Can Independent Contractor Misclassification Automatically Violate Federal Labor Law? (Hint: Yes)

[NOTE 9/2019: Not anymore. The information in this post has been superseded by a later NLRB decision. In Sept. 2019, the NLRB ruled that independent contractor misclassification is not an automatic violation of the NLRA.  It still can be, but it is no longer automatically a violation. Read more here.]

Here’s the original post:

The past two weekends, we have seen NFL players link arms in solidarity. They protest mistreatment and injustice in society, not mistreatment and injustice by their employers. In fact, there have been several instances where owners and coaches have joined in.

Had the players been protesting actions by their employers — their teams — their actions likely would be considered “protected concerted activity” under the National Labor Relations Act (NLRA). The NLRA grants employees the right to act collectively to protest terms or conditions of their employment. Employees have these rights even if there is no union.

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Update: Uber’s Misclassification Cases, Arbitration, and the Supreme Court

Independent contractor vs employee Uber misclassification lawsuit arbitration agreements IMG_1111Remember the children’s game called Red Light, Green Light? One ambitious youngster is selected as the traffic cop, who randomly shouts “red light” or “green light,” requiring all the children to run and stop and start in short bursts that would cause an adult human to tear an ACL.

That’s essentially what’s happening in the big Uber misclassification case that has been pending in California since 2014. The case is called O’Connor v. Uber Technologies and is being overseen by traffic cop / federal judge Edward Chen in San Francisco. If anyone ever gets to the finish line, it will eventually be determined whether Uber drivers are properly classified as independent contractors, rather than employees.

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Subcontractors Can Be Jointly Liable for Contractors’ Labor Law Violations

Otter: “He can’t do that to our pledges.”

Boon: “Only we can do that to our pledges.”

–Animal House, 1978

Subcontractors are like pledges in a way. They have to abide by the rules that apply to the primary contractor. If they fail to do so, they are responsible. Fairness isn’t really the issue.

A recent case shows how subcontractors can be held responsible when a primary contractor improperly fails to bargain with a union. In 2014, a contractor won a bid to take over a Job Corps Youth Training Center. The Center had been a union facility, and the contract was set to expire right around the same time the contractor took over operations. The contractor brought in a subcontractor, MJLM, to handle wellness, recreation,

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Drivers Rack Up Misclassification Settlements, While GrubHub Fights Back

In 1984, the Cars released a sad-sounding song called Drive. I assume it was about a guy longing for a girl, but it’s too depressing to listen to the whole thing. Throughout the song, Ric Ocasek asks “Who’s gonna drive you home tonight?” (Why the long face, Ric? Kidding.)

If you use a ride hailing service, chances are it’s an independent contractor driver who’s gonna drive you home. But in several high profile lawsuits, drivers have challenged their independent contractor status. While these suits have been in the news for years, there have been a recent flurry of high dollar settlements. Earlier this year, Lyft agreed to pay $27 million to a class of 95,000 drivers in California and Door Dash agreed to pay $5 million. Just last week, Postmates agreed to pay $8.75 million.

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Who is the Next “Miss Classified”? Here’s How I Would Award the Prize.

IMG_1107I received an email this week from a worker claiming he was “Miss Classified.” I did not know there was a pageant for that, but I suppose congratulations were probably due. I politely responded that I only represent companies, not individuals, in disputes relating to independent contractor misclassification, and I wished him luck.

But then I started thinking, What if there was a pageant? What would it take to be crowned Miss Classified?

I came up with a few criteria.

To be named Miss Classified, a contestant would probably have a job that requires her to work a set daily schedule, with little flexibility. She’d have to ask a supervisor for time off (including to enter this pageant).

A fixed schedule suggests employment when assessing Independent Contractor vs. Employee, so I’d award that contestant a point toward becoming Miss Classified. If the supervisor denies the request for time off, I’d award an extra point toward Miss Classified status — but sadly, if denied the day off, this worthy contestant might not show up for the pageant. [🤔]

I’d award another point toward being named Miss Classified if she uses company tools and equipment. If she does office work, she’d get points if she uses someone else’s desk and computer, performs her work at the company’s primary place of business, and has a company badge. I’d award bonus points if she has a company email address.

Instead of a swimsuit competition, I’d have contestants reveal what they wear to work. Anyone wearing a swimsuit is at the wrong pageant and would be asked to leave. But anyone wearing company uniform or logo would get a point. I’d have an exception, though. If the company shirt says “Company – Authorized Contractor,” no points.

For the talent portion of the Miss Classified pageant, I’d ask candidates how they learned their special skill. I’d award no points to anyone who became licensed and trained on their own time and on their own dime. But if they learned their craft from the company they are working for, I’d award a point toward being named Miss Classified. If the company paid for the license or training, I’d award another point.

My pageant would have a monetary award for the winner (let’s just call it damages), but before awarding any economic prizes, I’d ask the contestants about their current financial situation. Are you economically reliant on one company for all your compensation? If yes, two points. That’s a candidate who might be worthy of the title Miss Classified.

On the other hand, a candidate gets no points if she performs work for several companies and advertises her services in the marketplace. Anyone using a personal business card and website to advertise her services to the public gets no points. Anyone who is simultaneously working for one company and that company’s direct competitors will be disqualified from the competition. That person is probably not Miss Classified.

I’d hold my competition in California. That would be the most likely place for someone to be named Miss Classified. California has all sorts of state laws that would influence the outcome of my competition.

I’d have Simon Cowell judge. Not for any good reason though. I just think that would be good for ratings.

And the winner is … hopefully not anyone performing services for your company!

(In case you were wondering, this would NOT be the among the world’s strangest pageants. But these are.)

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Irma, Harvey and Force Majeure Clauses: What Does It All Mean?

What is Force majeure hurricane legal law irma harvey contracts IMG_1108Your contracts with staffing agencies and consultants probably include a bunch of legalese boilerplate mumbo jumbo at the end, which no one ever reads. One of those standard clauses is a “force majeure” clause. That’s French for “Skim over this clause.”

Companies affected by Irma and Harvey, however, may have good reason to check their contracts for these clauses. “Force majeure” means, literally, superior force.

These clauses typically say that So-and-so is excused from performing under the contract in the event of uncontrollable circumstances, such as war, terrorism, hurricanes, voodoo curses, other Acts of God, or anything caused by Pedro Cerrano and Joboo’s Cult (Major League) [Ed. Note: “Hats for Bats!”].

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Court Serves Up Reminder that Contractors Can Be Properly Classified and Misclassified – At The Same Time.

elephant-reminder pennsylvania court joint employment joint empoyer construction workplace misclassification act

A recurring theme in this blog has been that when trying to determine Who Is My Employee?, there are different tests under different laws. Different tests can yield different results.

A recent court decision from Pennsylvania emphasizes this point. In the Keystone State (proud home of Dunder Mifflin and Hershey Park), contruction workers are considered employees for workers compensation purposes unless they (i) have a written contract, (ii) have a place of business separate from their general contractor’s site, and (iii) have liability insurance of at least $50,000. This strict test is courtesy of the Construction Workplace Misclassification Act (CWMA), an Act whose name shows a disappointing lack of creativity.

I might have gone with “Construction Occupation Workers’ Act Regarding Designations In Classifying Employees” (COWARDICE) or “Law About Misclassifying Employees” (LAME) or, if I was hungry for shellfish, then maybe “Construction Law About Misclassification for Builders And Keeping Employees Safe” (CLAMBAKES).

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Tip of the Day: Set Up a Gatekeeper

door-gate-entrance-gateway

What you don’t know can hurt you.

Claims of independent contractor misclassification can sneak up on companies that don’t even know they have a problem.

Businesses usually treat the retention of contractors as an expenditure, not an increase in headcount. Since no new employees are being hired, Human Resources Departments and Legal Departments often have no idea when operations managers have retained contractors–sometimes at distant locations.

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Are Non-Compete Agreements for Independent Contractors Enforceable?

binding-contract-independent contractor non-compete agreement noncompetition - 948442_1920If you could ask me one question about independent contractors and non-compete agreements, what would it be?

  • Are they enforceable?
  • Are they a good idea?
  • A bad idea?

Hey buddy, that’s three questions, not one.

As for enforceability, that will vary state by state. A recent federal decision involving an independent sales contractor found his non-compete agreement to be unenforceable. The court found that (1) it was not reasonably necessary to protect the company’s business, and (2) the burden on the sales contractor was out of proportion to the benefit to the business. The decision applied Iowa law, though, so unless you have contractors in the Hawkeye State, you might not really care.

Each state applies a somewhat different test for determining whether non-competes are Continue reading

Can Independent Contractors Form Unions? Seattle Wants to Allow It.

space-needle-independent contrcator drivers seattle uber lyft seattle law ordinanceA legal battle in Seattle (“The Battle of Seattle!”) may soon determine whether independent contractor drivers can form unions. In 2015, the city passed a law allowing Uber and Lyft drivers to organize. The mayor allowed the law to go into effect but didn’t sign it because he was concerned it would spawn expensive litigation. He was right.

This month, a federal judge handed the City a victory, dismissing a lawsuit by the U.S. Chamber of Commerce which had argued that the ordinance was illegal. The decision is certainly not the last word on the subject, since the Chamber will appeal and there is a companion lawsuit still pending anyway.

The issues go beyond the basic question of whether independent contractors can form unions.

Generally, they cannot. Independent contractors are separate businesses. Antitrust law Continue reading