Ding-Dong, the Witch is Dead! NLRB Overrules Browning-Ferris

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Remember the good old days, way back in 2014? You recall the time — back when David Letterman was still on the air and it was not yet illegal in New York to take a selfie with a tiger.

Yes, that was life before 2015, when the NLRB waved its magic wand, rewrote the definition of joint employment, and forced several of the planets to spin out of orbit. The Board’s decision in Browning-Ferris erased decades of precedent and caused bloggers everywhere to vomit profuse amounts of text and doomsday predictions.

For those of you who missed the news in 2015 (understandable if you spent the year focused on following the saga of Winston, the Aussie python who swallowed salad tongs), allow me to offer this quick refresher: The 2015 Browning-Ferris decision declared that, under federal labor law, a business would be considered a joint employer if it retained the right to exercise even a teeny tiny bit of control, and even if it never actually exercised that control.

Good news, citizens of earth! The planets realigned on Thursday, when the Board reversed its 2015 decision and reverted back to the old standard. The new standard is the old standard. (Got it?)

Effective December 14, 2017, here is the standard for determining joint employment under the National Labor Relations Act:

For all these reasons, we return today to pre-Browning-Ferris precedent. Thus, a finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control), the control must be “direct and immediate” (rather than indirect), and joint-employer status will not result from control that is “limited and routine.”

From today forward (or at least until the next administration reconfigures the Board and they go back to the old-new-old Browning-Ferris standard), businesses will not be deemed joint employers under the NLRA unless (a) they actually exercise control, (b) the control they exercise is over essential employment terms, and (c) the control is direct and immediate. Here is the decision, titled Hy-Brand Industrial Contractors.

This is a practical, workable standard, just in time for the holidays. Thank you, Santa.

Now if only we could get Pluto back on the roster of planets.

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

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Be Kind, Rewind: Here’s Why the Browning-Ferris Joint Employment Standard Is Going to Be Reversed

AF6DB19D-A636-4AB4-BFA8-7D592D57137FRemember when you used to go to the video store to rent VHS tapes and there was that little sticker on the tape cheerfully reminding you to “Be kind! Rewind!”  I know, half of you have no idea what I am talking about, but there used to be these things for watching movies before Netflix — no, not DVDs, before that — no, no, not cave drawings, after that.

Anyway, take my word for it. The point was, when you were done with your movie, you were supposed to rewind the tape so the next viewer could start over, back at the beginning of the film. It was the courteous thing to do.

With last week’s confirmation of Peter Robb as the new General Counsel of the NLRB, the pieces are now in place for a rewind of the 2015 Browning-Ferris joint employment decision, which made it much easier under federal labor law to find joint employment. The 2015 decision changed the standard so that indirect and tangential control was sufficient to establish a joint employment relationship, rather than the previous standard requiring a more direct exercise of control.

The changed standard was a product of two factors: (1) a majority-Democratic, pro-union NLRB, and (2) a Democratic, pro-union NLRB General Counsel. A few weeks ago, the NLRB was reconstituted to bring back a Republican majority. Last week, a new General Counsel was confirmed. To overstate how this works, the General Counsel decides which cases to bring to the Board. The Board then decides those cases.

With these two recent developments, it’s almost time to Be Kind (to Businesses) and Rewind, back to the pre-2015 joint employment standard.

It will take some time, but it now seems almost inevitable that at some point during the next couple of years, the right case will be brought to the Board (courtesy of Mr. Robb), and the new Republican-majority Board will vacate the 2015 standard and return to the requirement that direct control must be shown before a business can be deemed a joint employer under federal labor law.

It’s too early right now for businesses to disregard Browning-Ferris. For now, it’s still the law, and Administrative Law Judges are likely to follow it (although that too may change, with the Browning-Ferris decision currently on appeal).

Anyway, stay tuned for further developments. And meanwhile, please fix the blinking green “12:00” on the face of your VCR.

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

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Time to Dance? Momentum Builds for Proposed New Joint Employment Law

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Leadership Lessons from Dancing Guy is a low-quality youtube video that has somehow amassed more than a million hits. In the video, a lone (possibly intoxicated) festival goer starts dancing in a field. After a minute or so, momentum builds and others join him, showing off their terrible dance moves in a video you’ll wish you hadn’t wasted three minutes watching. (Just speaking from experience here.)

Several weeks ago, the House began considering a bill that would rewrite the definition of “joint employment” under federal wage and hour law (Fair Labor Standards Act) and federal labor law (National Labor Relations Act). The Save Local Business Act would require “direct” and “significant” control over “essential terms” of employment before a business could be considered a joint employer of a worker employed by another business (such as a staffing agency or a subcontractor). Read more here and here.

Originally sponsored by Rep. Bradley Byrne of Alabama (you might think of Rep. Byrne as the original dancer in the Leadership video, but dressed as a conservative Southern gentleman), the bill now has 112 co-sponsors, including a few Democrats. Dance party!

The bill continues to gain momentum. On October 4, in celebration of  International Toot Your Flute Day, a House committee voted to advance the bill to a vote by the full House.

The business community has been active and vocal in supporting its passage. On October 26 (National Mincemeat Day!), as part of a coordinated effort by the International Franchise Association, franchise owners from 19 states sent letters to Congressional leaders urging passage of the Act. Other coordinated campaigns in support of the Act have been organized by the U.S. Chamber of Commerce, Retail Industry Leaders Association (RILA), National Waste and Recycling Association, and other pro-business groups.

On October 27, the Congressional Budget Office issued its report on the Act, finding that the Act would not affect direct spending, revenues, or the federal budget.

Chances of passage in the House appear strong, but no floor vote is scheduled. Businesses should follow the status of this bill, which may have profound effects on federal interpretation of the joint employment doctrine.

If the bill passes, businesses might join Mike Myers in celebration, proclaiming “Now is the time on Sprockets when we dance!

[Update 11/8/17:  The House of Representatives approved the bill yesterday by a vote of  242-181, with 8 Democrats voting yes. Passage in the Senate, however, will be far more difficult.]

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

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NLRB Shifts to Republican Majority; Change in Joint Employment Doctrine Is Likely

NLRB joint employment william emanuelWatching the National Labor Relations Board is like riding a see-saw (a very slow one, and not a very fun one, but stay with me here).

Board members serve five-year terms and, when they expire, the President has the right to appoint a successor, with confirmation by the Senate. Predictably, under Democratic administrations, the Board tips toward union workers’ rights, and under Republican administrations, the Board tips toward protecting businesses.

With the late September confirmation of William Emanuel to the Board’s fifth (and tie-breaking) seat, the see-saw tipped back toward the side of protecting businesses.

Emanuel joins the Board from a defense firm that represents many large companies in labor disputes. Firms that represent companies in labor disputes typically do not also represent employees because doing so would create philosophical conflicts between the firm’s clients. You’d be arguing to interpret the law one way for an employee client, then another way for an employer client. Emanuel’s background therefore, has been pro-business.

As I wrote here, that background caused several Democrats to express concern. It was little surprise, then, that he was confirmed by a partisan vote of 49-47, winning by a safety when the Democratic quarterback was sacked in the end zone late in the fourth quarter.

Emanuel joins Republicans Philip Miscimarra and Marvin Kaplan, giving Republicans a 3-2 majority on the Board for the first time in almost 10 years.

The Board does not decide which cases to bring. The NLRB General Counsel does that. But the Board acts as the main decision-making body for labor law disputes, with its decisions appealable to the U.S. Courts of Appeal.

One of the Board’s most controversial decisions in the past five years was the Browning-Ferris decision in 2015, which drastically lowered the bar for finding joint employment in a relationship. You know those playground monkey bars you used to have to jump to reach? The Board lowered those to knee level. You’d have to limbo to get under them. They are no fun to play on. Under the new standard, a business can be a joint employer even if it exerts only indirect and minimal control. You can read more about that decision here.

The Browning-Ferris case is currently under appeal in the D.C. Circuit Court of Appeals. It might be affirmed, might be reversed. But here’s what you should remember: The NLRB tends not to follow the rulings of the U.S. Courts of Appeals. The NLRB’s decisions cover all 50 states, but each Court of Appeals covers only a handful of states, and so its rulings do not have widespread reach.

So no matter what the Court of Appeals does in Browning-Ferris, the NLRB is likely to continue to apply the standard it wants to apply. Under the Obama Board, that standard was to lower the monkey bars to your knees. Under the new Board, the standard for finding joint employment is expected to be raised back up to the point where you can swing freely from bar to bar without your feet ever touching the mulch below. The new Board is likely to re-establish the old joint employment standard, in which more direct control over workers is required for a finding of joint employment under federal labor law.

This change won’t happen right away. It may be a while before the right case gets to the new Board and the new Board has the opportunity to change course. But it is expected to happen.

Employers concerned about being tagged as joint employers for labor law purposes should remain cautious and continue to follow developments. Even if the labor law standard changes, though, there are still different tests for joint employment under different laws, so a change will have limited effect. For now, the indirect Browning-Ferris standard remains in place, but probably not for too much longer.

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

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

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.

NLRA rights apply only to employees, not to independent contractors. Independent contractors have no right under the NLRA to engage in collective behavior. In fact, antitrust laws can sometimes prohibit independent contractors from acting collectively — such as in price fixing.

So let’s get to the issue that is the focus of this blog — the issue of Independent Contractor vs. Employee.

Here’s the question of the day:

If independent contractors have no rights under the NLRA but employees do, can the mere act of misclassifying independent contractors be considered a denial of NLRA rights? 

Yes, said an Administrative Law Judge in a recent case involving couriers.

Here’s the judge’s reasoning: Employees have NLRA rights, allowing them to act collectively. An employer violates the NLRA by denying an employee the right to act collectively. Protected concerted activity can include discussing wages with co-workers, discussing discipline, speaking out against a supervisor, criticizing work conditions, and a broad range of other activities (many of which you probably never thought were protected).

Independent contractors do not have these rights because the NLRA applies only to employees. By misclassifying a worker as a contractor, the judge ruled, a business is essentially telling the worker — who is actually an employee — that he has none of these rights.

Telling an employee that he has no right to engage in protected concerted activity is pretty clearly a violation of the NLRA.

And there you go.

So what does that mean for businesses that use independent contractors? In other posts, we have discussed many of the negative consequences of independent contractor misclassification. A business that has misclassified workers as independent contractors (when they should really be deemed employees) can be liable for failure to pay employment taxes, failure to provide workers’ compensation and unemployment coverage, failure to follow hiring and paycheck laws, failure to provide employee benefits, and more.

Now add to that list a possible automatic violation of the National Labor Relations Act — at least according to this judge.

You can’t see me, but I am kneeling in protest.

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

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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.

There are lots of Uber cases, but this one is the biggie for now, with potentially a billion dollars at issue. For those keeping score at home, that’s 1,000 times more than Dr. Evil demanded for the return of the Kreplachistan warhead.

In December 2015, the judge approved a class of 240,000 drivers, and allowed the case to proceed toward a trial. Green light! Notably, many of the drivers in the class had signed arbitration agreements preventing them from participating in a class action. The judge, however, ruled that the arbitration agreements were unenforceable. He said that the agreement prevented the drivers from engaging in “protected concerted activity” (participating in a class action lawsuit), a right protected under the National Labor Relations Act (NLRA).

Now wait a minute. We have a chicken and egg problem here. The NLRA only applies to employees. If the drivers are truly independent contractors, the NLRA does not apply, and the validity of the arbitration agreements should not be an issue. Uber filed an immediate appeal, claiming that the agreements are valid and that judge should not have allowed the case to proceed as a class action. (Red light?)

In April 2016, the Ninth Circuit Court of Appeals agreed to hear Uber’s appeal.

Meanwhile, Judge Chen allowed the case to proceed toward trial, despite the appeal. Green light! But both sides flinched (Red light!), and the case settled for $100 million.

But wait. A judge must approve a class settlement. This judge ruled the settlement was unfair to drivers since the actual recovery in trial could be much greater. (Hey, isn’t that the point of a settlement? The drivers also might have taken home nothing!) Anyway, Green light!

Meanwhile, back at the Ninth Circuit, the appeals court issued an order last week that said, “Hey, everybody wait.” Red light!

The Court of Appeals noted that the U.S. Supreme Court is about to decide whether employee arbitration agreements that waive the right to participate in a class action are permissible, or whether they violate the NLRA. That’s the same issue that led Judge Chen to call “Green light!” in 2015 and certify the class of Uber drivers. The Supreme Court’s decision will likely govern whether the Uber drivers’ arbitration agreements are valid.

On October 2, the Supreme Court will hear oral arguments on this issue, and a decision is expected in the first half of 2018. The Supreme Court’s decision will have far reaching consequences for all businesses who ask their workers to sign arbitration agreements waiving the right to trial and waiving the right to participate in a class action.  So far, courts around the country have split on this important issue, reaching different conclusions about whether these agreements are allowed. The Supreme Court decision will settle this issue for everybody.

The Supreme Court case, called NLRB v. Murphy Oil USA, will be one of the more significant employment law decisions from the Supreme Court in a long time. You can read more here from SCOTUSblog or here from Baker Hostetler blogs.

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

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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,

The contractor initiated a new hire process, and some union employees were rehired while others were not. The contractor imposed new terms and conditions of employment, disregarding the progressive discipline and other procedures that had been negotiated into the prior union contract.

The union filed an unfair labor practice charge with the NLRB, alleging that the contractor engaged in various unfair labor practices, including making unilateral changes to terms of employment without bargaining and improperly discharging various union employees. The Board’s General Counsel amended the complaint to allege that MJLM was equally responsible for any violations as a joint employer.

MJLM fought back, claiming that it was along for the ride, but the NLRB — and ultimately the Fifth Circuit Court of Appeals — found otherwise. The Board and the Court found that MJLM was a joint employer because it was involved in the hiring process, had influence over wages, assisted in setting holiday schedules, and helped to operate the center.

MJLM, as a subcontractor, was found to be a joint employer and therefore equally responsible for any unfair labor practices committed by the contractor.

When I read the case, I assumed the case was decided under the controversial new Browning-Ferris standard that allows for a finding of joint employment if there was merely indirect control. I was wrong. The Board (and Court) ruled that even under the old standard requiring direct exercise of control, the subcontractor was a joint employer.

Businesses should remember that joint employment can result in liability for violations by others. A subcontractor can be held responsible for unfair labor practices by a contractor. In this case, both the contractor and subcontractor were required to recognize the union, undo their unilaterally imposed practices, commence bargaining, and reinstate and make whole the employees who were not rehired.

MJLM was just as responsible as the contractor. To paraphrase the Court’s decision, with apologies to Dean Wormer, “The time has come for someone to put his foot down, and that foot is me.”


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

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