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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Say It Like You Mean It! NLRB Says Uber Drivers are Independent Contractors

All You can Eat Seats - Independent contractor misclassification

Section 223 looks delicious!

I was in Phoenix last week and saw this sign at a Diamondbacks Game. The seats in Section 223 were probably plastic and hard to chew but otherwise looked pretty tasty. Still, I don’t think I could eat more than a few at a time.

Ok, I know what the sign intended, but my reading is a fair one too. Right? The message wasn’t quite clear.

The NLRB was much more clear in the message it sent last week in an Advice Memorandum from the Office of the General Counsel. The Board opined that UberX and UberBLACK drivers were independent contractors, not employees of the ride-share app.

The opinion letter applies only to federal labor law (the NLRA), not to wage and hour law, employee benefits law, tax law, or the vast potpourri of state laws, but it’s another sign that the current administration is intent on protecting independent contractor relationships — if the relationships are properly structured.

The memo applied the same Right to Control Test for determining Independent Contractor vs. Employee that the Board used in January in its SuperShuttle decision. In SuperShuttle, the Board ruled that a group of airport van drivers were independent contractors, not employees, under the National Labor Relations Act. The ten-factor Right to Control Test used by the Board is explained here.

This NLRB Advice Memorandum arrives less than three weeks after a similar opinion letter from the Department of Labor (DOL). The DOL’s April 29 letter concluded that service providers who use “virtual marketplace” apps to find customers are independent contractors, not employees. While the letter doesn’t identify the app it reviewed, the DOL’s analysis seems to apply to Uber and other ride-share apps and to the service providers (drivers) who use these apps to find customers. The DOL’s letter addressed only the Fair Labor Standards Act (FLSA), which applies a six-factor Economic Realities Test for determining Independent Contractor vs. Employee. Different law, different test. 

Here are four takeaways from the two letters, viewed together:

  1. Different tests apply to different laws, even for similar circumstances. That’s been a consistent theme in this blog, and these two letters — one interpreting the NLRA and the other interpreting the FLSA — reinforce the different approaches. Click here for a chart showing the different tests for Independent Contractor vs. Employee, as of January 2019.
  2. The current administration and its executive agencies are much friendlier toward independent contractor relationships than their Obama-era predecessors. The Obama DOL and NLRB were outright hostile toward independent contractor relationships (see examples here for DOL and here for NLRB), so this is a major change.
  3. These are not court decisions and do not bind the federal courts, even as to NLRA and FLSA cases.
  4. These opinions apply only to the NLRA and the FLSA — two of the many federal laws that apply only to employees, not independent contractors. The opinions do not directly impact federal tax law or employee benefits law, and they do not impact any of the myriad state laws. In other words, the states don’t care.

The area of independent contractor misclassification and the never-ending quest to determine Who Is My Employee? continues to evolve at a pace that should keep readers on the edge of their seats. Just don’t sit too close to the edge, because if you abandon your seat, someone at a D-Backs game might try to eat it.

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

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Too Many Beef Livers? NLRB Addresses How It Will Review 29,000 Comments on Its Proposed Joint Employer Rule

NRLB Ring too many beef livers avocadosToo much of a good thing can be a bad thing. For example, according to this article in Popular Science, consuming 240 avocados in one sitting would put the average man at risk of sudden death by potassium poisoning. (It doesn’t say how many avocados an above-average man could eat, but presumably the number is similar.) 

A similarly bad outcome can result from over-consumption of beef livers, although it would take approximately 431 pounds of beef livers before the toxicity of excessive vitamin A might cause a man to think he should have stopped after 430.

Lots of comments can overwhelm an administrative agency’s internal organs as well. As we discussed here, the NLRB has proposed a new regulation that would make it harder to establish joint employment under the National Labor Relations Act. In response to the Notice of Proposed Rulemaking, the Board has received nearly 29,000 comments from interested organizations, unions, academics, business owners and individual workers (like Cindy, perhaps) about the proposed new rule.

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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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NLRB Changes Independent Contractor Test (Again). Ch-Ch-Ch-Changes!

changes independent contractor test super shuttle nlrbThe word of the day is change. Not the kind I needed Saturday morning when it required 37 quarters to drive 50 miles on the Florida Turnpike. (Thank you Walgreens, for the roll of quarters!) No, I mean the David Bowie kind. Turn and face the strange.

On Friday, the Trump-appointed, Republican-majority NLRB issued an important pro-business decision, changing the test for Independent Contractor vs. Employee under the National Labor Relations Act (NLRA). The case is called SuperShuttle DFW and involves independent contractor airport shuttle drivers in the Dallas-Fort Worth area.

The new test is the old test. Or as Roger Daltrey might say, “Meet the new boss. Same as the old boss.

The new test is the traditional common law Right to Control Test, which had been the test until 2014. In 2014, a Dem-led Board made it harder to prove independent contractor status by changing the test in a case called FedEx Home Delivery. 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.

Friday’s decision brings back the old test — a traditional Right to Control Test.

A Right to Control Test asks who has the right to control the manner and means by which the work is completed. More control by the hiring party tilts toward a finding of employment. Less control means more entrepreneurial opportunity for the worker, which tilts toward a finding of independent contractor.

The Right to Control Test re-adopted in the Super Shuttle decision is a balancing test, and here are the factors the NLRB will consider:

(a) The extent of control which, by the agreement, the master may exercise over the details of the work.

(b) Whether or not the one employed is engaged in a distinct occupation or business.

(c) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.

(d) The skill required in the particular occupation.

(e) Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.

(f) The length of time for which the person is employed.

(g) The method of payment, whether by the time or by the job.

(h) Whether or not the work is part of the regular business of the employer.

(i) Whether or not the parties believe they are creating the relation of master and servant.

(j) Whether the principal is or is not in business.

In this case, the Amalgamated Transit Union was trying to organize 88 shuttle drivers, each of whom owned their vehicles and paid a flat fee for the right to transport passengers to and from the airport. Drivers kept the money they received for each fare, providing them with the opportunity for profit or loss, depending on how much they chose to work and which rides they chose to accept. Drivers could work when they wanted and could accept or decline rides.

The union argued that the drivers were subject to extensive rules about how they operated, including what they wore, the communication system they used, background check and training requirements, and the appearance and seating arrangements in their vehicles. These requirements, however, were not imposed by the franchisor, which then contracted with the individual drivers. Rather, these requirements were imposed by the state-run DFW Airport.

The Board recognized the important principle that requiring compliance with state- or customer-issued requirements is not the kind of control examined in a Right to Control analysis. Although the DFW Airport’s requirements were extensive, the franchisor’s insistence that its independent contractor drivers follow those rules did not turn the drivers into the franchisor’s employees. That’s an important point for businesses to remember when they enter into independent contractor arrangements.

So where does that leave us? A million dead end streets and every time I thought I’d got it made, it seemed the taste was not so sweet.

The test keeps changing, depending on which political party controls the Board. For now, we’re back to a common law Right to Control Test when determining Independent Contractor vs. Employee under the NLRA.

Ch-ch-ch-ch-changes.

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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