Future of “Joint Employment” Test May Be at Issue, as NLRB Chair Files Complaint Against NLRB’s Inspector General.

F35D8CDD-3497-4FCC-83D8-732CC87B195A

From the county sheriff’s scratch-and-sniff twitter account

Police officers in Clay County, Missouri were searching for a suspect wanted for felony possession. They brought out the K9 crew. The suspect was hiding and, so far so good. But then…

According to Fox 4 in Kansas City, the suspect passed gas so loudly that he gave his location away. The police sniffed him out and cuffed him. Stinks for that guy.

There’s another search-and-destroy mission going on at the NLRB. It’s a power struggle that could be described as a complicated game of cat vs. mouse vs. cat, and — bizarre as it seems — the result of this internal power struggle may ultimately decide the test for joint employment.

Board Chairman John Ring is trying to sack NLRB Inspector General David Berry, who is trying to disqualify Republican-appointed Board member William Emanuel from participating in two key joint employment cases. Member Emanuel is likely to be the deciding vote in favor of a stricter, more pro-business definition of joint employment in either of two significant joint employment cases before the Board. (The cases are Hy-Brand and McDonald’s.)

According to this piece of excellent reporting by Bloomberg Law’s @HassanKanu, Chairman Ring has filed a formal complaint against Inspector General Berry, seeking to have him removed from his post for inappropriate conduct. The complaint, according to Kanu, alleges that Berry has mistreated agency employees, and it references an EEOC complaint filed againt Berry.

So how does this affect joint employment?

Inspector General Berry has been the driving force behind efforts to disqualify Member Emanuel (R) from participating in two key joint employment cases — the Hy-Brand case (in which the Board tried to overturn the Browning-Ferris joint employment test) and the pending McDonald’s case.

Berry claims that Member Emanuel has a conflict of interest that prevents him from particpating in these two cases, stemming from Emanuel having been a partner at the Littler law firm.

If Berry is removed, a new Inspector General may view the conflict issue differently.

From my point of view, there’s no conflict and Member Emanuel should be allowed to participate. For those of you who like to peek behind the curtain, here is a copy of the amicus brief that I filed on behalf of the Restaurant Law Center. The brief argues in support of McDonald’s position that Member Emanuel should not be recused. (There have been similar efforts to try to recuse Ring too.) But that issue remains unresolved.

If a new Inspector General concludes that there is no conflict, then a three-member Republican majority of the Board is likely to rule, at its first opportunity, that the test for determining joint employment should be changed.

The Hy-Brand decision in late 2017 described the test the Republican majority wants to implement. Read more here. The test the Board wants to implement would make it much harder to prove that joint employment exists under federal labor law. Although the Board adopted the new test in the Hy-Brand case, it later withdrew the Hy-Brand ruling because of the conflict issue. The Board wants to go back to the Hy-Brand test but needs to clear up the conflict/recusal issue first.

If Inspector General Berry is forced out, the recusal obstacle could go away.

The recusal issue could also go away if the Board just sits on the pending McDonald’s case until October. September 2019 marks two years since Member Emanuel was appointed to the Board, and any conflict issue related to his previous role as a partner at the Littler firm should drop off. There are two ethics rules in play. One has a one-year lookback period, and the other has a two-year lookback period. If the Board delays deciding the McDonald’s case, the conflict issue might just go away because of the passage of time. (More detail in the amicus brief, here.)

So where does that leave us? Ring is going after Berry, who is trying to interfere with Ring’s effort to adopt a new pro-business definition of joint employment. Sound complicated? That’s high drama within the NLRB!

Will Berry survive the complaint? Will Ring oust his rival? Will Emanuel be allowed to participate in joint employment decisions? Will the Board find a way to implement its desired new definition of joint employment? Can the whole recusal issue be avoided if the Board just waits until October before doing anything? Can the Board get around the whole recusal issue by relying on the rulemaking process to implement a new test for joint employment?

There’s a lot to keep watching here. A change to the test for joint employment would be welcomed by the business community.

Until then, keep checking here for the latest developments on joint employment, and keep checking Fox 4 in K.C. for the latest developments on suspects who fart away their hiding places.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Will NY Lawmakers Create a New Class of “Dependent Contractors”? If So, It Could Be a Work of Art.

Horse no shadow - independent contractor misclassification - dependent contractor - Todd Lebowitz

This piece of art hung in the bedroom at the apartment I rented on my recent vacation in Paris. See the shadow of the dog? Yep. See the shadow of the horse? Yep. See the shadow of the rider?

Oops. I expected it to be there. Chalk up another win for bad art.

Art requires creativity and, sometimes, a different perspective. Things are not always the way we expect them to be. That can be due to oversight (such as with bad art) or due to creativity. New York lawmakers are looking at new ways to approach the Independent Contractor vs. Employee question, and under one recent proposal, lawmakers could get creative.

A proposed bill would create the status of dependent worker, allowing gig workers to form quasi-unions to negotiate fees and directing the state to hold public hearings exploring ways to provide other rights to gig workers, such as minimum wage and anti-discrimination protections.

The bill was withdrawn just before summer recess, but the question will be revisited in the next legislative session. 

Some worker groups say the bill does not go far enough. Many worker advocates would like to see a new law that presumes all gig workers to be employees, unless the hiring party can prove an exception. ABC Tests are one example of that type of law. Business groups seem more open to the proposal, recognizing that labor laws probably need to start recognizing a middle ground between employees and independent contractors. (You can read more about that movement here, in last week’s post.)

We’ll have to wait until the fall, when New York lawmakers return to Albany, to see how this plays out in New York. In the meantime, if anyone is looking for something fun to do during summer break, I know of at least one amateur French painter who could use some tutoring.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Opinion Piece Asks California Not to Be the Pigeon in this Photo

Pigeon head Tuileries - independent contractor misclassification Todd LebowitzI took this picture last week in Paris, walking through the Jardin des Tuileries with my family, just outside the Louvre.  

If you think of the statue as being ride-share giants Uber and Lyft, and if you think of the California state legislature as the pigeon, you’ll know why Uber and Lyft’s chief executives joined forces to write this opinion piece in the San Francisco Chronicle.  

As we explained here, California seems likely to pass a bill that would rewrite California law in a way that will instantly convert many — perhaps most — independent contractors into employees.  The bill would take the ABC Test created last year in the Dynamex case and apply it to the entire California Labor Code, as well as to state unemployment law. (Currently, the ABC Test applies only to state wage and hour claims, and a more neutral balancing test applies to other state law claims.)

The law, if passed, would undoubtedly fuel new claims against Uber and Lyft, alleging that ride-share drivers are employees under state law.

In the opinion piece, the companies argue in favor of legal reform, but in a way that does not threaten to change drivers into employees.

The Uber-Lyft proposal would secure three new types of protections for ride-share drivers, while safeguarding their status as independent contractors. The proposal would:

  1. Set up a portable benefits system for gig workers, including retirement savings accounts, paid time off, and lifelong learning opportunities;
  2. Create a drivers’ association, in partnership with state lawmakers and labor groups, to represent drivers’ interests and administer benefits; and
  3. Establish a new driver pay system that includes greater earnings transparency for the work performed between accepting a ride and dropping off a passenger after accounting for reasonable expenses.

So why can’t Uber and Lyft just do these things on their own? Because if they did, the current legal system would likely treat those acts of goodwill as evidence that Uber and Lyft were treating the drivers as employees.

Current labor laws were not written with the gig economy in mind. The law right now is an all-or-nothing proposition — independent contractor or employee. The modern economy, though, requires a middle ground — an alternative that allows app companies to provide greater benefits and protections to drivers without running the risk that these well-meaning gestures could convert the drivers into employees.

Pigeons are going to poop on statues forever. Marble heads provide a comfortable spot for loosening the ol’ avian bowels, and we all know it’s hard to find a good public toilet these days. But some things should not be set in stone. Let’s hope the California assembly backs off of the fast track for A.B. 5 and instead tries something new. The system proposed in the joint Uber-Lyft opinion piece would help drivers and would help the gig economy continue to thrive. 

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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A New Low for California’s Independent Contractors? ABC Test May Be Adopted for the Whole Labor Code

Death valley for independent contractors - california dynamexCalifornia is the home of both the highest and the lowest points in the continental U.S. — Mt. Whitney at 14,495 feet and Death Valley at -282 feet. As far apart as these two sites are on the altimeter, they’re less than 100 miles apart on the odometer.

That’s a lot of up and down. If you follow California’s developing law on Independent Contractor vs. Employee tests, you’ve also seen a lot of ups and downs recently. If a pending bill passes (as expected), businesses using independent contractors may be about to experience a new low.

Remember the Dynamex case? As explained here, that’s the California Supreme Court decision that enacted a strict ABC Test for determining whether someone is an employee or an independent contractor under California’s wage orders. As we discussed here, though, the ABC Test only applies to certain state law employment claims. Other less stringent tests still apply when analyzing whether a contractor should really be considered an employee under other state employment laws.

But that may be about to change.

Assembly Bill 5 would adopt the Dynamex ABC Test as the way to determine whether someone is an employee under all parts of the California Labor Code and under state unemployment law.

In its current form, the law would exempt certain licensed professions from being subject to the ABC Test. Extensive lobbying efforts are underway by various trade associations to carve other trades out of the law as well. For those professions excluded from the law’s reach, the test for determining whether a contractor is really an employee would be the S.G. Borello balancing test, a much less stringent standard than the Dynamex ABC Test.

The bill is now pending before the state senate. If it passes, it will become even harder to be a legitimate independent contractor in California. The state with one of North America’s highest peaks will become a virtual Death Valley for contractors trying to maintain their independent status.

We’ll continue to follow the status of this bill.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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New ABC Test Under Federal Labor Law? Dem-Sponsored Bill Would Make That Change

Independent contractor misclassification NLRB peacock

All eyes on me!

According to The Atlantic, when a peacock spreads and shakes its elaborate feathers, it shakes them at 26 times a second, which creates a pressure wave that is sensed by a female peahen through the crest atop her head. This precise frequency causes the female’s crest to vibrate in a way that is apparently very sexy for peafowl. The male seeks attention and, with just the right vibrations, he lets all the single pea-ladies know that he wants some action. Note to pea-fellas: If you like it, then you shoulda put a ring on it.

In a crowded field of Democratic Presidential hopefuls, something similar is happening, but it’s less pretty, less sexy, and less appealing for businesses across the country.

As Democratic legislators vie for union support in the upcoming 2020 election, they’re making sure to signal to workers and unions that they’ve got pretty feathers and they’re not afraid to use them. A new bill co-sponsored by Presidential hopefuls Kamala Harris (Calif.), Bernie Sanders (Vt.), Elizabeth Warren (Mass.), Cory Booker (N.J.), Kirsten Gillibrand (N.Y.), Amy Klobuchar (Minn.), and Rep. Tim Ryan (Ohio) would amend the National Labor Relations Act (NLRA) to redefine “employee” and “joint employment.”

The Protecting the Right to Organize Act of 2019 would impose a strict Dynamex-style ABC Test for determining Who Is My Employee? under the NLRA. A worker would be deemed an employee under the NLRA by default and could only be deemed an independent contractor if all three of the following could be proven:

(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.

This is the same strict ABC Test adopted by the California Supreme Court in Dynamex and by the Massachusetts legislature for its state wage and hour claims.

The Act would also redefine joint employment. It would require that an entity be deemed a joint employer under the NLRA if it “codetermines or shares control over the employee’s essential terms and conditions of employment.” So far, so good. But then there’s this: “In determining whether such control exists, the Board or a court of competent jurisdiction shall consider as relevant direct control and indirect control over such terms and conditions, reserved authority to control such terms and conditions, and control over such terms and conditions exercised by a person in fact.”

The Act would stymie the NLRB’s current effort at passing a new regulation that would limit “joint employment” to situations where actual control is exerted (not merely reserved) and where that control is exerted over essential terms and conditions of employment, such as hiring, firing, and pay.

Most damaging of all (but not related to independent contractor or joint employment issues), the bill would fundamentally change the collective bargaining process by imposing binding arbitration on the parties to resolve any disputes in contract negotiation. That change, if it were ever adopted, would change the nature of bargaining as we know it, potentially removing much of the incentive for unions to bargain in good faith.

If the Act emerges from committee, it will likely pass the House but has no chance of success in the Senate. Even if it passed, it would almost certainly be vetoed by Trump anyway.

For now, the Act is a political move intended by the Democratic Presidential hopefuls to demonstrate their pro-worker, pro-union credentials. For a certain audience, the Act looks pretty and may vibrate some crests. But for at least the next two years, this display of feathers is not likely to lead to any action.

Bonus feature: For another peacock-related post, click here.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Slip Slidin’ Away? Truckers’ Fall Short in Bid to Overturn California’s Dynamex Standard (Plus: Bonus Quiz for Paul Simon Fans)

Truckers Western States dynamex independent contractor misclassificationIt seems a little presumptuous that when Paul Simon released the single, “Slip Slidin’ Away,” he released it as one of two new songs on his 1977 Greatest Hits, Etc. album. How is it a greatest hit before it’s been released? But sure enough, the song rose to #5 on the Billboard charts. Today’s Challenge: Ten bonus points will be awarded to anyone who can name the other new song that debuted on Simon’s 1977 Greatest Hits, Etc. compilation. The answer is at the end of the post.

In July, we wrote about “Convoy,” a 1975 song about a fictional trucker rebellion, as a way to introduce a new lawsuit filed by the Western States Trucking Association. The lawsuit seeks to invalidate California’s burdensome ABC Test (the Dynamex test), which is now used to determine who is a contractor and who is an employee under California wage and hour law.  The truckers argued that the law — as applied to truckers — was preempted by federal laws that seek to promote uniformity in the interstate transportation industry.

Based on a recent decision in a California federal court, the truckers’ hopes of invalidating Dynamex may be Slip Slidin’ Away.

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“This is a Cabinet”: DOL Proposes New Definition of Joint Employer, Seeks to Clear Up a Confusing Label

This post was originally published as a BakerHostetler Employment Alert on April 3, 2019. Cabinet joint employmentSometimes it’s obvious what something is, and you don’t need a label. Other times it’s not so obvious, and you do need a label. Then there’s the rare instance when it’s obvious what something is, but someone feels compelled to supply a label anyway. That third scenario is what I saw when I went to my daughter’s volleyball tournament last weekend and snapped this photo of a cabinet in the lobby. The label is small, but if you look closely, you’ll see that it helpfully declares the item to be a “cabinet.” It further announces, in red handwriting, that the item has been “sold,” thereby allaying my concerns that my daughter was spending her Saturday playing volleyball in a den of cabinet thieves.

The second scenario – label needed – is the focus of this Alert. And the territory is familiar ground ‒ joint employment.

It’s rarely obvious what that phrase means, and companies that use workers supplied by other companies have been seeking clarity for some time now. Ignoring Ronald Reagan’s famous quip about the nine most terrifying words in the English language, the Department of Labor (DOL) announced on Monday that it’s here to help.

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