by Todd Lebowitz

For Upcoming Changes to Independent Contractor Rules, Look to Band Names

The band America (“A Horse with No Name,” “Ventura Highway”) was formed in England. Yes, really. But by three Americans whose fathers were in the U.S. Air Force and stationed overseas.

That got me thinking about other bands with place names. When I was growing up in Miami in the 1980s, if someone mentioned Boston, I thought of just another band out of Boston, on the road to make ends meet. If someone mentioned Kansas, I thought of dust in the wind, even though I never particularly liked that song. Chicago made me think of the Cubs, but only in 1984. Otherwise, does anybody really know what time it is?

Not that I am older and have a life, place names mean something different to me. They now make me think of federal, state, and local laws affecting independent contractor status.

(Ok, I take back the comment about having a life. I realize this is a sad and pathetic way to think of place names.)

After the election, place names are going to take on greater importance as businesses aim to protect their independent contractor relationships. Federal enforcement activity isn’t going away, but I expect to see a growing emphasis on legislation and enforcement at the state and local level.

In the realm of non-employee workers (independent contractors, staffing agency temps), I expect to more state and local legislation in these areas:

1) Freelancer Laws. We now have freelancer laws in CA, NY, IL, Los Angeles, NYC, Minneapolis, Seattle, and Columbus. These laws impose requirements when retaining individuals who are independent contractors. The laws generally require written contracts that contain several mandatory components.

2) Temporary Worker Laws. We have these in NJ and IL. They generally require that staffing agencies pay their workers an equivalent wage rate (and sometimes the value of benefits) being paid to workers they work alongside at the company where they are providing services.

3) Misclassification Laws – the Bad Kind. In states with Democrat trifectas (house, senate, governor), expect new laws that make it harder to be an independent contractor. Expect more ABC Tests, like in CA and MA. Other states have ABC Tests for determining who is an employee under workers’ comp and unemployment law.

4) Misclassification Laws – the Good Kind. In states with Republican trifectas, expect more safe harbor laws. If you satisfy a set of basic requirements in your dealings with a non-employee worker, then the worker is an independent contractor under that state’s laws. Pesky balancing tests (and long-haired freaky people) need not apply. We have these state laws in WV and LA (not L.A.)

We will likely see changes at the federal level too, but these may take years to develop. The federal agency rulemaking process is slow and cumbersome, and agency rules will take on less importance as federal agency power continues to diminish after the Supreme Court’s Loper Bright decision.

I haven’t touched on Europe or Asia, but those are bands for another day and another post. When? At some point, in the heat of the moment, but only time will tell.

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01.02.24

by Todd Lebowitz

Snakes! And Other Things to Watch for in 2024

*This is a venomous Eastern Brown Snake, native to Australia. Stay away.*

Tennis star Dominic Thiem knew what to watch for in his match this past weekend in Brisbane. It was on-court hazard he couldn’t ignore.

Play was interrupted when a “really poisonous snake” slithered onto the court near the ballkids. The intruder, an Eastern Brown Snake, “has the unfortunate distinction of causing more deaths by snake bite than any other species of snake in Australia.” The snake’s venom causes “progressive paralysis and uncontrollable bleeding,” which is not one of the on-court hazards typically of ballkidding.

(I don’t know if ballkidding is the real word for this, but it should be. Or ballkiddery maybe. I also learned from the snake bite article that the proper term for being bit by a venomous snake is “envenomation,” which is a word I hope to use elsewhere in a sentence sometime in 2024. So there’s a New Year’s resolution. [@Lisa, take note, I made one, even though you {correctly} say I am no fun because I won’t play the New Year’s Resolution game.])

The Eastern Brown Snake is not present in the U.S., so we don’t have to watch for any in 2024.

But here are several other things that could bite you in the behind in 2024 if you’re not paying attention:

1. New DOL test for independent contractor misclassification. The DOL issued its proposed new rule in October 2022 and targeted the fall of 2023 for release of a new final rule. The proposed rule would identify seven factors to consider when evaluating whether someone is an employee under the Fair Labor Standards Act (FLSA). The final rule will likely be very similar. We’re still waiting, and the final rule could be released at any time.

2. The new NLRB test for joint employment takes effect Feb. 26, 2024. Unless it doesn’t. The new rule is being challenged in both a federal district court in Texas and the U.S. Court of Appeals in D.C. Either court could quash the rule. The new rule will substantially expand who is a joint employer under the NLRA, even for worksites without unions.

3. Increased state and local enforcement activity. States and localities are filing their own lawsuits alleging worker misclassification. The New Jersey Attorney General recently filed a major lawsuit. The California Attorney General and California localities have been pursuing misclassification lawsuits too. Remember this: As much as I advocate for individual arbitration agreements with class waivers, they have no effect on enforcement actions brought by a state or local government. These lawsuits pose a substantial risk, and the governments love to issue one-sided accusatory press releases when they file the lawsuits.

4. The feds are doing this too. The DOL is bringing its own enforcement actions and publicizing them.

5. State and local laws that affect independent contractor classification and joint employment. We’re seeing legislative activity in three main areas:

(a) laws to change the tests;
(b) laws that provide a safe harbor for independent contractor classification if certain protections are provided to the workers (Cal. Prop 22, this proposed Mass. state law); and
(c) Freelancers laws that impose various requirements when retaining a solo independent contractor (currently: NY, IL, Los Angeles, Minneapolis, Seattle, NYC, Columbus).

6. State laws that criminalize worker misclassification. Take a look at recent legislation passed in NY State and Rhode Island.

7. State laws governing the use of temporary workers. Look for more states to enact laws like the Illinois Day and Temporary Worker Services Act (amended in Aug. 2023) and the New Jersey Temporary Workers’ Bill of Rights (enacted in Aug, 2023). These laws force companies that use staffing agencies to disclose the wages and benefits being paid to direct employees.

8. California’s AB 5 is still being challenged. This is the law that codified the ABC Test for most independent contractor relationships. But it also included a grab bag of miscellaneous and arbitrary exceptions. A full en banc Ninth Circuit has agreed to rehear Olson v. State of California, which challenges the constitutionality of AB 5.

Wishing you a happy, healthy, and litigation-free 2024.

Best wishes,
Todd

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07.17.23

by Todd Lebowitz

Free Lancers? Fourth Major US City Now Requires Written Contracts for Freelance Workers

In ancient and medieval warfare, cavalrymen who fought battles with lances were known as lancers. Actually, they were probably known as whatever Assyrians or Normans or Persians called lancers in their languages, but that’s not important right now.

I should share that my junior high, Palmetto, was also known as the Lancers when I attended in the 1980s. I don’t know if they are still the Lancers, but I do know that they are no longer Palmetto Junior High. Instead, the school is now known as Palmetto Middle School, which is unfortunate and a bit cruel to the teenage cheerleaders who must wear the school’s initials across their chests.

Medieval lancers might have been paid, or might not. Don’t know, don’t care. I know that PMS Lancers are not paid. But this post is not about free lancers. It’s about freelancers. And that space makes a lot of difference.

Los Angeles is the latest major city to pass an ordinance that imposes several strict requirements when retaining freelancers. The Freelance Worker Protection Ordinance took effect July 1, and L.A. now joins NYC, Seattle, and Minneapolis as cities that require a written contract when retaining a solo independent contractor.

This L.A. law is not a TV drama where “office politics and romance often distract the legal staffers from matters in the courtroom.” No, this L.A. law is more boring. This law applies when retaining a solo contractor who will earn $600 or more in a calendar year. If that’s the case (see what I did there?), then these rules now apply:

Must have a written contract that includes:
- name, mailing address, phone, email of both hiring party and freelance worker,
- itemization of services to be provided,
- rate and method of compensation, and
- date by which payment is due, or manner for determining due date.
Payment must be made by the due date or, if none is specified, within 30 days after services are rendered.
Both the hiring party and freelancer must retain records for 4 years.
Any waiver of these requirements is unenforceable.

The NYC, Seattle, and Minneapolis ordinances also require written contracts with similar contents when retaining solo independent contractors who will earn about the same amount. The NYC law applies to work worth $800 in one project or in the aggregate over 120 days. The Minneapolis law applies to work valued at $600 in a calendar year or $200 in a single week. The Seattle law applies to work valued at $600 in a calendar year.

Businesses and individuals who retain solo independent contractors in these cities need to be aware of these laws, which apply even if the hiring party is located elsewhere.

Hiring parties who fail to comply may be liable for double damages, fines for not providing a written contract, penalties for late payments, and attorneys’ fees. The most egregious violators may also be subjected to cavalry charges and lance attacks. Maybe.

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09.26.22

by Todd Lebowitz

Seattle Trades Nirvana & Ken Griffey for Burdensome New Independent Contractor Law

Back in the 1990s, Seattle was known for Nirvana and Pearl Jam, Ken Griffey Jr., Microsoft, Frasier (which I could never get into), the emergence of Amazon, and a lot fewer homeless people. The fewer homeless people may have been in part to the Fremont Troll, an 18-foot sculpture erected in 1990 under the Aurora Bridge, where it holds a crushed VW Beetle and would be scary as hell to sleep next to.

The troll’s still there, but Griffey and Frasier are gone and we all know what happened to Nirvana.

Having left the 90s behind, Seattle in 2022 apparently wants to be known instead as a city where it is pretty burdensome to retain independent contractors.

The Seattle City Council passed a law that requires immediate action from all companies that have solo independent contractors working in the city. The Independent Contractor Protections Ordinance, codified at SMC 14.34, took effect Sept. 1.

The rest of this article was originally published as a BakerHostetler Alert, here. Immediate action is needed for companies with solo contractors in Seattle, so read on. All the same helpful info is just below.

The law applies to solo independent contractors who perform any part of their work in Seattle for a commercial hiring entity if the contractor receives or is expected to receive at least $600 in total compensation from the hiring entity during a calendar year. If the hiring party knows or has reason to know that the work is being performed in Seattle, then the law applies, even if the hiring party has no preference as to where the work is performed.

Independent contractors are defined to include individuals and entities consisting of only one person. The law does not apply to workers being treated as employees by a staffing agency or consulting firm.

Commercial hiring entities are defined to include for-profit and nonprofit organizations. Modified rules apply to drivers for transportation network companies, such as ride-share services. There are also exceptions for lawyers and for contractors whose sole relationship to the hiring party is a property rental agreement.

Commercial hiring entities with independent contractors covered under the new law must:

Provide a written precontract disclosure to the contractor that includes at least 12 specified categories of information about the engagement. This disclosure must be in a single document in the contractor’s primary language. A model notice is available.
Provide written updates before making changes to any of the required information.
Provide timely payment consistent with the precontract disclosure terms or a later written contract. If no deadline for payment is specified, then the contractor must be paid no later than 30 days after the work is completed.
Provide an itemized, written payment disclosure accompanying each payment. The disclosure must be in a single document, such as a pay stub or invoice, and it must contain information in at least 12 specified categories.
Provide a written notice of the contractor’s rights under the new law. The notice must be in English and, if applicable, the contractor’s primary language. A model notice is available.
Maintain for three years records that demonstrate compliance with these requirements.
Refrain from retaliating against any contractor who asserts rights protected under the new law. Prohibited retaliation includes threatening to report that the contractor is an illegal immigrant. If any adverse action is taken within 90 days of a contractor’s exercise of rights, the law creates a rebuttable presumption that the action was retaliatory.

The precontract disclosure and disclosure of rights must be provided before work begins or, for contractors already providing services, by Sept. 30, 2022.

Penalties for violating this law may include payment of unpaid compensation, liquidated damages, civil penalties, other penalties payable to an aggrieved contractor, fines and interest. These penalties are in addition to any other relief available under any other law.

BakerHostetler’s Contingent Workforce team continues to monitor state and local developments affecting companies that retain independent contractors. Please reach out to your BakerHostetler contact or any member of the Contingent Workforce team for compliance assistance.

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06.22.20

by Todd Lebowitz

New Seattle Sick Pay Law for Gig Workers: Squishy or Full of Venom?

Horrifying images not intended to scare children. Thanks, PBS Learning.

I learned this week that a species of jellyfish found off the coast of China, Japan, and Korea can weigh up to 440 pounds. There’s a video here, and the size of this thing is terrifying.

In Finding Nemo, I learned that you can bounce on the fleshy heads of jellyfish without getting stung, and this creature has an abundantly fleshy head. The tentacles, though, are a different story. There are a lot of them. So the lesson here is that when approaching a Nomura’s Jellyfish, as they are called, be thoughtful in how you approach.

Which brings me to the City of Seattle. Seattle has been relentless in looking for ways to provide gig workers benefits of some kind, without getting caught up in the Independent Contractor vs. Employee question. The city has been aiming to grant gig workers certain rights, whether they are employees or not.

Seattle’s strategy is to aim for the jellyfish’s head, not wanting to get caught up in the tentacles of a dispute over whether the gig workers are employees or not.

In its latest head shot, Seattle has enacted an ordinance requiring transportation network companies and food delivery network companies (app based) to provide paid sick time to gig workers who perform services in Seattle. The requirement applies regardless of whether the workers are contractors or employees. The law was signed on June 12, 2020.

This move may signal a new strategy for states and localities that wish to provide benefits to gig workers. They can require benefits for gig workers, regardless of whether the workers are deemed employees.

This approach, if it works, may introduce other problems for app-based companies.

If companies start providing benefits such as paid sick leave to workers they consider to be independent contractors, that fact could be used against them as evidence the workers are being treated as employees.

In other words, this ordinance sets a trap. App-based companies will still be able to argue that they are providing sick leave only because they are required by local law, but surely the plaintiffs’ bar will argue that providing sick leave is evidence of employment status.

It’s a dangerous game, trying to bounce of the heads of the squishies while avoiding the sting. We’ll see how it plays out. In the meantime, obey beach hazard signs and try to avoid getting stung.

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05.14.18

by Todd Lebowitz

Cartels in Seattle? Court Decision May Stop Independent Contractor Drivers from Forming Quasi-Unions

Seattle uber unions cartel Usually when “cartels” are in the news, we’re hearing about El Chapo or other organized drug trafficking operations. But the word “cartel” refers to any combination of independent enterprises joining together to fix prices. The City of Seattle is trying to create ride sharing cartels. The city wants the Teamsters to represent your independent contractor ride share drivers. Really, the Teamsters.

The U.S. Chamber of Commerce is fighting back, reminding our brothers and sisters in the Emerald City that we still have federal antitrust laws. Antitrust laws prohibit the formation of cartels to fix prices. Seattle claimed it was immune from federal antitrust laws and, at first, a federal court in Seattle agreed.

But last week, the federal Court of Appeals stepped in and confirmed that, yes, the federal antitrust laws do apply, even in the Great Northwest. Here’s the ruling.

Here’s what the stir is all about.

In late 2015, Seattle passed a law creating quasi-unions for ride share drivers. We wrote about it here. The ordinance had the city overseeing the collective bargaining processes and didn’t call these collective groups “unions.” Seattle says they’re not unions. Then Seattle picked the Teamsters Local 117 to represent the independent contractor ride share drivers. Still not a union???

The law has not yet gone into effect, and its validity is in question. If antirust laws prohibit independent contractors from colluding on pricing, how can Seattle create a process to encourage independent contractors to collude on pricing?

Last week’s decision by the Ninth Circuit Court of Appeals confirms that federal antitrust laws do apply, even to cities that claim to have good intentions and great music.

The case now goes back to a federal court in Seattle to decide whether Seattle’s ordinance violates federal antitrust laws. I’m betting it does.

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08.14.17

by Todd Lebowitz

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

space-needle-independent contrcator drivers seattle uber lyft seattle law ordinance A 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 Continue reading →

Who Is My Employee?

Exploring Independent Contractor Misclassification & Joint Employment Issues

Tag Archives: Seattle

For Upcoming Changes to Independent Contractor Rules, Look to Band Names

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Snakes! And Other Things to Watch for in 2024

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Free Lancers? Fourth Major US City Now Requires Written Contracts for Freelance Workers

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Seattle Trades Nirvana & Ken Griffey for Burdensome New Independent Contractor Law

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New Seattle Sick Pay Law for Gig Workers: Squishy or Full of Venom?

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Cartels in Seattle? Court Decision May Stop Independent Contractor Drivers from Forming Quasi-Unions

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

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