Will NY Lawmakers Create a New Class of “Dependent Contractors”? If So, It Could Be a Work of Art.

Horse no shadow - independent contractor misclassification - dependent contractor - Todd Lebowitz

This piece of art hung in the bedroom at the apartment I rented on my recent vacation in Paris. See the shadow of the dog? Yep. See the shadow of the horse? Yep. See the shadow of the rider?

Oops. I expected it to be there. Chalk up another win for bad art.

Art requires creativity and, sometimes, a different perspective. Things are not always the way we expect them to be. That can be due to oversight (such as with bad art) or due to creativity. New York lawmakers are looking at new ways to approach the Independent Contractor vs. Employee question, and under one recent proposal, lawmakers could get creative.

A proposed bill would create the status of dependent worker, allowing gig workers to form quasi-unions to negotiate fees and directing the state to hold public hearings exploring ways to provide other rights to gig workers, such as minimum wage and anti-discrimination protections.

The bill was withdrawn just before summer recess, but the question will be revisited in the next legislative session. 

Some worker groups say the bill does not go far enough. Many worker advocates would like to see a new law that presumes all gig workers to be employees, unless the hiring party can prove an exception. ABC Tests are one example of that type of law. Business groups seem more open to the proposal, recognizing that labor laws probably need to start recognizing a middle ground between employees and independent contractors. (You can read more about that movement here, in last week’s post.)

We’ll have to wait until the fall, when New York lawmakers return to Albany, to see how this plays out in New York. In the meantime, if anyone is looking for something fun to do during summer break, I know of at least one amateur French painter who could use some tutoring.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Opinion Piece Asks California Not to Be the Pigeon in this Photo

Pigeon head Tuileries - independent contractor misclassification Todd LebowitzI took this picture last week in Paris, walking through the Jardin des Tuileries with my family, just outside the Louvre.  

If you think of the statue as being ride-share giants Uber and Lyft, and if you think of the California state legislature as the pigeon, you’ll know why Uber and Lyft’s chief executives joined forces to write this opinion piece in the San Francisco Chronicle.  

As we explained here, California seems likely to pass a bill that would rewrite California law in a way that will instantly convert many — perhaps most — independent contractors into employees.  The bill would take the ABC Test created last year in the Dynamex case and apply it to the entire California Labor Code, as well as to state unemployment law. (Currently, the ABC Test applies only to state wage and hour claims, and a more neutral balancing test applies to other state law claims.)

The law, if passed, would undoubtedly fuel new claims against Uber and Lyft, alleging that ride-share drivers are employees under state law.

In the opinion piece, the companies argue in favor of legal reform, but in a way that does not threaten to change drivers into employees.

The Uber-Lyft proposal would secure three new types of protections for ride-share drivers, while safeguarding their status as independent contractors. The proposal would:

  1. Set up a portable benefits system for gig workers, including retirement savings accounts, paid time off, and lifelong learning opportunities;
  2. Create a drivers’ association, in partnership with state lawmakers and labor groups, to represent drivers’ interests and administer benefits; and
  3. Establish a new driver pay system that includes greater earnings transparency for the work performed between accepting a ride and dropping off a passenger after accounting for reasonable expenses.

So why can’t Uber and Lyft just do these things on their own? Because if they did, the current legal system would likely treat those acts of goodwill as evidence that Uber and Lyft were treating the drivers as employees.

Current labor laws were not written with the gig economy in mind. The law right now is an all-or-nothing proposition — independent contractor or employee. The modern economy, though, requires a middle ground — an alternative that allows app companies to provide greater benefits and protections to drivers without running the risk that these well-meaning gestures could convert the drivers into employees.

Pigeons are going to poop on statues forever. Marble heads provide a comfortable spot for loosening the ol’ avian bowels, and we all know it’s hard to find a good public toilet these days. But some things should not be set in stone. Let’s hope the California assembly backs off of the fast track for A.B. 5 and instead tries something new. The system proposed in the joint Uber-Lyft opinion piece would help drivers and would help the gig economy continue to thrive. 

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Reefer Madness? Did Colorado Just Criminalize Independent Contractor Misclassification?

Colorado independent contractor misclassification wage theft law 2019

The state that brought us legalized recreational marijuana and local decriminalization of psychedelic mushrooms may be a bigger buzzkill than we thought — at least for businesses using independent contractors.

A new Colorado law reclassifies the failure to pay wages as theft, which sounds pretty chill; but the way the law is written, it could have the effect of making independent contractor misclassification a crime.

Failing to pay wages under Colorado law includes failing to pay a minimum wage or overtime. When independent contractors sue and allege they were really employees, one of the most common claims asserted is that, since they were really employees, they were entitled to a minimum wage and overtime pay. In these lawsuits, contractors often allege they worked enough hours that they should have been paid overtime. Colorado overtime law requires employees to be paid overtime not only after working 40 hours in a workweek, but also after working more than 12 hours in a workday or 12 consecutive hours over two days.

It is unclear whether the new law was intended to criminalize independent contractor misclassification, but it may have that effect. On the other hand, Colorado businesses may be able to an assert a good faith defense, arguing that the new criminalization law is intended only to cover willful acts of failure to pay, not legitimate disputes over whether someone is legitimately classified as an independent contractor.

It remains to be seen how things play out, but when Colorado businesses get an occasional break from making sure their laborers aren’t high, it might be a good idea to double check independent contractor relationships to make sure they can withstand a legal challenge.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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After Robert R Died, the State Agency Kept Sending Him Assessments. Then I Did This…

Graveyard independent contrractor misclassificationThis is a true story — and it was the most fun I ever had as a lawyer.

I was representing the administrator of an estate. The deceased, Robert R, had required round-the-clock care before his demise, and his family retained several home heath care nurses. The family treated them as independent contractors. When one nurse was no longer needed, she filed for unemployment.

The state agency decided she was an employee, not a contractor. The agency sent a bill to the family for not paying into the state unemployment fund. The assessments covered all of Robert R’s nurses, not just the one who filed for unemployment. The agency also assumed that Robert R continued to retain nurses, and it issued new assessments each quarter.

But then Robert R died. At that point, he no longer needed nurses.

That’s where I come in. Shortly after Robert R’s death, I wrote a polite letter to the agency, informing it that Robert R had passed. I attached the death certificate and told the agency there were no more nurses, so please do not send any new assessments.

But the next quarter, the state agency sent a new quarterly assessment.

I sent another letter. I attached a second copy of the death certificate and again informed the agency that Robert R had died and no longer had any nurses, so please stop sending new assessments.

The next quarter, the state agency sent another new quarterly assessment.

Exasperated, I then sent this.

THL letter - why we are not paying these assessments

The agency stopped sending assessments, and I never heard from them again.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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A New Low for California’s Independent Contractors? ABC Test May Be Adopted for the Whole Labor Code

Death valley for independent contractors - california dynamexCalifornia is the home of both the highest and the lowest points in the continental U.S. — Mt. Whitney at 14,495 feet and Death Valley at -282 feet. As far apart as these two sites are on the altimeter, they’re less than 100 miles apart on the odometer.

That’s a lot of up and down. If you follow California’s developing law on Independent Contractor vs. Employee tests, you’ve also seen a lot of ups and downs recently. If a pending bill passes (as expected), businesses using independent contractors may be about to experience a new low.

Remember the Dynamex case? As explained here, that’s the California Supreme Court decision that enacted a strict ABC Test for determining whether someone is an employee or an independent contractor under California’s wage orders. As we discussed here, though, the ABC Test only applies to certain state law employment claims. Other less stringent tests still apply when analyzing whether a contractor should really be considered an employee under other state employment laws.

But that may be about to change.

Assembly Bill 5 would adopt the Dynamex ABC Test as the way to determine whether someone is an employee under all parts of the California Labor Code and under state unemployment law.

In its current form, the law would exempt certain licensed professions from being subject to the ABC Test. Extensive lobbying efforts are underway by various trade associations to carve other trades out of the law as well. For those professions excluded from the law’s reach, the test for determining whether a contractor is really an employee would be the S.G. Borello balancing test, a much less stringent standard than the Dynamex ABC Test.

The bill is now pending before the state senate. If it passes, it will become even harder to be a legitimate independent contractor in California. The state with one of North America’s highest peaks will become a virtual Death Valley for contractors trying to maintain their independent status.

We’ll continue to follow the status of this bill.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Fun with Funerals? Cremation Company Settles Misclassification Case for $2.5 Million

Cannon cremation funeral Independent contractor misclassificationEveryone loves a fun funeral story, right? Apparently so. AARP.com posted this article about creative cremations. Available options for ashes include:

  • Being blasted out of a cannon to the tune of “Mr. Tambourine Man,” (Thank you, Hunter S. Thompson);
  • Being placed in an “environmentally safe, ball-shaped concrete memorial reef” and placed in the ocean to create a marine habitat, (giving a new and more literal meaning to “sleeps with the fishes”);
  • Being launched into space for an earth orbit; and
  • My personal favorite – being loaded into a five-foot biodegradable helium balloon and launched over the hills surrounding the deceased owner’s ranch so his buddies could shoot at the balloon until it burst, spreading the ashes over the surrounding foothills (so beautiful it almost makes me want to weep in my moonshine).

A cremation company had a less fun time last month, when a judge approved a $2.5 million settlement for independent contractor misclassification. The settlement included $1.65 million to a class of independent sales representatives and $825,000 in attorneys’ fees to the plaintiffs’ lawyers.

The company’s independent sales representatives had claimed that they were really employees, despite having signed an Independent Contractor Agreement in which they agreed they were contractors.

As we’ve noted many times before, though, it’s the facts of the relationship that matter, not what the parties call themselves. According to the plaintiffs, the cremation company told them when to work and where to work, paid them an hourly non-negotiable rate, required frequent reports, supervised their work, and provided them a handbook instructing them how to conduct themselves and how to perform their work. These are all facts that weigh in favor of employment status.

The sales reps’ lawsuit alleged that, when assessing the facts of the relationship, they were really employees and not independent contractors. They alleged violations of several laws that apply only to employees, including violations of California’s overtime, meal and rest break, waiting time, recordkeeping, and business expense reimbursement laws; and violations of the federal FLSA overtime rules.

The parties settled the dispute, and a federal judge approved the settlement.

There’s nothing suprising here, but the settlement should remind us that:

  • The facts of the relationship are what matter, even if the parties agree to call the workers “independent contractors” and they sign an Independent Contractor Agreement;
  • Different tests apply to different laws; here, there were claims that would have to be evaluated under:
  • Independent contractor misclassification remains a real and potentially costly risk.

The settlement did not say whether any of these sales representatives sold cannon, reef, space, or skeet shooting funerals along with cremation services. But I sure hope they did.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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New ABC Test Under Federal Labor Law? Dem-Sponsored Bill Would Make That Change

Independent contractor misclassification NLRB peacock

All eyes on me!

According to The Atlantic, when a peacock spreads and shakes its elaborate feathers, it shakes them at 26 times a second, which creates a pressure wave that is sensed by a female peahen through the crest atop her head. This precise frequency causes the female’s crest to vibrate in a way that is apparently very sexy for peafowl. The male seeks attention and, with just the right vibrations, he lets all the single pea-ladies know that he wants some action. Note to pea-fellas: If you like it, then you shoulda put a ring on it.

In a crowded field of Democratic Presidential hopefuls, something similar is happening, but it’s less pretty, less sexy, and less appealing for businesses across the country.

As Democratic legislators vie for union support in the upcoming 2020 election, they’re making sure to signal to workers and unions that they’ve got pretty feathers and they’re not afraid to use them. A new bill co-sponsored by Presidential hopefuls Kamala Harris (Calif.), Bernie Sanders (Vt.), Elizabeth Warren (Mass.), Cory Booker (N.J.), Kirsten Gillibrand (N.Y.), Amy Klobuchar (Minn.), and Rep. Tim Ryan (Ohio) would amend the National Labor Relations Act (NLRA) to redefine “employee” and “joint employment.”

The Protecting the Right to Organize Act of 2019 would impose a strict Dynamex-style ABC Test for determining Who Is My Employee? under the NLRA. A worker would be deemed an employee under the NLRA by default and could only be deemed an independent contractor if all three of the following could be proven:

(A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact, and
(B) the worker performs work that is outside the usual course of the hiring entity’s business, and
(C) the worker is customarily engaged in an independently established trade, occupation, or business.

This is the same strict ABC Test adopted by the California Supreme Court in Dynamex and by the Massachusetts legislature for its state wage and hour claims.

The Act would also redefine joint employment. It would require that an entity be deemed a joint employer under the NLRA if it “codetermines or shares control over the employee’s essential terms and conditions of employment.” So far, so good. But then there’s this: “In determining whether such control exists, the Board or a court of competent jurisdiction shall consider as relevant direct control and indirect control over such terms and conditions, reserved authority to control such terms and conditions, and control over such terms and conditions exercised by a person in fact.”

The Act would stymie the NLRB’s current effort at passing a new regulation that would limit “joint employment” to situations where actual control is exerted (not merely reserved) and where that control is exerted over essential terms and conditions of employment, such as hiring, firing, and pay.

Most damaging of all (but not related to independent contractor or joint employment issues), the bill would fundamentally change the collective bargaining process by imposing binding arbitration on the parties to resolve any disputes in contract negotiation. That change, if it were ever adopted, would change the nature of bargaining as we know it, potentially removing much of the incentive for unions to bargain in good faith.

If the Act emerges from committee, it will likely pass the House but has no chance of success in the Senate. Even if it passed, it would almost certainly be vetoed by Trump anyway.

For now, the Act is a political move intended by the Democratic Presidential hopefuls to demonstrate their pro-worker, pro-union credentials. For a certain audience, the Act looks pretty and may vibrate some crests. But for at least the next two years, this display of feathers is not likely to lead to any action.

Bonus feature: For another peacock-related post, click here.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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