Independent Contractors

Following the launch of the so-called “MeToo” movement, the California Legislature (controlled by a Democratic supermajority) has aggressively churned out new bills that further strengthen the ability for workers to sue their employers and increase the already-significant regulatory burden on these companies. This fall, the California Legislature is geared to send three significant bills to Governor Gavin Newsom that all California employers should carefully follow.
Continue Reading Three Major Workplace Bills to Land on Gov. Gavin Newsom’s Desk

This article originally appeared in Healthcare News on August 6, 2019.

The California Supreme Court’s 2018 landmark decision, Dynamex Operations West, Inc. v. Superior Court (Dynamex), redefines the employment relationship between entities and workers in California and creates one of the most stringent standards in the United States for classifying workers as independent contractors.

Applying the changes introduced by Dynamex can present significant complications in many industries. This is especially true for the health care industry due to California’s prohibition of corporate practice of medicine (CPOM) and its associated rules. For example, the state requires hospitals to have physicians available during all hours of hospital operation, while, at the same time, generally prohibiting hospitals from hiring physicians directly.

Due to these complexities, many California health care entities may benefit from examining the potentially sweeping impacts of this new interpretation of the law and determining near- and long-term methods for making necessary changes to their hiring and retention policies. Following is an in-depth overview of the potential implications for health care employers and how those in the health care industry will likely need to respond.
Continue Reading Unintended Consequences: Dynamex and California Health Care Employers

UberX and UberBLACK Drivers Are Not Employees for Purposes of the NLRA

According to the NLRB General Counsel’s Division of Advice (GC), Uber’s UberX and UberBLACK drivers are independent contractors exempt from the rights and protections of the National Labor Relations Act (NLRA), including the right to form and join unions.  Advice Memo, dated April 16 2019, Uber Technologies, Inc., Case Nos. 13-CA-163062, 14-CA-158833 and 29-CA-177483. Applying the National Labor Relations Board’s (Board or NLRB) traditional multi-factored common law agency test used to determine whether workers are employees or independent contractors and after considering all of the common law factors through the “prism of entrepreneurial opportunity” as mandated by the Board’s recent decision in Supershuttle DFW, Inc., 367 NLRB No. 75 (January 25, 2019), the GC has found that the drivers were independent contractors and not employees within the meaning of the NLRA.

The GC also considered and then discounted certain factors often relied upon to establish a worker’s employee status, finding them not dispositive indicators of employee status.  For instance, in the GC’s view, the fact that Uber received a percentage of a driver’s fare instead of charging a driver a flat fee for their use of the Company’s ride sharing platform did not support a finding of employee status because the fundamental features of the Uber system including Uber’s reliance on customer reviews to maintain quality and insure repeat business without the need for company control overcame any inference of employer control or the diminution of a driver’s entrepreneurial opportunity.  Likewise, the fact that no special skills or experience were required to qualify a driver to use the Uber platform and that the driver’s work was integral to Uber’s business did not mandate a finding of employee status, citing prior Board decisions in which individuals were held to be independent contractors, even though their services were integral to the business of the company that engaged them, given the entrepreneurial opportunity afforded them. 
Continue Reading Which Are They? Independent Contractors Or Employees? Navigating The Conflicts Between State And Federal Law

Last year, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a landmark decision that dramatically increased the risk of misclassifying individuals as independent contractors. As previously reported, although Dynamex replaced the longstanding Borello standard with the “ABC” test, it also left two critical questions unaddressed. First, Dynamex did not address whether the ABC test applies retroactively. Second, Dynamex did not decide whether its scope was limited to coverage under the Industrial Wage Commission’s (“IWC”) Wage Orders or if its holding generally applied to the Labor Code as a whole. In the last five days, both questions have been answered.

On May 2, 2019, the Ninth Circuit found that Dynamex applies retroactively under California law in Vazquez v. Jan-Pro Franchising International, Inc., the most notable decision to date regarding Dynamex’s retroactivity. Shortly thereafter, on May 3, 2019, the Division of Labor Standards Enforcement (“DLSE”), California’s wage and hour enforcement agency, issued a letter opining the ABC test applies to both the IWC Wage Orders and any Labor Code provisions that enforce requirements set forth in the Wage Orders. Although neither the Ninth Circuit nor the DLSE can authoritatively interpret California law, these developments indicate that Dynamex’s scope—which governs hundreds of thousands of independent contractor relationships throughout the state—has continued to expand its already extensive reach.
Continue Reading The Future of Independent Contractors: Ninth Circuit Applies Dynamex Retroactively and the DLSE Issues Opinion Letter Expanding Its Scope

In a business-friendly decision issued on January 25, 2019, the National Labor Relations Board (“NLRB” or “Board”) revised its test for determining whether putative independent contractors are exempt from coverage under the National Labor Relations Act (“NLRA”). See SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019) (“SuperShuttle”). The Board’s SuperShuttle decision affirmed a 2010 Acting Regional Director’s decision that a group of franchisee airport shuttle operators were independent contractors. In the process, the Board overturned FedEx Home Delivery, 361 NLRB 610 (2014) (“FedEx”), an Obama-era decision that, according to the SuperShuttle Board, “significantly limited the importance of entrepreneurial opportunity” to the NLRB’s independent contractor test. Given this new development, employers should expect that, at least under the NLRA, it will be easier than before to show that a worker should be classified as an independent contractor (instead of an employee).
Continue Reading National Labor Relations Board Issues Decision Overruling Obama-Era Independent Contractor Test: What This Means For (Putative) Employers

On January 15, 2019, the Supreme Court issued its decision in New Prime Inc. v. Oliveira, where it decided independent contractor truck drivers cannot be forced into arbitration.  The Court’s decision is based on Federal Arbitration Act § 1, which excepts from coverage disputes involving “contracts of employment” with “workers engaged in foreign or interstate commerce.” 
Continue Reading SCOTUS Holds Independent Contractor Truck Drivers Exempt from Arbitration Under FAA

In Jesus Cuitlahuac Garcia v. Border Transportation Group, LLC, et al, the California Court of Appeal, Fourth Appellate District has held that the ABC test set forth in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) applies only to causes of action brought under wage orders.

Plaintiff Garcia was a taxicab driver for several years with Border Transportation Group (“BTG”). In 2015, a year after ceasing work for BTG, he sued BTG and two individual defendants for various wage and hour violations.
Continue Reading California Court of Appeal Affirms That Dynamex’s ABC Independent Contract Test Is Limited To Claims Arising Under Wage Orders

On Monday, April 30, 2018, the California Supreme Court issued a landmark decision in the matter of Dynamex Operations West, Inc. v. Superior Court of Los Angeles. In a voluminous, 82-page decision, the California Supreme Court reinterpreted and ultimately rejected the Borello test for determining whether workers should be classified as either employees or independent contractors for the purposes of the wage orders adopted by California’s Industrial Welfare Commission (“IWC”) in favor of a worker-friendly standard that may upend the existing independent contractor labor market.

In particular, the Court embraced a standard presuming that all workers are employees instead of contractors, and placed the burden on any entity classifying an individual as an independent contractor of establishing that such classification is proper under the newly adopted “ABC test” which will be discussed in further detail below.
Continue Reading The Dynamex Decision: The California Supreme Court Restricts Use of Independent Contractors

Last week, the ridesharing giant, Uber, secured a resounding legal win when a federal judge dismissed a putative class action lawsuit alleging the company violated the Fair Labor Standards Act by failing to pay drivers overtime. The ruling is enormously important, not simply for Uber, but for the growing rideshare technology industry as a whole.

Less than a decade ago, outside of calling a cab company and hoping for the best, the notion of reliably getting from ‘here to there’ via a few button presses on a cell phone was unthinkable. Things have changed. Uber—the now-ubiquitous application that allows patrons to hail various styles of ride—has wholly disrupted the transportation service industry. According to the latest estimates, over 160 thousand Uber drivers dot the roads. Those drivers provide approximately 40 million rides each month, and the company’s 2017 valuation reached $69 billion. The term “Uber” has become a verb (e.g., “I’ll Uber there”) analogous to “just Google it” or “xerox the document.”


Continue Reading Uber Drivers’ Class Action Lawsuit Hits Permanent Red Light

Earlier this year, we reported that New York City adopted The Establishing Protections for Freelance Workers Act, also known as the Freelance Isn’t Free Act, (the “Freelance Law”). As explained in our prior blog, under the Freelance Law, a company must: (1) provide a written contract when it contracts with a freelance worker for services worth $800 or more, (2) ensure that all payments to freelance workers are made on a timely basis and paid in full, and (3) prohibit any type of retaliatory or adverse action against freelance workers for exercising the rights granted to them under the Freelance Law.
Continue Reading UPDATE: NYC Adopts New Rules Implementing Freelance Law