majority after Member Miscimarra stepped down, but earlier this month, the Senate confirmed John Ring as the third Republican member, restoring a majority and a pro-business slant.

Time (Pink Floyd, 1973). Last week the Board extended the deadline for briefing to April 30th. Any business or trade organization that wishes to provide input to the NLRB on this important issue still has an opportunity. Here are instructions for filing.

Careful with that Axe, Eugene (Pink Floyd, 1969). This is an important issue for businesses using independent contractors. If misclassification by itself violates the NLRA — even with no actual harm to the worker — then businesses may face unfair labor practice charges, even where there’s no union and, even stranger, those ULP charges can come from workers you didn’t even think were your employees.

Take It Back (Pink Floyd, 1994). Hopefully for businesses, the full Board will reverse the ALJ and reinstate the pickup basketball rule. I have High Hopes (Pink Floyd, 1994).

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Office Space (1999): Lessons for Avoiding Independent Contractor Misclassification

Office Space poster - independent contractor or employeeIf you haven’t seen Office Space in a few years, it’s time to refresh. The workers in the movie are all employees, but what if they weren’t?

Here are five signs that the Initech cubicle dwellers and others in the movie wouldn’t pass as independent contractors.

If you’ve never watched the movie, then this post might not be for you. There are no spoilers here, so feel free to read on anyway if you like. Then go watch.

Milton’s stapler. He really loves that red Swingline. Use of the company’s equipment is a sign you’re an employee, not an independent contractor.

Joanna’s flair. When the boss says you’ve got to wear at least 15 pieces of flair, that’s the sort of control indicative of an employment relationship.

Lumbergh’s 17 answering machine messages.  He’s trying very hard to direct Peter’s work. Direction and supervision are signs of control.

Peter’s frustrations, as told to the Bobs. Peter has to answer to seven layers of management? That’s seven layers too much supervision for an independent contractor. Contractors should be in business for themselves.

Storage Unit 2.  When Milton is directed to address the cockroach problem in Storage Unit 2, he knows that’s not in his job description. If management can assign additional duties, the worker is likely an employee, not a contractor.

Ah-yeah!

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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New California Law Aims to Punish Contractors for Wage Violations They Did Not Commit. Huh?

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Suppose you are a general contractor, hired to erect a monument to honor Carlos Santana’s monument-worthy performance of the national anthem during last year’s NBA Finals. Because the monument will be so tall (to house the many awards he should win for it), you need to hire subcontractors. Suppose the subcontractors cheat their employees, though, and don’t pay them a proper wage.

Under a new California law, the general contractor is strictly liable for the sub’s wage violations.

There’s no balancing test. No Right to Control Test. No joint employment finding needed. It’s strict liability. Call it the Jerry Brown corollary to Colin Powell’s Pottery Barn Rule. Someone else breaks it, you own it.

I hear you: “Not fair!” But as we all know, fair is not a required feature element of employment law in California. (Fair may still be an element of due process, however, for those who may seek to challenge the constitutionality of this law.)

The new law, cleverly titled “Section 218.7,” took effect January 1, 2018.

To try to protect themselves, contractors may require their subs to show proof of payment by the subs to its employees. They may also tell noncompliant subs, “you’ve got to change your evil ways, baby, before I start loving you.” But most contractors probably won’t say that.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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NLRB Roller Coaster Ride on Joint Employment Rolls On

roller-coaster-NLRB joint employment test

I used to go to summer camp in Georgia, and the highlight of the summer was always a trip to Six Flags, where we would ride the Mindbender roller coaster. My coaster days are over, thanks to two back surgeries and a desire to remain upright and mobile, but watching the NLRB lately brings back memories of the sharp turns, fast drops, and tight spirals.

Yesterday, the Senate approved John Ring’s nomination as the third NLRB member, returning the Board to a Republican majority. (The vote was 50-48, like halftime in the NBA.)

With three Republican members, we can expect the Board to quickly find another opportunity to overturn Browning-Ferris and return the joint employment test to a more rational standard that requires a finding of direct, material control before a company can be deemed a joint employer.

There are a few ways this might happen.

Plan A is that the D.C. Circuit Court of Appeals could help. In an unusual move, the Court of Appeals agreed late last week to re-open the Browning-Ferris appeal.

The Court of Appeals had dismissed the appeal several weeks ago as moot, after the NLRB issued its Hy-Brand decision, which overturned Browning-Ferris. But after the NLRB said “my bad” and vacated its Hy-Brand decision, the Board asked the Court of Appeals to take the case back and to issue a ruling on what the proper joint employment standard should be. On Friday, the Court of Appeals re-opened the case and will soon issue a decision.

If the Court of Appeals says the Browning-Ferris case was wrongly decided by the Obama Board, then the newly constituted NLRB can hop on that bandwagon and decide to adopt that decision as its new test.

On the other hand, if the Court of Appeals affirms Browning-Ferris, the NLRB will just ignore the decision and move to Plan B or C.

Plan B would be to get Hy-Brand back on the books as good law. That would mean reinstating the Hy-Brand test as the proper standard for determining joint employment. The Hy-Brand test would require direct and material control before a business can be deemed a joint employer under labor law. The NLRB’s General Counsel recently chastised the Board for vacating its own Hy-Brand decision without following the usual rules for recusal.

If that fails, there’s Plan C, which seems more viable now that John Ring has restored the NLRB to a 3-2 Republican majority. The Board can find a new case — other than Hy-Brand — and adopt the revised business-friendly joint employment test that the NLRB tried to adopt in Hy-Brand.

Plan C would require finding a case that allows Board Members Ring and Emanuel to dodge any conflict issues, as they both come from large law firms with lengthy client lists, which is precisely the problem that led to Hy-Brand being vacated in the first place. Too many potential conflicts. They will need to find a clean case with no apparent conflicts, but that can be done.

Meanwhile, this has been a roller coaster ride. The NLRB will eventually settle on a new joint employment standard (I expect), just like the Mindbender eventually settles back down on a straightaway and slows down to let off the riders — who, like NLRB-watchers, are now dizzy and disoriented.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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NLRB Joint Employment Fiasco Grows More Fiasco-ey with General Counsel’s Brief

tennis image NLRB general counsel brief hy-brandWhen watching tennis, it’s best to sit on one of the ends of the court. If you sit in the middle of the court, your head will swivel back and forth on every shot, eventually causing your neck to detach from your shoulders. (Disclaimer: I am not a doctor.)

Watching the NLRB wrestle with joint employment in real time is like watching a long rally from a seat in the middle of the court. My neck hurts just reading this stuff.

The latest development is that the NLRB’s General Counsel, a Presidential appointee who acts as the Board’s chief prosecutor, filed a brief with the Board asking for a decision that the Board’s recent decision to reverse the decision that reversed the Browning-Ferris decision should be reversed. Got that?

Let’s review.

In December 2017, in a case called Hy-Brand, the NLRB reversed the “indirect control” test for joint employment that had been established in the 2015 Browning-Ferris case. The Hy-Brand decision was issued by a 3-2 vote, along party lines.

In February 2018, the NLRB Inspector General (IG) released an opinion suggesting that Member Emanuel should have recused himself from the Hy-Brand decision. Had Emanuel not participated in Hy-Brand, the vote would have been 2-2, and Browning-Ferris could not have been overturned.

The timing of Hy-Brand was important too, since it was issued just before Member Miscimarra stepped down. When Miscimarra stepped down, his absence temporarily left the Board without a Republican majority, which is where things sit today, pending confirmation of John Ring to replace Miscimarra in the third Republican seat.

A few days later, after squinting into my defective crystal ball, I wrote that the IG’s argument in favor of recusal was a bunch of hooey, that Member Emanuel’s participation in the Hy-Brand decision was appropriate, and that the chances of the Board vacating the the Hy-Brand decision was roughly equivalent to the Cleveland Browns’ chances of an undefeated season in 2018. (Ok, I didn’t go that far, but close.)

Hours after my post, the Board vacated the Hy-Brand decision, prematurely ending my lifelong aspirations of becoming a fortune teller. (I really liked the post too. I even commented on the origins of the “The” in The Ohio State University. Click here to satisfy your curiosity.)

The order vacating Hy-Brand was entered into by three members of the Board, without participation by Member Emanuel. He was in time-out. 😢

Ok, now we’re caught up.

The General Counsel’s Brief, filed April 5th, argues that the decision vacating Hy-Brand was bungled and should be undone.

First, he argues that the proper procedure for considering whether a member should recuse himself is for the member at issue to decide whether to recuse himself. That’s been the procedure for approximately forever, except in this instance. Same thing in federal court. That’s how it works. But the normal procedure was not followed.
Second, the GC argued that Hy-Brand (the company) was entitled to a hearing before the full 5-member Board, meaning that Member Emanuel had a duty not to recuse himself.

Got all that?

Now, are you ready for the icing on the pile of poo? 💩

Guess who gets to decide whether three of the four Board members acted improperly when they vacated the Hy-Brand decision without consulting Member Emanuel and without allowing him to evaluate whether he should recuse himself? Yes, this decision will be made by the three members who vacated Hy-Brand, plus Emanuel. Should they recuse themselves? Can they? Should Member Emanuel recuse himself from deciding whether the Board should have allowed him to consider whether to recuse himself earlier?

This is fun!

Go Browns!

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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What is a Dependent Contractor?

What is a dependent contractor?

One of the most frustrating aspects of the Employee vs. Independent Contractor conundrum is that that it’s really hard to spell conundrum. Another frustrating thing, though, is that the choice is binary. Under U.S. law, a worker is either an employee or an independent contractor. There’s no third choice.

Not so in Canada.

Our neighbor to the north recognizes the legal status of “dependent contractor.” A dependent contractor is a worker who operates as an independent business in most respects, but who works primarily for just one company.

In the U.S., doing all your work for just one company can sometimes cause the imaginary switch to flip from independent contractor to employee. A dependent contractor, however, sits comfortably in the land of in-between (which I think is somewhere near Newfoundland).

In Canada, there is no at-will employment. Regular employees are entitled to receive notice and severance pay before being shown the door. Independent contractors have no such rights. But dependent contractors do. In Canada, dependent contractors are entitled to notice and severance when terminated.

Could this third category of worker be recognized in the U.S.? Not likely to happen any time soon. In Canada, the main benefit of being a dependent contractor is entitlement to the same notice and severance benefits that Canadian employees are entitled to receive. In the U.S., most employees are at-will and, when they are fired, the only thing they get is out. (Get Out = great movie, by the way.) There’s rarely any legal entitlement to notice or severance pay.

U.S. employment laws are stuck in an earlier era and were not drafted with the modern workplace and gig economy in mind. Other worker status options are needed and should be considered. Maybe a version of “dependent contractor” status would work here, but it would look different than it does in Canada.

For now, the U.S. answer to the question, What is a Dependent Contractor? is that it’s not yet a thing. Hopefully one day it will be.

 

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Is Joint Employment Illegal?

Is joint employment illegal? Buddha statue(Or, How is Joint Employment Like Tibetan Reincarnation?)

In Tibet, it is illegal to be reincarnated as a living Buddha unless “a majority of local religious believers and the monastery management organization” has requested the reincarnation. This is according to State Religious Affairs Bureau Order No. 5, issued in 2007, apparently to clamp down on rampant, uncontrolled reincarnations.

Joint employment is like Tibetan reincarnation in that both have lots of rules. But unlike Tibetan reincarnation, joint employment is not illegal.

Joint employment merely means that, in the eyes of the law, there are two employers. So far, no problem.

The problems arise if the primary employer doesn’t do what it’s supposed to do.

Consider a staffing agency scenario. The staffing agency is the primary employer. If the staffing agency’s employees are working at your company, taking direction from your supervisors, and working side-by-side with your employees, then the staffing agency workers are probably your joint employees.

The staffing agency is expected to pay its employees minimum wage, properly calculate their overtime, track their hours, etc. If they do all those things, no problem.

But if they don’t, that’s when joint employment becomes a problem. Even though your company has no control over the payroll processes of the staffing agency, your company can be held liable for their mistakes. That’s because under the Fair Labor Standards Act (FLSA), joint employers are both responsible for making sure that employees are properly paid.

The lesson here is to be careful about the companies you partner with for your staffing needs. If the agency is reliable, well-established, well-financed, and well-insured, then you should be in good shape. Fly-by-night operations that price their services at too-good-to-be-true discounts are a risk — not just because they might fail to provide you with quality employees, but because they might fail to properly pay those employees and then your company can be held responsible.

Be careful who you invite into your tent. Screen your staffing agencies. Impose contractual requirements that protect your business. Require adequate insurance. And do not ever permit any unauthorized reincarnations.

 

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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