“So Tired of Being Alone”? Blogger Managers at SB Nation Claim Independent Contractor Misclassification

Bloggers independent contractor misclassificationThe good reverend and crooner Al Green was “so tired of being alone,” but he sang it in a way that made me want to keep listening. Stay solo, Rev. Al. On a more somber note, The Motels’ song, Only the Lonely is depressing. Why can only the lonely play? Everyone should be able to play.

Blogging can be a lonely endeavor. Bloggers write and push out content, hoping people will read. Fortunately for me it’s just a side gig, but for many it’s a way of life.

A lawsuit involving bloggers at SB Nation serves as a reminder that bloggers’ status as independent contractors is subject to challenge. In this case, three blogger/site managers allege that, despite their independent contractor agreements (Blogger Agreements), they were really employees entitled to overtime pay. According to the plaintiffs, site managers are required to watch games and report on breaking news on their assigned teams.

In a recent decision, the federal district court granted conditional certification to the proposed class of all site managers and managing editors. In proposed class actions, conditional certification is often easily granted. The bar to conditional certification is low. That means companies who classify their bloggers as independent contractors can be subjected to the hassle and expense of written discovery, depositions, and litigation — just to determine whether a class can proceed. And that’s before litigation on the merits of a misclassification claim.

Litigation involving alleged independent contractor misclassification can be a long and expensive slog. Depositions, deposition prep, and document discovery involve lots of people’s time and attention, none of whom will be lonely. Everyone at the company who was involved in classification, oversight, and pay decisions may have to play — all of which means The Motels were wrong. So there. Next time write a more upbeat song.

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

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For more information on joint employment, gig economy issues, and other labor and employment developments to watch in 2019, join me in Chicago on Mar. 21 for the 2019 BakerHostetler Master Class on Labor Relations and Employment Law: Meeting Today’s Challenges. Advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com. If you list my name in your RSVP, I will have your registration fee waived.

We’ve Got Baby Steps Toward a New Definition of Joint Employment Under the FLSA.

Baby steps joint employment FLSA new rule

I still don’t know what this is, but I got it from Wikipedia.

According to Wikipedia, which knows everything, or thinks it does, Baby Steps is the name of a Japanese manga series by Hikaru Katsuki. I have no idea what that means, but apparently it’s a story of some sort, which I infer from the following description: “The story is centered on Eiichirō Maruo, a first year honor student who one day decides that he is lacking exercise.”

This does not make me want to watch it.

I will, however, be watching the baby steps being taken by the Department of Labor’s Wage and Hour Division (WHD). On February 28, the WHD submitted a proposed new rule on joint employment to the White House Office of Information and Regulatory Affairs (OIRA). The new rule would modify the meaning of “joint employment” under the Fair Labor Standards Act (FLSA), which is the federal law governing minimum wage and overtime requirements.

This submission is the first step before a proposed new rule is formally presented to the public for notice and comment. You’ll recall this is the same process the NLRB is pursuing to try to revise the definition of “joint employment” under the National Labor Relations Act. But the NLRB is much further along.

The notice of submission (viewable here in all its glorious lack of specificity) tells us nothing about the content of the proposal.

We can make a fairly good guess though. As detailed here, the NLRB is proposing a regulation that would narrow the meaning of joint employment under federal labor law. Under the NLRB proposal, there would be no finding of “joint employment” unless there’s a showing of direct and substantial control over essential terms and conditions of employment. It would be much harder to prove joint employment.

The proposed new rule for joint employment under the FLSA is likely to be the same.

A little bit of consistency across the statutes would be a welcome change from the hodgepodge of rules, test, and standards we have now.

We can expect additional baby steps toward a new definition of “joint employment” under the FLSA. But I would not hold my breath for a new manga series. Whatever that is.

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

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For more information on joint employment, gig economy issues, and other labor and employment developments to watch in 2019, join me in Chicago on Mar. 21 for the 2019 BakerHostetler Master Class on Labor Relations and Employment Law: Meeting Today’s Challenges. Advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com. If you list my name in your RSVP, I will have your registration fee waived.

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Should the Economic Realities Test be Changed for the Gig Economy? One Court Thinks So (But How Would That Affect Jon and Ponch?)

CHiPS are off duty police officers contractors or employees?

Go Jon! Go Ponch! Screenshot from IMDb

According to IMDb, the highest rated episode of CHiPs was Christmas Watch. Thieves at the community church ran off with a 15th century bell, which meant — according to IMDb — “The Christmas season doesn’t mean any less work for Jon and Ponch!”

Well ho ho ho then. The Christmas season means lots of extra work for lots of other people, including real life police officers. A recent case in the Sixth Circuit Court of Appeals addressed whether police officers taking second jobs are independent contractors or employees.

The test for Independent Contractor vs. Employee under the Fair Labor Standards Act (FLSA) is well-established. It’s the Economic Realities Test, a multi-factor test that seeks to determine whether, as a matter of economic reality, the worker is reliant on the hiring party to earn a living.

But in Acosta v. Off Duty Police Services, the Court of Appeals questioned whether the usual formula should still apply in the modern gig economy, when lots of people take second jobs.

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What is the Test for Independent Contractor vs. Employee? (Jan. 2019)

what is the test for independent contractor misclassificationSeems like a simple question, but it isn’t. My question to your question is, “Why do you ask?” That’s because the test for Independent Contractor vs. Employee is different under different laws.

And worse, the tests keep changing, as we saw in Monday’s post about the NLRB’s SuperShuttle decision.

As of today, January 31, 2019, here’s where we stand:

The current tests for determining Independent Contractor vs. Employee are:

National Labor Relations Act (NLRA)

Right to Control Test (SuperShuttle version, as of 1/25/19)

Title VII, Age Discrimination in Employment Act (ADEA), ERISA

Right to Control Test (Darden version, or some variant of it, as applied circuit by circuit)

Internal Revenue Service

Right to Control Test (IRS version)

Affordable Care Act

Right to Control Test (emphasis on particular factors, based on regulation)

Fair Labor Standards Act (FLSA)

Economic Realities Test (which different courts articulate differently)

California, Massachusetts wage & hour laws

ABC Tests (strict version of Part B)

New Jersey wage & hour

ABC Test (regular version of Part B)

California state laws other than wage & hour

S.G. Borello & Sons Test (customized hybrid version of Right to Control & Economic Realities Tests), we think, for now

State Unemployment and Workers Comp Laws

Pick a card, any card. Tests vary substantially state to state. Some are Right to Control Tests, some are ABC Tests, some are entirely made-up, customized tests that require consideration of — or proof of — specific factors

Other State Laws (wage & hour, discrimination, tax)

Tests vary significantly state by state, law by law

This chart may be a helpful start, but three significant challenges remain, when trying to determine Independent Contractor vs. Employee.

  1. Fifty Shades of Gray.  These tests, for the most part, are balancing tests. Courts and agencies must weigh multiple factors. In most instances, some factors will favor contractor status and some will favor employee status. Different courts may reach different conclusions, even with the same facts.
  2. Planes, Trains, and Automobiles. Multi-state employers face the added challenge of having to deal with different tests in different states. Then, just to keep everyone on their toes, states generally apply different tests for different state laws. Sometimes different tests apply in different industries too. Transportation workers, for example, may be subject to different tests than construction workers.
  3. Into the Wild. The tests keep changing. In January 2019, the NLRB changed its test in the SuperShuttle case. In 2018, California changed its test under state wage and hour law from the S.G. Borello balancing test to a strict ABC Test. In 2015, New Jersey switched to a different version of an ABC Test for its state wage and hour law. The times they are a-changin.

What to do about it? (Free tips!)

  1. Know the tests that apply where your business operates.
  2. Construct your independent contractor relationships in a way that tends to favor the factors supporting independent contractor status. Inevitably, business considerations will get in the way, and tough decisions will have to be made about how much control can be relinquished and how the relationships need to be structured. Adjust the facts of the relationship.
  3. Use a customized independent contractor agreement that emphasizes the factors that support independent contractor status. Avoid off-the-shelf agreements. Merely reciting that everyone agrees the relationship is an independent contractor relationship is only a teeny bit helpful. “Teeny bit helpful” is not the gold standard.
  4. Re-evaluate existing relationships, and make changes from time to time.
  5. Implement a gatekeeper system to prevent operations managers from entering into contractor relationships that may be invalid. Require any retention of a contractor to be approved by a point person, who can issue spot and seek help in evaluating whether a contractor relationship is likely to withstand a misclassification challenge.
  6. Seek legal help before you get audited or sued. Now is the time to review and modify relationships to reduce the likelihood of a misclassification claim. Once a claim is made, your business can only play defense. Create your playbook now, before the defense has to take the field.

For more information on joint employment, gig economy issues, and other labor and employment developments to watch in 2019, join me in Philadelphia on Feb. 26 or Chicago on Mar. 21 for the 2019 BakerHostetler Master Class on Labor Relations and Employment Law: Meeting Today’s Challenges. Advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com. If you list my name in your RSVP, I will have your registration fee waived.

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

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What It Means to “Suffer” in California, Independent Contractor Version

suffer or permit to work California

This article describes how gestures that are common in the U.S. can have very different meanings abroad. For example, the “ok” finger gesture is a vulgar bodily reference in Brazil, Germany, and Russia. (Not ok!) The thumbs up gesture in Greece or the Middle East can mean “up yours!” The University of Texas’s “hook ‘em horns” gesture in Italy means you’ve been cuckolded — your wife is cheating on you.

Same thing, different meaning.

To employers, California often feels like a foreign country. It has some of the most employee-friendly laws in the nation, creating migraines for multi-state employers. When it comes to interpreting legal phrases, California lives up to its reputation, especially in the Employee vs. Independent Contractor context.

Today we look at California’s definition of “employ” as it relates to determining whether someone is an employee or an independent contractor.

California’s wage and hour laws are set forth in the state’s Industrial Wage Orders, a bulky set of directives that set the rules for minimum wage, overtime, meal and rest breaks, and various record keeping requirements for California employers. These rules apply only to employees, not independent contractors, but the test for determining Who Is My Employee? in California is different than under any federal law.

California’s Industrial Wage Orders use the same language to define “employ” as used in the federal Fair Labor Standards Act (FLSA). But fittingly, the Republic of California applies a different meaning to the same phrase.

California’s wage and hour laws provide three alternative definitions for “employ”: (1) to exercise control over the wages, hours, or working conditions, (2) to suffer or permit to work, or (3) to engage, thereby creating a common law employment relationship.

The FLSA also defines “employ” as “to suffer or permit to work.”

On Monday, we described how the FLSA’s “suffer or permit” standard is applied when determining whether someone is an employee or an independent contractor.

Today’s post describes California’s test for the same phrase. It’s different. Hook ‘em horns.

Historically, California courts have rejected the federal interpretation of “suffer or permit” as not being broad enough. California courts interpret the phrase more literally. If you permit someone to work, that person is likely your employee.

In April 2018, California’s Supreme Court set up a test that cemented that expansive interpretation into law.

In Dynamex Operations West v. Superior Court, the California Supreme Court ruled that, to determine whether someone is an employee or an independent contract, an ABC Test must be used.

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 the hybrid Right to Control/Economic Realities Test that California had been using since 1989 to answer the Employee vs. Independent Contractor question.

California’s 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.

As of now, the Dynamex test applies only to claims brought under California wage orders, we think.  These claims generally include minimum wage, overtime, and meal and rest break claims. So far, this test does not appear to apply to claims such as failure to reimburse expenses or failure to provide employee benefits.

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

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Pain, Humiliation & Self-Pity: How Does the Definition of “Employ” Relate to Independent Contractor Misclassification?

Suffer or Permit to Work FLSA Definition of Employ

According to the New World Encyclopedia, examples of “suffering” include pain, illness, disability, hunger, poverty, grief, hatred, frustration, heartbreak, guilt, humiliation, anxiety, loneliness, self-pity, and death.

According to federal wage and hour law, “suffer” means employment.

Ouch. Happy Monday.

One of the many problems with the Fair Labor Standards Act (FLSA) — the federal law that sets minimum wage and overtime standards — is that it’s archaic, outdated, old. It was passed in 1938.  Before Hitler invaded Poland.  Before the first Captain America comic book. Even before the invention of the Slinky.

In 1938, Mick Jagger wasn’t even born yet. (But Betty White was 16.)

The language used in the FLSA reflects a different era. In the definitions section of the Act, “employ” includes “to suffer or permit to work.” What exactly does that mean? At the time it was written, what did Congress intend for it to mean? And what does it mean now, in the modern economy, especially when trying to determine whether a worker is an employee or an independent contractor?

According to the FLSA regulations, if “the employer knows or has reason to believe that [the individual] is continuing to work,” then the time is working time. It’s employment. Even work that is “not requested” is work time if the employer permitted the work to be done.

When asking the question, Who Is My Employee?, this broad definition presents a challenge. As the Supreme Court has recognized, this definition is broader than the ordinary “common law” definition of employment, which looks at the extent of control the employer exercises (or has the right to exercise) over the worker. That’s the Right to Control Test, which is discussed in more detail here.

Because the definition of “employ” is different under the FLSA than under most other employment laws, the test for determining Who Is My Employee? is different too.

The FLSA uses an Economic Realities Test to determine whether a worker is an employee (as compared to an independent contractor).

The Economic Realities Test is expressed slightly differently by different federal courts but, in general, the test asks whether the worker is economically reliant on the potential employer to earn a living. If economically reliant, the worker is likely an employee. If the worker has other sources of income or is business for himself/herself, the worker is more likely an independent contractor, not an employee.

The Economic Realities Test is described in more detail here.

So that’s how the federal courts interpret the “suffer or permit to work” language in the FLSA. But to keep things interesting, California’s wage and hour laws use the same “suffer or permit” language in its state law definition of “employ,” but California interprets that phrase differently and imposes a different test. Same standard, different test.

As we will discuss in Thursday’s post, California’s alternative interpretation of that same phrase can lead to very different results when evaluating whether someone is an employee or independent contractor.

It’s California’s definition — more than the federal definition — that is more likely to cause pain, illness, disability, hunger, poverty, grief, hatred, frustration, heartbreak, guilt, humiliation, anxiety, loneliness, or self-pity. To the Golden State’s credit, though, probably not death. Good job, California.

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

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New Rule May Clear Up ‘Employee vs Contractor’ Test under FLSA, But Not Quite Yet

DOL joint employment

New regulations may soon be proposed to redefine “employee” under federal wage and hour law. In a recent interview with Bloomberg BNA, Secretary of Labor Alex Acosta hinted that the DOL is working on a new regulation that would more definitively speak to who is an employee and who is an independent contractor.

The Fair Labor Standards Act (FLSA), the federal law governing minimum wage and overtime for employees, does not apply to independent contractors. That’s one of the reasons it matters whether someone is classified as an employee of a contractor. Contractors are not entitled to a minimum wage or overtime under federal law.

The FLSA was passed in the 1930s and does not fit the modern gig economy. Secretary Acosta appears committed to modernizing the regulations, which would bring much needed clarity to the question of who is an employee and who is an independent contractor.

In terms of priorities, the DOL appears likely to address the definition of “joint employment” first.

The National Labor Relations Board (NLRB) has initiated formal rulemaking procedures that would result in a new regulation defining joint employment more narrowly under federal labor law.  The DOL has indicated it has plans to follow suit, using rulemaking procedures to seek a new regulation redefining “joint employment” under the FLSA. We can probably expect to see a new proposed FLSA regulation redefining “joint employment” by early 2019.

Based on Secretary Acosta’s comments to Bloomberg BNA, it seems likely that the DOL will turn it’s attention to the Independent Contractor vs Employee conundrum next.

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

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