It’s a Mistake? Too Bad. NLRB Might Soon Make Misclassification an Automatic Unfair Labor Practice

Cover art from the single, released on Epic Records

In the early 80s, I had two cassettes by the Australian band Men at Work — Business as Usual, released in 1981, and Cargo two years later.

Cargo includes the single, “It’s a Mistake,” a satirically upbeat Cold War-inspired song in which a soldier tries to figure out whether the Cold War is about to turn hot. The video features too-short shorts, bad lip syncing, and old ladies hitting the band members with umbrellas on the battlefield, all of which leads to an accidental nuclear launch, triggered when an officer tries to stub out his cigar in an ashtray but hits the wrong button.

All in all — a good song, a mediocre video, and a strong commentary on the politics of the day.

A recent move by the NLRB’s General Counsel revives the “It’s a Mistake” narrative, this time in the context of independent contractor misclassification. There are no accidental nukes involved, but the move is definitely politically motivated.

If the General Counsel has her way, the Board will rule that independent contractor misclassification is an automatic unfair labor practice (ULP), even if it’s a mistake.

To reach that conclusion, the Board would have to overturn its 2019 decision in Velox Express, in which the Republican-controlled Board ruled that misclassifying a worker, by itself, is not automatically a ULP.

The GC’s actions are no surprise. In mid-2021, she issued a strategy memo announcing that one of her strategic (political) priorities was to get Velox Express overturned during her tenure. With the NLRB now featuring a 3-2 Democratic majority, she’s likely to prevail.

What does this mean for companies that use independent contractors?

It means the stakes are higher. If Velox Express is overturned, misclassification of independent contractors would likely become an automatic ULP, even if the classification was well-intentioned. Essentially, there would be strict liability for misclassification.

Traditional remedies for ULPs include back pay and reinstatement, which could mean forced reclassification as employees. The GC has been pushing to further expand the scope of available remedies because, hey, why not.

If your business is hit with a ULP and forced to reclassify workers under the NLRA, good luck trying to maintain independent contractor status under wage and hour laws or other laws.

A reversal of Velox Express, therefore, may have sweeping ramifications, making it much harder to maintain independent contractor status across a broad range of federal and state laws.

The consequences of this expected reversal will be serious — not quite on the scale of nuclear devastation, but worse than old ladies hitting you on the head with an umbrella.

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Hold Your Horses! A Court of Appeals May Have Granted Independent Contractors the Right to Strike and Organize

On June 4, 1923, jockey Frank Hayes rode 20-1 long shot Sweet Kiss to victory at Belmont Park. While that seems impressive, what made the win even more memorable is that at some point during the race, poor Frank died. He somehow stayed on the horse and ended up in the winner’s circle. Or six feet under it. It was his first (and last) win as a jockey.

Jockeys are in the news again, and we’ve got another surprise finish. But this one has implications far beyond the racetrack.

Click here for the rest of the story, originally posted yesterday on the BakerHostetler blog, Employment Law Spotlight.

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Twilight Zone? AFL-CIO Says “Not Now,” as NLRB Considers Redo of Independent Contractor Test

Raise your hand if you remember the 1982 song “Twilight Zone”? Seeing several hands raised, I will continue. The tune is catchy, but the lyrics are hard to understand. I heard the song this weekend and decided to finally check the lyrics. “There’s a storm on the loose, zarmines in my head” couldn’t be right, could it?

Raise your hand if you knew the chorus was this:

Help I’m steppin’ into the twilight zone
The place is a madhouse,
Feels like being cloned
My beacon’s been moved under moon and star
Where am I to go, now that I’ve gone too far?

Seeing no hands raised, I will continue.

It’s all very confusing to me, but it made sense once I read through it more carefully.

I had the same reaction after seeing an amicus brief that the AFL-CIO recently filed with the NLRB. The brief was filed in a case that may — yet again — change the test for independent contractor status.

In Atlanta Opera, the Regional Director for Region 10 ruled that a proposed unit of makeup artists and hairstylists were employees, not independent contractors, and that an election could proceed.

The NLRB then issued a notice asking the parties and the public for briefs addressing whether the Board should reconsider the test for determining whether workers are independent contractors or employees. It seems inevitable that the Board will rewrite the test to make it harder for a worker to be deemed a contractor. But is Atlanta Opera the right case to use for rewriting the test?

The AFL-CIO, somewhat surprisingly, said no. Like the lyrics to “Twilight Zone,” that was confusing to me at first, but it makes sense when I read through it more carefully.

Undoubtedly the unions want a rewrite of the test to make it as hard as possible for someone to maintain contractor status. But the AFL-CIO urged the NLRB to wait, arguing this isn’t the right set of facts to make a sweeping change.

The AFL-CIO’s brief argued that, even under the existing test, it was pretty clear the makeup artists and stylists were employees. It would be more impactful to wait for a closer case to rewrite the test. Ah, so that’s their angle — wait til later then really shake things up.

Eventually, the NLRB is going to change the test. The current test, explained in SuperShuttle DFW (discussed here), examines ten Right to Control factors.

At a minimum, it seems clear that the Board would like to go back to the FedEx Home Delivery test. The FedEx test asked whether the worker was “in fact, rendering services as part of an independent business” and essentially adopted an Economic Realities Test, rather than the Right to Control Test that had always been applied.

When the Board revises the test, it could go back to FedEx or it could try to adopt a new, more stringent test, like an ABC Test. (The courts probably would not allow the Board to adopt an ABC Test without Congressional action, but that’s for another day.)

And the Board will revise the test. It’s just a question of when and to what. The Board will make it harder to be an independent contractor under federal labor law. That means it will become easier for unions to file election petitions and try to organize groups of workers that might now be operating as independent contractors.

Yeah there’s a storm on the loose, sirens in my head.

Oh. That makes more sense.

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Low-Hanging Fruit? DOL and NLRB Join Forces to Fight Misclassification

Much has been written about the phrase low-hanging fruit. The metaphor’s origins are fairly obvious, referring to obtaining quick wins through minimal effort.

But how good is the metaphor? For harvesters, starting with the lowest hanging fruit is not the best strategy. Fruit near the top of a tree is generally riper and ready to eat, due to better sun exposure. Fruit can also be heavy, and harvesters who start at the top of the tree can work their way down as their bags grow heavier. Then there’s this insightful warning from one author’s mother, who cautioned that the blackberries near the bottom of the bush are the ones most likely to have been peed on by an animal.

Pee notwithstanding, the Department of Labor and the NLRB have seized on the low-hanging fruit strategy as a way to go after companies that misclassify independent contractors.

Last month the two agencies signed a Memorandum of Understanding, agreeing to share information and better coordinate investigations when they suspect there have been violations of the law.

While the DOL and NLRB apply different tests to determine Who Is My Employee?, it’s likely that a relationship failing one test also fails the other. Violators of one law are the low-hanging fruit.

What does that mean for businesses? It means that if the NLRB believes your company misclassified its independent contractors, they’ll share that information with the DOL, which would be pleased to piggyback on the NLRB’s finding and tag you with wage and hour violations as well. And vice versa.

The information sharing arrangement raises the stakes for alleged violators. Companies found to be in violation of one law are more likely to be found in violation of multiple laws. And that means more fines, more assessments, and more disruption to your business.

For the DOL and NLRB, the information-sharing arrangement means they’ll go after each other’s targets and seek to double up on penalties. For companies whose independent contractors may resemble employees, it means you’re the blackberry that’s about to get peed on.

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© 2022 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Dole-Kemp ‘96? NLRB Announces Plan to Go Back to Old Rules on Joint Employment (But Not That Old)

The internet may be a playground and an encyclopedia, but it’s also a living graveyard. For those of you politically inspired, it’s not too late to join up with Dole-Kemp ‘96. Fans of the X-Files, who still await the next episode, can stay caught up at Inside the X. And anyone still looking to join the Heaven’s Gate cult can check out the group’s webpage here. The site is supposedly maintained by two of the only members who did not commit suicide in 1997, so leadership opportunities may be available.

The NLRB is hopping on the retro train too. Earlier this month, the Board announced its intent to adopt a new rule on joint employment. The new rule would displace the Trump-era regulation, which currently requires direct and substantial control over essential terms and conditions of employment before joint employment can be found.

The NLRB’s Notice of Proposed Rulemaking follows the trail blazed by the Wage and Hour Division (WHD) of the DOL, which in July rescinded the joint employment regulations passed during the Trump Administration. The WHD didn’t make a new rule; it just left a giant crater in the landscape, and now for Fair Labor Standards Act claims, there is no regulation at all.

The NLRB seems intent on adopting its own rule, not just rescinding the current regulation. There’s little doubt as to what the new rule will look like. Expect it to track the Browning-Ferris standard imposed by the Board in 2015. Under Browning-Ferris, when one company has the right to control aspects of the work, joint employment exists — regardless of whether control is actually exerted, and regardless of whether the control is over wages, hours, scheduling or anything else that fits within the meaning of essential terms and conditions.

Expect a substantial expansion in the scope of who a joint employer under the NLRA after the new rule is released. The impacts of joint employment under the NLRA can include being forced into bargaining with workers directly employed by a different company (a subcontractor, for example), being accused of a broader range of unfair labor practices, and being subjected to picketing that would be illegal secondary picketing if there were no joint employment relationship.

Back when Bob Dole was seeking the White House, actual control was required to be a joint employer under the NLRA. Since 2015, the standard has ping-ponged back and forth as the political winds have shifted. We’re about to see another major change sometime in mid-2022. If after the change you find yourself missing the good ol’ days, at least you can still cozy up with your Apple 2E and check out the Dole-Kemp campaign website.

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© 2021 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Watch This Rooster! PRO Act Would Change Definition of Employee Under Labor Law.

Who says the news is always negative? Not so in Alabama, where we were treated this headline on AL.com:

Teen reunited with pet rooster lost at Alabama Cracker Barrel after Civil War reenactment

It seems an 18-year old Civil Ward reenactor brought his Buff Orpington rooster, Peep, to a civil war reenactment in nearby Tennessee, then stopped for lunch afterward. Our hero dutifully put on Peep’s leash and secured him to the bed of his truck while dining at a nearby Cracker Barrel after the event. But when he returned, the rooster was gone.

Police and animal control were summoned to the scene. The parties were later reunited when Peep wandered back to the Cracker Barrel, and this story had a happy ending. This had been Peep’s third Civil War reenactment, although his role in the battle plan was unclear. Fortunately for Peep, further battles lie ahead.

Further battles lie ahead in Congress too, not for roosters but for businesses everywhere. Rep. Bobby Scott and 200 Democratic co-sponsors have re-introduced a massive labor bill that fulfills every wish of the unions.

The PRO Act – Protecting the Right to Organize – would bring a massive overhaul to the National Labor Relations Act. Two portions of the bill would affect independent contractor misclassification and joint employment.

First, the PRO Act would re-adopt the Browning-Ferris test for determining whether someone is a joint employee of two employers. This test had been adopted by the Obama Board but reversed by the Trump Board. The test would consider two entities to be joint employers if they “share or codetermine” control over workers’ terms of employment. The notion of control would be broad. It would include not just actual direct control, but reserved control or indirect control. Under the original Browning-Ferris test, control over the speed of an assembly line was considered sufficient control to make a business a joint employer.

Second, the PRO Act would adopt a nationwide strict ABC Test for determining whether someone is an employee or independent contractor. The new rule would require that all workers performing services be considered employees under the NLRA unless (all three):

(A) the individual is free from the employer’s control in connection with the performance of the service, both under the contract for the performance of service and in fact;
(B) the service is performed outside the usual course of the business of the employer; and
(C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

This is the same test adopted by California (recall Dynamex and AB 5) but without the exceptions. California lawmakers recognized this test wouldn’t work in all industries and adopted a long list of exceptions to this test.

The PRO Act would not have any exceptions.

It’s no surprise that the bill was reintroduced. A similar bill was passed by the House last year but never considered by the Senate.

While 60 votes in the Senate isn’t going to happen, this bill deserves a close and watchful eye. (Follow its progress here.)

That means really watching it, not just tying it to the bed of your truck and hoping it’s still there after you finish your Cracker Barrel omelet.

© 2021 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Gator in Your Basement? Nope, That’s Just the NLRB Sharpening Its Joint Employer Test

NBLRB joint employer new regulation 2020

“Be careful as you go down the stairs, officer. An alligator lives in my basement.”

Police in Madison Township, Ohio, last week found a 5-foot gator penned in the basement of a family home. The family said that “Alli” was a pet they’ve raised for 25 years, since purchasing him as an adorable little tot at a reptile shop. (My, how they grow.)

The family accepted responsibility and avoided legal liability because they allowed to police to remove the animal.

A larger battle over responsibility and legal liability was also decided last week, but this battle was over the meaning of “joint employment” under the National Labor Relations Act (NLRA).

Here’s a quick Q&A to get you up to speed on the new regulation.

What happened?

On February 26, 2020, the National Labor Relations Board (NLRB) published a new regulation that changes the rules for determining whether a business is a joint employer under the NLRA.

What do you mean by joint employer?

When one business hires another business to provide services, the business providing the services is the primary employer. We see this often in staffing agency arrangements. The staffing agency is the primary employer. The primary employer is responsible for treating its workers as W-2 employees and doing all the things an employer is supposed to do.

If the business receiving the services exercises sufficient control over the workers, it can be deemed a “joint employer” of those workers. The workers would have two employers simultaneously.

Why should I care if I am a joint employer under the NLRA?

Being a joint employer creates rights and obligations under the NLRA on issues such as collective bargaining, strike activity, and unfair labor practice liability:

  • If the employees are represented by a union, the joint employer must participate in collective bargaining over their terms and conditions of employment.
  • Picketing directed at a joint employer that would otherwise be secondary and unlawful is primary and lawful.
  • Each business comprising the joint employer may be found jointly and severally liable for the other’s unfair labor practices.

Does the new rule make it harder or easier to be deemed a joint employer?

Much harder. The new rule significantly narrows the circumstances when a business can be deemed a joint employer.

What’s the new test?

Under the new regulation, a business can only be a joint employer of another employer’s employees only if it exercises “substantial direct and immediate control” over the “essential terms and conditions” of the workers’ employment.

What are essential terms and conditions?

Wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

Can you give me an example of how that works?

No.

Please?

Ok. I was just messing with you.

Let’s look at wages. You retain a staffing agency. You negotiate a cost-plus arrangement. You negotiate the rate you’ll pay the staffing agency per worker per hour, but the staffing agency determines the rate of pay each worker will receive. That’s not substantial and direct control because the staffing agency sets the wages of the worker.

Let’s consider discharge. You want to remove a staffing agency worker from the project. You instruct the agency to remove the worker. That’s not substantial control over whether the worker is discharged from employment. It’s up to the agency what to do with the worker next — reassign the worker, discharge the worker, tar and feather, etc.

How does this affect background checks and other terms in my contract with the primary employer?

Commonplace and routine clauses, like requiring the agency to perform background checks, are not evidence of joint employment.

In a dispute over whether there’s joint employment, who has the burden of proof?

The party asserting that an entity is a joint employer has the burden of proof.

Is the NLRB’s new joint employer regulation the same as the DOL’s new joint employer regulation?

Of course not. That would make this way too easy, and you wouldn’t need your lawyers as much.

In January 2020, the Department of Labor published a new regulation that sets up a new test for determining whether an entity is a joint employer under the Fair Labor Standards Act (FLSA). There are similarities in the tests. Both tests require the actual exercise of control for there to be joint employment. Previously, the mere right to exercise control was enough. But the tests are different.

You can read more about the DOL test here.

So now there are two tests for joint employment — one under the FLSA and one under the NLRA?

Ah, so naive. Who’s coming up with these questions, anyway?

Nope, there are lots of tests for determining who is a joint employer; and the tests differ based on which law we’re looking at — and based on who’s looking at it.

The DOL announced its new regulation for determining joint employer status under the FLSA, but unless you’re in a DOL audit, that doesn’t mean much. No court has adopted the new regulation yet, and we don’t know whether courts will defer to the regulation or disregard it. There will be litigation over whether the DOL has the right to redefine “joint employer” and limit the scope of a statute (the FLSA) passed by Congress.

The states have their own tests for determining joint employer status under state employment laws. Some states might defer to the regulations, but many states won’t.

But the NLRB regulation is here to stay, right?

Maybe, maybe not. In late 2018, the D.C. Circuit Court of Appeals ruled that the NLRB has no right to redefine “joint employment,” since the question of whether someone is an employee under the NLRA is governed by the common law test of agency — essentially, a right to control test.

But the NLRB chose to disregard that decision and issued its new regulation anyway.

But how can the NLRB enforce a new regulation defining “joint employer” when a federal court has said it can’t do that?

Because the NLRB will just do it anyway. There are 12 federal circuit courts of appeal, and they often disagree. The NLRB has a longstanding practice of ignoring rulings by the federal courts of appeal, except as to the specific case and the specific parties before that specific court. The NLRB takes the position that it must follow rulings by the Supreme Court, not the federal circuit courts of appeal.

So what’s the real status of the new NLRB regulation?

The NLRB will apply this new regulation in all of its proceedings. The new regulation takes effect April 26, 2020, which is 60 days after its publication in the Federal Register.

If NLRB rulings are appealed to a court, it remains to be seen whether some courts will apply the new regulation. The D.C. Circuit Court of Appeals probably will not.

Is the new regulation permanent?

It’s intended to be. There are at least three ways it could be undone.

  • Future NLRB members with a more pro-worker orientation could enact a new regulation that changes the definition.
  • Congress could pass a statute that redefines joint employer status. The statute would override the regulation.
  • The Supreme Court could rule that the NLRB has no authority to create a joint employer test.

Until one of those three things happens, the new test will stick around for a while, like a pet alligator. The Board will apply the new test to NLRA issues.

What happened to the alligator?

It has been relocated to an animal sanctuary in Myrtle Beach, South Carolina. Despite its new residence, the gator was deemed ineligible to vote in last Saturday’s primaries.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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NLRB Wants New Rule To Prevent Student Teaching Assistants From Joining Unions

Flip flops NLRB union graduate students 2019Summer may be over, but the National Labor Relations Board isn’t ready to put away its flip flops.

It’s been a busy few months, with the NLRB releasing a number of recent decisions that change Obama-era interpretations of federal labor law.

On Friday, the Board released a new proposed rule that would declare college teaching assistants to be non-employees, meaning they cannot form unions. The proposed rule would declare these graduate students to be just students under federal labor law, not both students and employees of their institutions. The new rule would apply even though the students are paid.

The Board’s explanation for the proposed rule is that graduate students are primarily students and the paid work is primarily for an educational purpose.

If this rule were to pass, it would reverse a 2016 NLRB decision, which found that Columbia University students assistants were also employees of the school because “they perform work, at the direction of the university, for which they are compensated.”

The 2016 decision reversed a 2004 George W. Bush-era Board decision, which found that Brown University student assistants were not employees because their relationship to the university was primarily educational.

The 2004 decision reversed a 2000 Clinton-era Board decision finding that NYU graduate student assistants were employees that could form unions.

The 2000 decision reversed a 1974 decision, which found that Stanford University graduate students were not employees because their paid roles as student assistants was primarily educational.

I think you see what’s happening here.

The new development is just that the Board has proposed a new rule. The rule, if enacted, would change the offical interpretation of the National Labor Relations Act to be that graduate student assistants are not employees. Notably, despite the flip flops listed above, the statute has not changed. But depending on which political party has a majority on the 5-member Board (currently 4-member Board), the Board’s interpretation of the National Labor Relations Act changes and changes again.

The current Board seems to think that by making its changes through rulemaking, rather than through Board decisions on actual cases, maybe its interpretation will be stickier in the long run. I doubt it.

Even if the proposed rule passes, it seems inevitable that whenever the next Democratic-majority Board is in place, it will switch back to the view that graduate student assistants are employees and can form unions.

There’s a 60-day comment period on the proposed rule, then the Board can decide whether to pass it as written, modify it, or scrap it.

In any event, students are back in school, and so far the weather seems good enough to keep using flip flops — at least in Washington, D.C., at the National Labor Relations Board.

See you at the beach.

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

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Employees Say They’ve Been Robbed! NLRB Says Independent Contractor Misclassification Does NOT Violate the National Labor Relations Act

Burglar roomba misclassification

Sheriff’s deputies in Washington County, Oregon, responded with guns drawn, expecting they were responding to a burglary in progress. A woman had called 911, saying that someone had broken into her house and locked themselves in the bathroom. She could hear rustling noises from behind the bathroom door, even though she knew she hadn’t allowed anyone into her home.

The officers entered the home and heard it too. They demanded that the suspect come out of the bathroom, hands raised. But no one responded. They busted open the door, ready to take down the suspected burglar by force.

What they found instead was a Roomba. The homeowner’s robotic vacuum cleaner had gotten stuck in the bathroom.

Calling the Roomba a burglar didnt make it a burglar, and calling in a suspected burglary did not make the woman a victim.

People make mistakes, and calling something the wrong thing can be an excusable mistake.

That’s essentially what the National Labor Relations Board ruled late last week, in a major pro-business decision.

In a case called Velox Express, The Board ruled that to misclassify a worker as an independent contractor — when the worker should have been an employee — is not a violation of the National Labor Relations Act (NLRA or the Act).

The Board reasoned that The Act prohibits interfering with employees’ Section 7 rights. Section 7 rights refer to employees’ right to engage in protected concerted activities, such as banding together to complain about their treatment. The Board said that by misclassifying employees as independent contractors, a company is merely stating a legal opinion about what the worker is. Telling workers they are contractors does not, by itself, interfere with their ability to organize or engage in protected concerted activity. If they’re really employees, they still can. It’s only if the company coerces or threatens the workers that the company interferes and then violates the Act.

The Board further reasoned that it’s hard sometimes to tell whether a worker is a contractor or an employee, and Congress did not intend to punish companies for making a mistake.

This decision will be blasted by worker advocates and, frankly, it’s surprising even to me.

The ALJ Decision That Led to This Ruling

We wrote about this case previously here, when an Administrative Law Judge made three important rulings.

First, the ALJ found that Velox exercised significant control over how its delivery drivers performed their work, which made them drivers under the NLRB’s Right to Control Test.

Second, the ALJ ruled that Velox violated Section 8(a)(1) of the Act when it discharged driver Jeannie Edge for raising group complaints that Velox exercised too much control over its drivers.  (In a somewhat ironic twist, Edge wanted to be an independent contractor but had perceived, correctly, that Velox was treating its drivers more like employees, even though it was calling them contractors. Edge wanted Velox to treat the drivers more hands-off, the way contractors would typically be treated.)

Third, the ALJ ruled that misclassifying an independent contractor was, by itself, a violation of the NLRA. The ALJ’s reasoning was that by misclassifying workers as independent contractors, the company was in effect telling the workers they had no rights under the NLRA, since that Act protects only employees, not independent contractors.

NLRB’s Decision

The case was appealed to the full Board, which agreed that (1) the Velox drivers were really employees under the common law Right to Control Test, and (2) Velox violated Section 8(a)(1) when it discharged Edge for engaging in protected concerted activity.

But the Board rejected Finding #3, ruling instead that misclassifying workers as independent contractors is, ho-hum, merely expressing a legal opinion. Section 8(c) of the Act says it’s not a violation to express an opinion.

The Board recognized that the outcome would be different if the company misclassified its workers as contractors for the purpose of interfering with employees’ Section 7 rights or to coerce them not to exercise those rights. But misclassification alone is not a violation of the NLRA.

So, Is Misclassification Now Lawful? Hey Man, Are You Gonna Shut Down the Blog?

No! and No! This decision says only that the act of misclassification is not an automatic violation of the NLRA. That’s just one law.

When a company misclassifies an employee as an independent contractor, every other law related to employees still applies. A company that misclassifies employees as contractors can still be violating tax law by not withholding from wages; can be held liable for violating wage and hour law by failing to pay a minimum wage or overtime or failing to provide meal and rest breaks; can still be in violation of state workers’ compensation and unemployment insurance law by failing to pay into those systems; can be in violation of the Family and Medical Leave Act by failing to offer the type of leave available to employees; and can still find itself in violation of every other law that grants rights to employees when the company does not grant those rights.

Misclassification can still violate the NLRA too, if a company engages in misclassification for the purpose of interfering with employees’ rights.

The game is still very much on.

So What Impact Will This Decision Have?

Probably not much. It sounds like a doozy, and it is; but as a practical matter, it probably doesn’t change a whole lot. Independent Contractor Misclassification still has significant legal consequences, and companies who misclassify workers as independent contractors when they should really be employees still face liability under a long list of employment, tax, and benefit laws. Violations of these laws continue to result in massive liabilities, often in the many millions of dollars.

This pro-business decision by the Board may result in fewer unfair labor practice disputes, but even that outcome seems unlikely. Disputes over employee vs. independent contractor status usually arise because there’s a real dispute over how a company is treating its workers, not merely because it used the wrong terminology. Any failure by a company to grant employees rights they are entitled to receive is still a violation of law, even if it’s no longer a violation of the NLRA merely to call an employee an independent contractor.

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

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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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