Since 2010, the First and Only Blog Dedicated to Independent Contractor Law

No Major Changes; Impact of Final Independent Contractor Regulation Issued Today ‎Is Questionable

As we reported here on the day the U.S. Department of Labor issued a proposed regulation regarding the classification status of independent contractors, the regulation, once finalized, would be “much ado about (almost) nothing.”  We observed that unlike regulations with hard and fast rules, the proposed regulation was in the nature of an administrative interpretation comprising the Labor Department’s review of existing court decisions and its articulation of a preferred legal analysis. We predicted that, when released in final form (which occurred today), courts would not give much if any deference to this agency regulation on the classification of independent contractors under the federal wage and hour law.

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A Company’s Best Friend ‎– An Effectively-Drafted Arbitration Clause in an IC Agreement: December 2020 News Update

December was a very slow month for court decisions affecting independent contractors, but both decisions reported below confirm that effectively drafted arbitration clauses remain one of two “best friends” for businesses that engage independent contractors. On the very day the U.S. Supreme Court issued its decision in New Prime Inc. v. Oliveira in January 2019, we predicted here that, despite some commentators’ exuberance and others’ despair, the decision “may have little or no impact as to whether workers classified as independent contractors can be compelled to arbitrate their IC misclassification claims.”  In New Prime, the Supreme Court held that a court, not an arbitrator, should decide if an IC is covered by the Federal Arbitration Act’s arbitration exclusion for workers engaged in interstate transportation. We commented that the FAA is not the only basis upon which companies can seek to compel arbitration; most state arbitration laws, which typically do not have exclusions for interstate transportation workers, also may provide an alternative basis to compel arbitration of IC misclassification class action claims. That is exactly what transpired in one of the two IC arbitration cases we discuss below.

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CARES Act, Take 2: Pandemic Unemployment Assistance Extended for Independent Contractors

Earlier this evening, December 27, the President signed the next stimulus bill that Congress ‎passed on December 21. The legislation extends unemployment assistance not only for ‎employees but also for independent contractors and other self-employed individuals for 11 ‎weeks. The bill (H.R. 133) includes the “Continued Assistance for Unemployed Workers Act of ‎‎2020,” which provides for an extension of the CARES Act unemployment provisions from ‎December 31, 2020 until March 14, 2021, including the provisions that had created a new form ‎of benefits for all self-employed individuals: pandemic unemployment assistance (PUA). As ‎detailed in a prior blog post, the original CARES Act provided PUA benefits for up to $600 a ‎week for as many as 39 weeks, retroactive to January 27, 2020. The new stimulus bill, CARES ‎Act II, halves that amount and limits PUA to $300/week. Those eligible for PUA also will ‎receive an additional $300/week through the end of the extension period, whereas CARES Act I ‎had added $600/week in federal stimulus payments. Finally, the new stimulus bill provides ‎independent contractors with paid sick and paid family leave benefits through March 14, 2021.‎

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Tough Month for Football, Interpreting, Energy, and Trucking Industries in Misclassification Cases: November 2020 News Update

November 2020 was a superb month for ride-sharing and app-based delivery companies and for President-Elect Biden, but was far less favorable to professional sports leagues, interpreting and translation companies, oilfield businesses, and the trucking industry. We comment below on the success enjoyed in a California voter referendum for selected gig economy industries and the Biden Plan for addressing independent contractor misclassification. But unfavorable class action litigation experiences in other industries, including high-profile cases involving the NFL and the trucking industry, send a message to businesses using independent contractors that they need to enhance considerably compliance with federal and state independent contractor laws. 

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The Confusing Biden Plan for Independent Contractor Misclassification

President-elect Joe Biden’s campaign issued a comprehensive labor plan that seems to focus on empowering unions. But while the title of this campaign platform is “The Biden Plan for Strengthening Worker Organizing, Collective Bargaining and Unions,”[1] buried inside is a proposal addressing the misclassification of independent contractors that is internally inconsistent. Was it purposeful, reflecting the Biden campaign’s effort to court union voters, while maintaining a moderate view of the vital role played in our economy by the contingent workforce and businesses that play by the rules? Or is it just confusing? And what should businesses that use independent contractors do in the meantime?  We answer these questions below.

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Oil and Gas, Cable, Shopping, Pet Sitting, and Shipping Companies Lose Ground in Independent Contractor Misclassification Cases: October 2020 News Update

In October, a diverse group of industries experienced adverse court rulings defending independent contractor classification class and collective action cases.  Two cases involved courts granting conditional certification of collective status: one involves Texas oil field workers; the other concerns Illinois cable technicians.  Both industries have been targeted by multiple IC misclassification class actions, as reported on a number of occasions in this blog. Shipt, the personal shopping service, was subjected to a new IC misclassification lawsuit, also in Illinois, which uses a test for independent contractor status that is very unfavorable to companies with an independent contractor business model. A pet sitting company in Missouri also fared poorly when an appellate court affirmed an administrative decision finding the pet sitters with whom it contracts are employees and not independent contractors.  A shipping company suffered the worst news last month for companies relying on the use of independent contractors when it lost its effort to bypass an administrative decision assessing it $1.8 million in unemployment tax liabilities for drivers found to be misclassified as independent contractors.

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“Yes” on Prop 22 in California Brings Relief to Rideshare and App Delivery Services; Legal Challenges Will Continue, However

The results are in. Voters in California don’t want their rideshare and app-based delivery services to change.  By an overwhelming majority, Proposition 22 was approved by California voters.  Essentially, that means that unlike all other businesses in California that have to meet the strict Dynamex ABC test or, if they are exempted from this test, the more rational multi-factor Borello test, companies in these gig economy industries now have a safe harbor, so long as they provide the benefits set forth in Prop 22 to their independent drivers and couriers.

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Over 1,800: The Number of Comments Submitted to Labor Department on Proposed Rule Governing Independent Contractor Status

In response to the U.S. Department of Labor’s proposed regulation on independent contractor status under the Fair Labor Standards Act, over 1,500 individuals and organizations have already filed comments prior to the deadline at midnight tonight, October 26, 2020. Those submitting comments in support of the proposed rule include the U.S. Chamber of Commerce and the National Association of Manufacturers; those opposed include the AFL-CIO, the Teamsters Union, and the National Employment Law Project. The comment period was only 30 days in duration.  Regardless of the results of the upcoming election, it appears that the Labor Department will seek to issue a final rule before the end of this calendar year.  The publisher of this legal blog filed comments as well, which are reproduced in their entirety below.  They neither support nor oppose the proposed rule but rather suggest the Labor Department make clarifications and offer examples of some of the factors to be considered in determining if a worker or group of workers should be classified as independent contractors or rather employees under the FLSA. At the conclusion of this post, we provide an analysis and offer readers a key takeaway: regardless of the issuance of the final rule impacting this particular federal law (the FLSA), companies should take steps to enhance their compliance with all applicable federal and state IC laws and minimize their potential exposure to IC misclassification liability.

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Polar Opposites Among Independent Contractor Tests: September 2020 News Update

Last month presented a clash between the enactment of a new version of the most restrictive ‎state law test in the nation for independent contractor status and the issuance of a proposed ‎federal regulation that would create one of the more lenient legal standards for IC status. The ‎state law, California Assembly Bill 2257 (AB2257) which Governor Newsom signed into law on ‎September 4, 2020, replaced Assembly Bill 5 (AB5), which had codified California’s version of ‎the so-called ABC test. Many commentators regard this ABC test, which changed decades of ‎settled law, as the death-knell for the overwhelming number of California independent contractor ‎relationships that were structured in a lawful manner, causing many freelancers to lose their work ‎opportunities with both gig economy and traditional businesses. Meanwhile, the U.S. Labor ‎Department issued a proposed regulation establishing a test for IC status under the Fair Labor ‎Standards Act that essentially preserves the legitimate nature of many independent contractor ‎relationships but did so in a manner that may insulate more businesses from misclassification ‎liabilitys. ‎

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Much Ado About (Almost) Nothing: The Labor Department’s New Proposed Independent Contractor Classification Rule

Earlier today, the U.S. Labor Department issued a proposed regulation addressing the ‎classification criteria of workers as independent contractors or employees under the Fair Labor ‎Standards Act (FLSA). Unlike regulations with hard and fast rules, this proposed regulation is in ‎the nature of an administrative interpretation articulating the Labor Department’s view of the ‎law. It analyzes decades of court decisions and seeks to issue a uniform interpretation of those ‎cases for the courts to apply in the future. Yet at the same time, the proposed regulation includes ‎a 90-page preamble that acknowledges that the courts have, with few exceptions, uniformly ‎applied the test for independent contractor status under the FLSA. The proposed rule, therefore, ‎if issued in final form, would provide little guidance to the public or the courts. But it will shine ‎a brighter light on the issue of independent contractor misclassification. Companies would be ‎wise to enhance their independent contractor compliance, such as in the manner noted in the ‎‎“Takeaway” below.

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About The Publisher

Richard ReibsteinRichard Reibstein is the publisher of this legal blog, which has been, since its inception in 2010, the only legal blog in the country dedicated exclusively to the subject of independent contractor compliance and misclassification. Read more

JDSupra The publisher of this blog, Richard Reibstein, was named “Top Author” in JD Supra Readers’ Choice Awards (2016, 2017, 2019 and 2020) for his thought leadership on the topic of “Employer Liability” issues as well as “Top Author” on “Class Actions” in 2016 and 2020.

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Locke Lord LLP

For the latest information about our Firm visit lockelord.com and Locke Lord’s Independent Contractor Misclassification and Compliance Practice