Can Independent Contractors Form Unions? Seattle Wants to Allow It.

space-needle-independent contrcator drivers seattle uber lyft seattle law ordinanceA legal battle in Seattle (“The Battle of Seattle!”) may soon determine whether independent contractor drivers can form unions. In 2015, the city passed a law allowing Uber and Lyft drivers to organize. The mayor allowed the law to go into effect but didn’t sign it because he was concerned it would spawn expensive litigation. He was right.

This month, a federal judge handed the City a victory, dismissing a lawsuit by the U.S. Chamber of Commerce which had argued that the ordinance was illegal. The decision is certainly not the last word on the subject, since the Chamber will appeal and there is a companion lawsuit still pending anyway.

The issues go beyond the basic question of whether independent contractors can form unions.

Generally, they cannot. Independent contractors are separate businesses. Antitrust law generally forbids businesses from banding together and collectively fixing prices and other conditions. You know the drill: Collusion bad, free market good.

The judge ruled that the circumstances here, however, are different than usual. First, it’s worth noting that the “unions” aren’t really unions (despite being overseen by the Teamsters), since unions are for employees and these are representation associations. That seems like word play to me, but everyone’s being careful not to call these things “unions.”

Second, the situation here is not merely that independent contractors are banding together to fix prices. Rather, a local law has established a procedure for ride hailing drivers to collectively share information in a particular format and setting, then negotiate collectively in a government-approved manner. The law enables the activity, not the drivers.

Ok, but what about the National Labor Relations Act (NLRA)? Only employees can unionize, right? Well, sort of. The NLRA definitely does not apply to independent contractors.  But, then again, the NLRA definitely does not apply to independent contractors.

So what does that mean? Does the NLRA preempt laws that would allow non-employees to unionize (as the U.S. Chamber of Commerce argued)? Or does the NLRA’s inapplicability to contractors mean that Congress was indifferent (and silent) as to whether independent contractors could organize? The judge went with Door #2, deciding that the NLRA did not pre-empt the City of Seattle from enacting this ordinance.

The judge dismissed the lawsuit, finding that the Seattle ordinance did not violate any federal or state laws.

This is a case to watch. If Seattle ultimately succeeds in setting up a way for independent contractors to band together and collectively bargain, the gig economy could be changed fundamentally. Other cities would be sure to follow suit and pass similar laws.

A lot still needs to be sorted out, and this is a case that could eventually be heard by the U.S. Supreme Court. An ordinance like this poses a challenge to the scope of federal authority over labor law and antitrust law, both of which are areas where a uniform national policy has generally been considered important to maintain.

Keep an eye on this one. We’ll see if Seattle can hold onto the ball this time, or if the city again throws an errant pass to a wide-eyed Malcolm Butler hiding in the end zone. [Seahawks fans are advised not to click on this link.]

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

Enter your email address to follow this blog and receive notifications of new posts by email.

Appeals Court Slams NLRB Joint Employer Finding in Landmark CNN Case, But Ruling May Prove Hollow

NLRB CNN joint employment Browning-Ferris overrule Second Circuit Court of Appeals IMG_1094A federal Court of Appeals has ruled that the NLRB cannot abruptly change its definition of joint employment without sufficient explanation. This decision (the CNN case) rebukes the NLRB for its initial attempt, in 2014, to expand the definition of joint employment.

This decision does not, however, address the Browning-Ferris case that followed in 2015, in which the Board similarly expanded the definition of joint employment but, that time, with an expansive explanation and justification for doing so. Browning-Ferris in on appeal too.

Here’s what happened.

Back in the good old days, when TV was pure and the world had not yet been exposed to Janet Jackson’s halftime nipple, CNN used to contract with an outside company who supplied technicians for its TV production. CNN’s camera operators, sound technicians, and broadcast engineers were employees of a third party, and they were represented by a union.

In late 2003, just a few months before that fateful Super Bowl wardrobe malfunction, CNN decided to bring that work in house. It set up a hiring and interview process and then directly hired its own technicians, severing its ties with the third party.

That made the union mad.

The union claimed the decision was motivated by anti-union animus and filed an unfair labor practice charge. The NLRB ultimately agreed with the union, determined that CNN was a joint employer of the third party technicians, and therefore had to respect the union status of the technicians. CNN could not hit the reset button without bargaining.

There was more to the decision too, with findings of anti-union statements by supervisors and a question about whether CNN was a successor employer (which is not the same thing as being a joint employer), but for our purposes, let’s focus on the joint employment piece.

Before the Board’s CNN decision, the legal standard for joint employment under the NLRB (remember, different laws have different standards) required “direct and immediate control.” In the CNN decision, the Board inexplicably abandoned that standard and ruled that two separate entities are joint employers of a single workforce if they “share or codetermine those matters governing the essential terms and conditions of employment.”

“Share or codetermine” is much looser than “direct and immediate control.” Think of your teenage children. You may try to “share and codetermine” whether they have a party at your house when you are out of town on business, but you have no “direct and immediate control” over the matter. At least not while it happens. (Purely hypothetical. My kids didn’t do this. Kids, if you are reading, DON’T do this!)

This case has been crawling through the courts for years, but finally last week, the Second Circuit Court of Appeals ruled that the NLRB could not simply switch the test without explaining itself. On that basis alone, the Court rejected the conclusion that CNN was a joint employer of the third party technicians.

So what does this mean for Browning-Ferris and the vastly expanded definition of joint employment that the Board instituted in that case?  Unfortunately, nothing.

In contrast to the CNN case, the Board’s Browning-Ferris decision included a lengthy and expansive discussion of the joint employer standard and why the Board — like in Sympathy for the Devil, “saw it was a time for a change.”

The Browning-Ferris case is also on appeal in the Second Circuit Court of Appeals (the same appellate court that just issued this decision) but will be heard by a different panel of three judges. A decision in that case is expected in the next several months.

For now, the Browning-Ferris standard — that indirect control is enough to demonstrate joint employment — remains the standard used by the NLRB.

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

Enter your email address to follow this blog and receive notifications of new posts by email.

Joint Employment Legislation Needs to Be Expansive — If It’s to Be Effective

IMG_1093On Monday, we wrote about the Save Local Business Act — proposed legislation that, if passed, would create a new definition for joint employment under the NLRA and FLSA. But would that law go far enough?

No. Not at all.

On the bright side for businesses, the law would provide some predictability in that staffing agency workers would most likely be excluded from bargaining units. It would also remedy the current unfairness that results when a staffing agency makes payroll and overtime miscalculations but the company using the workers is held responsible as a joint employer.

But much more needs to be done to provide real clarity and predictability for business owners.

First, the law fails to address who is a joint employer under other federal employment laws, including the Family and Medical Leave Act, Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Occupational Health and Safety Act. Vast uncertainty in these areas would remain.

Second, the law does nothing to address the patchwork of standards under state and local laws. Businesses are subject to those laws too, and it’s fairly common that state and local standards for determining joint employment differ from state-to-state and law-to-law.

Businesses that operate in multiple locations would still be subject to different standards under different laws in different locations. The HR Policy Association has recommended that any legislation intended to clear up the messy patchwork of joint employment standards should include federal preemption or a safe harbor provision — something to ensure that businesses can rely on one set of rules to know whether they are a joint employer or not. That would make much more sense.

The newly proposed legislation has a long way to go. It might never even get to a vote. Let’s hope, however, that the introduction of this bill is just a first step, and that through the amendment process or through a Senate bill, its shortfalls will be addressed.

Business deserve the certainty that would come from a more comprehensive piece of legislation.

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

Enter your email address to follow this blog and receive notifications of new posts by email.

Congress May Rewrite “Joint Employment” Definition

IMG_1092Congress may finally provide some clarity in determining who is a joint employer. In legislation introduced last week, the House proposed a bill that would rewrite the definition of “joint employer” under federal labor law (National Labor Relations Act) and federal wage and hour law (Fair Labor Standards Act).

The Save Local Business Act — despite lacking a fun-to-say acronym — would create a new standard for determining who is a joint employer under these two laws. The proposed new standard would allow a finding of joint employment “only if such person [business] directly, actually, and immediately, and not in a routine and limited manner, exercises significant control over the essential terms and conditions of employment….”

The definition provides examples of what are “essential terms and conditions,” including:

  • Hiring employees;
  • Discharging employees;
  • Determining individual employee rates of pay and benefits;
  • Day-to-day supervision of employees;
  • Assigning individual work schedules, positions, and tasks; and
  • Administering employee discipline.

No longer would a business be deemed a joint employer for exercising indirect or potential control, as permitted by the NLRB in its 2015 Browning-Ferris decision, which is currently on appeal. (Read more about that here.)

The bill would also overrule a recent decision by the Fourth Circuit Court of Appeals that vastly expanded the scope of joint employment under the FLSA, but only for a handful of Mid-Atlantic states.  Read more on that dreadful decision here.)

As illustrated in this colorful map, the current standard for who is a joint employer varies by which law is being applied and by where you live. The bill, if passed, would provide much-needed clarity in the law — or, at least in some of the laws. The bill would not affect the FMLA, federal anti-discrimination law, or any state or local standards. (In other words, loyal reader, you’ll still need this blog. Ha!)

The bill was introduced by Rep. Bradley Byrne (R-Ala.), but already shares some bipartisan support, with co-sponsors including Virginia Foxx (R-N.C.), Tim Walberg (R-Mich.), Henry Cuellar (D-Texas) and Luis Correa (D-Calif.).

Here’s the current bill.  It’s short, so don’t be afraid to click.

No one knows whether this proposed law will take effect or will even reach a vote (except perhaps Carnac the Magnificent!).  But we can expect significant support from the business community, which may create some momentum toward consiuderation and passage. The National Association of Home Builders has already issued a press release praising the proposed legislation.

If Congress wants to make a positive impact on businesses large and small, this bill could do it. So now let’s all sit back and watch how they screw it up.

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

Enter your email address to follow this blog and receive notifications of new posts by email.

NLRB Nominees Hate Puppies & Rainbows, Dems Claim

dog nlrb independent contractor -1674115_1920

Ok, not really, but it seemed that way.

Last week, NLRB nominees William Emanuel and Marvin Kaplan were alternatively tossed softballs and stink bombs in “questions” from Senators on the Health Education Labor and Pensions Committee (known in Congressional circles as the HELP Me Rhonda, HELP HELP Me Rhonda Committee).

I use the word “questions” in quotes because, as both Americans who have ever watched C-SPAN would know, these events are typically staged to allow Senators who have already made up their minds to hear themselves talk, rather than ask questions. Here’s an example:

Question by Sen. Elizabeth Warren:  “Your entire career has been to discourage union membership and I just don’t understand how we can rely on you to defend workers after a long career of making it harder for them to join unions.  But let me push to another point… [changing the topic].”

Or this:

Question by Sen. Warren: “You have made it clear that you have pre-judged. … I think the American people deserve better.”

I don’t think she has pre-judged the nominees though. Just sayin’.

Or this:

Question by Sen. Al Franken (whose recent book I liked, by the way): “It seems likely that big business will probably push you to change the NLRB’s modernized election rule. If you’re concerned, I just wanted to point that out. … What I’m saying is that the unions should be able to vote sooner than 35 days. [then on to another subject]”

Sen. Patty Murray accused the nominees of “anti-worker, anti-union, even anti-NLRB measures” and characterized them as having “careers of fighting against workers’ rights.”  At least she did not dress up her remarks as a question, though. These were in a pre-published statement.

Sen. Maggie Hassan, a former corporate lawyer, was one of the few Senators to ask questions relating to independent contractor misclassification and joint employment. I should note too that her questions were legitimate questions, both topically and in the sense that they included actual question marks at the end.

Sen. Hassan asked Mr. Emanuel, “If you are confirmed, what steps will you take as a Board member to curb this epidemic of misclassification?”

Ok, “epidemic” is a bit loaded, but the bar is low here. Think pre-school obstacle course low.

Anyway, Mr. Emanuel did not take the bait. He responded, “I’m not sure I would agree with the characterization that it’s an epidemic. It does occur. … It’s like any other issue that comes before the NLRB. I would consider the facts of the case.” Jab, uppercut, duck, jab.

She then asked Mr. Kaplan if he thought the recent Browning-Ferris joint employment case was wrongly decided.  In keeping with the great tradition of non-answer answers (the perfect counterpart to non-question questions!), he declined to answer, instead acknowledging that it is up to the Board to determine the proper standard for joint employment under the NLRA.

And that’s about as exciting as it got, folks!

For those without C-SPAN access, StubHub may still have seats available to future hearings.  The secondary market for labor committee hearing tickets is white hot this time of year, especially with all the tourists in D.C.  The committees overcharge for popcorn, though.  Or so I’m told.

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

Enter your email address to follow this blog and receive notifications of new posts by email.

Two Key Developments in Joint Employment are Expected This Week

IMG_1091.JPG

This could be a busy week for developments in the joint employment area.

1) Congressional Republicans have begun drafting legislation that could change the definition of joint employment, Bloomberg BNA reports. Presumably the goals of a new bill would be (a) to add clarity to the standards for deciding who is a joint employer, and (b) to make it more difficult for workers or unions to claim they are jointly employed.

The scope of the proposed legislation is yet to be determined. It would most likely roll back the NLRB’s Browning-Ferris decision and restore the prior test for joint employment, requiring more substantial evidence of control. House Republicans have also hinted that they may broaden the scope of the proposed bill and address the standard for joint employment under federal wage and hour law (FLSA) and health and safety (OSHA) as well.

Key supporters of the proposed legislation include Rep. Bradley Byrne (R-Ala.), House Education and the Workforce Committee member, and Rep. Tim Walberg (R-Mich.), chairman of the Education and the Workforce Subcommittee on Health, Employment, Labor and Pensions. The U.S. Chamber of Commerce is involved in this effort as well.

A committee hearing entitled, Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship, has been scheduled for July 12, at 10:15 am.  It can be live-streamed on the web. Click here for more information.

2) On the following day, July 13, hearings are scheduled on the nominations of William Emanuel and Marvin Kaplan to join the NLRB. The hearings will take place before the Senate Health, Education, Labor & Pensions Committee. If recommended by the committee, the full Senate would then vote on the appointments.

If confirmed, these two new members would return the Board to a 3-2 Republican majority for the first time since the beginning of the first Obama administration.

The newly configured Board is likely to roll back the expansive Browning-Ferris decision, which made it substantially easier for workers to claim they are joint employees under federal labor law. Last week’s post about these nomination contains more detail.

I’ll provide further updates as new developments take place.

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

Enter your email address to follow this blog and receive notifications of new posts by email.

New NLRB Nominations May Lead to New Joint Employment Test (or to my misuse of Lynyrd Skynyrd song lyrics)

IMG_1088In the Lynyrd Skynyrd song, “Gimme Three Steps,” we find our hero cutting a rug down at a place called The Jug with a girl named Linda Lou. This catchy song has nothing to do with labor law but does deal with someone who finds himself in a bad situation (shakin’ like a leaf on a tree!) and needs three steps to get out the back door.

Same thing here (in a sense). [C’mon, work with me here, I’m trying to make NLRB appointments interesting!]. When not posting tweets of himself pummeling a photoshopped CNN logo outside a WWE ring, President Trump found the time to make two important nominations to fill vacancies on the National Labor Relations Board (NLRB), giving companies two of the three steps needed to undo a long list of anti-business decisions from the past eight years.

The two new appointmnents, once confirmed, will shift the Board back to a 3-2 Republican majority, which should spell relief for businesses in several areas — including joint employment. (Two appointments = two steps. There’s a third step coming.  Wait for it….)

Nominee William Emanuel is a long-time employment defense lawyer who has made a career out of representing companies in labor disputes.

Nominee Marvin Kaplan is currently counsel to the Occupational Safety and Health Review Commission, an independent federal agency that rules on disputes over OSHA citations. He has served nearly a decade in various federal roles, including as Bush 43’s assistant secretary of labor for administration and management at the DOL.

Once confirmed, Emanuel and Kaplan will join current members Philip Miscimarra (R), Mark Gaston Pierce (D), and Lauren McFerran (D).

The rightward shift in the Board will likely bring relief to employers on a number of important labor issues, including the test for joint employment under the National Labor Relations Act (NLRA).

The Board’s landmark 2015 decision in Browning-Ferris (currently under appeal) redefined the test for joint employment, deeming workers to be joint employees under federal labor law even when a company exercises only minimal and indirect control over their working conditions. The reconstituted Board is likely to revert back to the prior joint employment standard, which required more direct control over how, when, and where work was performed before a company could be deemed a joint employer. (Of course, the D.C. Circuit Court of Appeals may take care of that itself by reversing the Browning-Ferris decision on appeal. A decision is expected before the end of the year.)

Meanwhile, one significant hurdle remains.  (As promised, loyal reader, here’s the third step.) The term of the NLRB’s General Counsel, Richard Griffin, does not expire until November 2017. As General Counsel, Griffin acts as the NLRB’s Chief Prosecutor. When his term expires, the appointment of a new General Counsel with a more pro-business outlook is expected.

The combination of two appointments to make a more pro-business Board, plus a more pro-business General Counsel, should finally bring relief to employers who have been battered by eight years of anti-business interpretations on issues like union elections, handbook policies, and social media. These rulings have been applied to union and non-union businesses, and so a more pro-business Board will be a welcome change to the business community.

Of course, it will take time for businesses to see the effects of a new Board and, later, a new General Counsel. The right cases and circumstances will need to arise, and then more pro-business interpretations can be issued. I blogged about this topic here a few few months ago, before we knew who the two new NLRB nominees would be. With the President’s two June 2017 nominations, we are two steps closer to these changes taking full effect.  (“That’s the break I was looking for.”)

Thank you, Ronnie Van Zant and Allen Collins, for helping me to try to make this blog post interesting and, most of all, for naming your band after a gym teacher.

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

Enter your email address to follow this blog and receive notifications of new posts by email.