Employment Law Observer

On November 22, 2023, Governor Kathy Hochul signed the “Freelance Isn’t Free Act” into law. The Act, which is similar to the New York City law containing the same name, is designed to provide protections for freelance workers (i.e., independent contractors). The Act will go into effect on May 20, 2024, and will apply to work contracts entered into on or after that date.

Earlier this week, the United States Department of Labor (DOL) issued a "final rule" providing guidance on the proper classification of employees and independent contractors under the Fair Labor Standards Act (FLSA).

The U.S. Department of Labor (DOL) has proposed a rule that would make it more difficult for companies to treat workers as independent contractors. The proposed rule would return to a "totality-of-the-circumstances" analysis of the economic realities test—in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. The DOL said it will consider, among other factors, the worker's "opportunity for profit or loss, investment, permanency, the degree of control by the employer over the worker, whether the work is an integral part of the employer's business, and skill and initiative."

In the spirit of the season, we are using our annual "12 days of the holidays" blog series to address new California laws and their impact on California employers. On this tenth day of the holidays, my labor and employment attorney gave to me: ten lords a-leaping and AB 1506 and 1561.

On September 30, 2021, Florida’s hourly minimum wage rate increased from $8.56 to $10.00. For the next five years, the hourly minimum wage in Florida will increase by $1.00 each year until it reaches $15.00 per hour in 2026. This increase came as the result of Amendment 2, passed on November 3, 2020, by an overwhelming majority of Florida voters.

During the Trump administration, the Department of Labor (DOL) issued a new rule regarding the classification of independent contractors. Designed to streamline how a company determines whether a worker is an employee or independent contractor, the rule narrowed the factors in the "economic realities" test and focused the analysis on the two "core factors" of control and the opportunity for profit and loss. The proposed regulations were set to go into effect on March 8, 2021. With the change in administration, the DOL initially pushed the effective date back to May 7, 2021, to allow for further review and consideration. The DOL announced on May 5, 2021, that it is withdrawing the rule altogether.

In a Hinshaw Insights for Employers Alert, we consider the drastic revisions to the National Labor Relations Act and federal labor policy contemplated by the Protect the Right to Organize Act of 2021. The bill was passed with little fanfare by the U.S. House of Representatives last month.

On Friday, March 12, 2021, the California Court of Appeal issued a ruling in Wilson v. The La Jolla Group that addresses the appropriate scope of class treatment for employee misclassification under Dynamex Operations West, Inc. v. Superior Court. Dynamex—and its later enactment into statute in the form of AB 5—established the ABC test for determining independent contractor status.

Under the administration of former President Donald Trump, the Department of Labor (DOL) proposed new regulations to simplify the test for determining whether a worker is an employee or independent contractor. The regulations were set to go into effect on March 8, 2021.

In the spirit of the season—and keeping some semblance of normal—we are using our annual "12 days of the holidays" blog series to address new California laws and their impact on California employers. On this eighth day of the holidays, my labor and employment attorney gave to me: eight maids a-milking and AB 2257.

Last week, the Department of Labor (DOL) proposed new regulations designed to make it easier for companies to determine whether workers can be classified as independent contractors. The DOL proposed an "economic reality" test to determine whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA).

When assessing potential exposure for their employer-clients under federal labor and employment statutes, employment and health care attorneys often must start with the basics. That determination of employment status becomes even more important in medical facilities, such as hospitals, which have multiple and complex levels of workers with varying levels of skills and responsibilities. This is especially true with independent medical staff members who may have other contractual relationships with hospitals—such as recruitment agreements or administrative services contracts—which can complicate these questions.

The National Labor Relations Board (NLRB) continues to retreat from its previously expansive approach to what might be considered interference with Section 7 rights under the National Labor Relations Act (the "Act"). Followers of Hinshaw's blog submissions will recall the NLRB gave a very broad interpretation during the Obama era to the scope of Section 8(a)(1) of the Act. An August 29, 2019 ruling from the NLRB in Velox Express, Inc. vs. Jeannie Edge further highlights how this is certainly not true of the Trump-era Board.

When former District of Columbia Police Chief Cathy Lanier stepped into her new role as security chief for the National Football League (“NFL”), she let it be known there was a “new sheriff in town,” a federal lawsuit alleges. About one year later, the NFL fired 9 security representatives accounting for approximately 1/3rd of the league’s staffing for the position and approximately 75% of the security representatives who were of the of age 60 or older. The security personnel promptly filed a federal suit in the Southern District of New York.

In a win for California’s “gig economy employers,” a California District Court held earlier this week that Chicago-based GrubHub, Inc. properly classified a food delivery driver as an independent contractor, not an employee. Accordingly, the driver's labor law claims, which require an employer-employee relationship, were precluded.

Both the U.S. Senate and House have passed the Defend Trade Secrets Act of 2016, and it is expected to be signed by President Obama in short order.

It is not uncommon for companies to contract their daily business operations to third-party companies. In Motta et al v. Global Contact Services, Inc., the court addressed whether such relationships relieve the outsourcing company of any duties to address discrimination or harassment in the workplace.

In this case, the employer, an S corporation that operated a masonry subcontracting business, treated its workers as independent contractors and not employees. The workers were hired on a per-job basis, brought their own tools to the jobs, were free to work for other employers and were paid on a piecework basis in cash. The payments made to the workers were often not adequately recorded and minimal documentation existed. The employer was then selected for an employment tax audit through which the Internal Revenue Service (IRS) determined the workers should have been categorized as employees. As a result it determined the employer owed employment taxes it should have originally withheld, along with penalties and interest on these amounts and penalties for the failure to file returns and remit these amounts.

A class of truck drivers filed suit against a home delivery and transportation logistical support services company claiming alleged violations of the Fair Labor Standards Act and various related California labor laws, including failure to pay overtime, failure to pay wages, and unfair business practices. The company defended the claims by arguing that the drivers were not employees, but instead were independent contractors, and pointed to the Independent Truckman's Agreement and Equipment Lease Agreement signed by the drivers. Further, because the Agreement contained a provision indicating that Georgia law was to apply to any disputes relating to the relationship, the company claimed that Georgia law confirmed that the drivers were not employees and thus could not maintain their claims. After motion practice and a bench trial, the district court agreed with the company and found that not only did Georgia law properly apply to the dispute, but that under Georgia law, there is a presumption of independent contractor status and that the drivers could not establish the existence of an employer-employee relationship. The Ninth Circuit Court of Appeals, however, disagreed with the trial court's analysis, at least in part, and reversed the decision. The Court of Appeals found that the district court failed to consider whether applying Georgia law would be contrary to fundamental California policies, and whether California had a materially greater interest in the resolution of these issue than did Georgia. Since the Court of Appeals found Georgia law to directly conflict with California law on the presumptions and burdens involved in the consideration of independent contractor status, and because worker protection is a fundamental public policy in California, the application of Georgia law would be improper. Finding that California law applied to the dispute, the case was remanded with instructions for the district court to reconsider the issues in light of California law. You can read more about the Court's decision and why it ultimately determined that the company's choice of law provision and Georgia law did not apply here. 

On December 27, 2011, the National Labor Relations Board found that musicians at three different symphony orchestras in Pennsylvania, Massachusetts, and Texas were “employees” and not “independent contractors.” In reaching this decision, the Board found that though musicians have some control over their work, once they are selected, orchestra management has great control over the musicians in terms of their work hours, payment schedules, dress codes, and standards of behavior. This ruling overturns the Regional Director’s 2007 Decision and Order in which she found that the musicians in the petitioned-for bargaining unit were independent contractors, and the dismissal of the representation petition. By virtue of the new rulings, the employees may now proceed with their petitions.