“Maybe Later”: California Legislature Declines Business Community’s Request to Fix ABC Test

California ABC Test legiuslative efforts fail 2018

Peter Gabriel’s 1986 album, So, includes the song “Don’t Give Up.” It is a mournful duet with Kate Bush that must not be included on anyone’s workout playlist. The blend of an inspirational title and weepy output, though, seems appropriate for this post.

Today we’re following up on the state of independent contractor misclassification in California, five months after the Dynamex decision and its contractor-hatin’ ABC Test.

This summer, in response to Dynamex, California businesses that rely on independent contractor gig workers engaged in a coordinated effort to persuade the California legislature to suspend the Dynamex ruling and to reinstate a common sense balancing test for determining Independent Contractor vs. Employee.

For now, they have failed.

California’s 2018 legislative session just ended. The Democratically controlled Assembly and Senate declined to consider any legislation that would affect the Dynamex ruling and its new ABC Test.

In a recent interview with California’s Capital Public Radio, three weeks before the legislative session closed, Assembly Speaker Anthony Rendon admitted that he is a much weaker hitter than the Washington Nationals third baseman who shares his name and has 19 more home runs this year than the Speaker. (Actual quote unavailable.) But, more relevant to this post, Rendon also said that there would be no action this year on legislation to define Who Is My Employee?

“Ultimately, this decision is about the future of the way work looks. And that requires us to be thoughtful and deliberate,“ Rendon said. “And there’s no way we can be thoughtful and deliberate in three weeks.”

Senate President pro tem Toni Atkins, who may or may not have been in the late-80s-early-90s soul/R&B group Tony! Toni! Toné!, expressed similar sentiments: “The California Supreme Court voted unanimously for this new test. I agree with Speaker Rendon that forging any legislative review or response to their decision in just three weeks isn’t workable.”

Let’s break that down.

When my oldest daughter was little and didn’t want to do something, she developed a polite way of saying “no f-ing way.”  She’d say, “Maybe later.”  We all knew what that meant.

I am hearing the same thing from Rendon and Atkins when they say that three weeks wasn’t enough time to draft new legislation. All they had to do was reinstate the status quo before Dynamex, which was a well-established balancing test for determining whether someone is an employee or an independent contractor.

But instead they gave us the legislative equivalent of “maybe later.” I won’t be putting that on my workout playlist either. And it’s not gonna get worked out any time soon. The ABC Test in California is here to stay. (Cue weepy mournful background music.)

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

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Arbitration Agreements Can Prevent Discovery of Other Class Members

McGrew independent contractor collective action sixth circuit court of appeals

An old Canadian poem called “The Shooting of Dan McGrew” tells the tale of a Yukon Gold Rush prospector (McGrew), his sweetheart “Lou,” and a stranger who buys drinks for everyone in the saloon, plays a sad song on the piano, then shoots McGrew, who also shoots the stranger, and everyone dies except Lou, who gets McGrew’s gold. You can read a summary here.

This post is about a different McGrew, who doesn’t get any gold.

This McGrew is an exotic dancer in Kentucky. She filed a lawsuit alleging independent contractor misclassification, an issue that was mildly less prevalent during the Yukon Gold Rush. Melissa McGrew had an arbitration agreement but filed a lawsuit anyway, trying at least to get the court to grant conditional certification and require all potential class members to be notified of the lawsuit and their opportunity to bring claims.

No way, said the district court; and no way said the Sixth Circuit Court of Appeals.

The Court of Appeals, guided by the Supreme Court’s recent decision in the Epic Systems case, ruled that because arbitration agreements are enforceable, a plaintiff can’t first try to take advantage of collective action notice procedures in court. Arbitration means no court, which means no collective action notice procedures.

This is not a surprising ruling, but it’s an important reminder of another benefit to businesses of arbitration agreements with class action waivers.

Not only can businesses prevent class action litigation, but they can also prevent the procedures that would result in notifying all potential class members.

In this case, McGrew got no gold, and her lawyers got no list.

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

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Beware of Classwide Arbitration: Instacart Case Might Allow It

Instacart arbitration decision allowing class actions

Did that photo make you want to eat a pumpkin right now? (Probably not.)

🍿🍩🍰🍦🍨 Do these emojis make you hungry?

Does this one 🍺 make you wish the workday was over?

Fortunately for those who like instant gratification, driving services like Instacart promise to connect you with contractors who will go grocery shopping for you and will deliver the bounty to your house. This is not an ad for Instacart, though. This is a post about arbitration.

You see, like many other delivery app companies, Instacart’s drivers are independent contractors. Also like many other delivery app companies, Instacart gets sued for independent contractor misclassification. Wisely, Instacart has all contractors sign arbitration agreements.

One of the most significant benefits of arbitration agreements for companies is the opportunity to insert a clause that waives the right to bring any class/collective action claims. All claims must be brought individually — but only if that waiver language is clearly stated in the contract.

Instacart may have had an Oops!

In a pending case alleging independent contractor misclassification, the arbitrator has ruled (preliminarily) that the driver bringing the claim may bring a class/collective action. Instacart said, Whahhh?, and asked a California court to intervene and to rule that the arbitrator was overstepping his authority.

Arbitrators, though, are pretty well insulated from court review. That’s usually a plus, but it can also be a minus. For Instacart, it’s a minus here.

The California court ruled that it has no jurisdiction to intervene. It cannot review that preliminary decision by an arbitrator. Rather, a court can only review an arbitrator’s decision under very limited circumstances, mainly only after there has been an “award.” Instacart appealed but fared no better. The California Court of Appeals agreed.

The Court of Appeals, like the court below, ruled that the arbitrator’s decision to allow class arbitration is not an “award,” and the court cannot intervene. The arbitration must continue under the jurisdiction of the arbitrator. Only when the case is done will the court take a look.

This decision should serve as a reminder of two important points:

  1. In arbitration agreements with independent contractors, it is important to include a carefully drafted clause that waives the right to file or participate in a class or collective action. The clause should also state that the arbitrator has no jurisdiction to consider a class or collective action. These clauses need to be unambiguous.
  2. When parties agree to arbitrate, the arbitrator has a lot of power, and the preliminary rulings of an arbitrator are generally not subject to court review (except in limited circumstances). When you choose arbitration, you’re all in.

The case is in its very early stages, so we’ll see what happens. But there are some early lessons to be learned here. Congratulations. You made it to the end of the post. Now you can go eat.

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

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Will New Bill Finally Allow Independent Contractors to Receive “Employee” Benefits?

Employee benefits for independent contractors

In 1983, Journey released the album Frontiers which, as you all know, is not as good as Escape but way better than Raised on Radio. The third song on Frontiers is After the Fall (youtube 80s refresher here), not to be confused with the later-formed Australian rock band, After the Fall (which is not to be confused with the much earlier British post-punk band The Fall, which came before After the Fall, but I digress). The Australian band, After the Fall, featured a drummer named Mark Warner, not to be confused with the Democratic Senator from Virginia, who, incidentally, is not related to John Warner, who was also once a Senator from Virginia.

Mark Warner the Senator recently introduced a bill that relates to the subject of this blog, and so for that, I am grateful, especially since it allowed me to mention the album Escape, which I really liked very much.

Sen. Warner has been trying for some time to gain traction on a bill that would promote portable employee benefits for gig workers. I am solidly behind this idea, as it would provide much more flexibility for independent contractors to carve out their own career paths without forfeiting employee benefits. I never understood why we tie health insurance to employment in this country, but that’s for another day.

Warner’s bill has never gone anywhere but, to his credit, he is trying again.

Last week, he introduced an amendment to a massive appropriations package. The amendment would set up a system to award grants for state and local governments and non-profits. The grants would support the creation of programs to allow portable benefits for gig workers, including health insurance, workers compensation, disability coverage, and retirement savings plans.

I hope the program succeeds. The current legal framework, which recognizes independent contractors and employees but no third option, is not consistent with how the modern gig economy works. If benefits can be de-coupled from employment, as they should be, we may eventually see a 21st century system that allows gig workers to receive insurance, workers comp, and other protections, without having to be reclassified as employees.

Thank you, Sen. Warner. I won’t stop believin.

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

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NYC to Cap Number of Uber, Lyft Drivers

Traffic uber lyft NYC law suspect TLC license

In the Jimi Hendrix song, Crosstown Traffic, Jimi plays a nifty little riff with a makeshift kazoo constructed from a comb and tissue paper. The lyrics compare trying to get through to his lady friend with trying to get through Manhattan’s cross-town traffic, which was already bad in 1967. (Thanks Wikipedia!)

News Alert: New York City Has Bad Traffic!

So whose fault is that?

In a gut punch to the gig economy, New York City just passed an ordinance that will place a one-year ban on granting new licenses for ride hailing vehicles.

To drive using Uber or Lyft in NYC, you need a license from the Taxi and Limousine Commission (a different kind of TLC). During this one-year suspension period, the city will conduct a study on traffic and congestion and will examine driver compensation.

According to this Wall Street Journal article and nifty graph, since the emergence of Uber and Lyft as ride-share options, the value of NYC taxi medallions has plummetted from about $1 million to roughly $200,000; and since 2015, the number of TLC-licensed drivers (cabs and ride-sharing services) has more than doubled. The City points to increased congestion as the reason to suspend the issuance of new TLC licenses for a year.

The ride-share companies argue that the cap will limit the number of available drivers in outer boroughs, increasing New Yorkers’ wait times.

Is the City’s motivation really to address traffic congestion? Or is the idea instead intended to help the struggling taxi industry? Hmmmm.

Under the new law, licenses that have already been granted are not being taken away.

In case you were interested (or even if you are not), here are the general requirements for obtaining a license from TLC if you want to drive. [Uber, Lyft]

But for the next 12 months, the application process will be “just like crosstown traffic,
So hard to get through to you.”

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

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Can Independent Contractors Sue for Employment Discrimination?

diaper independent contractor discrimination

The answer brings to mind the one must-have item for the thousands of crazies who spend 12 hours in Times Square waiting for the ball to drop every New Years’ Eve with no available public restrooms:

Depends.

Under federal anti-discrimination law, an individual generally needs to be an employee to bring an employment discrimination claim. Laws like the Age Discrimination in Employment Act (ADEA) and Title VII of the 1964 Civil Rights Act require employment status to file a lawsuit. Race discrimination claims, on the other hand, can potentially be brought under a different statute.

State laws, however, vary. Some states permit independent contractors to bring “employment discrimination” lawsuits; other states do not.

A recent decision by the Washington Supreme Court serves as a reminder that in the Great Northwest (home of Mount St. Helens and Blaine Peace Arch Park [which I visited  last month and got to run around and around the obselisk that marked the international border]), an independent contractor can bring a state law claim for discrimination “for the making or performance of a contract for personal services.”

The Pennsylvania Human Relations Act also prohibits discrimination against independent contractors.

On the flip side, state anti-discrimination laws in Ohio and Florida protect only employees, not independent contractors.

To determine whether independent contractors are protected under anti-discrimination laws, the answer truly is: It depends.  It depends on the type of alleged discrimination and depends on the state whether the alleged discrimination occurred.

None of this is to say that companies in states like Ohio or Florida should discriminate against contractors. In fact, where facts of any individual case are particularly egregious, common law claims might be recognized by courts uncomfortable with the idea that there is no remedy, even if the state’s anti-discrimination statute does not permit the claim. Although I live on the defense side, I still say: Do the right thing.

And if you should ever find yourself in Times Square on New Years’ Eve, passing the hours until the ball drops, I say this: Bring your adult undergarments. There’s no place to pee.

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

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DOL: Association Health Plans Are Not Evidence of Joint Employment

451DCB77-A195-4A4F-A846-E9E47C59AA02

For some conditions, medical treatment will not help. For example, in 1979, Robert Palmer had “a bad case of lovin’ you” and no pill was gonna cure his ill. It is unknown whether this condition ever cleared up. At last report, Palmer had become addicted to love.

For those with conditions where pills can cure ills, or for those (like Huey Lewis?) who just want a new drug, medical coverage can be important. A new DOL rule allows small businesses to participate in Association Health Plans without exposing themselves to joint employer liability.

An Association Health Plan (AHP) is a group health plan that allows small employers to band together to purchase the types of coverage that are available to large employers, which can be less expensive and better tailored to the needs of their employees. AHPs can be formed based on common geography or based on a common industry or trade group.

The Department of Labor recently issued FAQs and a lengthy rule about AHPs, but for our purposes, one of the important pro-business features is that participation in an AHP cannot be used as evidence that the participant employers are joint employers under federal wage and hour law or employee benefits law.

The rule also recognizes that businesses may contract with individuals as independent contractors and that jointly participating in an AHP with these independent contractors does not make the business an employer or the contractor an employee.  The inclusion of independent contractors in an AHP is not evidence of misclassification.

The rule takes effect August 20, 2018.

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

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