Whaddaya Call It? DOL Proposes New Independent Contractor Test

Soda or pop? Pill bug or roly poly? What you call things depends on where you live. In 2014, the New York Times published this 25-question dialect quiz that will tell you, with startling accuracy, where you or your parents are from.

The test is fun, and you can see how words and dialects vary from region to region.

But some things should not vary from region to region — federal laws.

The Fair Labor Standards Act (FLSA) has one definition of “employ,” but when it comes to deciding who is an employee and who is an independent contractor, different courts in different states apply different standards.  The DOL is trying to fix that.

Under a proposed new rule, released on September 22, the same test would be used in all parts of the country, regardless of whether you call your lunch sandwich a hoagie, sub, or grinder.

Click here for the rest of the post, originally posted on BakerHostetler’s Employment Law Spotlight blog.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Joint Employment Test Gets Muddied Again: Federal Court Rejects New DOL Test

Muddy Waters is how you want your blues, not how you want your laws.

A federal district judge in New York last week kicked up a lot of mud in an area of the law that had finally seen some clarity – the definition of “joint employment.” Now we’re back in the muck.

Click here to read all about it, and let me know if you; like to subscribe to the BakerHostetler Employment Law Spotlight Blog, where I originally posted this week’s post.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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California’s AB 5 Has Been Repealed, Sort Of.

Rain rain go away, come again another day.

When Zeus sends his thunderbolts into Cleveland, Zippy gets scared. The snow, wind, and rain don’t bother her, but the thunder and lightning cause her to shake. Usually she hides in the shower.

Seeking shelter from the storm (apologies to Robert Zimmerman) is what California businesses are doing too. Assembly Bill 5 (AB 5), codifying the ABC Test for determining who is an employee, has been in effect since January 1, 2020.

On Friday, a new law repealed and replaced it. This new law, AB 2257, passed both chambers in the California legislature unanimously and was signed into law September 4 by Gov. Newsom. It contains an urgency clause, which means it takes immediate effect. So AB 5 is gone.

Great news for businesses, right? Not exactly.

AB 2257 moves the ABC test to a different part of the California Labor Code– new Sections 2775 through 2787–and cleans up some of the confusing and poorly considered language in AB 5. It does not, however, provide relief from the ABC Test for most large businesses.

The revisions make it easier for entertainers, freelance writers and photographers, and digital content aggregators to maintain independent contractor status. It scraps the arbitrary 35-article limit for freelance writers to maintain independent contractor status. It allows entertainers to perform single event gigs without becoming employees. It cleans up some other language too, but it does not make substantial changes that would excuse large businesses from the ABC test.

For example, subsection 2750.3(f) of AB 5 addressed whether an exception applies for work requiring a license from the Contractors State License Board (CSLB). The exception, with its multi-part test, is unchanged. It just moves to a new section of the Labor Code, new Section 2781.

One small glimmer of hope comes from some clarifying language for the business-to-business exception. That exception still does not apply for work that requires a CSLB license. To fall within that exception (meaning that the ABC Test would not apply), one of the requirements is that the work must be performed for the benefit of the contracting business, not its customers. Under the revised law, that requirement goes away if “the business service provider’s employees are solely performing the services under the contract under the name of the business service provider and the business service provider regularly contracts with other businesses.” For grammarians who despise double negatives, this is an exception to the exception. You’re welcome. What it means is if your subcontractor has its own employees, operates as its own business, and performs work not requiring a CSLB license, it may be easier to meet the business-to-business exception, thereby avoiding the ABC test.

So where does that leave us? On one hand, the fact that the bill passed both chambers unanimously shows a recognition that AB 5 had some serious flaws. But on the other hand, the fixes that both chambers thought were appropriate are of minimal help to large businesses. It’s like unleashing a horrible lab-created supermonster, then deciding that its eyelashes should be less curly. The largely-superficial changes in AB 2257 are mainly designed to help maintain independent contractor status for individuals who truly run their own businesses, particularly in the entertainment, journalism, and digital content fields.

This new law obliterates AB 5 in name, but not in function.

Like the blanket I gave Zippy, this move by the California legislature is not likely to provide any shelter from the storm. The ABC Test in California remains alive and well. Whether you grab a blanket or hide in the shower, the ABC Test is here to stay.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Something Is Rotten in the State of California? Ride Share Misclassification Ruling Is Merely Act I

CA flag pole

“To be or not to be” are the opening words of a soliloquy by Prince Hamlet. With that, I have exhausted what I remember about Shakespearean plays without consulting Wikipedia. Having consulted Wikipedia, I can confirm that this soliloquy occurs in Hamlet, Act III, Scene 1.

A lot happens in Act III and beyond, and if you stopped reading Hamlet after Act I, you’d miss most of the action, including assorted plotting, scheming and mayhem.

Last week in California, a different kind of mayhem began in a major case involving alleged independent contractor misclassification. In California v. Uber, a state superior court judge granted a preliminary injunction, requiring ride-sharing app companies to reclassify California drivers as employees. But this order might not be the poisoned blade it seems to be. Either the ruling is a substantial blow, or it’s much ado about nothing. For now, it’s too early to tell. We’re still in Act I. Like in Hamlet, the real action will be in the later acts.

Read the rest of the post here, on BakerHostetler’s Employment Law Spotlight Blog.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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The Dishes Go Where? NLRB Reverses Major Joint Employer Ruling. Again.

text8-1-2020

– Me, to my mostly adult kids, on Friday (and the day before that, and the day before that, and the day before that…)

The text above should be no surprise to any of you who have elected to reproduce. Our offspring live in the stone ages. They do not understand the concept of an electric dishwasher. They are pre-Edison old school. If everything goes in the sink, they know that I will be the washer of the dishes.

For years, I have been sending the same message, usually face-to-face. It never gets through. But I keep trying and maybe, just maybe, one day we’ll get to the right result.

Same goes for the National Labor Relations Board and its repeated efforts to unravel the 2015 Browning-Ferris decision on joint employment.

Ah, yes, remember the Browning-Ferris case? Remember how in 2015, the Dem-controlled Board tried to rewrite the test for joint employment? The Board rejected 30 years of Board law and decided that indirect and reserved control would be enough to make someone a joint employer.

In 2017, the Board later tried to undo the Browning-Ferris decision but failed and — sorry, my bad — had to reinstate it. The case went to the Court of Appeals and then came back to the Board. But the Board it came back to is a more pro-business, Republican-controlled Board than the 2015 Board that issued the original decision.

Last week, the Board (for a second time) retracted the 2015 Browning-Ferris ruling. This time, the Board ruled that it had been “manifestly unjust” for the 2015 Board, after making up its new test, to apply that new test retroactively to Browning-Ferris Industries.  Cheers to that!

In last week’s ruling, the Board did not formally revoke the 2015 test, but it didn’t have to.

That’s because in February 2020, back in an era when mankind could roam the earth freely without hiding their lips, the Board issued a new test. The new test requires direct and immediate control before a company can be deemed a joint employer.

More information about NLRB’s new test is here, including a Q&A. For now, this is the test for joint employment under the National Labor Relations Act. A finding of joint employment requires direct and immediate control.

Before you go back to your home office all content and happy that you learned something already today and it’s not even coffee o’clock yet, remember — the NLRB test is not the full story when it comes to joint employment. The DOL has a different test for Fair Labor Standards Act (FLSA) disputes, summarized here.  And the courts may or may not apply either of these agency-created tests. As discussed here, there’s a lawsuit filed by 18 states that challenges the legitimacy of the DOL test.

So the Browning-Ferris case may be finally done (or maybe not). At least for now, it seem done. But what’s not done is the jousting and pivoting over the various tests for determining who is a joint employer. That battle rages on.

Much like my personal battle to fill the dishwasher at home.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Silver Linings? DOL Looks to Adopt New Independent Contractor Test Before Year End

canoe

The past few months have included many silver linings — more family time, a Lake Michigan vacation, and professional cornhole on TV. I’ve also learned new things — governors have more power than I thought, remote work is more doable than many of us thought, and there’s such a thing as professional cornhole.

Now the Department of Labor wants us to learn something new too — about independent contractor status. (Too many long dashes so far? I’m flagging myself for excessive use.)

Last week the DOL published a notice that it intends to fast-track a new regulation covering the test for independent contractor vs employee under the Fair Labor Standards Act.

What would that test look like? The DOL gave no hints, but here is my educated guess.

The test for independent contractor status under the FLSA is an Economic Realities Test.  That is a court-created test, it’s well-established, and it’s not likely to change. If the DOL did try to change it, I don’t think the courts would follow the new regulation anyway. So the DOL is going to have to work more around the edges.

I expect the regulation to define more precisely the factors to be taken into account under the Economic Realities Test. Right now, different courts use different versions of it. Some uniformity would be helpful.

I also expect some examples to help illustrate how the factors should be applied. Look for sample fact patterns that seem like close calls but perhaps would be deemed supportive of independent contractor status under a new DOL interpretation.

We can expect the DOL will gently place its fingers on the scales, making it a bit easier to maintain independent contractor status under the FLSA. Don’t expect a full rewrite of the test.

The DOL will want to implement the new rule quickly, in case a new administration takes over in January. Look for a proposed regulation shortly, a quick public comment period, and a new regulation on the books late this year.

Hopefully by the time we see a final rule, we can watch real sports on TV and demote cornhole to livestream only. That way both people who care could still watch.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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New Joint Employment Decision: Poo Paint or Just Poo?

poo rainbow

Sitting outside this weekend I was thinking about things I wish I had when my kids were toddlers, things that would have helped to keep them occupied. The first things that came to mind were all electronic — iPhone, iPad, Netflix. But then I came upon this. And it’s good that I didn’t know about it a decade ago.

https://www.poopaint.net/home-1

From the website:

Inspiration found in a bathroom stall!
PooPaint allows kids to wipe using toilet paper that feels as if they were playing with a colouring book.
Making potty time into a positive and fun experience!

Yes, my friends, it’s a coloring book for poo, like color by numbers but with only one color — brown. Or maybe for some, a beautiful mahogany. Square 3 is an exact reproduction of Cleveland winters: fill in the whole page, leaving gray at the top for sky.

Anyway, the case I want to talk about today is a joint employment case from the Sixth Circuit Court of Appeals. For potential joint employers, the decision is like potty time with poopaint — “a positive and fun experience!” For workers, it’s just poo.

In this case, a physical therapist assistant named Thomila worked in a nursing home. The operator of the nursing home contracted with a third party to provide staff.  The third party did the hiring, firing, controlled pay, provided benefits, supervised the workers, and scheduled them.

Thomila worked for the third party. At one point Thomila accused her supervisor, also a third party employee, of sexually harassing her. The third party investigated and fired him. So far, so good.

But then the nursing home operator — which apparently liked the supervisor — decided that Thomila was no longer a “good fit” for the nursing home and asked the third party to remove her. It did.

Thomila sued the nursing home operator, claiming that its request to remove her (after she complained of sexual harassment) was retaliation in violation of Title VII. Although she was employed by the third party, she claimed that the nursing home operator was a joint employer and therefore could be liable under Title VII’s anti-retaliation rule.

But the case was thrown out on a motion for summary judgment. The court ruled that the nursing home operator was not a joint employer under the test used for determining joint employment under Title VII.

The test for joint employment under Title VII is whether the alleged joint employer has the ability to:

  • Hire and fire,
  • Discipline,
  • Affect compensation and benefits, and
  • Direct and supervise performance.

(At least, that’s the test in the Sixth Circuit, which includes OH, MI, TN, and KY. You’d think the test would be the same everywhere since this is a federal law, but it sometimes varies a bit.)

Anyway, back to Thomila. The third party controlled all of these things, so the nursing home operator was not a joint employer. Since it was not a joint employer, it has no duty to Thomila under Title VII. The anti-retaliation provisions in Title VII did not apply. Case dismissed.

Thomila tried one other claim too, and this may have been her stronger argument. She alleged that by firing her, the nursing hone operator interfered with her access to employment opportunities. That’s a separate kind of claim. But the court ruled that the nursing home operator was not liable under that claim either, since the third party had offered Thomila other placement opportunities (but all were out of state). On this claim, the decision was 2-1, with the dissenting judge arguing that the interference claim should have been allowed to go forward. The interference claim does not require a finding of joint employment.

The lesson here for employers is that the test for joint employment is technical. The facts matter a lot. The risk of joint employment can be minimized if the relationship is carefully structured so that the third party retains control over the factors listed above. The contract should be drafted carefully, detailing who is responsible for what.

A poorly drafted contract is not worth the paper it’s written on. Kind of like that specific kind of paper advertised here as “Inspiration found in a bathroom stall!” And that should not be the kind of paper you’re looking for when drafting your contracts.

So draft wisely and, for “a fun and positive experience!“, choose your paper carefully.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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NSFW? Not Quite. But 18 States Say DOL’s New Joint Employment Rule Is Inappropriate.

Zippy Michigan

Zippy sunbathes in the nude.

Some things sound inappropriate, but they’re not. For example, I sometimes post naked pictures on my blog. But only of my dog. She’s immodest and doesn’t seem to mind. (Her fur coat doesn’t count.) So, you see, that’s not inappropriate.

What about the DOL’s new joint employment test, which went into effect in March? Was that inappropriate? Eighteen Democratic state attorneys general seem to think so, and they’ve filed a federal lawsuit to try to undo the rule. For those of you keeping score at home, they claim the new rule violates the Administrative Procedures Act and is not consistent with the Fair Labor Standards Act.

Last week, a federal judge in New York rejected the DOL’s motion to dismiss the lawsuit, meaning the case moves forward. The DOL argued that the states lacked standing to challenge the new rule. Lack of standing means they can’t sue because they’re not harmed by the new rule.

But the judge found that the states “plausibly alleged” that they have standing to sue. He noted that the new rule could reduce the total amount of wages paid to employees in their states, which could lead to a reduction in tax revenues. The loss of tax revenues and the anticipated increased expense in enforcing state wage and hour laws would be enough. The states can proceed.

The ruling does not address whether the lawsuit has any merit, just that it may proceed.

While no one would claim the new rule is NSFW, these states argue that the content of the new rule and the way it was passed was inappropriate. But like the naked photo above, you need to see the full picture before drawing any conclusions about what’s proper and what’s not. 

For now, the DOL’s new rule remains in effect.  That means it’s more difficult to establish joint employment than it was before. It’s also difficult, by the way, to get a dog to wear a hat. But we did it. And Zippy looks ready for college football season. 

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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New Rules for Drivers? California’s ABC Test Could Change Again in 2021

Worst parking.jpg

Rebellious? Indifferent? Clueless? I’m still trying to understand how this car thought it was ok to take up FOUR parking spaces in the parking lot at a Walgreens near my house.

Any one of the spaces seems suitable for a car of ordinary proportions. I have parked in most of these four spots before, and my experiences were uniformly positive. I’d give four stars to each spot. Reliable, met expectations. Near enough to the store entrance. Picking just one of the four would be an excellent way to start your shopping experience.

When people don’t like the rules they’re expected to follow, one approach is to try to change the rules. That’s what ride share and delivery app companies are doing in California.

Late last month, these companies achieved an important milestone, reaching the 625,000 signature threshold for a November ballot initiative that, if passed, would change the test in California for determining Employee vs. Independent Contractor. The measure will now appear on California ballots, giving voters the chance to override A.B. 5 for ride share and delivery app companies.

If the initiative passes, the new ABC Test would not apply to workers in the app-based rideshare and delivery business. Instead, those workers could stay classified as independent contractors, but the app-based companies must ensure that the drivers receive a predetermined level of compensation and benefits, including:

  • Earnings Minimum. The measure would require app-based companies to pay at least 120 percent of the minimum wage for each hour a driver spends driving—but not time spent waiting for requests.
  • Health Insurance Stipend. The measure would require rideshare and delivery companies to provide a health insurance stipend of about $400 per month to drivers who regularly work more than 25 hours per week (not including waiting time). Drivers who average 15 driving hours per week but less than 25 driving hours would receive half as much.
  • Medical Expenses and Disability Insurance. The measure would require that companies buy insurance to cover driver medical expenses and provide disability pay when a driver is injured while driving.
  • Rest Policy. The measure would prohibit drivers from working more than 12 hours in a 24 hour period for a single rideshare or delivery company.
  • Other. The measure would require that rideshare and delivery companies have sexual harassment prevention policies and conduct criminal background checks and safety training for all drivers. It also would prohibit discrimination in hiring and firing.

The measure would also prevent cities and counties from passing further restrictions on driver classification.

I wrote more about this bill here, leading the post with a harrowing flight selection option offered on my United app.

So if you‘re reading this post from the Left Coast, get out and vote in November. You can make a meaningful change in the way that California approaches the question of Who Is My Employee? In the meantime, drive safe, wear your mask, and park within the lines.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Worried about ABC Tests? Here’s What You Have to Look Forward to.

balloons-1786430_1280

Recent coronavirus-related conversation in my house, after cancellation of planned spring break vacation, loss of kids’ summer internships, suspension of in-person college classes, and more than one day of snow in May:

Lisa: This is getting ridiculous. We need something to look forward to.

Me: 2021?

It may feel like there’s not much to look forward to lately, but if you’re into watching state bills on independent contractor misclassification, I’ve got some exciting news for you! Not really. No one’s into that. But I’m going to share anyway.

Seven states are currently considering bills that would adopt strict ABC Tests for determining whether someone is an employee or an independent contractor. What do I mean by “strict ABC Tests”? I mean the same test California recently adopted in Dynamex and under Assembly Bill 5. I mean the test where anyone performing services is presumed to be an employee unless all three of these things are proven, with part B being the hardest to meet:

(A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact, and 

(B) the worker performs work that is outside the usual course of the hiring entity’s business, and 

(C) the worker is customarily engaged in an independently established trade, occupation, or business.

So which states are vying for the title of Miss California? Here are the 7 states with bills currently pending that, if passed, would adopt a strict ABC Test:

  • Massachusetts – would expand test to unemployment
  • Michigan
  • Minnesota
  • New Jersey – switching from looser part B
  • New York
  • Pennsylvania – for gig-based platforms only
  • Rhode Island

I’ll continue to minor these bills, mainly because I know no one else wants to. But at least we all have something to look forward to.  Happy new year?

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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