There have been many notable Bills in rock music. There’s Billy Joel, Billy Idol, and Billy Ocean. Remember Billy Ocean? “Carribean Queen”? Subtitled “(No More Love on the Run).” Billy O gave us this ridiculous video that screams 1980s and includes such bad lip synching that you know, right away, he never could have pulled off a Milli Vanilli.
There’s another Bill that some businesses need to be aware of, including those that are working with independent contractors.
New York City requires businesses to post and to provide all employees the new Worker’s Bill of Rights, which includes information that applies mostly to employees but also, in some cases, to independent contractors. There is no separate requirement, however, to provide the Bill of Rights to independent contractors.
Independent contractors’ rights addressed in the notice include anti-discrimination, anti-harassment, and Freelance Isn’t Free Act rights.
Restaurant delivery app drivers also have enumerated rights, including that the app companies must:
pay you a minimum pay rate;
tell you how much the customer tips for each delivery;
tell you your total pay and tips for the previous day;
allow you to limit how far you will go from restaurants and refuse to use certain bridges or tunnels;
tell you route details before you accept a delivery; and
pay you at least once a week.
The Bill suggests contacting the NY State DOL if you recognize that you may have been misclassified as an independent contractor. The notice doesn’t tell contractors how they might recognize misclassification.
You’d probably recognize most of the Bills in rock that I listed above, but the award for most recognizable Bill in rock goes to Billy Gibbons, guitarist and vocalist for ZZ Top. Yes, he has one of the band’s two fantastic beards, the other belonging to the late Dusty Hill.
Fun fact about ZZ Top: The only band member without a fabulous beard was the drummer. His name? Frank Beard.
The band America (“A Horse with No Name,” “Ventura Highway”) was formed in England. Yes, really. But by three Americans whose fathers were in the U.S. Air Force and stationed overseas.
That got me thinking about other bands with place names. When I was growing up in Miami in the 1980s, if someone mentioned Boston, I thought of just another band out of Boston, on the road to make ends meet. If someone mentioned Kansas, I thought of dust in the wind, even though I never particularly liked that song. Chicago made me think of the Cubs, but only in 1984. Otherwise, does anybody really know what time it is?
Not that I am older and have a life, place names mean something different to me. They now make me think of federal, state, and local laws affecting independent contractor status.
(Ok, I take back the comment about having a life. I realize this is a sad and pathetic way to think of place names.)
After the election, place names are going to take on greater importance as businesses aim to protect their independent contractor relationships. Federal enforcement activity isn’t going away, but I expect to see a growing emphasis on legislation and enforcement at the state and local level.
In the realm of non-employee workers (independent contractors, staffing agency temps), I expect to more state and local legislation in these areas:
1) Freelancer Laws. We now have freelancer laws in CA, NY, IL, Los Angeles, NYC, Minneapolis, Seattle, and Columbus. These laws impose requirements when retaining individuals who are independent contractors. The laws generally require written contracts that contain several mandatory components.
2) Temporary Worker Laws. We have these in NJ and IL. They generally require that staffing agencies pay their workers an equivalent wage rate (and sometimes the value of benefits) being paid to workers they work alongside at the company where they are providing services.
3) Misclassification Laws – the Bad Kind. In states with Democrat trifectas (house, senate, governor), expect new laws that make it harder to be an independent contractor. Expect more ABC Tests, like in CA and MA. Other states have ABC Tests for determining who is an employee under workers’ comp and unemployment law.
4) Misclassification Laws – the Good Kind. In states with Republican trifectas, expect more safe harbor laws. If you satisfy a set of basic requirements in your dealings with a non-employee worker, then the worker is an independent contractor under that state’s laws. Pesky balancing tests (and long-haired freaky people) need not apply. We have these state laws in WV and LA (not L.A.)
We will likely see changes at the federal level too, but these may take years to develop. The federal agency rulemaking process is slow and cumbersome, and agency rules will take on less importance as federal agency power continues to diminish after the Supreme Court’s Loper Bright decision.
I haven’t touched on Europe or Asia, but those are bands for another day and another post. When? At some point, in the heat of the moment, but only time will tell.
This is a venomous Eastern Brown Snake, native to Australia. Stay away.
Tennis star Dominic Thiem knew what to watch for in his match this past weekend in Brisbane. It was on-court hazard he couldn’t ignore.
Play was interrupted when a “really poisonous snake” slithered onto the court near the ballkids. The intruder, an Eastern Brown Snake, “has the unfortunate distinction of causing more deaths by snake bite than any other species of snake in Australia.” The snake’s venom causes “progressive paralysis and uncontrollable bleeding,” which is not one of the on-court hazards typically of ballkidding.
(I don’t know if ballkidding is the real word for this, but it should be. Or ballkiddery maybe. I also learned from the snake bite article that the proper term for being bit by a venomous snake is “envenomation,” which is a word I hope to use elsewhere in a sentence sometime in 2024. So there’s a New Year’s resolution. [@Lisa, take note, I made one, even though you {correctly} say I am no fun because I won’t play the New Year’s Resolution game.])
The Eastern Brown Snake is not present in the U.S., so we don’t have to watch for any in 2024.
But here are several other things that could bite you in the behind in 2024 if you’re not paying attention:
1. New DOL test for independent contractor misclassification. The DOL issued its proposed new rule in October 2022 and targeted the fall of 2023 for release of a new final rule. The proposed rule would identify seven factors to consider when evaluating whether someone is an employee under the Fair Labor Standards Act (FLSA). The final rule will likely be very similar. We’re still waiting, and the final rule could be released at any time.
2. The new NLRB test for joint employment takes effect Feb. 26, 2024. Unless it doesn’t. The new rule is being challenged in both a federal district court in Texas and the U.S. Court of Appeals in D.C. Either court could quash the rule. The new rule will substantially expand who is a joint employer under the NLRA, even for worksites without unions.
3. Increased state and local enforcement activity. States and localities are filing their own lawsuits alleging worker misclassification. The New Jersey Attorney General recently filed a major lawsuit. The California Attorney General and California localities have been pursuing misclassification lawsuits too. Remember this: As much as I advocate for individual arbitration agreements with class waivers, they have no effect on enforcement actions brought by a state or local government. These lawsuits pose a substantial risk, and the governments love to issue one-sided accusatory press releases when they file the lawsuits.
4. The feds are doing this too. The DOL is bringing its own enforcement actions and publicizing them.
5. State and local laws that affect independent contractor classification and joint employment. We’re seeing legislative activity in three main areas:
(a) laws to change the tests; (b) laws that provide a safe harbor for independent contractor classification if certain protections are provided to the workers (Cal. Prop 22, this proposed Mass. state law); and (c) Freelancers laws that impose various requirements when retaining a solo independent contractor (currently: NY, IL, Los Angeles, Minneapolis, Seattle, NYC, Columbus).
6. State laws that criminalize worker misclassification. Take a look at recent legislation passed in NY State and Rhode Island.
7. State laws governing the use of temporary workers. Look for more states to enact laws like the Illinois Day and Temporary Worker Services Act (amended in Aug. 2023) and the New Jersey Temporary Workers’ Bill of Rights (enacted in Aug, 2023). These laws force companies that use staffing agencies to disclose the wages and benefits being paid to direct employees.
8. California’s AB 5 is still being challenged. This is the law that codified the ABC Test for most independent contractor relationships. But it also included a grab bag of miscellaneous and arbitrary exceptions. A full en banc Ninth Circuit has agreed to rehear Olson v. State of California, which challenges the constitutionality of AB 5.
Wishing you a happy, healthy, and litigation-free 2024.
In the 1800s, P.T. Barnum used to promote the arrival of the circus with parades and clowns and band wagons through the town. By the late 1800s, politicians were noticing the excitement generated by the band wagons, and they would ride their own band wagons through town to generate support and excitement for the campaigns. Supporters would climb aboard, and the phrase “jump on the band wagon” was born.
So it seems fair to say, even back then, politicians were imitating clowns.
Over time, the phrase has come to mean rallying around any popular cause, clowns or no clowns.
And with the new statewide Freelance Isn’t Free Act, signed by Gov. Hochul on Nov. 22, the State of New York has done just that. New York’s statewide adoption of this freelancer law follows similar laws enacted in Illinois, New York City, Los Angeles, Minneapolis, Seattle, and Columbus. You can compare the four cities’ laws here and read more about Illinois’ law here.
Here’s what the NY State version will require, any time there is a contract with an individual independent contractor for services valued at $800 or more, either for one project or an aggregation of projects over 120 days:
Written contract required, which must include:
Name and address of hiring party and contractor
Itemization of services
Value of services
Rate and method of compensation
Date payment is due, or how due date will be determined
Any deadline by which the contractor must submit a list of services provided so that the hiring party can timely process payment.
The hiring party must provide a copy of the contract to the contractor.
The hiring party must retain the contract for six years!
Payment to the contractor must be made by the deadline specified in the contract or, if no deadline is specified, then within 30 days after the services have been completed.
The hiring party cannot require the contractor to accept less than the contracted amount. (The law does not seem to provide any exception for unsatisfactory services.)
Retaliation is prohibited against any contractor who seeks to exercise rights under the Act.
If there is a dispute over whether timely payment was made, the burden of proof is on the hiring party.
The law creates a private right of action.
The penalty for failing to provide a written contract is $250, if the contractor requested the written contract. Such a claim must be brought within two years.
The penalty for failing to make payment as required by the law or under the contract is the value of the contract, plus double damages, plus attorneys’ fees, and possibly injunctive relief. The statute of limitations for this type of claim is six years.
Waivers of any right under this Act are void as against public policy.
The law takes effect on May 20, 2024, and it will apply to contracts entered into after that date. In December 2022, Gov. Hochul vetoed an earlier version of this law, finding that it imposed too great a burden on the NYSDOL. Those concerns have been resolved in the new version of the Act.
The law does not apply to contracts with independent sales representatives, lawyers, medical professionals, or construction contractors.
The law applies not only to businesses, but to anyone in New York State who retains an independent contractor. As we discussed here when the New York City version of the law was enacted in 2017, the Act applies even to babysitters and dog walkers, if the minimum compensation amount is met.
Businesses and individuals who retain individual independent contractors in New York State, Illinois, Los Angeles, Minneapolis, Seattle, and Columbus need to know their obligations under these laws and act accordingly.
The Freelance Isn’t Free laws do not weigh in on whether the contractor is properly classified as an independent contractor.
There is a clear trend toward passing these types of laws, and we can expect more cities and states to jump on the band wagon.
When Johnny Cash recorded At Folsom Prison in 1968, he has performing for an audience of arsonists, kidnappers, and killers. But the inmate audience probably didn’t include any independent contractor misclassifiers.
Fast forward to 2023. There’s a new sheriff in town, and you wouldn’t believe what might now qualify a person for prison time.
Under a new law signed by Governor Hochul last week, wage theft in New York State is now larceny. The law amends section 155 of the penal code (larceny).
Section 155 defines larceny:
2. Larceny includes a wrongful taking, obtaining or withholding of another`s property, with the intent prescribed in subdivision one of this section, committed in any of the following ways:
The definition then lists five subparts: (a) by embezzlement, (b) by taking lost property, (c) by issuing a bad check, (d) by false promise, or (e) by extortion.
Now there’s a subpart (f) “by wage theft.”
Wage theft is defined to include failing to pay overtime, if overtime is due, for work performed. That definition appears broad enough to include the failure to pay overtime because a worker was treated, incorrectly, as an independent contractor.
Larceny comes in different degrees, based on how much money is involved. The new law says that prosecutors can aggregate multiple instances of wage underpayment to one person into one count. It’s unclear to me whether underpayments to multiple people could be aggregated to create a higher degree of felony.
If the value of the property is up to $1,000, that’s petit larceny and a class A misdemeanor. But anything over $1,000 is grand larceny.
If the value of the property exceeds $1,000, that’s grand larceny in the 4th degree, which is a class E felony. More than $3,000 is 3rd degree grand larceny and a class D felony. More than $50,000 is 2nd degree grand larceny and a class C felony. More than $1,000,000 is 1st degree grand larceny and a class B felony.
These are serious crimes. Non-violent felonies can mean prison time. Conviction of a class E felony (for taking $1,001 to $3,000) can result in up to four years of prison time.
New York is not alone in seeking to classify wage theft as criminal conduct. Minnesota and Washington, D.C., are among other jurisdictions that have criminalized wage theft with laws that authorize jail time. California and Rhode Island are considering similar legislation. Rhode Island’s bill would criminalize the knowing misclassification of independent contractors as a felony.
Here’s a link to the new law in New York, created through two companion bills, A154A and S2832A.
Do I expect Riker’s Island to start filling up with accountants and corporate officers who misclassified independent contractors? Not exactly. But I do expect this new law to be used by the state as leverage.
Now that felony prosecutions are a new weapon in the enforcement arsenal, it would not surprise me to see the state threaten prosecution as leverage to force a company to settle disputes over whether independent contractors were misclassified. States can initiate proceedings through tax, unemployment, or workers compensation audits or as a result of worker complaints. Investigations can lead to findings of misclassification, along with hefty fines and back assessments, and companies naturally want to dispute these findings (sometimes causing my phone to ring).
Will the state use the threat of criminal prosecution to try to leverage settlements or capitulation? Yeah, probably.
This is a well-intentioned law because intentional wage theft from employees is obviously a bad thing. But the breadth of the law is a concern for companies that use independent contractors.
For those of you in New York City, there’s also the Freelance Isn’t Free Act, which imposes all sorts of contractual requirements when retaining solo independent contractors. Don’t forget about that.
There are lots of traps out there, and the dangers of misclassification keep growing.
I got stripes, stripes around my shoulders I got chains, chains around my feet I got stripes, stripes around my shoulders And them chains, them chains, They’re about to drag me down.
In ancient and medieval warfare, cavalrymen who fought battles with lances were known as lancers. Actually, they were probably known as whatever Assyrians or Normans or Persians called lancers in their languages, but that’s not important right now.
I should share that my junior high, Palmetto, was also known as the Lancers when I attended in the 1980s. I don’t know if they are still the Lancers, but I do know that they are no longer Palmetto Junior High. Instead, the school is now known as Palmetto Middle School, which is unfortunate and a bit cruel to the teenage cheerleaders who must wear the school’s initials across their chests.
Medieval lancers might have been paid, or might not. Don’t know, don’t care. I know that PMS Lancers are not paid. But this post is not about free lancers. It’s about freelancers. And that space makes a lot of difference.
Los Angeles is the latest major city to pass an ordinance that imposes several strict requirements when retaining freelancers. The Freelance Worker Protection Ordinance took effect July 1, and L.A. now joins NYC, Seattle, and Minneapolis as cities that require a written contract when retaining a solo independent contractor.
This L.A. law is not a TV drama where “office politics and romance often distract the legal staffers from matters in the courtroom.” No, this L.A. law is more boring. This law applies when retaining a solo contractor who will earn $600 or more in a calendar year. If that’s the case (see what I did there?), then these rules now apply:
Must have a written contract that includes:
name, mailing address, phone, email of both hiring party and freelance worker,
itemization of services to be provided,
rate and method of compensation, and
date by which payment is due, or manner for determining due date.
Payment must be made by the due date or, if none is specified, within 30 days after services are rendered.
Both the hiring party and freelancer must retain records for 4 years.
Any waiver of these requirements is unenforceable.
The NYC, Seattle, and Minneapolis ordinances also require written contracts with similar contents when retaining solo independent contractors who will earn about the same amount. The NYC law applies to work worth $800 in one project or in the aggregate over 120 days. The Minneapolis law applies to work valued at $600 in a calendar year or $200 in a single week. The Seattle law applies to work valued at $600 in a calendar year.
Businesses and individuals who retain solo independent contractors in these cities need to be aware of these laws, which apply even if the hiring party is located elsewhere.
Hiring parties who fail to comply may be liable for double damages, fines for not providing a written contract, penalties for late payments, and attorneys’ fees. The most egregious violators may also be subjected to cavalry charges and lance attacks. Maybe.
Kathleen Corradi has been an educator, a land use and sustainability expert and — now — New York City’s first Rat Czar.
The word czar derives from the Latin Caesar and had been used by the Russians to describe their emperor from the 1500s until the 1917 February Revolution, which led to Czar Nicholas II’s unemployment (and, not to bury the lede, the subsequent imprisonment and murder of the former czar, his family and staff).
But Ms. Corradi does not seek to be emperor of the rats. She seeks to eradicate them. Hell of a thing for an emperor to do, don’t you think?
NYC advertised the position with a bit of whimsy, seeking someone “bloodthirsty” with a “general aura of bassassery.”
NYC exercises considerably less whimsy, however, when dealing with independent contractors in its midst.
In most jurisdictions, independent contractors receive none of the protections of employees. NYC, however, imposes some additional burdens on businesses retaining contractors. Here are four things that New Yorkers retaining independent contractors should know:
1. NYC independent contractors are protected against discrimination and harassment under the NYC Human Rights Law.
2. NYC businesses with 15 or more workers must provide annual sexual harassment training to independent contractors, if the contractors (a) work for that business more than 80 hours in a calendar year, and (b) perform on at least 90 days, which don’t have to be consecutive.
3. NYC’s Freelance Isn’t Free Act requires written contracts with freelancers who provide services worth $800 or more, and the contracts must include specified information. This law applies to individuals retaining contractors, not just businesses.
4. NYC rideshare drivers must receive at least a specified minimum wage.
A chess-playing robot took enforcement a bit too seriously at a recent tournament in Moscow. Facing a 9-year old human opponent, the robot grabbed and broke the boy’s index finger when the boy reached toward the board when it was the robot’s turn to move. When you’re a robot, rules are rules.
The robot had been in use for 15 years (and the boy had been in use only 9). Neither robot nor boy had any known history of delinquency, but this sounds like a textbook case of bullying. And there’s video!
In an unrelated matter, New York Governor Kathy Hochul was not going to be bullied by the state legislature into signing a recently passed bill that would have imposed new requirements on the use of individual independent contractors.
Hochul vetoed the proposed Freelance Isn’t Free Act on the grounds that it imposed inappropriate burdens on the NY State Department of Labor. In her veto statement, she wrote that the state DOL “could not implement the legislation effectively” because it required the DOL to oversee private contracts between businesses and non-employees. That’s well outside the DOL’s mission of enforcing labor protections for employees.
The law would have required written contracts with individual freelancers, with various types of mandatory disclosures in each contract.
The proposed law was a statewide version of New York City’s Freelance Isn’t Free Act, which NYC enacted in 2016. A summary of the NYC law is here. In 2017, the NYC Department of Consumer Affairs published an additional set of rules implementing the act and adding new restrictions that were not in the original law.
Because the 2022 legislative session has ended, the NY state assembly cannot override her veto, but the bill could be reintroduced in 2023.
If the assembly wants to try again, it might try another version that does not involve the DOL, since this is not a misclassification bill and is not a matter between employers and employees. For the bill to be effective, it would need a suitable yet aggressive enforcer of the new rules.
I know of a chess-playing robot in Moscow that might be available.
On Victoria Island in Northern Canada there is a series of long finger lakes. In one of the lakes there’s an island. Inside that smaller island, there’s a smaller lake, which contains a still smaller island about a fifth of a mile long. It is the largest known island in a lake on an island in a lake on an island. You can see it here.
I like maps and islands. I like exclaves and enclaves and have lots of questions about islands.
One of my questions is why Rhode Island came to be called that, since it’s not an island. This was particularly confusing to me in elementary school but I have come to terms with it and no longer lose sleep over this.
But now Rhode Island is causing me to lose sleep again.
Why? ABC Tests.
There are bills pending in both Rhode Island and New York that, if passed, would adopt strict ABC Tests for determining who is an employee and who is an independent contractor. The tests would follow the California AB 5/Dynamex model and the Massachusetts model, meaning that a worker providing services would automatically be classified as an employee unless (all 3):
(A) the individual is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for performance of the work and in fact;
(B) the individual performs work that is outside the usual course of the hiring entity’s business; and
(C) the individual is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
As discussed here, Part B is the killer B, the destroyer of most independent contractor relationships.
The bills have not yet passed either house, but both have popular support among legislatures that are heavily Democratic. Both bills seem to have a good chance at passing in 2021.
Keep an eye on these bills.
Meanwhile, Victoria Island is the eighth largest island in the world but has only about 2,100 people. I am not aware of any push among the mostly-Inuit inhabitants to reclassify independent contractors anywhere in Nunavut, but I also don’t feel like I have my finger on the pulse of Nunavut politics. It’s harder to track legislation there.
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Witness: The severed head of a sea slug. Image by Sakaya Mitoh, who performed this awesome experiment.
Did you know that sea slugs have superpowers?
According to researchers at the Nara Women’s University in Japan, if you sever the head of a certain type of slug, the slug can grow a new body, organs and all. I like that as the basis for a new Marvel character. Or maybe the slug is a distant cousin to Roland the Headless Thompson Gunner.
The moral of the story is that when a slug loses its head, all is not lost. (This is how sea slugs survived the French revolution.) The same may be true in the context of arbitration agreements for independent contractors. (Come on, that’s a really good segue, isn’t it?)
For independent contractors in the transportation industry, arbitration agreements may be unenforceable under federal law. But all is not lost. In some states, state arbitration law can save the day. That means it’s important to know your state laws and to draft choice of law clauses carefully.
Here’s what I mean:
For companies that work extensively with independent contractors, there are lots of good reasons to require that disputes are resolved in arbitration, not in court. One of the biggest advantages of arbitration is the ability to include a class action waiver, requiring any claimant to bring a case on an individual basis only. No class actions. Class claims are the sexiest of all claims to plaintiff’s lawyers. Individual claims are not nearly as lucrative. Or sexy.
The Federal Arbitration Act (FAA) embraces arbitration as an enforceable way to resolve disputes. But there’s a big exception to the FAA. It doesn’t apply to transportation workers “engaged in … interstate commerce.” The meaning of that phrase is unclear, and there are lots of lawyers fighting about its scope. Different courts have come to different conclusions, especially regarding last mile delivery drivers and rideshare. Eventually, the Supreme Court is likely to rule on exactly what this phrase means.
But in the meantime, what if your contractors are arguably “engaged in … interstate commerce”? Are you stuck with a lengthy legal battle over whether your arbitration agreement is enforceable under the FAA?
Not necessarily. Don’t forget about state law. Several states have their own laws embracing arbitration as an enforceable way to resolve disputes, and these state laws generally do not have exceptions for transportation workers.
New York is a good example. Courts in New York have upheld arbitration agreements, even when the workers were arguably transportation workers not covered by the FAA.
Choose your state law carefully, especially if your arbitration agreement might be subject to the FAA’s exception for transportation workers. It’s common to include a “choice of law” clause in contracts, but those clauses are often dropped into contracts without anyone thinking about why a certain state’s law should apply. Those clauses really do matter, and the choice of law section should be carefully considered.
When it comes to arbitration agreements, the choice of law clauses should not be viewed as a boilerplate clause to toss in without careful thought.
The ability to choose a particular state’s law is a real superpower. Use it like a sea slug!
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Who Is My Employee? 