Unions Divided on Pathway to Organize Gig Economy Workers

Unions remain baffled in how to organize workers in the gig economy. The gig economy is a term use for companies, like Uber, whose business model is built on the use of independent contractors. Independent contractors are, by law, not allowed to join unions. But that is not stopping unions from creatively trying to represent the independent contractors.

 

Remember when Seattle City Council passed an ordinance allowing ride-share drivers to join unions? Well, that ordinance is on-hold pending the outcome of a lawsuit filed by the U.S. Chamber of Commerce seeking to invalidate it. In the meantime, union organizers are considering quasi-union models for independent contractors. One option bandied about is to create an industry-wide oversight board with the power to audit sharing-economy businesses and negotiate certain terms and conditions of work.

 

The gig economy is not limited to just Uber. It also includes Lyft personal car service, Instacart personal grocery shoppers, Postmates food deliverers, and home cleaning and repair service providers linked with customers through online platforms such as TaskRabbit and Handy, to name a few. As technology continues to develop, conventional wisdom believes that the gig economy will proliferate which means 1) less employees for unions to organize, and 2) more independent contractors for unions to figure out how to organize.

 

A Teamster lobbyist recently said “Labor unions are kind of split, and they certainly don’t have a single voice on how to [unionize gig workers] and how to create an organizing model that makes sense.”

 

The Independent Driver’s Guild is trying to fill some of that void for Uber drivers in New York. The Guild is funded by Uber and works in partnership with the International Association of Machinists. (IAM representing independent contractors in the taxi/ridesharing industry sounds about right these days.) The Guild has established an appeals system for drivers kicked off of the Uber platform and convinced Uber to scrap a policy requiring luxury vehicle drivers to also pick up lower-paying fares.

 

Notice the Guild hasn’t done anything with prices or pay. When you have a bunch of businesses (which independent contractors are) coming together to fix prices among them, you may have antitrust issues. Antitrust law exempts unions that bargain on behalf of employees they represent. But, according to Mike O’Brien, a member of the Seattle City Council, “My understanding of antitrust law is that it was intended to break up the robber barons colluding to limit competition. [To say] that these companies want to use it to stop low-wage workers from joining together seems to be a stretch.”

 

To be sure, unions would like dues money from gig workers, but as it relates to rideshare gig workers, unions would rather they go out of business. Follow me here. Each effort that chips away the rideshare gig worker from being an independent contractor places the worker, and the company, closer to a traditional taxi company which will ruin the very thing (whatever that is) that makes the gig economy successful. Americans outside of New York City and Chicago do not regularly use taxi cabs. Americans throughout the United States use Uber. Organizing Uber equals turning Uber into a cab company which equals no one will use it which results in Uber going out of business. A union wins if it organizes a company or the company goes out of business. A union loses if its workers are non-union.

 

Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 285-5342 or emailing him at Matt@MattAustinLaborLaw.com. 

NLRB Quick to Conclude Independent Contractors are Employees

The National Labor Relations Board filed a complaint against Postmates, Inc., an on-demand company, similar to Uber, that has a network of couriers delivering goods. The complaint alleges that Postmate’s violated the National Labor Relations Act by requiring employee drivers to enter into arbitration agreements as a term of employment. The complaint further alleged that Postmates interfered with the Section 7 rights of Customer Service Associates (CSA) by prohibiting them from discussing terms and conditions of employment.

While the NLRB has made clear that misclassification of independent contractors could result in an unfair labor practice, in this case the NLRB simply assumed that Postmates’ couriers are employees, rather than independent contractors, without holding a hearing or allowing any briefing on the issue. This is significant because the NLRB does not have jurisdiction to file complaints on behalf of independent contractors.

The Postmates complaint should put employers utilizing independent contractors on notice that the NLRB will likely gloss over the employer’s characterization of independent contractor status and file a complaint when it believes that worker are “employees” under the National Labor Relations Act, and that a violation of the Act has occurred. 

As a result, employers in the on-demand economy should: 1) make sure that their classification of couriers as independent contractors is consistent with the law; and 2) avoid having overly-broad or vaguely defined employment policies that could be interpreted to infringe on the Section 7 rights of potential employees. This “belt and suspenders” approach could help on-demand companies avoid lengthy and costly battles at the NLRB.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

h/t Seyfarth Shaw’s Employer Labor Relations Blog

Court Overrules NLRB, Says Workers are Independent Contractors Not Employees of Referral Service

A referral service that referred stagehands to event producers for concerts, plays, trade shows, and other events offered jobs to employees on a first-come, first-served basis. The referral service, which required employees to sign independent contractor agreements, did not withhold taxes or other benefits, prohibit the stagehands from accepting jobs from other referral services or from doing other work, or provide stagehands with any tools (other than a company vest for safety and identification reasons). The stagehands were required to check in and out with the company in order to keep track of their hours. Nonetheless, when a union petitioned the NLRB to represent the stagehands, the Board concluded they were employees, directed an election, and certified the union.

On appeal, the Eleventh Circuit said the Board made several errors “when it applied the law to the facts.” The errors include:

  1. The Board erred by not giving adequate weight to the facts that the employer did not withhold stagehands’ taxes and that the stagehands signed independent contractor agreements.
  2. The Board’s consideration of the stagehands’ inability to negotiate their pay was irrelevant.
  3. The Board’s conclusion that the stagehands performed the “essential functions” of the company’s operations was erroneous.
  4. Contrary to the Board’s conclusion that the company controlled the workers, “[o]nly the event producers and touring crews control the means of the work performed by the stagehands, and [the employer] lacks the expertise to direct the stagehands in their work for any particular client.”

The Court’s analysis is instructive to other companies faced with the potential union organizing of independent contractors. As the NLRB continues to aggressively expand the reach of the National Labor Relations Act and help unions organize any worker possible, this case provides a decent roadmap to ensure independent contractors remain independent.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

NLRB Finds Door-to-Door Solicitors are Employees

A non-profit organization that distributes food to low-income individuals funds its operations by using canvassers to solicit contributions from area residents. The non-profit requires the canvassers to be on time for transportation to and from the areas they target for solicitations, but otherwise canvassers largely work unsupervised. The non-profit considered the canvassers independent contractors, and their earnings were reported on an IRS 1099 form.

The non-profit ended its relationship with a canvasser shortly after a union began organizing them. The union filed unfair labor practice charges against the non-profit over this “firing.” An administrative law judge dismissed the charges because the canvassers were independent contractors rather than employees, and independent contractors cannot unionize under the National Labor Relations Act.

The National Labor Relations Board disagreed, and found that the non-profit’s lack of supervision did not automatically make the canvassers independent contractors.

Companies that label their workers independent contractors are not immune from unionization efforts. Even if a company classifies its workers as independent contractors, treats them like independent contractors, and pays them like independent contractors, and the workers agree they are independent contractors and act like independent contractors, the Board may still find that they are employees. Here, the Board ordered the non-profit to reinstate the terminated worker, pay him back pay for the time he was off work, and allow him to renew his union organizing efforts.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

Independent Contractor Misclassification Results in $1.5M in Back Wages Against Company’s Owner, Personally

Have you ever called a cable company and another company’s van showed up in your driveway? Do you know whether workers in those “other vans” are employees of the cable company or independent contractors hired by the cable company to install cable in your home?

According to the United States Department of Labor Wage and Hour Division, those workers were employees and owed significant back pay. Specifically, Cascom, Inc. from Fairfield, Ohio was liable for back wages and liquidated damages of nearly $1,500,000 to 250 cable installers that were misclassified as independent contractors.

Trying to avoid liability for the misclassification, Cascom shut down during the DOL investigation. Now, the DOL is seeking to collect the $1.5 million from Cascom’s owner, personally. I’d hate to try to explain that one to the wife.

According to the DOL’s press release about this case:

Misclassified employees are often denied access to critical benefits and protections – such as family and medical leave, overtime, minimum wage, and unemployment insurance – to which they are entitled. Employee misclassification also generates substantial losses to the Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers’ compensation funds.

Under the FLSA, an employment relationship must be distinguished from a strictly contractual one. An employee – as distinguished from a person who is engaged in a business of his or her own – is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business that he or she serves.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses, and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records.

I couldn’t have said it better myself.

Let this be a reminder to all companies that the federal government is rampantly investigating independent contractor status. Companies that use independent contractors should have their status reviewed by counsel to ensure they are not inadvertently inappropriately paying workers.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.