Category Archives: Joint Employment

09.13.18
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Loss of Control? New Trademark Bill Would Help Franchisors to Reduce Joint Employment Risks

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The Van Halen song, “Loss of Control,” supposedly is intended to poke fun at the punk rock scene, turning everything up to high volume and high frequency. It is not a song to fall asleep to. If the lyrics took more than ten minutes to write, I’d be as surprised and disappointed as if I found a brown M&M in the Van Halen dressing room.

The lyrics consist of a few basic lines and then repeating the phrase “Loss of Control” over and over and over again at high speed. A copy of David Lee Roth’s handwritten lyrics can be found here.

Franchisors constantly struggle with how much control they can exert over their business model and over franchisees without becoming a joint employer of the franchisee’s employees. On one hand, they need brand consistency to project an image to the public and to ensure that a reliable product or service is being offered, regardless of franchise location. On the other hand, day-to-day decisions like hiring and scheduling should be left to the individual franchise owner.

One area where franchisors absolutely must exert control is over their trademarks. They need to ensure that their marks are used consistently and appropriately and that individual franchise owners don’t use the marks in unapproved ways.

A new bill introduced in Congress aims to help franchisors protect their marks in a way that does not increase the risk of a joint employment finding.

The proposed Trademark Licensing Protection Act has bipartisan support, having been co-introduced by House Small Business Committee Chairman Steve Chabot (R-OH) and Rep. Henry Cuellar (D-TX).

If passed, it would declare that when a mark is licensed to a related company (such as a franchisee), any control exerted over that mark “for the purpose of preserving the goodwill, reputation, uniformity, or expectation of the public of the nature and quality of goods or services associated with the mark” would not be evidence of an employer-employee relationship or of joint employment.

This clarification would be helpful to the franchise industry. Franchisors are under constant attack with claims of joint employment. This bill would help protect them against joint employment claims while helping them to avoid a loss of control.

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

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08.02.18
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DOL: Association Health Plans Are Not Evidence of Joint Employment

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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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07.09.18
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Free Smells! Jimmy John’s Avoids Franchisor Joint Liability

Joint employment jimmy john’s overtime litigation

The famous bank robber Willie Sutton supposedly once said that he robs banks “because that’s where the money is.” I doubt he said that since it seems rather incriminating. (“I’m sorry, your honor. What I meant is ‘If I did it…” See, Simpson, O.J.). But that’s the legend anyway. You can read more here on whether it’s true.

The strategy for plaintiffs in overtime cases is much the same. Sue the deepest pockets. That’s where the money is. When the deepest pocket is not your employer, allege joint employment.

That’s what happened in the recent overtime lawsuit against some Jimmy John’s franchise owners (the direct employers) and the franchisor (corporate Jimmy John’s). The lawsuit is cleverly titled In Re: Jimmy John’s Overtime Litigation. Like many lawsuits, the case has dragged on for four years. It has not been freaky fast.

Continue reading →

06.04.18
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Rules are Rules: Shetland Islands Should Stay in a Box, but NLRB Should Proceed with Change to Joint Employment Test

Shetland Islands joint employment

From bbc.com, putting a u in “labor” just for you!

Some rules bring clarity, but other rules are plain wacky.

In the second category we introduce Scottish member of Parliament Tavish Scott, who is trying to pass a law requiring maps of Scotland to show the actual location of Shetland, in proportion to its distance, instead of putting it in a box like U.S. maps do for Hawaii and Alaska. The problem is that the Shetland Islands are pretty far north of the rest of Scotland, a 12-hour ferry ride across ancient-sea-monster-infested waters. According to one mapping agency,  Scottish maps would be “mostly sea” under Scott’s idea.

(Danish mapmakers, still angry about the territorial addition of Greenland, could not be reached for comment.)

A better way to use rules is to bring clarity. Scots know that the Shetland Islands are far away. That’s what the box means. Less clear, however, is the meaning of “joint employment” under U.S. labor law. As we’ve seen from several earlier posts (like here, here, and here), the new NLRB is trying to change the test for “joint employment” from the broad Browning-Ferris test (indirect opportunity to control = joint employment) to a tighter, more workable standard (requiring direct control over key terms of employment).

Continue reading →

05.17.18
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Inspired by Animal House? NLRB May Force Long-Term Change to Joint Employment Test

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“What? Over? Did you say “over”? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!” —Bluto

The Republican-majority NLRB has been trying to figure out how to overturn the Browning-Ferris joint employment standard without running into conflicts of interest. It tried in December 2017, when it set a new test in Hy-Brand, but then backed off a few months later after allegations that Member Emanuel had a conflict of interest and should not have participated. The Browning-Ferris test went back into effect.

Two members of the Board come from large law firms and may face allegations of conflicts of interest if they vote to overturn Browning-Ferris.

But did you say it’s over? Nothing is over until we decide it is!

The Board announced last week that it is not giving up. Instead, it is planning a new way for changing the joint employment test. This plan, if successful, may mean a new test that is not subject to flip-flopping every time the NLRB majority flip-flops between Ds and Rs (as it does whenever there’s a new President from the other party.)

The new plan involves crafting a rule through the administrative rulemaking process. Sounds boring (and it is). The tedious rulemaking process includes issuing a public notice of the proposed new rule and a comment period.  Then, the Board gets to ignore any negative comments and adopt the rule.

The process takes time, but like a tiny water bacterium with a funny name, the new rule would be sticky.

From livescience.com: The tiny water bacterium Caulobacter crescentus secretes a sugary substance so sticky that just a tiny bit could withstand the pull from lifting several cars at once. With an adhesive force of nearly five tons per square inch, this “glue” is one of nature’s strongest.

The new rule would actually go in the books as a regulation, which future Board members would be obligated to follow.

It’s a sound strategy if it works.

The new rule would presumably resemble the rule the Board tries to enact in the Hy-Brand decision, which makes it much harder to show that a business is a joint employer. The new test presumably would require “joint control over essential employment terms” and would require control that is “direct and immediate,” not “limited and routine.”

For businesses that use other vendors’ workers (such as staffing agencies) and face the risk of being named a joint employer, this is an important development. Keep an eye on this one.

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

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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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04.02.18
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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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03.22.18
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Will Recusals Sink the NLRB’s Pro-Business Agenda?

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“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.

03.05.18
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Go Carts or Bumper Cars? NLRB Asks Court to Fix Its Browning-Ferris Blunder

Browning-Ferris joint employment go cartThe two most fun activities at amusement parks (aside from skee-ball) are Go Carts and Bumper Cars. This is scientific fact. Go Carts are fun because you can go fast, weave around, and drive in circles — all without getting honked at. Bumper Cars are fun because, well, you get to bump people.

The NLRB seems stuck on the Go Cart track, going round and round, when it would rather be in the Bumper Cars.

Last week, we reported on the Board’s sudden decision to vacate its important Hy-Brand decision, issued in December 2017. Hy-Brand was important to businesses because the decision restored sanity and workability to the NLRA’s test for joint employment.

But by vacating the Hy-Brand decision, the dreadful Browning-Ferris standard went back into effect, Continue reading →