Voters Would Reject This Flight Option, But They Could Change Independent Contractor Law in California This November

Expensive flight

A few years back, I found myself headed to the Houston airport earlier than expected after a business trip. I decided to check my phone to see whether I could get on an earlier flight back home to Cleveland.

Turns out I could — for $52,270. For coach. There was also a first class seat available. For $69,570.

I declined and decided to wait the three hours for my originally scheduled departure. But for good measure, I took this screenshot because, hey, why not.

Taking the earlier flight would not have been a good use of my money. The real subject of this post is about five app-based companies who are making much better use of their money.

With app-based companies under constant attack through independent contractor misclassification claims, and with California’s new Assembly Bill 5 making it even harder to classify people as independent contractors, the major providers are fighting back.

They’ve pledged $110 million to support a ballot initiative in California that would redraw the lines in the Employee vs. Independent Contractor debate — at least for rideshare and delivery drivers.

Under current federal and state laws, a worker is either an independent contractor or an employee. It’s binary. Employees get lots of protections. Contractors get almost none. There’s no third category that would allow rideshare and delivery drivers to operate independently while receiving a minimum level of legal protection.

This proposed initiative would change that. The law would create new rules for app-based transportation providers and drivers in California.

If the initiative passes, the new ABC Test would not apply to workers in the app-based rideshare and delivery business. Instead, those workers could stay classified as independent contractors, but the app-based companies must ensure that the drivers receive a predetermined level of compensation and benefits, including:

  • Earnings Minimum. The measure would require app-based companies to pay at least 120 percent of the minimum wage for each hour a driver spends driving—but not time spent waiting for requests.
  • Health Insurance Stipend. The measure would require rideshare and delivery companies to provide a health insurance stipend of about $400 per month to drivers who regularly work more than 25 hours per week (not including waiting time). Drivers who average 15 driving hours per week but less than 25 driving hours would receive half as much.
  • Medical Expenses and Disability Insurance. The measure would require that companies buy insurance to cover driver medical expenses and provide disability pay when a driver is injured while driving.
  • Rest Policy. The measure would prohibit drivers from working more than 12 hours in a 24 hour period for a single rideshare or delivery company.
  • Other. The measure would require that rideshare and delivery companies have sexual harassment prevention policies and conduct criminal background checks and safety training for all drivers. It also would prohibit discrimination in hiring and firing.

The measure would also prevent cities and counties from passing further restrictions on driver classification.

The initiative needs 625,000 signatures to appear on the November 2020 ballot in California. I expect they’ll get the signatures, and then the media campaign will kick into high gear. Expect TV and radio ads, billboards, and a heavy social media push to garner support.

If the ballot measure passes, that will have been money well spent — a much wiser use of resources than for some dodo to pay $52,270 to take an earlier flight home from Houston. The proposed law would create a fairer and more predictable set of rules for drivers and companies, and it should substantially reduce the rampant misclassification lawsuits in the rideshare and delivery driver area.

I’ll be watching for similar proposed legislation in other states. And I’ll be watching airfares too, before I switch any future flights.

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

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The Biggest Overlooked Risk for Independent Contractor Misclassification Claims Is…

unemployment independent contractor misclassification

Remember the Chicago song called Baby What A Big Surprise? That’s about a good surprise. The girl he longed for was there all along. How sweet.

This post about is about another kind of surprise – one that’s much more bitter.

When trying to avoid independent contractor misclassification claims, we’re often focused on reducing the risks of lawsuits, especially class actions. But there’s another threat that can be much harder to guard against.

So… what is the biggest overlooked risk for independent contractor misclassification claims?

I wrote about it last week, on the BakerHostetler Employment Law Spotlight blog. Still in suspense? You’ll have to click here to find out the answer.

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

Need training on avoiding independent contractor misclassification claims? Hey, I do that!  

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Opinion Piece Asks California Not to Be the Pigeon in this Photo

Pigeon head Tuileries - independent contractor misclassification Todd LebowitzI took this picture last week in Paris, walking through the Jardin des Tuileries with my family, just outside the Louvre.  

If you think of the statue as being ride-share giants Uber and Lyft, and if you think of the California state legislature as the pigeon, you’ll know why Uber and Lyft’s chief executives joined forces to write this opinion piece in the San Francisco Chronicle.  

As we explained here, California seems likely to pass a bill that would rewrite California law in a way that will instantly convert many — perhaps most — independent contractors into employees.  The bill would take the ABC Test created last year in the Dynamex case and apply it to the entire California Labor Code, as well as to state unemployment law. (Currently, the ABC Test applies only to state wage and hour claims, and a more neutral balancing test applies to other state law claims.)

The law, if passed, would undoubtedly fuel new claims against Uber and Lyft, alleging that ride-share drivers are employees under state law.

In the opinion piece, the companies argue in favor of legal reform, but in a way that does not threaten to change drivers into employees.

The Uber-Lyft proposal would secure three new types of protections for ride-share drivers, while safeguarding their status as independent contractors. The proposal would:

  1. Set up a portable benefits system for gig workers, including retirement savings accounts, paid time off, and lifelong learning opportunities;
  2. Create a drivers’ association, in partnership with state lawmakers and labor groups, to represent drivers’ interests and administer benefits; and
  3. Establish a new driver pay system that includes greater earnings transparency for the work performed between accepting a ride and dropping off a passenger after accounting for reasonable expenses.

So why can’t Uber and Lyft just do these things on their own? Because if they did, the current legal system would likely treat those acts of goodwill as evidence that Uber and Lyft were treating the drivers as employees.

Current labor laws were not written with the gig economy in mind. The law right now is an all-or-nothing proposition — independent contractor or employee. The modern economy, though, requires a middle ground — an alternative that allows app companies to provide greater benefits and protections to drivers without running the risk that these well-meaning gestures could convert the drivers into employees.

Pigeons are going to poop on statues forever. Marble heads provide a comfortable spot for loosening the ol’ avian bowels, and we all know it’s hard to find a good public toilet these days. But some things should not be set in stone. Let’s hope the California assembly backs off of the fast track for A.B. 5 and instead tries something new. The system proposed in the joint Uber-Lyft opinion piece would help drivers and would help the gig economy continue to thrive. 

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

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Has Ontario Gone Loony? Court Rejects Independent Contractor Arbitration Agreement

Common loon Ontario

Our northern neighbor, the common loon. Photo from Cornell Lab of Ornithology.

According to OntarioTravel.net, Ontario’s official bird is the Common Loon. The loon is a water bird, regarded as an agile swimmer and a connosseur of the fine fish that populate Ontario’s lakes.

Loon has a second, seemingly unrelated definition too, though. According to dictionary.com, synonyms for “loony” include screwball, wacky, kooky, nutty, crazed, batty, lunatic, cuckoo, nuts, silly, psycho, berserk, ape, barmy, bonkers, cracked, daffy, daft, delirious, and demented.

For fans of arbitration agreements, a recent decision by the Ontario Court of Appeals might be regarded as a bit loony (using the non-water-bird definition). Ontario has generally been considered a province friendly to arbitration agreements. In Heller v. Uber Technologies, Inc., the court found Uber’s stock arbitration agreement to be invalid Continue reading

Arbitration Agreements Save Uber From Massive Class Action

uber victory arbitration agreements 2018

Two themes are often repeated in this blog: (1) Independent contractor relationships are under attack, and (2) there are a lot of things companies can do to protect themselves, but they need to be proactive, not wait until they get sued. I’ve also tried themes relating to song titles – like here (Led Zeppelin) and here (Tom Petty) – but that’s kind of not the point I’m trying to make right now.

These two themes came together nicely this week in a major ruling by the Ninth Circuit Court of Appeals. Uber earned a big win, thanks to its arbitration agreements and a May 2018 U.S. Supreme Court decision confirming that mandatory arbitration agreements should be enforced.

Uber has been a favorite target of the plaintiffs’ bar in independent contractor misclassification lawsuits. Uber has been trying to defeat class claims by asking courts to enforce the mandatory arbitration agreements signed by most of its drivers.

That fight has been going on since 2013, when a federal court in California rejected Uber’s bid to enforce its arbitration agreements. The California judge certified a class of 160,000 drivers, then certified another subclass of drivers, creating a massive class action that Uber tried to settle for $100 million. The judge in that case rejected the settlement as too small, but Uber’s long game in court appears to have paid off.

After the judge rejected the proposed settlement, the case was to proceed; but, remember, the judge had also rejected Uber’s attempt to enforce the arbitration agreements, which would have kept the matter out of court entirely. If the arbitration agreements were enforced, the drivers would have to litigate their claims individually, one-by-one, with no individual driver’s claim worth all that much money. The attractiveness of these claims for plaintiffs’ lawyers is in the massive dollars generated by consolidating tens of thousands of individual claims into class actions. Individual arbitrations do not have much lure.

In this week’s Court of Appeals decision, the arbitration agreements were upheld as valid and enforceable. Uber will not have to face this class action of 160,000+ California drivers. The jackpot settlement of $100 million is gone, and the drivers who wish to go forward will now have to pursue their claims drip-drip-drip, one-by-one, with only small amounts of money at issue in each case.

This ruling became inevitable after the U.S. Supreme Court’s Epic Systems decision in May 2018, which held that individual employee arbitration agreements are generally enforceable and do not violate workers’ rights under the National Labor Relations Act.

Based on the Supreme Court’s ruling, the Ninth Circuit Court of Appeals had no choice but to rule that Uber’s arbitration agreements were indeed enforceable, overturning the district court judge’s 2013 decision that said they were not.

The plaintiffs tried to argue that since one of the lead plaintiffs opted out of arbitration, the entire potential class should be viewed as if everyone opted out of arbitration. But the Court was having none of that. A single class representative plaintiff doesn’t have the authority to cancel thousands of other contracts that he wasn’t a part of.

The lesson here is that arbitration agreements work. They are a potent weapon in defending against and preventing massive class action risks, especially for companies that rely heavily on independent contractors for their business model.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Update: Uber’s Misclassification Cases, Arbitration, and the Supreme Court

Independent contractor vs employee Uber misclassification lawsuit arbitration agreements IMG_1111Remember the children’s game called Red Light, Green Light? One ambitious youngster is selected as the traffic cop, who randomly shouts “red light” or “green light,” requiring all the children to run and stop and start in short bursts that would cause an adult human to tear an ACL.

That’s essentially what’s happening in the big Uber misclassification case that has been pending in California since 2014. The case is called O’Connor v. Uber Technologies and is being overseen by traffic cop / federal judge Edward Chen in San Francisco. If anyone ever gets to the finish line, it will eventually be determined whether Uber drivers are properly classified as independent contractors, rather than employees.

Continue reading