Vorys on Labor

Vorys on Labor

Insights for the Labor Relations Professional

NLRB Revisits and Clarifies Test for Independent Contractors; Overturns 2014 NLRB Decision

Posted in Independent Contractors, Union Organizing

The Trump NLRB continues to revisit, and overturn, Obama-era decisions.  Late last week, in SuperShuttle DFW, Inc., the NLRB revisited the test for determining when a worker is an independent contractor, and in the process overruled the Obama NLRB’s decision in FedEx Home Delivery.

First, however, a little background information.  As we have previously discussed, employees may join unions; independent contractors may not.  Thus, whether a worker is an employee or an independent contractor is extremely important.

To determine whether a worker is an employee or an independent contractor, the NLRB applies a test that the United States Supreme Court articulated 50 years ago in NLRB v. United Insurance Co. of America.  The United Insurance test looks at ten factors, such as how much control the worker exercises over his work, the amount of skill required to do the work, who supplies the tools and workplace, and how the worker is paid.

“Entrepreneurial opportunity” is not explicitly listed as one of the factors, but the NLRB has over time recognized that entrepreneurial opportunity is an important principle by which the enumerated factors can be evaluated.  In 2014, however, the Obama NLRB, confronted with a decision from the D.C. Circuit Court of Appeals, decided FedEx Home Delivery v. NLRB.  At issue was the roles that “entrepreneurial opportunity,” one the one hand, and “control,” on the other, would play in the NLRB’s analysis.  The FedEx NLRB decided that entrepreneurial opportunity was merely a part of the analysis of a single factor in the United Insurance, 10-factor test.

In SuperShuttle, the Trump NLRB held that FedEx had not given enough weight to entrepreneurial opportunity.  In the NLRB majority’s own words:

[W]e find that the Board majority in FedEx, based on a mischaracterization of the D.C. Circuit’s opinion…, impermissibly altered the Board’s traditional common-law test for independent contractors by severely limiting the significance of the entrepreneurial opportunity to the analysis.

The proper role of entrepreneurial opportunity, the NLRB further explained, is as an element of the employment relationship that should be considered throughout the application of the United Insurance test:

[E]ntrepreneurial opportunity, like employer control, is a principle by which to evaluate the overall effect of the common-law factors on a putative contractor’s independence to pursue economic gain.  Indeed, employer control and entrepreneurial opportunity are opposite sides of the same coin:  in general, the more control, the less scope for entrepreneurial initiative, and vice versa.

The NLRB applied this test to determine whether franchisees who operated shared-ride vans for SuperShuttle Dallas-Fort Worth were employees or independent contractors.  The NLRB found that the franchisees were independent contractors, emphasizing that their control over their work schedules and ability to accept or reject work revealed that they had “significant opportunity for economic gain and significant risk of loss.”

NLRB Member McFerran (D) critiqued the majority’s decision in a lengthy dissenting opinion.  She explained, among other things:  “The majority’s position rests on the premise that ‘entrepreneurial opportunity’ is the core concept of the traditional common-law agency test.  There’s no support for such a claim.”

This decision is an important one, particularly for those employers that rely upon independent contractors to accomplish core business functions.  The NLRB’s action makes it more likely that an employer can defend an independent contractor classification, at least from an NLRA perspective.  This in turn limits risks associated with unionization, including organizing and collective bargaining.  Employers should be generally wary on other legal fronts, however, as the classification of a worker as an independent contract will also implicate potential liability under other laws like the Fair Labor Standards Act.

Joint Employer Issue at the NLRB: Update on Recent Activity

Posted in NLRB, Rulemaking

The joint employer issue at the NLRB continues to be a hotbed of activity.  We last updated our readers on this issue in mid-December.  Here’s what has happened since then:

Developments in the Courts.  At the end of the year, the U.S. Court of Appeals for the D.C. Circuit ruled in the appeal of the Obama Board decision that started it all:  BFI v. NLRB.  The court refused to enforce the NLRB’s order finding joint employer status.  It did so, however, not because it rejected the use of indicia of “indirect control” in the joint employer determination, but rather because the NLRB’s factual analysis in BFI “failed to differentiate between those aspects of indirect control relevant to status as an employer, and those quotidian aspects of common-law third-party contract relationships.”

Rulemaking.  The NLRB continues to move its rulemaking process forward.  The comment period was extended again, however, in light of the D.C. Circuit’s decision.  The current deadline for comments is January 29, 2019.

Congressional Opposition.  Chairman Ring (R) responded last week to a letter from Congressional Democrats who urged that the NLRB withdraw its proposed rulemaking.  Chairman Ring declined to do so, indicating that the NLRB’s majority continued to believe that notice and comment rulemaking was the best way to address the lack of guidance and clarity that exists in BFI.  A copy of the letter is here (pdf) for those interested in the details.

For labor professionals, the current state leaves much to be desired.  The refusal to enforce the NRLB’s order in BFI means there is reason to question its continuing viability.  Clearly, the NLRB’s proposed rule is intended to limit the extent to which “indirect control” plays into the analysis, but that rule is months (at least) from being finalized.  All of this looming at the same time as we start to hear of presidential contenders for the 2020 race, which will clearly have an impact on the NLRB’s alignment on these issues.  So, the best course is going to be to check with a trusted labor law advisor for the most suitable path forward for your particular company and industry.

Will Nathaniel Ogle Get His Money Back? Defendant Files Motion to Dismiss in Ogle v. Ohio Civil Service Employees Association

Posted in Courts, Union Membership

Janus v. AFSCME has opened the door for nonmember employees to sue unions for collecting fair share fees, and employees are taking action.  As readers of this blog know, Janus holds that requiring employees to pay a fee to a union without the employee’s affirmative consent is a violation of the First Amendment.  As discussed in our previous blog post, Nathaniel Ogle sued last year, on behalf of himself and others, to enjoin OCSEA from “requiring the payment of fair share fees as a condition of employment” and to collect damages for fair share fees collected before Janus was decided.  OCSEA has responded by filing a Motion to Dismiss.

The Motion argues that Ogle cannot demonstrate an actual or imminent injury in fact, and therefore lacks standing to sue, because OCSEA “promptly complied” with Janus and did not receive any fair share fees from any employee “attributable to the time after Janus was decided.”  According to OCSEA, Ogle cannot sue based on a now defunct law absent a “credible threat of enforcement.”  OCSEA has responded to Ogle’s demand for the return of his fair share fees by raising “the good-faith defense to liability for damages available to private parties sued under 42 U.S.C. § 1983.”  Here, OCSEA argues that it can presume statutes on the book are valid, even where nonbinding dicta critical of the statute’s constitutionality exist, without fear of being liable for damages.  For those interested in reading more, Defendant’s Motion to Dismiss is here.

Plaintiff refutes OCSEA’s standing and good faith defense arguments in its Opposition to Defendant’s Motion to Dismiss.  Here, Ogle argues that he has standing to sue so long as Ohio Rev. Code § 4117.09(C), the Ohio statute that allowed for the collection of “fair share fees” from nonmember employees, remains on the books.  Plaintiff also claims that “OCSEA cannot invoke a good faith defense,” as no such defense exists for deprivation of First Amendment Rights under § 1983.  For those interested in reading more, Plaintiff’s Opposition to Defendant’s Motion to Dismiss is here.

Stay tuned to vorysonlabor.com for additional updates.

Student Worker Unions are Here to Stay…For Now

Posted in Union Organizing

In 2016, in Columbia University, the NLRB held that students at private institutions have a right to organize. The 3-1 decision overruled a 2004 decision in Brown University, which found that graduate assistants were not employees and thus did not have a statutory right to unionize. Since the Columbia University decision, the NLRB’s makeup has shifted — and it is uncertain whether the NLRB under the Trump Administration would still side with student workers.

In 2018, unions at Yale University, University of Chicago, and Boston College seeking to represent student workers withdrew their petitions for recognition pending review by the NLRB. The unions explained that they would rather seek voluntary recognition from the schools than risk an unfavorable decision from the NLRB under the Trump Administration.

Last month, the Union of Grinnell Student Dining Workers (“UGSDW”) continued this trend, backing down from its attempt to unionize student workers at Grinnell College in Iowa. In November, student workers at Grinnell overwhelming voted in favor of unionization, and the NLRB ordered an election. Grinnell appealed the decision, arguing that the NLRB should reconsider whether student employees have a right to organize. The UGSDW explained that it was withdrawing its petition “in recognition of the national consequences of our fight, and the flimsy possibility of a fair ruling before the Trump labor board.”

For now, Columbia University is still good law, and student workers still have the right to unionize. At the same time, however, it appears safe to say that unions are strategically avoiding any case that would allow the Trump-era NLRB to overturn this decision. Whether the unions’ strategy, and Columbia University, can last until the next presidential administration is yet to be seen. Stay tuned for updates.

NLRB Pushes Back Deadline for Submitting Comments on Joint Employer Rule

Posted in NLRB, Rulemaking

The NLRB’s rulemaking on the joint employer issue has again been delayed.  Earlier this month, the AFL-CIO filed a memorandum (pdf) alleging that business groups secretly had “extensive input” on the proposed rule.  The AFL-CIO requested a 30-day extension of the time to submit comments on the proposed rule.

On Monday, the NLRB announced that it was pushing back the deadline for submitting comments.  Commenters now have until mid-January 2019 to submit comments on the proposed rule.  The NLRB published its proposed rule in September, and the comment period, which was initially set to expire on November 13, 2018, and had previously been extended to December 13, 2018, will now run until January 14, 2019.  Commenters may respond to a comment made during the comment period until January 22, 2019.

Almost 30,000 comments have been made so far about the proposed rule on joint employers.  The NLRB will consider these comments as it drafts a final rule on joint employers.  As we discussed on this blog in September, the proposed rule, as it is current written, would narrowly define joint employers as “employers [who] share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, supervision, and direction.”

 

Senate Finance Committee Holds First Hearing on Changes to Ohio Prevailing Wage Law

Posted in Legislation, Prevailing Wage

Last year we reported on S.B. No. 72, introduced by State Senator Matt Huffman (R), which would modify Ohio law to limit the scope of prevailing wage requirements in Ohio. After being referred to the Finance Committee in March 2017, word about S.B. 72 was mum until this week, when the committee held its first hearing on the bill. To recap, S.B. 72 would make multiple key changes to Ohio law, including eliminating the requirement that political subdivisions (i.e., cities and other public entities) pay prevailing wages on “public improvements.” For a full discussion of the bill itself, see our March 2017 blog post.

Senator Huffman provided testimony on the bill, explaining its aims and proposed benefits to Ohio public projects. Huffman testified that S.B. 72 “would make participation in prevailing wage guidelines permissive, rather than required, for local governments, institutions of higher education, and mental health and specialty districts.” By allowing political subdivisions to selectively apply the Ohio prevailing wage, “smaller, rural districts” that lack the large tax base of major cities can avoid the cost barriers that the prevailing wage imposes, many times “up to 10-20% more than the [local] market rate,” according to Huffman. Huffman also testified that “many bigger cities will agree to pay the mandated wage,” but other, smaller governments are “unable to pay a higher wage,” and are “in many cases not moving projects forward due to increased costs….” Huffman believes that S.B. 72 will allow these smaller political subdivisions to move forward with needed public projects.

S.B. 72 would also relieve local governments from the extensive documentation process needed to comply with the prevailing wage law, which Huffman called “a significant burden.” Huffman further testified, “many contractors do not even want to bid a job if it is a mandated wage project due to the heavy paperwork necessary from their end.”

The Committee will continue to consider S.B. 72, and make any changes the Committee believes necessary before potentially sending the bill to the floor of the State Senate for a vote. Vorysonlabor.com will keep you updated on the status of S.B. 72, and whether action is taken prior to the end of the “lame duck” session in the state legislature.

Class Actions Filed in Ohio Challenging Public Sector Employee Agency Fees and Union Dues

Posted in Courts, Union Membership

The landmark Supreme Court decision in Janus has now precipitated the filing of two new class actions, right here in Central Ohio.  Last week, public employees working at different public agencies, filed two class actions challenging not only the agency fees they have paid in the past, but also union dues they attempted to halt after the Janus decision issued.

As a quick recap, Janus held that public sector employees cannot be forced to pay mandatory agency fees to a public sector union if they are not a member of the union. In the Court’s words:  “Neither an agency fee nor any other payment to the union may be deducted from a nonmember’s wages, nor may any other attempt be made to collection such a payment, unless the employee affirmatively consents to pay.”  The Court reasoned that requiring payment of such fees is akin to forcing employees to subsidize the speech of public sector unions, in violation of their First Amendment free speech rights.

One of the two class actions, Ogle v. Ohio Civil Service Employees Association, AFSCME, Local 11, involves a class of agency-fee payers. The plaintiff, an employee of the Ohio Department of Taxation, brings class action claims on behalf of all public employees represented by the Ohio Civil Service Employee Association, an AFSCME Local in Ohio. The lawsuit seeks to have Ohio’s agency fee law declared unconstitutional in light of the Janus decision, along with obtaining back payments from the OCSEA for agency fees it has impermissibly taken from employees.

The significance of Ogle, however, is that it seeks not just to obtain repayment for all agency fees dating back to the decision in Janus this year, but potentially all the way back to 2012, when the Supreme Court issued a decision in Knox v. SEIU Local 1000, which began to outline the First Amendment case law that lead to the Janus decision. If plaintiffs are successful in forming a class, and obtaining payment for all agency fees taken dating back to 2012, the financial loss to public sector unions would likely be quite substantial.

The other case, Smith v. AFSCME, Ohio Council 8, involves employees of two agencies in different Ohio counties as well as an employee of a metropark, all public employers in Ohio.  Unlike Ogle, these employees allege that they were members of the union paying union dues, but then notified the union that they were resigning and did not consent to further deduction of dues from their pay.  Allegedly, the union denied the employees’ request, citing a provision in the documents the employees signed upon becoming members that establishes a “window period” during which membership may be rescinded.

In this case, the union allegedly had a practice of restricting employees to only being able to withdraw their union membership in the 15 days prior to the expiration of the current collective bargaining agreement. Further, the union also allegedly informs members that after they provide notice of withdrawal from the union, their withdrawal will not be processed for “at least” 30 days, which allegedly has resulted in collection of further dues and fees during that 30-day period after employees have announced they no longer want to be in the union.

Smith is significant, therefore, because it will be the first step to resolving the question of whether an employee who at one time joined a public sector union can rescind that agreement, and the dues obligation that comes with it.  Whether the circumstances under which the employee joined are relevant may also be decided.  Indeed, plaintiffs in Smith alleged that they only joined because they would have had to pay agency fees if they did not.  As discussed in my original post on Janus, this could be particularly significant because many unions, in anticipation of Janus, undertook significant efforts to get agency fee payers to join the union.  Stay tuned to vorysonlabor.com for further developments in these two cases.

NLRB Publishes Proposed Joint Employer Rule

Posted in NLRB, Rulemaking

On Friday last week, the NLRB (in a 3-1 decision) carried through on its previous announcement and published a notice of proposed rulemaking that would address the hotly contested joint employer issue.  “Joint employer” refers to the question of whether one business can be considered the employer of another business’ employees.  Think of situations like subcontracting, franchising, and temporary employment agencies, to name just a few.

The Obama NLRB adopted an expansive rule in the BFI decision, making it fairly easy for two employers to be considered joint employers.  In December 2017, the Trump NLRB overturned this decision in the Hy-Brand decision.  But, this decision was itself vacated earlier this year after the NLRB Inspector General determined that one of the Republican nominees should have recused himself; a conclusion that has generated significant controversy.

In the published notice, the NLRB majority proposes to adopt the following rule regarding joint employment:

An employer…may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.

The NLRB majority goes further, and specifically addresses the concept of “indirect” or “potential” forms of control that BFI held could be used as indicators of a joint employer relationship: Continue Reading

Part 2: Will the Federal Government Take Over the UAW?

Posted in Union Organizing, Unions

Another shoe dropped on the growing UAW-Chrysler scandal.  Recently, Alphons Iacobelli, the former Chrysler VP of Labor Relations, was sentenced to 5½ years in federal prison for siphoning money from the joint UAW-FCA training center.  Mr. Iacobelli purchased a $350,000 Ferrari, $35,000 Mont Blanc pens, and built a pool in his backyard with money from the training center.  He also provided funds and gifts to UAW officials.

Mr. Iacobelli’s sentence follows the 18-month sentence of a former UAW official and wife of a deceased UAW VP who was responsible for negotiation with Chrysler.  Monica Morgan-Holiefield and her departed husband, General Holiefield, paid off their home mortgage and went on extravagant trips with funds from the UAW-Chrysler joint training center.

Thus far, four UAW officials and three Chrysler employees have been indicted.  The UAW and Chrysler’s stance has been the same:  these unlawful payments did not influence collective bargaining negotiations between the two.

But, the federal government sees it differently. The federal prosecutors are alleging that over $9 million from the training center were used to influence negotiations.  In the government’s sentencing memorandum filed with the court, the prosecutors stated, “FCA sought to obtain benefits, concessions and advantages in the negotiation and administration of collective bargaining agreements with the UAW in an effort to buy labor peace.  High-level officials of the UAW sought to enrich themselves and live lavish lifestyles rather than zealously work on behalf of the best interests of tens of thousands of rank and file members of their union.”

If the government’s allegations turn out to be true, then the government could move to oversee the UAW’s finances, just like it did with the Teamsters for over a decade.

Will Employers Get Their Email Systems Back? NLRB Invites Briefs on Purple Communications

Posted in Employee Handbooks, NLRB, Union Organizing

Last Wednesday, the NLRB issued a notice and invitation for parties to file briefs to address how the board should treat its previous decision Purple Communications, Inc., 361 N.L.R.B. 1050 (2014).  As we explained when Purple Communications was decided, the NLRB held that employees who were given access to their employer’s e-mail system for work-related purposes have a right to use that system for statutorily protected communications during non-working time.  A similar case has now come before the board, Caesars Entertainment Corporation, and the NLRB has invited interested parties to file briefs as to whether it should adhere to, modify, or overrule Purple Communications.

The governing rule from Purple Communications replaced the one from Register Guard, 351 N.L.R.B. 1110 (2007). Under Register Guard, employers could lawfully limit employees’ use of their email system for certain non-business-related activities, including statutorily protected communications, assuming that it did so in a non-discriminatory fashion.

Purple Communications, Inc. held that the Register Guard rule was “clearly incorrect,” and overruled it. The NLRB reasoned that the old rule gave too much consideration to employers’ property rights and not enough to employees’ rights to communicate about their employment.  The NLRB added that the old rule did not properly take into account the importance of e-mail as a vital means of communication.  It also drew a distinction between bulletin boards and copiers, on the one hand, and e-mail systems on the other hand, given long-established NLRB precedent permitting employers to prohibit non-business uses of the former. Continue Reading