In a 5-4 decision, the United States Supreme Court has held that employers may enforce arbitration agreements signed by employees that bar class-action lawsuits and require individualized arbitration. In so holding, the Court found that the Federal Arbitration Act (FAA) instructs courts to enforce the terms of arbitration agreements, including terms requiring one-on-one arbitration proceedings. It also found that the National Labor Relations Act (NLRA) says nothing about how legal disputes must be resolved. “Far from conflicting, the Arbitration Act and the NLRA have long enjoyed separate spheres of influence and neither permits this Court to declare the parties’ agreements unlawful,” wrote Justice Neil Gorsuch for the majority.
The stories are legendary: the employee who calls in sick and then posts a picture of himself dressed as a fairy at a Halloween party hundreds of miles away; the video of the salesman in a drunken stupor at a conference he is attending on the company’s dime; and just this past week, the New York City lawyer railing against an employee and a customer speaking Spanish to one another in a restaurant. An individual’s social media can be a treasure trove of information about a person and could give insight into a person’s character and habits that might not become apparent until months or years of employment have gone by, perhaps never.
Back in September, we reported that the Trump Administration had abandoned the appeal of an injunction blocking new overtime rules from going into effect. That action effectively killed the Obama Administration’s effort to update and expand the overtime rule by raising the “salary level test” for executive, administrative, and professional workers from $455 per week to $913 per week. At the same time, the Trump Administration signaled that a scaled-down update of the overtime rule was on the way … eventually.
In what some believe the first federal trial over the classification of this new 21st Century worker, a federal district court found a Grubhub driver an independent contractor rather than an employee. With this determination, the worker did not qualify for protections extended to employees under California law. This is a big win for Grubhub, although Lawson appealed to the 9th Circuit Court of Appeals.
All eyes were on the case Lawson v. Grubhub Inc. in California. Grubhub is an on-line food ordering service that connects people to restaurants for take-out. In select markets, Grubhub also offers delivery of food through its drivers rather than the customer picking-up directly or a restaurant using its own delivery service.
Raef Lawson, who had worked as a driver for the company for less than six months, sued Grubhub claiming violations of California law. He alleged Grubhub had failed to pay him a minimum wage, overtime, and reimbursement of his work-related expenses. Lawson had worked under a Delivery Service Provider Agreement with Grubhub. He also served as a driver for two of Grubhub’s competitors – Postmates and Caviar – during this same time.
At issue was whether Lawson was an employee subject to certain protections under the law or an independent contractor. In reaching its determination, the trial court primarily considered Grubhub’s right to control Lawson as well as other secondary factors under California’s classification test, referred to as the Borello test. After a trial, the judge found that “considering all of the Borello factors as a whole in light of the trial record, the Court finds that Grubhub has satisfied its burden of showing that Mr. Lawson was properly classified as an independent contractor. While some factors weigh in favor of an employment relationship, Grubhub’s lack of all necessary control over Mr. Lawson’s work, including how he performed deliveries and even whether or for how long, along with other factors persuade the Court that the contractor classification was appropriate for Mr. Lawson during his brief tenure with Grubhub.” While reaching this conclusion, the judge also noted that this test is “an all-or-nothing proposition” and queried whether the legislature should consider other options or tests for these type of on-demand gig economy jobs.
The “gig” economy is a term that refers to a workforce of temporary or freelance workers who take short-term assignments, projects, or gigs. The increase in this on-demand worker shows a shifting away from the traditional long-term work relationship with a single employer to one of temporary projects. For more information on the gig economy, see my segment with Fred Kocher, host of NH Business.
This case is recognized as the first misclassification trial for a worker in the gig-economy. For years, many of us have been watching how the courts would classify these workers under current law. My previous blog posts (here and here) followed the class action litigation involving current and former Uber drivers in Massachusetts and California. Various other gig-economy cases are pending in federal and state courts. This recent decision is significant as it could influence those and other classification cases going forward.
The U.S. Department of Labor recently initiated a nationwide pilot program referred to as the Payroll Audit Independent Determination (“PAID”) program. The stated purpose of the program is to facilitate resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (“FLSA”). The expectation is that FLSA claims will resolve more expeditiously and without litigation thus improving employer compliance with wage and hour laws and getting back wages to employees more quickly.
The Federal Fair Labor Standards Act (FLSA) requires that covered employees who work more than forty hours in a week be paid overtime. However, the statute contains a number of exemptions removing certain groups of employees from the law’s protections. These “exempt” employees are not entitled to overtime pay when they work more than forty hours in a week, whereas “non-exempt” employees must be paid at the higher overtime rate for excess hours.
Technological advances over the past several years including laptops, smartphones, and widely-available wi-fi, have made it a lot easier for people to get work done remotely. And while many appreciate the flexibility and increased productivity that these advances provide, some lament that the ability to work anywhere, anytime has morphed into an expectation to work everywhere, all the time.
The EEOC announced on February 27, 2018 that it had reached a settlement in the agency’s first lawsuit alleging that parental leave policies which granted more rights to mothers discriminated against new fathers. Details of the settlement were not announced.
With news of US Immigration and Customs Enforcement (ICE) agencies raiding nearly 100 7-Eleven stores across 17 states in the US demanding employment verification from managers, TerraLex recently asked me to discuss what considerations employers and employees should keep top of mind if an onsite raid occurs. Here is my response for a TerraLex publication:
This week, the Massachusetts Supreme Judicial Court ruled that unused accrued sick time does not constitute “wages” that must be paid upon termination under the Massachusetts Wage Act. This decision, Mui v. Massachusetts Port Authority, resolves a previously unsettled question in Massachusetts wage and hour law.