Can Independent Contractors Form Unions? Seattle Wants to Allow It.

space-needle-independent contrcator drivers seattle uber lyft seattle law ordinanceA legal battle in Seattle (“The Battle of Seattle!”) may soon determine whether independent contractor drivers can form unions. In 2015, the city passed a law allowing Uber and Lyft drivers to organize. The mayor allowed the law to go into effect but didn’t sign it because he was concerned it would spawn expensive litigation. He was right.

This month, a federal judge handed the City a victory, dismissing a lawsuit by the U.S. Chamber of Commerce which had argued that the ordinance was illegal. The decision is certainly not the last word on the subject, since the Chamber will appeal and there is a companion lawsuit still pending anyway.

The issues go beyond the basic question of whether independent contractors can form unions.

Generally, they cannot. Independent contractors are separate businesses. Antitrust law generally forbids businesses from banding together and collectively fixing prices and other conditions. You know the drill: Collusion bad, free market good.

The judge ruled that the circumstances here, however, are different than usual. First, it’s worth noting that the “unions” aren’t really unions (despite being overseen by the Teamsters), since unions are for employees and these are representation associations. That seems like word play to me, but everyone’s being careful not to call these things “unions.”

Second, the situation here is not merely that independent contractors are banding together to fix prices. Rather, a local law has established a procedure for ride hailing drivers to collectively share information in a particular format and setting, then negotiate collectively in a government-approved manner. The law enables the activity, not the drivers.

Ok, but what about the National Labor Relations Act (NLRA)? Only employees can unionize, right? Well, sort of. The NLRA definitely does not apply to independent contractors.  But, then again, the NLRA definitely does not apply to independent contractors.

So what does that mean? Does the NLRA preempt laws that would allow non-employees to unionize (as the U.S. Chamber of Commerce argued)? Or does the NLRA’s inapplicability to contractors mean that Congress was indifferent (and silent) as to whether independent contractors could organize? The judge went with Door #2, deciding that the NLRA did not pre-empt the City of Seattle from enacting this ordinance.

The judge dismissed the lawsuit, finding that the Seattle ordinance did not violate any federal or state laws.

This is a case to watch. If Seattle ultimately succeeds in setting up a way for independent contractors to band together and collectively bargain, the gig economy could be changed fundamentally. Other cities would be sure to follow suit and pass similar laws.

A lot still needs to be sorted out, and this is a case that could eventually be heard by the U.S. Supreme Court. An ordinance like this poses a challenge to the scope of federal authority over labor law and antitrust law, both of which are areas where a uniform national policy has generally been considered important to maintain.

Keep an eye on this one. We’ll see if Seattle can hold onto the ball this time, or if the city again throws an errant pass to a wide-eyed Malcolm Butler hiding in the end zone. [Seahawks fans are advised not to click on this link.]

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

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Joint Employment Legislation Needs to Be Expansive — If It’s to Be Effective

IMG_1093On Monday, we wrote about the Save Local Business Act — proposed legislation that, if passed, would create a new definition for joint employment under the NLRA and FLSA. But would that law go far enough?

No. Not at all.

On the bright side for businesses, the law would provide some predictability in that staffing agency workers would most likely be excluded from bargaining units. It would also remedy the current unfairness that results when a staffing agency makes payroll and overtime miscalculations but the company using the workers is held responsible as a joint employer.

But much more needs to be done to provide real clarity and predictability for business owners.

First, the law fails to address who is a joint employer under other federal employment laws, including the Family and Medical Leave Act, Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Occupational Health and Safety Act. Vast uncertainty in these areas would remain.

Second, the law does nothing to address the patchwork of standards under state and local laws. Businesses are subject to those laws too, and it’s fairly common that state and local standards for determining joint employment differ from state-to-state and law-to-law.

Businesses that operate in multiple locations would still be subject to different standards under different laws in different locations. The HR Policy Association has recommended that any legislation intended to clear up the messy patchwork of joint employment standards should include federal preemption or a safe harbor provision — something to ensure that businesses can rely on one set of rules to know whether they are a joint employer or not. That would make much more sense.

The newly proposed legislation has a long way to go. It might never even get to a vote. Let’s hope, however, that the introduction of this bill is just a first step, and that through the amendment process or through a Senate bill, its shortfalls will be addressed.

Business deserve the certainty that would come from a more comprehensive piece of legislation.

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

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Congress May Rewrite “Joint Employment” Definition

IMG_1092Congress may finally provide some clarity in determining who is a joint employer. In legislation introduced last week, the House proposed a bill that would rewrite the definition of “joint employer” under federal labor law (National Labor Relations Act) and federal wage and hour law (Fair Labor Standards Act).

The Save Local Business Act — despite lacking a fun-to-say acronym — would create a new standard for determining who is a joint employer under these two laws. The proposed new standard would allow a finding of joint employment “only if such person [business] directly, actually, and immediately, and not in a routine and limited manner, exercises significant control over the essential terms and conditions of employment….”

The definition provides examples of what are “essential terms and conditions,” including:

  • Hiring employees;
  • Discharging employees;
  • Determining individual employee rates of pay and benefits;
  • Day-to-day supervision of employees;
  • Assigning individual work schedules, positions, and tasks; and
  • Administering employee discipline.

No longer would a business be deemed a joint employer for exercising indirect or potential control, as permitted by the NLRB in its 2015 Browning-Ferris decision, which is currently on appeal. (Read more about that here.)

The bill would also overrule a recent decision by the Fourth Circuit Court of Appeals that vastly expanded the scope of joint employment under the FLSA, but only for a handful of Mid-Atlantic states.  Read more on that dreadful decision here.)

As illustrated in this colorful map, the current standard for who is a joint employer varies by which law is being applied and by where you live. The bill, if passed, would provide much-needed clarity in the law — or, at least in some of the laws. The bill would not affect the FMLA, federal anti-discrimination law, or any state or local standards. (In other words, loyal reader, you’ll still need this blog. Ha!)

The bill was introduced by Rep. Bradley Byrne (R-Ala.), but already shares some bipartisan support, with co-sponsors including Virginia Foxx (R-N.C.), Tim Walberg (R-Mich.), Henry Cuellar (D-Texas) and Luis Correa (D-Calif.).

Here’s the current bill.  It’s short, so don’t be afraid to click.

No one knows whether this proposed law will take effect or will even reach a vote (except perhaps Carnac the Magnificent!).  But we can expect significant support from the business community, which may create some momentum toward consiuderation and passage. The National Association of Home Builders has already issued a press release praising the proposed legislation.

If Congress wants to make a positive impact on businesses large and small, this bill could do it. So now let’s all sit back and watch how they screw it up.

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

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NYC Freelancer Law & New Rules Now In Effect, But New Rules Could Violate Federal Law

new york city freelancer law new rulesIf you retain freelancers in New York City, pay attention.

As we wrote here, NYC’s Freelance Isn’t Free Act requires a written agreement when retaining an individual independent contractor, if the value of services is $800 or more. The law covers any individual non-employee, including nannies and babysitters. (Loyal readers, please read this earlier post for details.)

The law took effect May 15, 2017, but new rules — effective July 24, 2017 — create additional burdens.

The NYC Department of Consumer Affairs has published final rules implementing the Act. While the purpose of the rules is (supposedly) to clarify the Act, the Rules go much further and create new requirements — some of which may be contrary to federal law.

For example, the Rules prohibit class action waivers and prohibit arbitration agreements. That’s not in the original law. It also may be against federal law. As the Supreme Court recently ruled, state laws that prohibit arbitration of certain types of claims are in violation of the Federal Arbitration Act. (The Supreme Court will soon decide whether class action waivers in employee arbitration agreements are impermissible under the National Labor Relations Act, but that’s an entirely different issue, which requires the court to reconcile two federal laws — as opposed to conflicting federal and state/local laws. Read more here.)

The Rules also provide an absurdly expansive definition of retaliation, including creating an automatic violation for “any person who denies a work opportunity to a freelance worker who exercises or attempts to exercise any right guaranteed under the Freelance Isn’t Free Act ….” Note what’s missing here:  the word “because.”

Unless this is a drafting error (which is very possible), the Rules say it’s retaliation if you stop working with a freelancer after the freelancer complains or exercises certain rights — even if the decision to stop using the freelancer had nothing to do with the protected activity. I suspect the Rule will be interpreted as if there is a causation requirement, but Rules really should be drafted more carefully. The whole point of writing Rules that interpret laws is to add clarity, not add confusion!

The Rules also say:

  • The Act applies regardless of the worker’s immigration status;
  • Retaliation, which is prohibited, can include perceived threats to the worker’s immigration status or work authorization;
  • Anyone who retains a nanny or babysitter for at least three years must provide the freelancer with free tickets to Hamilton.

Ok, I made up that last bullet point.

The rest of this is true, though; so if you are using individual freelancers in New York City, pay attention. These requirements apply to businesses retaining freelancers and to individuals retaining freelancers.

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

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Map Shows Joint Employment Tests Are a Mess!

IMG_8284The tests for determining whether a business is a joint employer vary, depending on which law applies. That means there are different tests under federal labor law, wage and hour law, and employee benefits law, to name a few. There are also different tests under different states’ laws.

Further complicating the analysis, there are even different tests when applying the same law — depending on where you live.

Yes, you read that right. Even though the Fair Labor Standards Act (FLSA) is a federal wage and hour law that applies across the country, federal courts in different states use different methods for determining whether a business is a joint employer under that single law.

Same for Title VII. Although this federal anti-discrimination law applies to businesses coast-to-coast, a business can be deemed a joint employer under Title VII on the West Coast and not on the East Coast. Or vice versa. Or yes in Virginia, but no in Pennsylvania. Huh?

We’ve discussed this complication in other posts — such as here and here — but not in graphic form.  Thanks to Richard Heiser, who is in the Legal Department at FedEx Ground, we now have this beauty!

(Heiser testified recently before a Congressional committee on the need for legislation to clear up the confusion.)

The map shows that, depending on where in the U.S. you live, the test for determining whether you are a joint employer varies under the FLSA (color) and under Title VII (pattern).

The map illustrates quite nicely how difficult it is for multi-state employers to determine whether they have responsibilities as a joint employer or not. Editor’s Note: Alaska and Hawaii are not to scale. All U.S. maps are required to say that under federal law. Or not, depending on where you live.

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

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Two Key Developments in Joint Employment are Expected This Week

IMG_1091.JPG

This could be a busy week for developments in the joint employment area.

1) Congressional Republicans have begun drafting legislation that could change the definition of joint employment, Bloomberg BNA reports. Presumably the goals of a new bill would be (a) to add clarity to the standards for deciding who is a joint employer, and (b) to make it more difficult for workers or unions to claim they are jointly employed.

The scope of the proposed legislation is yet to be determined. It would most likely roll back the NLRB’s Browning-Ferris decision and restore the prior test for joint employment, requiring more substantial evidence of control. House Republicans have also hinted that they may broaden the scope of the proposed bill and address the standard for joint employment under federal wage and hour law (FLSA) and health and safety (OSHA) as well.

Key supporters of the proposed legislation include Rep. Bradley Byrne (R-Ala.), House Education and the Workforce Committee member, and Rep. Tim Walberg (R-Mich.), chairman of the Education and the Workforce Subcommittee on Health, Employment, Labor and Pensions. The U.S. Chamber of Commerce is involved in this effort as well.

A committee hearing entitled, Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship, has been scheduled for July 12, at 10:15 am.  It can be live-streamed on the web. Click here for more information.

2) On the following day, July 13, hearings are scheduled on the nominations of William Emanuel and Marvin Kaplan to join the NLRB. The hearings will take place before the Senate Health, Education, Labor & Pensions Committee. If recommended by the committee, the full Senate would then vote on the appointments.

If confirmed, these two new members would return the Board to a 3-2 Republican majority for the first time since the beginning of the first Obama administration.

The newly configured Board is likely to roll back the expansive Browning-Ferris decision, which made it substantially easier for workers to claim they are joint employees under federal labor law. Last week’s post about these nomination contains more detail.

I’ll provide further updates as new developments take place.

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

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