On May 5, the U.S. Department of Labor (DOL) withdrew a Trump-era final rule that would have made it easier for employers to designate workers as independent contractors rather than employees under the Fair Labor Standards Act (FLSA).
The rule, titled “Independent Contractor Status under the Fair Labor Standards Act,” was published on January 7, 2021, at the tail end of the Trump administration, and was scheduled to take effect on March 8.
The new decade brings Schiff Hardin’s Labor & Employment Group’s annual legislative update, summarizing new legislation in 2020 under federal law and in Illinois, California, New York, Michigan, and the District of Columbia.
Continue Reading 2020 Labor and Employment Legislative Developments
On September 11, 2019, the California Senate passed Assembly Bill 5 (A.B. 5), which – if signed into law – will codify the so-called “ABC Test” utilized by the California Supreme Court in Dynamex v. Superior Court of Los Angeles to hold that the company’s delivery drivers were employees, not independent contractors, for the purpose of applying California Department of Industrial Relations Wage Orders. The bill, which California Governor Gavin Newsom is expected to sign, will have major implications on so-called “gig economy” workers, potentially leading to many being reclassified as employees rather than independent contractors.
Continue Reading Pending Major Worker Reclassification Law Aims to Burst California’s “Gig Economy” Bubble
The California Supreme Court adopted a new test Monday for determining whether workers are employees—rejecting the court’s previous multi-factor test. The decision in Dynamex Operations West Inc. v. The Superior Court of Los Angeles County, S222732 (Cal. Apr. 30, 2018), has immediate ramifications for employers in California who hire or utilize independent contractors. In short, the bar for establishing “independent contractor” status has been raised, and California companies will have to assess their practices in order to conform to this new reality.
Continue Reading California Supreme Court Raises Bar on Independent Contractor Status
As we previously blogged here, beginning on October 31, New York City businesses will no longer be allowed to ask about an applicant’s salary history during the hiring process.
Just in time for the law to go into effect, the NYC Commission on Human Rights has published a set of FAQs to help employers and the public navigate through the hiring process under this new law. Below are some key takeaways from the FAQs. According to the Commission’s guidance, this is how the law is expected to be applied.
New York City made waves this month by imposing new requirements on independent contractor agreements and by passing a law that prohibits employers from asking about or considering an applicant’s prior salary. Although New York City is just the third jurisdiction to adopt a law prohibiting inquiries into an applicant’s salary history (Massachusetts and Philadelphia have already passed similar measures), employers everywhere should take note as it is widely anticipated that other local and state governments will follow suit.
Continue Reading Big Changes in the Big Apple: NYC Bans Salary History Questions and Imposes New Requirements for Independent Contractors
The National Labor Relations Board’s (NLRB) long-anticipated decision in Browning-Ferris Industries, 362 NLRB No.186, will dramatically impact business for companies ranging from leased employee staffing arrangements to franchisor-franchisee models.
The August 27, 2015 decision just turned 30 years of established precedent on its head. Since the mid-1980’s, the NLRB has followed a standard finding an entity to be a joint employer of another entity’s employees only if it had significant control over the employment terms of those employees, such as the right to hire, fire, discipline, supervise or direct the day-to-day methods by which employees completed their job duties.
Continue Reading Franchisor and Franchisee: Two Peas In A Pod (But What Will The NLRB’s Ruling Really Produce?)
Two weeks after publishing proposed new rules to update the white collar exemptions of the Fair Labor Standards Act (FLSA), yesterday the United States Department of Labor (DOL) issued a 15-page Administrator’s Interpretation concluding that “most workers” are employees, as opposed to independent contractors, under the FLSA. (A copy of the guidance can be found here) Although this guidance does not change current law or regulations but rather is intended to provide clarity on the proper classification of workers, employers who utilize independent contractors should view it as further evidence of the aggressive stance the DOL is taking on this issue.
Continue Reading DOL: Most Workers are Employees, Not Independent Contractors
In an August 27, 2014 decision, the Ninth Circuit U.S. Court of Appeals ruled that FedEx Ground misclassified approximately 2,300 California package delivery drivers as independent contractors from 2000 to 2007, resulting in the failure to pay certain wages and reimbursements for business-related expenses. For businesses that make use of independent contractors as part of their regular workforce, the decision, Alexander v. FedEx Ground Package System, Inc., furnishes current guidance into how courts in the Ninth Circuit can be expected to apply California’s “right to control” test in determining whether workers are appropriately classified.
Continue Reading FedEx Ground Found to Have Misclassified Drivers as Independent Contractors by the Ninth Circuit
Employers in construction and landscaping industries should be aware that on July 23, 2013, Illinois Gov. Pat Quinn signed two bills that add significant teeth to enforcement under the Illinois Employee Misclassification Act (the Act). The Act imposes penalties upon those employers that improperly misclassify employees as independent contractors. Gov. Quinn estimates that the State of Illinois loses upwards of $700 million in payroll and other employment-related taxes as a result of this misclassification.
House Bill 923 (Public Act 98-0105) will require contractors in the construction industry to report to the Illinois Department of Labor all payments made to any individual, sole proprietor or partnership not classified as an employee for work performed for the contractor. Such payments must be reported to the Department on or before January 31 following the taxable year in which the work was performed. The report must include the name, address and federal employer identification number of each individual, sole proprietor, or partnership performing the work, as well as for the contractor for whom the work was performed. Payments for the provision of equipment and materials must also be included in the report. The amount of the payments will be confidential and exempt from public disclosure, but the names, addresses and FEIN’s of the contractor, individual, sole proprietor or partnership contained in the reports will be subject to disclosure pursuant to a Freedom of Information Act request.
Continue Reading Amendments to Illinois Employee Misclassification Act to Affect Construction and Landscaping Companies