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

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

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

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

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

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

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

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

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

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

It’s a sound strategy if it works.

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

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

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

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Cartels in Seattle? Court Decision May Stop Independent Contractor Drivers from Forming Quasi-Unions

Seattle uber unions cartelUsually when “cartels” are in the news, we’re hearing about El Chapo or other organized drug trafficking operations. But the word “cartel” refers to any combination of independent enterprises joining together to fix prices. The City of Seattle is trying to create ride sharing cartels. The city wants the Teamsters to represent your independent contractor ride share drivers. Really, the Teamsters.

The U.S. Chamber of Commerce is fighting back, reminding our brothers and sisters in the Emerald City that we still have federal antitrust laws. Antitrust laws prohibit the formation of cartels to fix prices. Seattle claimed it was immune from federal antitrust laws and, at first, a federal court in Seattle agreed.

But last week, the federal Court of Appeals stepped in and confirmed that, yes, the federal antitrust laws do apply, even in the Great Northwest. Here’s the ruling.

Here’s what the stir is all about.

In late 2015, Seattle passed a law creating quasi-unions for ride share drivers. We wrote about it here. The ordinance had the city overseeing the collective bargaining processes and didn’t call these collective groups “unions.” Seattle says they’re not unions. Then Seattle picked the Teamsters Local 117 to represent the independent contractor ride share drivers. Still not a union???

The law has not yet gone into effect, and its validity is in question. If antirust laws prohibit independent contractors from colluding on pricing, how can Seattle create a process to encourage independent contractors to collude on pricing?

Last week’s decision by the Ninth Circuit Court of Appeals confirms that federal antitrust laws do apply, even to cities that claim to have good intentions and great music.

The case now goes back to a federal court in Seattle to decide whether Seattle’s ordinance violates federal antitrust laws. I’m betting it does.

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

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California’s Top Court Creates New Test for Independent Contractor vs. Employee, Re-Interprets 102-Year Old Definition

horse race dynamexA three-way horse race can be exciting. As the finish line gets closer, each horse seems to dig deeper and find a little extra something to try to pull ahead. (Or gets whipped. Whatever. Stay with me here.)

It’s been a nail-biter over the past several years, with California, New Jersey, and Massachusetts competing to see which state could create the most difficult test for maintaining independent contractor status in wage and hour cases. For years, courts have used an Economic Realities balancing test for determining Independent Contractor vs. Employee status under federal wage and hour law. Most states apply a variant of that test or apply a Right to Control Test for determining Who Is My Employee? under their wage and hour laws.

In 2004, however, the Plymouth Rockers surged ahead, passing a law that used an ABC Test to determine whether someone is an employee or an independent contractor under Massachusetts’ minimum wage and overtime laws. ABC Tests make it harder to prove that a worker is truly an independent contractor (and not an employee), as we’ll see in more detail below. In 2015, the Home of Bruce Springsteen pushed forward, with the New Jersey Supreme Court requiring businesses to Prove It All Night and adopting an ABC Test for its state wage and hour laws.

Poor California was left behind. (No Surrender?) The state that birthed the Eagles and Hotel California did not rewrite its wage and hour laws and did not adopt an ABC Test. Finding no help from the legislature, the California Supreme Court took it upon itself April 30th to whip the Golden State forward, creating a new ABC Test in its 82-page Dynamex decision.

Let’s be clear about what just happened:

  • There’s no new law.
  • There’s no new regulation.
  • There’s no new executive order.

In fact, the definition of “employ” that this decision is based upon has been the same since Year 4 of the Woodrow Wilson presidency.

But now, despite none of those things changing, there’s a new test — at least for wage and hour claims that are covered under California IWC wage orders.

An ABC Test sets a higher bar than a Right to Control Test or an Economic Realities Test. It also sets a higher bar than California’s S.G. Borello test, which is a hybrid Right to Control/Economic Realities Test that has been in place since 1989.

California’s new ABC Test starts with the presumption that, for claims covered under California wage orders, every worker is an employee. Then, to prove otherwise, the business retaining that worker must prove (all 3):

(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.

Fail just one part, and the worker is an employee under California wage and hour law. This new test is even stricter than most other states’ ABC Tests, which usually include two ways that Part B can be satisfied.

The new Dynamex test applies only to claims brought under California wage orders. These claims generally include minimum wage, overtime, and meal and rest break claims. This test does not apply to claims such as failure to reimburse expenses or failure to provide employee benefits.

Good luck out there!

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

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Pink Floyd or The Who?: NLRB Extends Deadline for Public Input on Important Misclassification Decision

pf photo 1 for nlrb post velox

Roger Waters & the boys, smiling pretty for the camera

Pink Floyd or The Who? Tough call for me, but I generally go with Pink Floyd, unless we’re listening to Tommy. Songs from both bands came to mind last week as I read the NLRB’s update on an important issue relating to independent contractor misclassification.

Who Are You (The Who, 1978)? In this post, we discussed a 2017 ruling, in which an ALJ found that the misclassification of independent contractors, by itself, is a violation of the federal labor law. This decision rejected the pickup basketball rule, “no harm, no foul.” Misclassification was deemed to be an unfair labor practice.

Join Together (The Who, 1990). The full Board then decided to reconsider that decision and invited public input on the question. Non-parties were asked to submit briefs to assist the Board in making its decision. Trade associations and labor groups are filing briefs on both sides of the issue.

Wish You Were Here (Pink Floyd, 1975). The Board temporarily lost its 3-2 Republican majority after Member Miscimarra stepped down, but earlier this month, the Senate confirmed John Ring as the third Republican member, restoring a majority and a pro-business slant.

Time (Pink Floyd, 1973). Last week the Board extended the deadline for briefing to April 30th. Any business or trade organization that wishes to provide input to the NLRB on this important issue still has an opportunity. Here are instructions for filing.

Careful with that Axe, Eugene (Pink Floyd, 1969). This is an important issue for businesses using independent contractors. If misclassification by itself violates the NLRA — even with no actual harm to the worker — then businesses may face unfair labor practice charges, even where there’s no union and, even stranger, those ULP charges can come from workers you didn’t even think were your employees.

Take It Back (Pink Floyd, 1994). Hopefully for businesses, the full Board will reverse the ALJ and reinstate the pickup basketball rule. I have High Hopes (Pink Floyd, 1994).

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

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NLRB Roller Coaster Ride on Joint Employment Rolls On

roller-coaster-NLRB joint employment test

I used to go to summer camp in Georgia, and the highlight of the summer was always a trip to Six Flags, where we would ride the Mindbender roller coaster. My coaster days are over, thanks to two back surgeries and a desire to remain upright and mobile, but watching the NLRB lately brings back memories of the sharp turns, fast drops, and tight spirals.

Yesterday, the Senate approved John Ring’s nomination as the third NLRB member, returning the Board to a Republican majority. (The vote was 50-48, like halftime in the NBA.)

With three Republican members, we can expect the Board to quickly find another opportunity to overturn Browning-Ferris and return the joint employment test to a more rational standard that requires a finding of direct, material control before a company can be deemed a joint employer.

There are a few ways this might happen.

Plan A is that the D.C. Circuit Court of Appeals could help. In an unusual move, the Court of Appeals agreed late last week to re-open the Browning-Ferris appeal.

The Court of Appeals had dismissed the appeal several weeks ago as moot, after the NLRB issued its Hy-Brand decision, which overturned Browning-Ferris. But after the NLRB said “my bad” and vacated its Hy-Brand decision, the Board asked the Court of Appeals to take the case back and to issue a ruling on what the proper joint employment standard should be. On Friday, the Court of Appeals re-opened the case and will soon issue a decision.

If the Court of Appeals says the Browning-Ferris case was wrongly decided by the Obama Board, then the newly constituted NLRB can hop on that bandwagon and decide to adopt that decision as its new test.

On the other hand, if the Court of Appeals affirms Browning-Ferris, the NLRB will just ignore the decision and move to Plan B or C.

Plan B would be to get Hy-Brand back on the books as good law. That would mean reinstating the Hy-Brand test as the proper standard for determining joint employment. The Hy-Brand test would require direct and material control before a business can be deemed a joint employer under labor law. The NLRB’s General Counsel recently chastised the Board for vacating its own Hy-Brand decision without following the usual rules for recusal.

If that fails, there’s Plan C, which seems more viable now that John Ring has restored the NLRB to a 3-2 Republican majority. The Board can find a new case — other than Hy-Brand — and adopt the revised business-friendly joint employment test that the NLRB tried to adopt in Hy-Brand.

Plan C would require finding a case that allows Board Members Ring and Emanuel to dodge any conflict issues, as they both come from large law firms with lengthy client lists, which is precisely the problem that led to Hy-Brand being vacated in the first place. Too many potential conflicts. They will need to find a clean case with no apparent conflicts, but that can be done.

Meanwhile, this has been a roller coaster ride. The NLRB will eventually settle on a new joint employment standard (I expect), just like the Mindbender eventually settles back down on a straightaway and slows down to let off the riders — who, like NLRB-watchers, are now dizzy and disoriented.

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

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NLRB Joint Employment Fiasco Grows More Fiasco-ey with General Counsel’s Brief

tennis image NLRB general counsel brief hy-brandWhen watching tennis, it’s best to sit on one of the ends of the court. If you sit in the middle of the court, your head will swivel back and forth on every shot, eventually causing your neck to detach from your shoulders. (Disclaimer: I am not a doctor.)

Watching the NLRB wrestle with joint employment in real time is like watching a long rally from a seat in the middle of the court. My neck hurts just reading this stuff.

The latest development is that the NLRB’s General Counsel, a Presidential appointee who acts as the Board’s chief prosecutor, filed a brief with the Board asking for a decision that the Board’s recent decision to reverse the decision that reversed the Browning-Ferris decision should be reversed. Got that?

Let’s review.

In December 2017, in a case called Hy-Brand, the NLRB reversed the “indirect control” test for joint employment that had been established in the 2015 Browning-Ferris case. The Hy-Brand decision was issued by a 3-2 vote, along party lines.

In February 2018, the NLRB Inspector General (IG) released an opinion suggesting that Member Emanuel should have recused himself from the Hy-Brand decision. Had Emanuel not participated in Hy-Brand, the vote would have been 2-2, and Browning-Ferris could not have been overturned.

The timing of Hy-Brand was important too, since it was issued just before Member Miscimarra stepped down. When Miscimarra stepped down, his absence temporarily left the Board without a Republican majority, which is where things sit today, pending confirmation of John Ring to replace Miscimarra in the third Republican seat.

A few days later, after squinting into my defective crystal ball, I wrote that the IG’s argument in favor of recusal was a bunch of hooey, that Member Emanuel’s participation in the Hy-Brand decision was appropriate, and that the chances of the Board vacating the the Hy-Brand decision was roughly equivalent to the Cleveland Browns’ chances of an undefeated season in 2018. (Ok, I didn’t go that far, but close.)

Hours after my post, the Board vacated the Hy-Brand decision, prematurely ending my lifelong aspirations of becoming a fortune teller. (I really liked the post too. I even commented on the origins of the “The” in The Ohio State University. Click here to satisfy your curiosity.)

The order vacating Hy-Brand was entered into by three members of the Board, without participation by Member Emanuel. He was in time-out. 😢

Ok, now we’re caught up.

The General Counsel’s Brief, filed April 5th, argues that the decision vacating Hy-Brand was bungled and should be undone.

First, he argues that the proper procedure for considering whether a member should recuse himself is for the member at issue to decide whether to recuse himself. That’s been the procedure for approximately forever, except in this instance. Same thing in federal court. That’s how it works. But the normal procedure was not followed.
Second, the GC argued that Hy-Brand (the company) was entitled to a hearing before the full 5-member Board, meaning that Member Emanuel had a duty not to recuse himself.

Got all that?

Now, are you ready for the icing on the pile of poo? 💩

Guess who gets to decide whether three of the four Board members acted improperly when they vacated the Hy-Brand decision without consulting Member Emanuel and without allowing him to evaluate whether he should recuse himself? Yes, this decision will be made by the three members who vacated Hy-Brand, plus Emanuel. Should they recuse themselves? Can they? Should Member Emanuel recuse himself from deciding whether the Board should have allowed him to consider whether to recuse himself earlier?

This is fun!

Go Browns!

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

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

6AEEC9D2-D576-4264-AE48-A0512A656B37

“Recuse.” Verb, meaning to cuse again.

Sorry, it doesn’t mean that at all. We’ve heard a lot about recusal in the news lately, relating to a certain Attorney General and one of the former Soviet Republics (the big one).

The NLRB is dealing with recusals too. And recusals within the Board may affect your business.

Of the soon-to-be-majority Republican Board members, two are from big defense firms. The Board recently vacated its important Hy-Brand decision that attempted to restore sanity to the joint employment test, after the NLRB’s Inspector General determined that Member Emanuel should have recused himself. That conclusion was based on the fact that his prior law firm, Littler, represented a party in the Browning-Ferris case, which Hy-Brand tried to reverse. Littler’s extensive client list of big businesses means this issue is likely to come up again. Emanuel could find himself disqualified from participating in other important Board cases, including other joint employment cases.

And he’s not the only one.

John Ring, the third Republican appointee to the Board (scheduled for confirmation hearings shortly), is from the large law firm Morgan Lewis, which also represents many large businesses. Ring recently submitted his potential conflicts list. It’s long, and it includes lots of well-known corporate names.

So he could find himself disqualified too.

The newly reconsitituted Trump-appointed Board is expected to issue plenty of 3-2 party-line pro-business decisions, reversing Obama-era decisions. Is that still possible, if two of the three Republican members could be conflicted out of the most significant cases?

It’s a tough question, and the answer remains to be seen. Trump could have appointed pro-business Board members from small employer defense boutique firms instead of choosing lawyers from two of the largest firms in the U.S. Had lawyers from smaller firms been selected instead, the likelihood of recusals would have been much smaller.

With important decisions to be made at the NLRB about the test for joint employment and other significant union-management issues, the Trump Administration’s decision to appoint two big firm lawyers could threaten its anticipated pro-business agenda.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

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