Author Archives: Todd Lebowitz

04.12.18
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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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04.09.18
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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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04.05.18
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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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04.02.18
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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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03.29.18
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If I Cut My Employee’s Hours, Can I Make Her an Independent Contractor?

Independent contractor part-time worker lizard

This question is best answered with an analogy to everyone’s favorite quadrupedal reptile – the lizard.

The lizard is a squamate reptile. I don’t know what squamate means, but I read it on Wikipedia. Lizards typically have four feet, external ears, and like to climb on the patio screens of retirees’ homes in Florida. Those are the defining characteristics that make them lizards.

Lizards also have tails, but they can shed those tails when in distress. I’m sure this makes the lizard sad, but sacrifices must be made.

The important point here is: Losing a tail doesn’t make a lizard any less of a lizard. (They are taught this by lizard psychotherapists.)

Now let’s get to the point. Today’s post is about what happens when businesses cut their employees’ hours. Workloads sometimes decrease to the point where employees are no longer needed for 40 hours a week. Maybe 10 hours is enough. Or maybe the work needed is sporadic — 5 hours one week, no hours the next week.

Can you convert these part-timers to independent contractors?

No, you can’t. A lizard is still a lizard after losing its tail, and an employee is still an employee after losing some hours. The lizard is not defined by the presence of its tail, and employee status is not determined by the number of hours worked.

It is ok to have an employee whose hours are minimal or occasional. Think of the high schooler who works once a week at the rec center. That’s an employee, not a contractor. The worker is an employee because of the work performed and the control the business has over how the work is done. An independent contractor, in contrast, is someone in business for herself.

What if the employee’s hours are reduced so much that she gets two other occasional jobs? That still doesn’t change the answer. If the work is classified as employment at 40 hours, it’s employment at 3 hours a week. Think of it this way: It’s employment the moment an employee shows up at the worksite. If the employee leaves the worksite after 30 minutes, the work performed for those 30 minutes was still employment.

Employment status doesn’t change based solely on the number of hours worked, and although this next fact is entirely irrelevant to the post, it is worth a quick mention since we have been discussing lizards. The Komodo Dragon is a lizard that has been known to eat mammals as large as a water buffalo (at least according to Wikipedia).

 

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

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03.26.18
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Arbitration Agreements: Still the Hammer You Want in Your Toolbox

E39455E8-972A-4B73-BD7B-53AD1C29F259

If I had a hammer, I’d hammer in the morning. I’d hammer in the evening. All over this laa-aaand. That’s a lot of free labor for somebody. And noise. No one should hammer too late in the evening.

The song could describe a national network of independent contractors in the construction field. It doesn’t, but it could. (This is how I think now. Sad. Very sad.)

Thank you, Peter, Paul, and/or Mary for helping me introduce the real hammer for companies that use lots of independent contractors: Arbitration Agreements with Class Action Waivers.

The legitimacy of requiring employees to sign arbitration agreements with class action waivers is under scrutiny by the NLRB and will be the subject of an important upcoming Supreme Court ruling in the Epic Systems case. Regardless of what the Supreme Court decides for employees, however, the Epic Systems decision is not likely to limit the use of arbitration agreements with class action waivers in independent contractor agreements.

A ruling this month by the Sixth Circuit Court of Appeals showed how useful these agreements can be for businesses. In a short decision, the Court ruled that two independent contractors wishing to bring a class action alleging independent contractor miscalssification were barred from doing so because they had signed arbitration agreements with class action waivers. If they wanted to dispute their status, they had contractually agreed to do so only in arbitration, and only through an individual (not class) claim.

These agreements work. If they are well-drafted and include provisions that help make them fair to all parties, they are enforceable in most jurisdictions and can be an effective tool for keeping your business safe from independent contractor misclassification class actions.

Businesses that rely on independent contractor labor should consider using this tool in the morning and in the evening, all over this laa-aaand.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

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

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03.22.18
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Will Recusals Sink the NLRB’s Pro-Business Agenda?

6AEEC9D2-D576-4264-AE48-A0512A656B37

“Recuse.” Verb, meaning to cuse again.

Sorry, it doesn’t mean that at all. We’ve heard a lot about recusal in the news lately, relating to a certain Attorney General and one of the former Soviet Republics (the big one).

The NLRB is dealing with recusals too. And recusals within the Board may affect your business.

Of the soon-to-be-majority Republican Board members, two are from big defense firms. The Board recently vacated its important Hy-Brand decision that attempted to restore sanity to the joint employment test, after the NLRB’s Inspector General determined that Member Emanuel should have recused himself. That conclusion was based on the fact that his prior law firm, Littler, represented a party in the Browning-Ferris case, which Hy-Brand tried to reverse. Littler’s extensive client list of big businesses means this issue is likely to come up again. Emanuel could find himself disqualified from participating in other important Board cases, including other joint employment cases.

And he’s not the only one.

John Ring, the third Republican appointee to the Board (scheduled for confirmation hearings shortly), is from the large law firm Morgan Lewis, which also represents many large businesses. Ring recently submitted his potential conflicts list. It’s long, and it includes lots of well-known corporate names.

So he could find himself disqualified too.

The newly reconsitituted Trump-appointed Board is expected to issue plenty of 3-2 party-line pro-business decisions, reversing Obama-era decisions. Is that still possible, if two of the three Republican members could be conflicted out of the most significant cases?

It’s a tough question, and the answer remains to be seen. Trump could have appointed pro-business Board members from small employer defense boutique firms instead of choosing lawyers from two of the largest firms in the U.S. Had lawyers from smaller firms been selected instead, the likelihood of recusals would have been much smaller.

With important decisions to be made at the NLRB about the test for joint employment and other significant union-management issues, the Trump Administration’s decision to appoint two big firm lawyers could threaten its anticipated pro-business agenda.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

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

03.19.18
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Selling Hot Dogs: Why the DOL Thinks It’s 2008 Again

Dol wage and hour guidance hot dogs

The year 2008 doesn’t seem that long ago. Flo Rida was atop the Billboard charts, No Country for Old Men won the Oscar for Best Picture, and Episode 1 of the 2008 season of Celebrity Apprentice (titled, “Selling Hot Dogs” [yes, really]) featured the judging panel of Donald Trump, Donald Trump Jr., and Ivanka Trump. More on Episode 1 below.

The DOL must be longing for the good old days. Earlier this month, the Wage & Hour Division quietly withdrew its 2014 Fact Sheet advising businesses how to differentiate employees from independent contractors under the FLSA.

Instead, they reposted the 2008 version. In practical terms, there’s probably no real effect. The statute and the regulations that would govern the analysis haven’t changed between 2008 and 2014. But the 2014 version (cached copy here) also included some Obama-DOL commentary, advising that “most workers” are employees under the proper analysis. The old/new 2008 version doesn’t say that.

In any event, what businesses need to know is that courts apply an Economic Realities Test when deciding Who Is My Employee? under the FLSA.

The FLSA is the federal statute requiring non-exempt employees to be paid minimum wage and overtime. It does not apply to independent contractors, which is one reason why misclassification matters. If you thought your worker was properly classified as an independent contractor, then the minimum wage and overtime requirements did not apply. If the worker was misclassified and was really an employee, your business may be held liable for failing to pay minimum wage and overtime.

And for those of you who read all the way to the end of this post hoping to be rewarded with more information about the outcome of Episode 1: Selling Hot Dogs, there’s this from Wikipedia:

Winning team: Hydra, with total sales of $52,286.
Reasons for win: Hydra used their celebrity status to drastically up-sell the hot dogs and Gene Simmons used his contacts to put impressive numbers. Piers Morgan also came up with an idea whereby anyone who paid $100 or more for a hot dog would get to have their picture taken with one of the celebrities, encouraging passers-by to make more substantial donations.

Good job, Piers. You should be proud.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

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

03.15.18
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Strip Clubs Nailed for $8.5 Million in Settlement of Independent Contractor Misclassification Claims

Independent contractor misclassification settlement $8.5 million spearmint rhinoI learned there’s a chain of strip clubs called the Spearmint Rhino. I didn’t know that was an option for rhinos. The rhinos I’ve seen at the zoo smell nothing like spearmint.

This club was paying its dancers as independent contractors. As we’ve seen in other “exotic dancer” cases, that can be an expensive decision.

This time it cost The Rhino $8.5 million. A class of 8,000 ladies reached a deal after claiming they should have been treated as employees under Caliufornia and federal wage and hour laws. The class members claimed they were denied overtime, denied a minimum wage, denied meal and rest breaks, and had their tips misappropriated.

In other words, they didn’t feel like they had much to dance about.

What happens now to The Rhino? Does it reclassify its dancers as employees? Who knows. Who cares.

I will, however, be asking the zoo if there’s anything they can do about the rhino smell. It seems there may be a minty version of the beast.

 

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

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

03.12.18
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Arbitrator or Court: Who Decides Who Decides?

New prime v olioviera - who decides who decides

Who decides who decides? That’s as fun to write as it is to think about.

On TV, sometimes the parties agree that Judge Judy can decide. (Here’s how that works.) But sometimes, the parties disagree over who decides. What happens then? Who decides who decides?

That’s an issue the Supreme Court is going to consider, as it relates to arbitration agreements for independent contractors in the transportation industry.

The dispute stems from an arbitration agreement between Dominic Oliviera, an independent contractor (although he’s not so sure of that), and New Prime, Inc., a trucking company. Their arbitration agreement says that all disputes go to arbitration, including those about the scope of what gets arbitrated. In other words, the arbitrator gets to decide whether something is subject to arbitration. (That’s not an unusual clause, by the way.)

Our protagonist Mr. O tried to bring a lawsuit, claiming wage and hour violations by New Prime. In response, New Prime pointed to the contract and said the issue had to be arbitrated. Not to be outwitted, however, Mr. O then pointed to an exception in the Federal Arbitration Act (FAA). The FAA is the federal law favoring arbitration of disputes, but the FAA contains an exception. The FAA doesn’t apply to employees in the transportation industry.

I hope I haven’t bored you because here’s where it gets interesting.

If the FAA exception applies, Mr. O doesn’t have to arbitrate and he can go to court with his wage and hour claims instead.

But the exception only applies (it seems) if he is an employee. If he’s an independent contractor, the FAA should still apply, which means that New Prime can still force him into arbitration.

Now here’s where it gets really weird.

The agreement says that the arbitrator gets to decide whether the matter is subject to arbitration. But Mr. O says he’s an employee and therefore he’s not bound by the arbitration agreement. If he’s not bound by the arbitration agreement, then New Prime can’t force him to go to the arbitrator to decide whether the dispute is subject to arbitration. So, who decides who decides?

Still with me? Here’s the bottom line. There are two important questions that the Supreme Court has agreed to consider in this case:

(1) Whether a dispute over applicability of the Federal Arbitration Act’s Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause; and
(2) whether the FAA’s Section 1 exemption, which applies on its face only to “contracts of employment,” is inapplicable to independent contractor agreements.

For businesses using mandatory arbitration agreements, these are important issues.

Last week, in this post, we addressed Issue #2. But Issue #1 is also pretty important for businesses with arbitration agreements in the transportation industry. If the validity of those agreements is contested, who decides whether they are valid?

If the arbitrator gets to decide what is subject to arbitration, the realist deep inside you (he’s roommates with the pessimist) expects that the arbitrator will keep the case. In other words, the most likely ruling by the arbitrator — who is paid by the parties by the hour to conduct the arbitration — is that the matter is going to be subject to arbitration. After all, that’s what the contract says, and if the contract didn’t apply, then the arbitrator never would have gotten involved in the first place.

This case won’t be decided until next year.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

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