UBER REACHES SETTLEMENT WITH DRIVERS, PENDING COURT APPROVAL

UBER has agreed to pay $100 million to resolve two wage and hour class actions pending in California and Massachusetts, but their drivers will remain independent contractors.  The class action settlement must first be approved by Judge Edward Chen of the District Court of Northern California before it becomes final.

Despite the hefty price tag, if there is a winner in this settlement, it is most likely UBER.  The ride-sharing giant valued at over $60 billion dollars can easily part with the $100 million.  In addition, they have also agreed to some non-monetary concessions – drivers will be given more information about rider feedback, more advanced notice before they are terminated, and an opportunity to appeal termination decisions.  Drivers will also be permitted to encourage – but not require – tips from riders.  Finally, UBER will assist drivers in forming “Driver’s Associations,” however those associations will not have the authority to collectively bargain on behalf of drivers.

Despite all they are agreeing to give up, UBER’s CEO is still “so pleased” with this settlement because it allows the company to continue classifying its drivers as independent contractors, not employees.  Such a classification allows UBER to avoid providing benefits such as minimum wage and overtime guarantees, health insurance, payroll taxes, and unemployment compensation, to name a few.  For more details on the implications of independent contractor status, click here.

Even if the settlement is approved, however, the debate over drivers’ (and other “gig” workers’) classification will continue.  This settlement simply kicks the can down the road.  As the nature of work changes, and the cost of actual “employees” continues to rise, it is a question that courts and legislatures will eventually have to answer.

If you are denied benefits because you are misclassified as an independent contractor, contact Kimble Law today.

NLRB’s Definition of “Employer” Could Have Wide-Ranging Effects

cropped-working-picture-5.jpeg

By Andrew Kimble

On August 27, 2015, the National Labor Relations Board redefined “joint employers” in a way that will impact the rights of workers in a broad range of industries.

The case addressed whether a waste management firm, Browning-Ferris, should be held responsible for labor violations committed by their contractors.  The NLRB concluded that Browing-Ferris was a “joint employer” of their contractors’ employees, because the two companies “share or co-determine those matters governing the essential terms and conditions of employment.”  As a result, both joint employers could be required to collectively bargain with the contracted employees, and were responsible for their contractor’s labor practices.

This is a notable departure from previous rulings, where the NLRB held that companies were responsible only for those working under their direct control.  But on Thursday, the Board said that the old standard was “increasingly out of step with changing economic circumstances.”  The decision comes in response to the growing trend in the U.S. for companies to employ temporary workers and contract workers through staffing agencies or other third parties.  This arrangement allows large companies to disclaim responsibility for the conditions of employment while leaving employees in limbo between the company that is listed on their paycheck and the company that directs their work.

Two dissenting NLRB appointees railed against the decision, saying it “dramatic implications” on labor relations policy and its effect on the economy.  Exactly what effect it will have is to be determined, but business groups are concerned that the franchisor-franchisee relationship is in danger.  While the decision does not address franchises, its logic can easily be extended to such arrangements.  If it is, franchisors will have increased responsibility in a broad range of industries, including hotels and hospitality, restaurants and fast food chains, manufacturers, construction firms, retail workers, and staffing agencies.

If you are an independent contractor, work for a staffing agency, or your work is subject to the control of two or more companies, you should contact an employment attorney to better understand your rights.  Call Kimble Law Office today for a free consultation.

My Boss says I Am Not Entitled to Overtime Because I Am an “Independent Contractor”…

No matter what your company tells you, the question of whether you are an “independent contractor” or “employee” is determined by the actual circumstances of your work relationship, not by any contract you sign or by the designation provided by your company.

There are a number of factors considered in deciding whether an independent contractors has been misclassified.  Many courts (and the U.S. Department of Labor) use the “economic realities” test, which considers the following factors:

  1. The extent to which the work performed is an integral part of the employer’s business;
  2. The worker’s opportunity for profit or loss depending on his or her managerial skill;
  3. The extent of the relative investments of the employer and the worker;
  4. Whether the work performed requires special skills and initiative;
  5. The permanency of the relationship; and
  6. The degree of control exercised or retained by the employer.

Within these factors, a wide range of factual circumstances can tip the scales one way or the other, such as:

  • Does the individual have to work a specific schedule set by the company;
  • Does the individual wear a company uniform;
  • Does the individual have to perform tasks in accordance with company operating procedures;
  • Does the individual perform similar work on a contract basis for other companies or individuals;
  • Who supplies tools for the work to be completed;
  • Who determined how much or in what manner the individual would be paid;
  • Are expenses are reimbursed by the company;
  • Does the individual receive benefits like paid time off, sick leave, insurance, or retirement benefits?

This is far from an exhaustive list, and each work relationship is analyzed based on the specific facts of the case. But generally, if the company exercise significant control over the work performed, and if the individually is economically dependent on the company, it is highly likely that the individual should be classified as an employee.

Whether you are an employee or an independent contractor has serious real-life consequences. Perhaps most importantly, independent contractors are not entitled to the same employment rights, benefits, and protections as traditional employees. For example, independent contractors are not “employees,” according to the Fair Labor Standards Act (FLSA), so they are not entitled to minimum wages or overtime compensation. For the same reason, independent contractors have no right to take medical leave according to the Family and Medical Leave Act (FMLA), will not be able to bring discrimination claims under most federal and state statutes, and are not entitled to unemployment insurance if they lose their position. These are only some of the rights and benefits that independent contractors are denied.

Additionally, an individual’s status affects the way both the company and the individual must pay taxes. This writer is not a tax professional, and therefore cannot provide advice on all of the specific ways independent contractor status relates to tax obligations. However, speaking generally, independent contractor status allows a company to avoid paying certain types of taxes, and allows them to push those burdens onto the individual.

The recent trend is that “independent contractor” designations – especially for lower income workers – are being met with skepticism by courts and government agencies.  Earlier this month, the DOL issued an agency interpretation as it relates to the FLSA, and made their position clear that “most workers are employees.”  Also, as was widely publicized, the California Labor Commissioner concluded last month that Uber, the car service juggernaut, had misclassified its drivers as independent contractors, even though drivers drive their own cars and set their own work schedules.

If you think you are misclassified as an independent contractor, you should contact an employment attorney as soon as possible to ensure you are not being denied your legal rights. For a free, confidential consultation, contact Kimble Law Office at 614-636-0509.