Update: Uber’s Misclassification Cases, Arbitration, and the Supreme Court

Independent contractor vs employee Uber misclassification lawsuit arbitration agreements IMG_1111Remember the children’s game called Red Light, Green Light? One ambitious youngster is selected as the traffic cop, who randomly shouts “red light” or “green light,” requiring all the children to run and stop and start in short bursts that would cause an adult human to tear an ACL.

That’s essentially what’s happening in the big Uber misclassification case that has been pending in California since 2014. The case is called O’Connor v. Uber Technologies and is being overseen by traffic cop / federal judge Edward Chen in San Francisco. If anyone ever gets to the finish line, it will eventually be determined whether Uber drivers are properly classified as independent contractors, rather than employees.

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Drivers Rack Up Misclassification Settlements, While GrubHub Fights Back

In 1984, the Cars released a sad-sounding song called Drive. I assume it was about a guy longing for a girl, but it’s too depressing to listen to the whole thing. Throughout the song, Ric Ocasek asks “Who’s gonna drive you home tonight?” (Why the long face, Ric? Kidding.)

If you use a ride hailing service, chances are it’s an independent contractor driver who’s gonna drive you home. But in several high profile lawsuits, drivers have challenged their independent contractor status. While these suits have been in the news for years, there have been a recent flurry of high dollar settlements. Earlier this year, Lyft agreed to pay $27 million to a class of 95,000 drivers in California and Door Dash agreed to pay $5 million. Just last week, Postmates agreed to pay $8.75 million.

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Who is the Next “Miss Classified”? Here’s How I Would Award the Prize.

IMG_1107I received an email this week from a worker claiming he was “Miss Classified.” I did not know there was a pageant for that, but I suppose congratulations were probably due. I politely responded that I only represent companies, not individuals, in disputes relating to independent contractor misclassification, and I wished him luck.

But then I started thinking, What if there was a pageant? What would it take to be crowned Miss Classified?

I came up with a few criteria.

To be named Miss Classified, a contestant would probably have a job that requires her to work a set daily schedule, with little flexibility. She’d have to ask a supervisor for time off (including to enter this pageant).

A fixed schedule suggests employment when assessing Independent Contractor vs. Employee, so I’d award that contestant a point toward becoming Miss Classified. If the supervisor denies the request for time off, I’d award an extra point toward Miss Classified status — but sadly, if denied the day off, this worthy contestant might not show up for the pageant. [🤔]

I’d award another point toward being named Miss Classified if she uses company tools and equipment. If she does office work, she’d get points if she uses someone else’s desk and computer, performs her work at the company’s primary place of business, and has a company badge. I’d award bonus points if she has a company email address.

Instead of a swimsuit competition, I’d have contestants reveal what they wear to work. Anyone wearing a swimsuit is at the wrong pageant and would be asked to leave. But anyone wearing company uniform or logo would get a point. I’d have an exception, though. If the company shirt says “Company – Authorized Contractor,” no points.

For the talent portion of the Miss Classified pageant, I’d ask candidates how they learned their special skill. I’d award no points to anyone who became licensed and trained on their own time and on their own dime. But if they learned their craft from the company they are working for, I’d award a point toward being named Miss Classified. If the company paid for the license or training, I’d award another point.

My pageant would have a monetary award for the winner (let’s just call it damages), but before awarding any economic prizes, I’d ask the contestants about their current financial situation. Are you economically reliant on one company for all your compensation? If yes, two points. That’s a candidate who might be worthy of the title Miss Classified.

On the other hand, a candidate gets no points if she performs work for several companies and advertises her services in the marketplace. Anyone using a personal business card and website to advertise her services to the public gets no points. Anyone who is simultaneously working for one company and that company’s direct competitors will be disqualified from the competition. That person is probably not Miss Classified.

I’d hold my competition in California. That would be the most likely place for someone to be named Miss Classified. California has all sorts of state laws that would influence the outcome of my competition.

I’d have Simon Cowell judge. Not for any good reason though. I just think that would be good for ratings.

And the winner is … hopefully not anyone performing services for your company!

(In case you were wondering, this would NOT be the among the world’s strangest pageants. But these are.)

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

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Court Serves Up Reminder that Contractors Can Be Properly Classified and Misclassified – At The Same Time.

elephant-reminder pennsylvania court joint employment joint empoyer construction workplace misclassification act

A recurring theme in this blog has been that when trying to determine Who Is My Employee?, there are different tests under different laws. Different tests can yield different results.

A recent court decision from Pennsylvania emphasizes this point. In the Keystone State (proud home of Dunder Mifflin and Hershey Park), contruction workers are considered employees for workers compensation purposes unless they (i) have a written contract, (ii) have a place of business separate from their general contractor’s site, and (iii) have liability insurance of at least $50,000. This strict test is courtesy of the Construction Workplace Misclassification Act (CWMA), an Act whose name shows a disappointing lack of creativity.

I might have gone with “Construction Occupation Workers’ Act Regarding Designations In Classifying Employees” (COWARDICE) or “Law About Misclassifying Employees” (LAME) or, if I was hungry for shellfish, then maybe “Construction Law About Misclassification for Builders And Keeping Employees Safe” (CLAMBAKES).

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Tip of the Day: Set Up a Gatekeeper

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What you don’t know can hurt you.

Claims of independent contractor misclassification can sneak up on companies that don’t even know they have a problem.

Businesses usually treat the retention of contractors as an expenditure, not an increase in headcount. Since no new employees are being hired, Human Resources Departments and Legal Departments often have no idea when operations managers have retained contractors–sometimes at distant locations.

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Are Non-Compete Agreements for Independent Contractors Enforceable?

binding-contract-independent contractor non-compete agreement noncompetition - 948442_1920If you could ask me one question about independent contractors and non-compete agreements, what would it be?

  • Are they enforceable?
  • Are they a good idea?
  • A bad idea?

Hey buddy, that’s three questions, not one.

As for enforceability, that will vary state by state. A recent federal decision involving an independent sales contractor found his non-compete agreement to be unenforceable. The court found that (1) it was not reasonably necessary to protect the company’s business, and (2) the burden on the sales contractor was out of proportion to the benefit to the business. The decision applied Iowa law, though, so unless you have contractors in the Hawkeye State, you might not really care.

Each state applies a somewhat different test for determining whether non-competes are Continue reading

What are “1099 Employees”?

chupacabra news independent contractor 1099 employee

The chupacabra is a heavy creature, reportedly the size of a small bear, with a row of spines reaching from the neck to the base of the tail. Its name means “goat-sucker,” which comes from its habit of attacking livestock, especially goats, and sucking their blood. [Editor’s note: Please, folks, protect your goats.]

Why am I leading this post with information about the chupacabra?

[SPOILER ALERT:] Because it’s not real. Not a thing. Doesn’t exist.

Same with “1099 employees.” Businesses using this term almost certainly are trying to classify these individuals as independent contractors. As we know, independent contractors (if properly classified) are not employees at all. Business must report the Continue reading

NLRB Nominees Hate Puppies & Rainbows, Dems Claim

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Image credit:   Well Pet Coach

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 Continue reading

Misclassification settlement strips $6 million from Club Assets

IMG_1090When I was an undergrad at Michigan, any time I would drive to the airport or to Tiger Stadium, I’d see billboards for Deja Vu, a strip club with (apparently) lots of locations. I never visited (not into that sort of thing, thanks for asking), and I never thought much of it. I certainly did not expect to be writing about Deja Vu and independent contractor misclassification 25 years later. But here goes.

When patrons of these fine establishments partake in the traditional lap dance, it’s doubtful they’re thinking about whether these often-single-mom “entertainers” who are just trying to make a living have been properly classified under wage and hour law. More likely, they’re thinking about — never mind.

But that’s an important issue, as Deja Vu recently learned, when it was sued by a class of 28,177 dancers alleging they were misclassified as independent contractors, rather than Continue reading

The DOL Wants You to Know Its Opinions (Here’s Why That’s Good News!)

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Everybody has an opinion, so why not share?

This week, Labor Secretary Alex Acosta announced that the WHD will resume its prior practice of issuing opinion letters to advise on difficult wage and hour issues. This is good news for companies and employees because it increases predictability.

An opinion letter is an official, written opinion by the WHD of how a particular law applies to a specific set of circumstances presented by an employer or employee. The benefit to the general public is that opinion letters are published and may be relied upon.

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