No quips or musical references today. Just hard news, and here it is. If you do not already subscribe to BakerHostetler labor and employment alerts but would like to, drop me an email.
https://www.bakerlaw.com/insights/court-vacates-new-nlrb-joint-employer-rule/
I could think of a few songs called “Hold On” – Yes and Wilson Philips were the two that first came to mind. But I had no idea how popular a song name that was.
According to Wikipedia, there are at least 17 albums called Hold On and 311 songs with that name. Who knew?
“Hold on” is the theme of today’s post because that’s what a federal court in Texas decided to do with the NLRB joint employer rule. Judge H. Campbell Barker pushed back the effective date of the rule from Feb. 26 to March 11.
But that doesn’t mean the rule will go into effect March 11.
In the meantime, the judge is considering the arguments presented by both sides and may invalidate the rule entirely. I believe the delay is to buy time to draft a thorough opinion. Whatever the ruling is, it will be appealed to the Fifth Circuit.
For now, employers should review their agreements with vendors supplying labor (e.g., staffing agencies, outsourced functions) and use this opportunity to button them up. Here are ten things that should be in your staffing agency agreements but probably aren’t.
Employers should also review the degree of control they exercise over outsourced labor. On one hand, staffing workers who are intermingled with regular employees and supervised by employer managers are likely in a joint employment relationship already. But with outsourced workers, steps should be taken to avoid joint employment. The new NLRB rule would make it harder to avoid joint employment, and employers should take steps to minimize control over outsourced workers.
© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Before reading this post, please enjoy this adorable video of a porcupine eating an apple.
The porcupine seems harmless and cute, but remember – it’s still a porcupine. Those quills are sharp, and they can impale small would-be predators.
And speaking of impale: A Congressional resolution, if passed, would impale the NLRB’s joint employer rule. The effort has enough support that it could bear fruit. Like the tasty apple in this video.
On January 12, the House passed H.J. Res 98, which would nullify the NLRB’s new joint employer rule. The resolution passed, 206-177, with eight Democrats voting in favor.
The Senate is considering an identical companion bill, S.J. Res 49, which has the support of at least one Democrat. Senator Manchin is a co-sponsor.
Under the Congressional Review Act, Congress can nullify an agency regulation with a simple majority of votes in each house. Sixty votes are not needed in the Senate.
But if the bill passes, President Biden can still veto it, and he has indicated that he would.
Meanwhile, the rule continues to face challenges in federal court. If Congress does not nullify the rule, a court might enter an injunction to prevent it from taking effect. Having reviewed the arguments presented to a federal judge in Texas last week, I think there’s a strong chance the rule will be set aside, at least temporarily.
Remember: The NLRB joint employer test is supposed to be a common law right-to-control test. The scope of the new rule is substantially broader and would create joint employment relationships automatically, including in situations where the common law balancing test would not result in a finding of joint employment.
We can expect a ruling from the court this week, since the NLRB joint employer rule is scheduled to take effect next Monday, February 26.
© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
“Faces” is a useful word.
It can mean the front part of the head, as in this selfie featuring two hairy-faced beasts. The one on the left has a wet drippy beard after sloppily drinking water from a bowl. No, I meant on your left.
It can mean the English rock band formed in 1969, which featured Rod Stewart and Ronnie Wood. Their 1971 album, A Nod Is As Good As a Wink… to a Blind Horse, reached #2 in the UK charts.
Or it can be a verb, as in “DOL Independent Contractor Test Faces Court Challenges.” In today’s post, we’re going with verb.
As expected, the independent contractor rule released by the DOL earlier this month is already being challenged in court.
A coalition of business groups is trying to invalidate the rule by asking the Fifth Circuit to reopen an earlier case. In the earlier case, these groups challenged the Biden DOL’s effort to withdraw the Trump DOL’s 2021 version of the independent contractor rule. The 2021 version would have simplified the test, focusing the analysis on two key factors — control and opportunity for profit or loss. In the lawsuit, the business groups argued that the Biden DOL’s efforts to delay and withdraw the Trump DOL’s 2021 rule violated the Administrative Procedure Act (APA).
These groups now argue that the new rule contains the same legal flaws and that that the Trump DOL rule should be the rule that rules. The case is Coalition for Workforce Innovation v. Su, 5th Cir., No. 22-40316.
A second challenge has been filed by freelancer writers and editors who argue that the new rule is impermissibly vague and “freewheeling” (an excellent word choice) and that it violates the APA. They claim that the new rule impermissibly threatens their ability to work as independent contractors and is too vague to allow them to reasonably structure their businesses.
These challenges will take a while to resolve, and more may be filed. Unless a court issues an injunction staying the rule while these cases proceed, the new rule will take effect March 11th.
In the meantime, we’ll keep watching to see what happens. It’s a real face off!
© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
I didn’t post last week because I was waiting for the DOL’s new independent contractor rule to drop.
And then it did. And I’m still focused on it. And businesses using independent contractors should be aware of it too.
So today, leave this page and don’t read this post.
Instead read this Client Alert, in which I break down the new DOL rule, its likely impact, and the practical implications for businesses.
https://www.bakerlaw.com/insights/the-dols-new-independent-contractor-test-just-dropped-now-what/
See you all next week!
© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
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
© 2024 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
TikTok star Matthew Lani earned a substantial following as a 27-year old medical prodigy, having graduated high school at age 16 before becoming a doctor. He posted videos of himself walking through a South African hospital, dishing out medical advice to his followers or selling them medication.
Lani, however, turns out not to be a doctor at all. When the ruse was uncovered and authorities went to arrest him, he said he had to pee and then tried to escape through a bathroom window. TikTok later banned his account.
The NLRB’s new joint employer rule has many employers trying to figure out whether they need a doctor or whether they can avoid the rule’s reach by escaping through a bathroom window.
Today we’ll answer questions about how the new joint employer rule affects non-union businesses.
We have no unions. Does the rule apply to me?
Yes, 100% yes. In fact, companies without unions may be most at risk here. If your business has vendors, suppliers, business partners, or even customers with employees, pay attention.
The point of the rule is that if your business exerts any control over any of the listed seven terms or conditions of employment, you’re a joint employer. In fact, the rule makes you a joint employer even if you merely have the right to exert control over one of these seven terms, even if you never do.
The listed terms and conditions are broader than the usual suspects, and they include control over health and safety matters.
If the other company’s workers are ever in your building while doing their jobs, you might be exercising control over their terms and conditions of employment without realizing it. Read more here.
What if the vendor’s employees don’t have a union?
Still yes. The rule may still directly affect your business’s rights and legal obligations.
What happens if I have no unions but am deemed a joint employer of someone else’s employees?
If you are a joint employer under the new rule, here’s what that means:
(1) If the other company’s employees form a union, your business would be required to participate in the collective bargaining process.
You’d be required to bargain regarding any term or condition that you have the authority to control. That could include your site-wide health and safety rules.
(2) If the other company’s employees have complaints about terms or conditions that your business can control, you cannot retaliate against them for raising these concerns.
Under federal labor law, all employees — including those not in unions — have the right to engage in protected concerted activity without being retaliated against.
Protected concerted activity can mean just about anything that involves more than one employee, including actions by one employee that are intended to seek support from other employees. Like an Instagram post or a Glassdoor review. Ending their assignment or asking the vendor to remove them from the project could be considered unlawful retaliation.
But these are not my employees? Why would I have to do these things?
Because joint employment.
The concept of joint employment is that more than one person can be the employer. If your business is deemed a joint employer of another company’s employees, then under the National Labor Relations Act (NLRA), you’re also their employer.
What about wage and hour law, unemployment compensation, and workers comp? Would I be a joint employer under those laws too?
No. The new NLRB joint employer rule applies only to the NLRA. Other laws have other tests for determining who is a joint employer.
You can be a joint employer under the NLRA and not a joint employer under other laws. But a finding of joint employment under one law could make it more likely that your business is deemed a joint employer under other laws — particularly if you comply with the new NLRB rule by, let’s say, participating in collective bargaining.
Do I need a real doctor, or will a TikTok doctor be good enough?
All businesses should pay attention to the new NLRB joint employer rule, even if you don’t have unions.
Proactively evaluate your risk of joint employment under the new rule. The whole point of the law is that you may be an employer of other workers without realizing it.
And you can’t escape the reach of the rule by climbing through a bathroom window.
© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Ginsberg’s Theorem is a parody of the laws of thermodynamics. Generally attributed to the poet Allen Ginsberg, it goes like this:
That’s the conundrum businesses now face when trying to comply with both the NLRB’s new joint employer rule and OSHA requirements (or general safe workplace practices).
Last week we looked at the new NLRB rule on joint employment. This week I want to focus on the most troubling part of that rule — the NLRB’s decision to include “Working conditions related to the safety and health of employees” as an “essential term and condition of employment” for purposes of determining joint employer status.
Businesses often have site-wide, plant-wide, or company-wide health and safety requirements. If you enter this building, you must follow the health and safety rules that apply in this building. For example, you must wear steel-toed shoes to enter the manufacturing floor. Or, you must not enter this high-voltage area without permission. Or, you must walk only on designated pathways to avoid the risk of being hit by a forklift.
Some of these rules are driven by OSHA compliance, some by other governmental regulations, and some by a general desire not to cause grievous injury to other human beings.
Those motivations may now cause your business to be joint employer. The reasoning goes like this:
Under the new NLRB joint employer rule, the exercise of control over “working conditions related to the safety and health” of a vendor’s employees would automatically create a joint employment relationship.
More absurd, merely reserving the right to exert control over health and safety conditions would create a joint employer relationship, even if such control is never actually exercised. In other words telling a vendor, if your employees enter our facility, they will will have to follow our site safety rules, would also seem to make you a joint employer.
The NLRB’s position ignores reality and creates a conundrum for businesses: If you comply with health and safety laws, or if you take steps to protect human beings from injury, and those humans are not your employees, the NLRB would now apparently say you’re a joint employer. Beware of showing feelings, showing feelings of an almost human nature.
Queue Pink Floyd “The Trial” from The Wall:
Good morning, Worm your honor
The crown will plainly show
The prisoner who now stands before you
Was caught red-handed showing feelings
Showing feelings of an almost human nature
This will not do
Call the schoolmaster
What to do?
Could the NLRB and OSHA be teaming up to jointly enforce this conundrum? Well, yes.
It just so happens that the NLRB and OSHA have teamed up, and on October 31 — less than a week after the NLRB released its final rule on joint employment — the two agencies jointly released a Memorandum of Understanding (MOU). In the MOU, the agencies commit to sharing information and working together to enforce their respective laws, including notifying workers who make OSHA complaints of their NLRA rights, and notifying workers who make NLRA complaints about health and safety of their OSHA rights.
So what are businesses to do?
The answer can’t be to ignore health and safety rules or to waive these rules for non-employees. But the NLRB needs to recognize that exercising control over health and safety conditions does not — or should not — convert a company into a joint employer. Certainly this aspect of the rule will be tested in court, as it seems to go well beyond the bounds of the common law definition of joint employment, and the common law test is supposed to be the joint employer test under the NLRA.
One option for businesses to consider is to tie site-wide health and safety rules to legal requirements whenever possible. Compliance with the law is not supposed to be the type of control that is taken into account under the common law joint employer test. But that approach creates a conundrum too. Be careful that you don’t go too far and say that the law requires something when, in reality, it doesn’t.
Another option might be to revise how site-wide health and safety rules are drafted. Try to try to thread the needle, protecting everyone onsite, but not explicitly setting working conditions for vendor’s employees. It might be possible to draft this way; it might not be. But it’s worth looking at your policy language.
In the meantime, let’s keep an eye on how this new factor is interpreted by administrative law judges and the Board when actual disputes are adjudicated. Let’s also see if court challenges to the new joint employer rule will knock out this troubling provision.
This will not do. Call the schoolmaster!
© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Ginsberg’s Theorem is a parody of the laws of thermodynamics. Generally attributed to the poet Allen Ginsberg, it goes like this:
That’s the conundrum businesses now face when trying to comply with both the NLRB’s new joint employer rule and OSHA requirements (or general safe workplace practices).
Last week we looked at the new NLRB rule on joint employment. This week I want to focus on the most troubling part of that rule — the NLRB’s decision to include “Working conditions related to the safety and health of employees” as an “essential term and condition of employment” for purposes of determining joint employer status.
Businesses often have site-wide, plant-wide, or company-wide health and safety requirements. If you enter this building, you must follow the health and safety rules that apply in this building. For example, you must wear steel-toed shoes to enter the manufacturing floor. Or, you must not enter this high-voltage area without permission. Or, you must walk only on designated pathways to avoid the risk of being hit by a forklift.
Some of these rules are driven by OSHA compliance, some by other governmental regulations, and some by a general desire not to cause grievous injury to other human beings.
Those motivations may now cause your business to be joint employer. The reasoning goes like this:
Under the new NLRB joint employer rule, the exercise of control over “working conditions related to the safety and health” of a vendor’s employees would automatically create a joint employment relationship.
More absurd, merely reserving the right to exert control over health and safety conditions would create a joint employer relationship, even if such control is never actually exercised. In other words telling a vendor, if your employees enter our facility, they will will have to follow our site safety rules, would also seem to make you a joint employer.
The NLRB’s position ignores reality and creates a conundrum for businesses: If you comply with health and safety laws, or if you take steps to protect human beings from injury, and those humans are not your employees, the NLRB would now apparently say you’re a joint employer. Beware of showing feelings, showing feelings of an almost human nature.
Queue Pink Floyd “The Trial” from The Wall:
Good morning, Worm your honor
The crown will plainly show
The prisoner who now stands before you
Was caught red-handed showing feelings
Showing feelings of an almost human nature
This will not do
Call the schoolmaster
What to do?
Could the NLRB and OSHA be teaming up to jointly enforce this conundrum? Well, yes.
It just so happens that the NLRB and OSHA have teamed up, and on October 31 — less than a week after the NLRB released its final rule on joint employment — the two agencies jointly released a Memorandum of Understanding (MOU). In the MOU, the agencies commit to sharing information and working together to enforce their respective laws, including notifying workers who make OSHA complaints of their NLRA rights, and notifying workers who make NLRA complaints about health and safety of their OSHA rights.
So what are businesses to do?
The answer can’t be to ignore health and safety rules or to waive these rules for non-employees. But the NLRB needs to recognize that exercising control over health and safety conditions does not — or should not — convert a company into a joint employer. Certainly this aspect of the rule will be tested in court, as it seems to go well beyond the bounds of the common law definition of joint employment, and the common law test is supposed to be the joint employer test under the NLRA.
One option for businesses to consider is to tie site-wide health and safety rules to legal requirements whenever possible. Compliance with the law is not supposed to be the type of control that is taken into account under the common law joint employer test. But that approach creates a conundrum too. Be careful that you don’t go too far and say that the law requires something when, in reality, it doesn’t.
Another option might be to revise how site-wide health and safety rules are drafted. Try to try to thread the needle, protecting everyone onsite, but not explicitly setting working conditions for vendor’s employees. It might be possible to draft this way; it might not be. But it’s worth looking at your policy language.
In the meantime, let’s keep an eye on how this new factor is interpreted by administrative law judges and the Board when actual disputes are adjudicated. Let’s also see if court challenges to the new joint employer rule will knock out this troubling provision.
This will not do. Call the schoolmaster!
© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Late last week, the NLRB issued its new joint employer rule. I’ve listed three takeways below. Don’t be left hanging. Click here for the full Alert.
1) The National Labor Relations Board has issued a Final Rule that changes the test for determining who is a joint employer.
2) The Final Rule rescinds the Rule enacted in 2020 and adopts a test that will vastly expand the circumstances under which a company is a joint employer of the employees of another company.
3) The new rule may cause absurd results, including creating joint employment from the application of worksite safety rules to everyone onsite, including a vendor’s employees. The new rule requires joint employers to participate in the collective bargaining process.
The full Alert explains in more detail. If you are not subscribed to BakerHostetler employment law alerts, let me know and I’ll add you to the distribution list.
© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Who Is My Employee? 