Tagged: Independent Contractor

The NLRB’s Ongoing Shift Toward Employee-Friendly Standards

The labor law landscape is constantly in flux as changes in presidential administrations continue to play a significant role in the development of rulemaking and decisional law at the National Labor Relations Board (NLRB or the “Board”). Over the past several months, various NLRB decisions and guidance memorandums have tipped the scales further in the employee’s favor, requiring employers to re-think their current policies and agreements to avoid the pitfalls created by these recent decisions. Employee Handbook Policies The NLRB’s August 2nd opinion in Stericycle, Inc., 372 NLRB No. 113 (2023), found an employee policy unlawful because, from the employee’s perspective, it had a “reasonable tendency” to discourage employees from exercising their rights under the National Labor Relations Act (NLRA). This decision is a departure from the previous standard where the Board examined, “the nature and extent of the potential impact on NLRA rights, and [] legitimate justifications associated with the rule.” Now a policy is unenforceable if an employee could reasonably interpret it to restrict conduct protected under the NLRA, i.e., if the policy was enacted in response to such protected conduct, or if the policy, in practice, limits rights under the NLRA. In other words, the Board’s primary concern is whether an employee believes they cannot avail themselves of the concerted activities protected...

New Jersey Enacts Three Laws with Enhanced Penalties for Employer Misclassification

On July 8, 2021, Governor Murphy signed into law three bills that amend the Worker Misclassification Package signed into law in January 2020 and intensify penalties against employers that misclassify workers. As employment practitioners across the state will recall, the Misclassification Package signed into law in January 2020 consists of a number of laws that grant the Commissioner of Labor and Workforce Development (“Commissioner”) the power to assess penalties against any employer that misclassifies its employees and to issue stop-work orders at the location where any state wage, benefit, or employment tax law violation is found. The laws included in the previously enacted Misclassification Package also allow the New Jersey Department of Labor (NJDOL) to post on its website a list of employers who have been found to misclassify their workers and to create joint liability for employers and staffing agencies for violations of state wage and hour laws. For a more detailed look at the Misclassification Package, see here.

The U.S. DOL Issues Updated Guidance on CARES Act Unemployment Programs

Since our March 28, 2020 post, “Phase Three COVID-19 Response Bill Now Law: What it Means for Businesses and Employees,” the United States Department of Labor (DOL) has issued three additional Unemployment Insurance Program Letters (UIPL), No. 15-20, No. 16-20, and No. 17-20, to provide additional guidance to states on the administration of the three unemployment insurance programs available under the CARES Act. UIPL No. 15-20 UIPL No. 15-20, issued on April 4, 2020, addresses Section 2104 of the CARES Act—Federal Pandemic Unemployment Compensation (FPUC) benefits—which provides “eligible” individuals who are already collecting state-provided unemployment benefits an additional $600 per week in federal benefits through July 31, 2020. Who is eligible for the additional $600 FPUC payments? Individuals collecting regular unemployment compensation under state programs, Pandemic Emergency Unemployment Compensation (PEUC), Pandemic Unemployment Assistance (PUA), Extended Benefits (EB), Short-Time Compensation (STC), Trade Readjustment Allowances (TRA), Disaster Unemployment Assistance (DUA), and Payments under the Self-Employment Assistance (SEA) program. FPUC is not available, however, for those receiving “additional benefits” (referred to as “extended benefits” by state UC programs) that extend the duration of benefits during high unemployment to those in approved training programs who have exhausted benefits, or for several other reasons. Individuals must be eligible for and receiving benefits under the above programs in order to be...

New Jersey’s Misclassification Package Creates More Protections for Workers

On January 20, 2020, New Jersey Governor Phil Murphy signed into law six bills geared toward protecting self-employed workers. The “Misclassification Package” to which the new laws are referred, expands the Department of Labor (DOL)’s compliance and enforcement tools, and creates new penalties for employers that misclassify their workers as independent contractors instead of employees. This new legislation has been enacted in the wake of a recommendation from the Task Force on Employee Misclassification, which was established by an executive order signed by Governor Murphy in May 2018. The Misclassification Package includes the following laws, which are summarized below. A5838 – Stop-Work Orders. Pursuant to A5838, the DOL Commissioner is authorized to issue stop-work orders against employers where any State wage, benefit or employment tax law violation is found pursuant to an audit or investigation. Procedurally, the Commissioner is required to serve notice of intent to issue the stop-work order at least seven days before the order is issued. Once in effect, the stop-work order requires cessation of all business operations, and remains in effect until the Commissioner determines that the employer has come into compliance and has paid any penalties, or the Commissioner finds in a hearing that the employer did not commit the act on which the order was based. Employers that operate...

SDNY Expands Interpretation of “Possession, Custody, or Control” – Orders Adverse Inference Against Company for Spoliation of Text Messages by Non-Party, Independent Contractor on Personal Phone

In Van Zant, Inc. v. Pyle, et al., 270 F. Supp. 3d 656 (S.D.N.Y. 2017), the Southern District of New York ordered an adverse inference against Los Angeles-based Cleopatra Entertainment LLC (“Cleopatra”), based on the conduct of its independent contractor and non-party to the case, Jared Cohn (“Cohn”). Cohn had been hired by Cleopatra to write and direct a motion picture about the 1977 plane crash that killed two members of the Southern rock band Lynyrd Skynyrd. During the film’s production, Cleopatra and Cohn enlisted the aid of Lynyrd Skynyrd drummer Artimus Pyle (“Pyle”), who, along with other surviving band members (and the estates of deceased members), was party to a 1988 Consent Order that set limits on the permissible use of the Lynyrd Skynyrd name; the likenesses, names, and biographical material of its members; the band’s history; and related items. The Consent Order also detailed the respective parties’ rights to royalties from Lynyrd Skynyrd music, merchandise, and other proceeds, and prohibited the parties from “implicitly or through inaction authoriz[ing] the violation of the terms [of the agreement] by any third party.” Pyle initially did not make Cleopatra aware of the Consent Order, but plaintiffs (also parties to the 1988 Consent Order) sent Cleopatra a copy, along with a cease and desist letter, after learning...

Courts Send Signal That Care in Drafting Arbitration Provisions is Key

Two recent decisions, one by the Third Circuit Court of Appeals and the other by the New Jersey Appellate Division, offer some interesting insight into the validity and viability of arbitration clauses that send employment-related disputes and claims out of the court system and into arbitration. In Moon v. Breathless, the Third Circuit Court held that an arbitration provision in an exotic dancer’s independent contractor agreement did not encompass her statutory FLSA and state wage-and-hour claims. Appellant Alissa Moon (“Moon”), a dancer at Breathless Men’s Club (“the Club”), filed a putative collective and class action against the Club in the District of New Jersey alleging violations of the Fair Labor Standards Act, the New Jersey Wage Payment Law and the New Jersey Wage and Hour Law. The Club moved to dismiss based upon an arbitration provision contained in the Independent Dancer Rental Agreement (the “Agreement”) that Moon signed. The Agreement also contained a provision stating Moon was an independent contractor and not an employee. The District Court denied the Club’s motion to dismiss and directed the parties to engage in limited discovery on whether Moon’s claims were subject to a valid arbitration provision. Following discovery, the District Court found that Moon’s claims fell within the scope of the Agreement’s valid arbitration provision and granted the...

New York Employers Mid-Year Review

In 2017, employers in New York encountered several important statutory changes affecting recruitment of applicants and retention of independent contractors. More legal change will come in 2018, warranting a mid-year review of current employment and hiring practices, as well as preparation for next year’s developments. Employers should take the time now to audit current practices and prepare for the imminent future. Pay Equity On May 4, 2017, Local Law 67 was enacted to prohibit all employers in New York City from inquiring about an applicant’s salary history (including current or prior wages, benefits, and other compensation), and from relying on an applicant’s salary history when determining his or her compensation package during the hiring process, including contract negotiations. The law applies to both public and private employers and employment agencies, and to their employees and agents (collectively, “employers”). Employers may, however, engage in communications with an applicant about his or her expectations as to salary, benefits, and compensation, including any deferred compensation or unvested equity which the applicant may forfeit as a result of leaving his or her current employer. In addition, if the candidate voluntarily (and without any prompting by the prospective employer), discloses his or her salary history to the prospective employer, the employer may consider salary history in determining compensation for the applicant,...

Federal DOL Rescinds Joint Employer and Independent Contractor Guidance

On June 7, 2017, the U.S. Department of Labor (“DOL”), Wage and Hour Division (“WHD”), announced that it was rescinding two significant and heavily-criticized Obama-era Administrator’s Interpretations, the first on joint employer liability under the Fair Labor Standards Act, 29 U.S.C. § 1801 et seq. (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act, 29 U.S.C. § 201 et seq. (“MSPA”) (the “Joint Employer AI”), and the second on independent contractor misclassification under the FLSA (the “Independent Contractor AI”). In its June 7th statement concerning the rescissions, the DOL made its intentions clear: Removal of the two administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act or Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the Department’s long-standing regulations and case law. The Department will continue to fully and fairly enforce all laws within its jurisdiction including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act. Although neither AI constituted a legal precedent, the January 2016 Joint Employer AI presented the DOL’s analysis of the joint employer principles under caselaw interpreting the FLSA and the MSPA. Gibbons issued an alert about the Joint Employer AI when it was first published. The underlying caselaw is not affected by the DOL’s withdrawal...

NYC Council Passes “Freelance Isn’t Free” Act

On October 27, 2016, The New York City Council unanimously passed a local law, the Freelance Isn’t Free Act, aimed to enhance protections for freelancers and purportedly to prevent wage theft. Under the law, freelancers include individuals (and organizations having no more than one person) retained as an independent contractor to provide services in exchange for payment. The law, however, excludes from coverage sales representatives (as defined in section 191 of the New York Labor Law), persons engaged in the practice of law under the contract at issue (and who are members in good standing of a bar and not under any restrictions with respect to the practice of law), and licensed medical professionals. The law does not apply to the United States government, New York City, and New York State (and their respective offices, departments, agencies, authorities, etc.) any local government, municipality, or county, along with any foreign government.

Federal DOL Issues Joint Employer Guidance to Interpret FLSA and MSPA

The U.S. Department of Labor (“DOL”), Wage and Hour Division (“WHD”) recently issued an Administrator’s Interpretation (“Interpretation”) on joint employer liability under the Fair Labor Standards, Act, 29 U.S.C. § 1801 et seq. and the Migrant Seasonal Agricultural Worker Protection Act, 29 U.S.C. § 201 et seq., that provides additional guidance to employers but also may demonstrate the DOL’s increased efforts to focus on joint employer liability for wage and hour compliance. According to the WHD, the workplace increasingly involves use of outsourcing, shared employees, integrated employers, and other forms of co-dependent business models. The WHD seeks to ensure compliance with wage and hour laws for entities that rely upon such alternative workforces. While the Interpretation is not binding upon the courts and constitutes guidance for employers, it lists factors extrapolated from court decisions, other DOL guidance, and related sources that should be considered where an employer utilizes alternative labor sources or has sister or related entities that share common operations or are interdependent.