Reflections: 2022 in Review
This webinar, conducted by Jim Wimberly, Larry Stine and Thom Walker, will address the major Employment and Labor Law developments for 2022. The major trends will be explored, such as question marks remaining in discrimination protection, expansion of employee and union rights by the National Labor Relations Board (NLRB), joint employment and independent contractor issues, and court rulings suggesting limits to federal agency power. The effect of the election mid-terms will be addressed as it affects Labor and Employment Law policies. Finally, the old standby “silver bullets” that employers can use to protect themselves will be mentioned.
Presented by James W. Wimberly, and J. Larry Stine.
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Webinar Transcript
James W. Wimberly Jr. (00:00):
I'm Jim Wimberly, and this is Larry Stine. And Larry's gonna be the first presenter. You'll notice that I have a set of tissues here. I've got a bad cold, have no fear. I was tested yesterday. Don't have covid. I don't even have the flu, but I've got a bad cold, so I sound indifferent and I may blow my nose during my presentation. Forgive me for that. Without further ado, Larry, I'll turn it over
J. Larry Stine (00:28):
To you. All right, thanks Jim. So we're gonna be talking about 2022 in review. We've diviv divvied up and I'll start off with the Supreme, Supreme Court decision because the Supreme Court obviously impacts, of course, the most critical decision issued this year was the Dobbs decision. We're not gonna go into the detail cuz it has been, but I do wanna make a point about the Dobbs unrelated to the abortion issue, and it's related to federalism. The Supreme Court has raised and elevated where some people call state rights, some people call federalism. But under our constitution, the principles were the rights between the federal government and the state government was at issue in Dobbs. That has an impact between how the administrative laws and what laws can be applied and what cannot. So you will see the Dom's case being applied in that concept to other decisions that are weighing the rights and balancing between the federal government and the state government.
J. Larry Stine (01:32):
So it, it is obviously one of the most significant Supreme Court decisions, probably in a generation, and it will have an impact on the law far beyond abortion. The other thing that the Supreme Court did and established, it's gonna have a major impact upon labor and employment law. All law is a major question doctrine. And the major question doctrine fundamentally says something along the lines of this, that the executive branch gets their power to issue regulations and stuff from a delegation by the Congress of its legislative duties. And in the expansive administrative state that we exist in, what the Supreme Court did is put a limiting factor on how far a, the executive branch can go with a piece of legislation with a major question doctrine. Fundamentally, it is that the legislature holds the authority, answer major questions. They can delegate it to the, the administrative, the executive branch, and the administrative state.
J. Larry Stine (02:38):
But they have to be clear when it's a major question. So we had a decision under West Virginia versus EPA A and then we had the I F I D versus Secretary of Labor, which was related to the Covid case. And in both cases, they struck with very expansive interpretation by the executive branch of their authority under the EPA and under osha, and found that the major question doctrine was violated. The courts of appeal have been working off that major question doctrine since. So there are two fundamental decisions of Supreme Court is putting a limitation on the administrative state or the executive power federalism principles announcing and stated in Dobbs in the major question doctrine. Those while sound less esoteric, are very important to our cases, can be very important to the ongoing laws and the regulations. And it gives us a major challenge to regulations where we think the executive branch has gone too far.
J. Larry Stine (03:48):
And then other aspects of 22 is what I call the Covid wars. Well, as we said in 2023, it's beginning to fade a little bit, but if you remember in January of 22, it was hot and heavy. The federal government had decided to mandate vaccines in a number of ways. OSHA issued regulations that you either got mandated to take the vaccine or you were tested weekly under the federal contract rules, under the Procurement Act, they did not even give you that option. They just said, if you wanna work for a federal contractor, you will get a Covid vaccine mandate or you will be fired. And then we had the issue with the mandatory Covid vaccine from Medicare and Medicaid. The Supreme Court ruled on OSHA and found that OSHA had exceeded their authority and mandating the a covid vaccine and invalidated the regulations. And they were temporary in nature.
J. Larry Stine (04:53):
OSHA withdrew them and as now what they have done with the covid is they have limited their enforcement fundamentally to healthcare groups. It's not to say they won't go elsewhere, but c D C has lessened the standards and OSHA's focus is now in the healthcare industry on the federal contractor COVID vaccine mandate. The 11th Circuit and the Fifth Circuit have found that the president exceeded their authority under the major question and issued injunctions against them, limited to the states and the parties before it. However, the government has decided to revisit the issue and are now studying it. And they are not trying to implement it in a they put a stay on those cases pending their revisitation of those issues. But as of now, no federal contractor has to have a covid. And on the Medicare Medicaid provider, Supreme Court found that the requirements for the COVID did meet the authority Congress had given him and did allow that to proceed.
J. Larry Stine (06:01):
At the end of the year. We've had some legislation directly related to labor and employment. We now have the Pregnant Workers' Fairness Act. Fundamentally what it did is it took the Americans with Disabilities Act a reasonable accommodation process and applied it to pregnant workers. Before this act, pregnant workers were treated more as under a straight discrimination rule. And you just had not to discriminate him against them like you wouldn't any other disabled person, but there was no reasonable accommodation as long as they didn't discriminate and treated all pregnant workers and all disabled workers the same. There was not a violation. Pregnancy law, this statute adds a reasonable accommodation process to allow pregnant women to have access to reasonable accommodations in the reasonable accommodation process for the ada. In other words, if a pregnant woman says, I need an accommodation, you have to get involved into the interactive process with a pregnant worker as to what reasonable accommodations you can provide them in assistance of the pregnancy and in another.
J. Larry Stine (07:15):
And also they asked another law, which sometimes shows that Congress really loves their acronyms and will give the most bizarre names to statutes ever. This is the Pump Act, the technical name of it, cause I had to write it down cause it's so weird, is providing urgent maternal protections for Nursing Mother's Act, which is a mouthful. It's gonna be called the Pump Act. And fundamentally what it requires is that you provide reasonable break time to express breast milk and a place shielded from view and intrusions other than a bathroom. Now, we already had that in the Fairly Standards Act for non-exempt workers. This is now included workers who were exempt on the other one, including the white collar women, which we were exempted under 5 41. Now, covered by it, there is a small employer exemption of 50. That is not much of an exemption because you gotta show that you, it is an undue hardship to be able to not have a place for them to express note that's shielded from view and from intriguing.
J. Larry Stine (08:31):
And it can be temporary if you got a office with as you're not using and you got a lock that will suffice. So it's, it's something you gotta give a little thought to under the lgb qt, whatever the initials are, Jim, I never Letters are. There's been a very interesting decision by the 11th Circuit, right at the very end of the year in a case called Adams versus School Boards of St. Johns Florida, which related to bathrooms, which seems to be the bathroom battle between the, the transgenders. St. John said that the students had to go either to the bathroom for their, their biological sex or they could go to a unisex bathroom, handicapped bathroom. The 11th Circuit went an on bond, which means every judge on the 11th circuit said something and they upheld the St. John's rules restricting transgenders to either go to the biological sex that they are or go use a single use room like a handicapped room.
J. Larry Stine (09:51):
The fourth circuit back in 2016 ruled the other way. So we now have a conflict between the circuits on the bathroom issue, which may be now headed towards the Supreme Court. They certainly can take it. The other thing in this area was in 2020, the Supreme Court issued a case that's called Bostock versus Clayton County. And I know this is a 2022 review, but the 2020 case has an impact on us. What they did is they included homosexuals in within the definition of sex under Title seven only. But what's happened is we now have litigation coming. There are cases all over the place bringing this issue to court, and now we're begin to see a lot of litigation related to homosexual discrimination that in the past we would've been able to dismiss not being about sex, but now they're coming in. So as part of your life now that you've gotta deal with under Title seven by the way, just so you know, we're gonna go about 2020 and then we'll take questions at the end.
J. Larry Stine (10:58):
Okay? Those are some of the really big issues I wanna talk about some little bit smaller issues. I wanna talk about arbitration and I wanna talk about arbitration because believe it or not, there were two Supreme Court decisions related to arbitrations. One of them is highly technical, whether the arbitration act is an exemption for transportation workers from the act. No, they were, you can't force 'em into arbitration. They get to go to court. And the case was related to a RAMP supervisor for an airline who went up the Supreme Court, held that ramp worker was a transportation worker and did not have to go to arbitration. That's a pretty small issue, but it was important enough that the Supreme Court took it. The other one has a major implication on how you handle litigation when you have an arbitration. So what happened in this particular case that went up to the Supreme Court, this company had an arbitration agreement.
J. Larry Stine (12:03):
They decided that they would file a motion to dismiss cause they thought they could get it through the motion to dismiss. They briefed that they went through the initial pretrial discovery, and then about eight months later from the beginning of the case, then it was only eight months they moved to compel. And the the employee, the plaintiff, said that they had waived their rights to arbitration. And the court applied a, well, you gotta show the prejudice for just having an eight month delay. And it, and the court found, the lower court found it. They didn't show prejudice to that and therefore denied the plaintiff's argument and granted arbitration, it went up. The court of appeals had pretty much split pretty heavily. And finding you did not waive your rights to arbitration until the plaintiff showed that there was prejudice to the party by the delay in seeking arbitration.
J. Larry Stine (13:06):
It was a eight two split, went up to the Supreme Court and they said to the two. So basically they said that in that circumstances, the plaintiffs don't have to show prejudice for delaying the time to seek arbitration and moving to compel. But the bottom line is, is real simple. If you have an arbitration agreement, the first thing that your attorney needs to do is file a motion to compel arbitration. If you don't do it, you're beginning to run a chance. And the longer that goes, the greater your chance is that you're not gonna be in arbitration, but you're gonna be in federal court. And there's so many benefits for the arbitration agreements that we have. You don't have to have a jury, you have arbitrators. You can limit it to collective and class actions. There's a lot of, and then you, you said you can eliminate it to collectively, you can limit it, you can eliminate it.
J. Larry Stine (14:03):
You can limit them from bringing collectives and bringing class actions is what I meant to say. So you, you wanna make certain, when you have arbitration agreement, you get litigation. The first thing the lawyers do is move to compel arbitration unless you've decided you like the court yourself for some technical reason or strategic reasons. But for the most part, you need to move elective actions under the Fair Labors Standards Act, which is a issue near and dear to me. Most of the court of appeals in the country set up a collective action with what they call a preliminary step and a decertification. And what they've done in the preliminary step is they say it's a very linear standard to allow people to join. When, when we mean that, they mean, boy, you really have to show just a very little, and all of a sudden the employers are required to give the names and addresses and the contact information to the plaintiffs.
J. Larry Stine (15:03):
Then you have to go as the employer and then file a motion to de-certify. But in the meantime, the plaintiff's lawyers got all your names and addresses of all the people in the group, which is something which I prefer not to do if I didn't have to, and I'll wait till the last minute to do it. The Fifth Circuit said, no, we're not going to do it that way. We're gonna follow the way they do it under class actions. So before we go and let you do it, we're gonna give you a discovery period. We're gonna bifurcate discovery, we're gonna let you have some discovery on what is the issues related to sim situated under the Fair Labor Standard Acts, which is what we're required to show for our collective action that the, their other employees simply situated to the plaintiffs. So their standard is they were gonna allow that to go.
J. Larry Stine (15:54):
And then once that discovery, then they could move for the collective action. And they wouldn't use lenient standard. They would use the standard where you have got to establish that those employees are sim circum circum, circum circulated, excuse me. And then they'll make a decision on that. It's a standard that I like and I think I'll be trying to argue it in some other places where the court of appeals really haven't made a decision on it. They've been letting the district courts kind of do it an ad hoc basis, so it can be critical what we're doing. Final thing I'm gonna talk about before Jim takes over is affirmative actions. Now, we don't have a decision in 2022, but we did have an oral argument on October the 31st. The Supreme Court had a very long, extensive argument about affirmative action programs at Harvard University.
J. Larry Stine (16:53):
And in that case, basically what the evidence had showed was that the standards and the tests for Asians had to score much higher than African Americans and Hispanics. The whites had to score higher than than the African Americans and Hispanics, but lower than the Asian Americans. They have raised an issue that that was a discrimination against them. The affirmative action was discriminatory. And the Supreme Court has it before us based upon the oral argument, which is kind of Chancey times Jim to base what they're going to do. But based on the oral alignments, it looks like the Supreme Court's about ready to strike down affirmative actions. And part of it is there was a decision by Supreme Court Justice a number of years ago saying, this seems there's gotta be a time limit for us fixing the discrimination we had in implication. And we're expecting a decision in June which is when they issue their last decisions on the impact of affirmative actions in the United States. And I would not be surprised that the Supreme Court is gonna find that what the Harvard did in their admissions is a violation of the Constitution. I was given about 20 minutes to talk about my side. I spent 20 minutes.
James W. Wimberly Jr. (18:17):
You you're exactly on time.
J. Larry Stine (18:18):
I'm exactly on.
James W. Wimberly Jr. (18:20):
I'm gonna start off Larry by comment on your last subject. Okay. The affirmative action case before the Supreme Court in oral arguments before the Supreme Court, the defense attorneys represent Harvard University and the University of North Carolina admitted that as part of their affirmative action at those particular schools, some decisions were based on race. Correct.
James W. Wimberly Jr. (18:49):
So you start off with a constitutional and legal concept that were not supposed to make decisions based on race. And the only exceptions historically were things like privacy. You could keep male guards out of female inmates restrooms or garden prisons. And if you were an actor and you had to depict a African-American or Caucasian person, you could use the person without race. But it had to be a very narrow exception. So the defense in that case is looking at broader purposes and saying the benefit of a a mixed student body is essential to the educational mission. So that's the fundamental issue. But I think we go a little too far when we say a decision will outlaw all affirmative action. For example, the state of California of all places outlawed affirmative action. How many years ago? 20 years ago. 20
J. Larry Stine (19:56):
Years ago. In our, in the proposition?
James W. Wimberly Jr. (19:58):
Yeah. So US states and Andys have been able to function upon different concepts of affirmative action. So I didn't wanna make that clarification that, for example, employers, even under limited circumstances where they can't consider race or sex at all, can go out and recruit more among some groups than others to try to balance their workforce. Any comment to that later? Yeah, we,
J. Larry Stine (20:30):
Yeah, I mean there, there are ways that they can go into affirmative action. So the educational missions and look at other factors that are not race-based, they can do it for disadvantage.
James W. Wimberly Jr. (20:42):
That's right. That's right. So what, what we're probably gonna come down as a result that you can use other devices not based on race of sex to encourage a diverse workforce.
J. Larry Stine (20:58):
Sure. But I, I think there might be an implication on executive order 1 12 46 on the affirmative actions in the way that they have set that up and set the quotas up. Because the way the affirmative action programs have set up is you literally have to have a goal to increase African American. You gotta have a goal to whatever your statistics shows, not meeting the kind of the standards and the, of the having a diverse workforce.
James W. Wimberly Jr. (21:31):
Yeah. Obviously I think this is an interesting subject, that's why I'm kind of jumping all over it. There's a potential for the decision to come out and say things so that we'll have to change terminology of some of our diversity officers to <laugh>. That sounds more equal. Yeah. Well,
J. Larry Stine (21:53):
The other thing is, is is it's perfectly valuable to use disadvantage, but what'll happen is it becomes more of a proxy than a precise instrument. Because if you say we're gonna use it from disadvantaged schools, well there disadvantaged white schools or schools predominantly Hispanics, Asian. So it would have a, it would be a less precise. And I think that's the point that you're trying to make, is we gotta use something that's more of a proxy for that. And, but I think we can see that with disadvantaged as opposed to having one where I gotta have di I have to have disadvantaged minority.
James W. Wimberly Jr. (22:30):
I'm just speculating. Well, this ruling comes out in June. It may be as big or bigger of a, a major ruling than even the abortion case. You think it certainly
J. Larry Stine (22:43):
Will. Unemployment law I mean the abortion doesn't impact employment all that much, but I this one will. Yeah. And particularly for federal contractors, I mean, we've been living under the executive order 24 since, since President Johnson. So that's been, you know, since the sixties we've been living with affirmative action programs inside employment for federal contractors. And
James W. Wimberly Jr. (23:07):
Didn't Nixon start some kind of diversity program on Oh, they were Philadelphia
J. Larry Stine (23:12):
Plan? No, the Philadelphia plan related to construction.
James W. Wimberly Jr. (23:15):
But it was a, a diversity plan.
J. Larry Stine (23:17):
It was a diversity plan for
James W. Wimberly Jr. (23:18):
Construction. Brought that up. I was at the US Department of Labor when the quote Philadelphia plan came out. Okay. And we had a department wide meeting to discuss the implications of that decision. Cause it was a first or, or the plan. Well,
J. Larry Stine (23:35):
The inter the interesting thing is the Philadelphia plan is probably what they will end up acting. Cause the Philadelphia plan doesn't require construction industries to have an affirmative action program. It's a more like, Hey, we have a policy. We bring in everybody and don't discriminate. And we value diversity. Whether when you're in the general industry, they have a place where you have to have a written affirmative action and have to have goals for various specific racists. And the Philadelphia plan does not.
James W. Wimberly Jr. (24:04):
Okay. Moving on to my topics. Does this mean I get more time? I use five minutes on your topics.
J. Larry Stine (24:12):
We got, we got both
James W. Wimberly Jr. (24:14):
My, it'll probably go on. First thing that I'm gonna talk about is what the Labor Board is doing. And I I'm calling it a major expansion of employee rights and union rights. Notice I omitted employer rights. No employer rights are part of the Biden Administration's plan. It's all to increase the power of individuals and unions. Man presentation is gonna be not as much as a technical presentation, but a real life big picture overview concept. The first act, the president, he as president, was to fire the general council, the top lawyer at the National Labor Relations Board. This was unprecedented. This person had a term of a contract and no previous president thought that the general counsel could be fired just like a Labor Board member. Can't be fired during the term of their appointment. But Biden did it anyway.
James W. Wimberly Jr. (25:28):
And he campaigned to be the most pro-union president in history and he's fulfilled that promise. And an interesting thing about this again, maybe from more of a philosophical concept, is that only 6% of the private workforce is union today. Now you'll see 6% and you'll see something like 10%. But that's counting public employers. The 10%, if you just look at the private sector, it's more like 6%. So many of Biden's programs are designed to benefit those 6% and maybe expanded from 6% to eight 10 or so forth. Now many of you on this portion will say, well, he is gonna talk about unions. I don't have a union, I don't think it's not a union within 500 miles of my plant <laugh>. But half of what I'm gonna say in talking about the Labor Board is directed totally at non-union employers that will never have a union campaign.
James W. Wimberly Jr. (26:31):
So keep keep listening, but normally when a company does have a union plan campaign, a union's trying to get in win a secret ballot election, hope we keep those secret ballot elections, that Pro Act may wipe them out. But the employer has two main campaign approaches. One and most common is to conduct group meetings. They may be a small group of six or eight people, a department, a shift a plant. Occasionally there'll be several hundred people. They're called captive audience meetings. Cause the employer has a right to require all employees to attend. They're paid for their attendance. It's time away from work for the employer to talk to the employees about the benefits of remaining union free and the potential consequences of having a union. The second most common thing for the employer to do is to send certain supervisors and managers around to talk to employees one-on-one on the job about certain issues pertaining to a union.
James W. Wimberly Jr. (27:47):
These are our most common ways to educate our workforce to remain union free. So the new NLRB general council, who's a's been a career as a union lawyer attack, is attacking both of them. She's saying you cannot require employees to attend I'll call it an anti-union meeting or even an anti-union one-on-one presentation on the job because you are coercing them to hearing non-union philosophy. Now, the Labor Board hasn't accepted that yet, but that's her position. It's scary. Would there be any way around it? Well, first of all, the Labor Board regional offices already applying this concept. So if you are hit with the union campaign, you've got to weigh to, I require everybody to attend these meetings and risk and unfair labor practice charge and objection to an election or what have you. Or do I try to comply with what the general counsel's saying?
James W. Wimberly Jr. (28:56):
And how would that be done? Presumably the employer would have to have some process of allowing employees to opt out of listening to these presentations are attending these meetings. Second thing the general counsel's trying to do to encourage unionization. Make no mistake about it. The administration feels that we need more unions in this country representing more workers. And our national policy should be to have full unionization of our economy. So a second portion of this approach is to allow us to or require us to allow union organizers on our premises. Now, I won't go into the various ways this will be done. They've already ruled that if you have a contractor on your premises, that union organizers can enter your premises to have contact with that contract of employees. But they're also ruled in many cases that we are discriminatorily enforcing what would otherwise be a legitimate rule not to allow outsiders within our premises.
James W. Wimberly Jr. (30:19):
Why Maybe we allow families to come in and wait in the waiting room or politicians to come in and tour the plant and they say, Hey, you're discriminating if you don't allow union organizers to do the same thing. Another ruling they've already made pertains to union buttons until the current administration, the previous rule was that the employer could have a non-discriminatory dress code that prohibited any type of button beyond a standard company uniform work shirt, et tc. Now they're saying, and this is already in the case law, that you've got to allow union buttons and other type buttons promoting concerted activity or unions, unless they're extremely unusual spec special circumstances that would damage the product or something like that, that are unlikely. So we're gonna see more union buttons. Of course, the most popular issue now is whether buttons like Black Lives Matter can be denied.
James W. Wimberly Jr. (31:31):
And there's so many cases litigating that issue. And some may say, what's wrong with the Black Lives Matter button on the job? Sure we ought to allow it. Well, you're gonna allow White Lives matter. Blue lives matter. All lives matter. There's a whole host of social causes out there, mag buttons. You're gonna allow the whole work to workforce to come in with Trump buttons. You see the issues. So that's gonna be an ongoing issue during the rest of the current administration expansion of protected activity, including social budget justice movements, I, I've just alluded to that. The administration general counsel's taking the position that any time an employee is espousing a cost that even remotely might relate to the workforce, that's protected concerned activity. And once they have a right to this protected concerned activity, it can't be prohibited by the employer as an extremely strong reason. And so, if an employee is terminated or, or forced to see such activity, another type of unfair labor practice, another way listen up. Totally non-union employers that have a fair union campaigns, they're gonna have the strictest regulation of company work rules you've ever seen in your life. Just don't give you two examples. Hopefully this will get your attention.
James W. Wimberly Jr. (33:05):
A common work rule that most of us have is no walking off the job. The Labor Board takes a position or will take the position during this administration that that rule is illegal. Cause employees have the concerted right to strike and some of them may interpret rule like that is prohibiting or chilling their interest in going out on strike. So cause the rule is ambiguous and over broad, it's unlawful. And then you get the tricky issue. If you've been forced the room, does that invalidate the discipline? Very technical issue that we don't have time to get into. Lemme give you another example. Have a general rule, no harassment on the job. Labor Board says it's illegal that that rule is illegal. And you say, what I can't prohibit harassment on. No, you know what? Cause union organizes harass other employees. And the Labor Board says if you have a broad rule like that, that prohibits harassment on the job, they might be chilled in their interest in going out and harassing other workers to join the union. So in essence, the employer has got to have a lawyer right at rules. And even then your aren't a hundred percent sure. So we're gonna see that. And again, you might say, well what's so they make me change my rule. But it gets a lot more complicated when they attack the discipline you've administered under that rule. So one of the lessons for employers in some of these situations in, in answering that I'm gonna talk about Starbucks for a minute.
James W. Wimberly Jr. (34:57):
Starbucks in a very short period of time had something like 300 union elections and lost 80%. Yeah. 300 stores outta Starbucks changed not that much. Or was it 1% or something? A very small percent. Yeah. Yeah. but Starbucks realized that as a company it was gonna be under organizational attack all over the country. And so they implemented a lot of what we call preventing maintenance, meaning setting up a work relationship, making it less likely for employees to wanna unionize. And they've been successful in doing so after this initial success of organizing all these restaurants. By the way, the unions don't have the first contract at any Starbucks restaurant. But after organizing all these restaurants, Starbucks went to work on its preventive maintenance and its own non-union facilities. And that union expansion in Starbucks has not only significantly flowed down, but all but stopped.
James W. Wimberly Jr. (36:09):
Unfortunately, we don't have time in this presentation to have a course on union free preventive maintenance, but I think you get the idea. Moving on to the second subject. I'm gonna cover very briefly in light of the fact that I'm almost outta my 20 minutes and Larry didn't gimme that Five minutes, minutes. I'm just going tell you conceptually why these last issues are so important. The joint employment rule that the NL RRB has proposed and the independent contractor rule that the US Department of Labor is proposing. It's important to understand what's an issue here. The current administration feels that we don't like the concept of contractors. Why? Cause the employment laws don't apply to contractors by the contracting entity. So that means they don't have wage and error rules. They're the right to unionize. They can, the contract can be terminated on the base of sex or whatever.
James W. Wimberly Jr. (37:33):
Not all the discrimination laws are applicable. So they want to limit an employer's use of contractors. And, and this has tremendous economic implications. I remember one time Larry we had an independent contractor case and an unemployment proceeding in California and the company took it very seriously. Cause California unemployment has a rule that once employment status is set in one case, it's gonna apply to future cases under similar circumstances with that same company and it is gonna be reported to the IRS Department of Labor. It just had broad ramifications. So the goal of the current administration is to limit the right of employers to consider another person or group an independent contractor. And I'm gonna give you a couple of words of advice here in just a minute. After getting into the joint employment concept, what's the difference between an independent contractor issue and a joint employment issue?
James W. Wimberly Jr. (38:47):
Well, the independent contractor issue is one of whether the person you're using to perform work is your employee or not. The joint employer issue has to do with the question of this person is an employee, but who is an employee of, if they're two related entities out there, is he the employee of both entities, joint employment or only one of the entities? Now where this surfaces is in three type situations, most prominent, number one it comes up in temporary agency cases. All of us use temporary agencies to bring employees temporarily in the plan. And a plaintiff or charged party would've a strong argument that cause our supervisors and essence supervisors, temporary agent employees, it's a strong argument that there's ad joint employment situation there. It won't play out that way in every case, but that's a presumption. A second type situation where it applies is a franchisee franchisor.
James W. Wimberly Jr. (40:04):
And the picture for this issue is McDonald's. They used franchisee, restauranters, whatever you call 'em, running their McDonald's facilities. And the unions wanna say, Hey, it's not these franchisees, it's also the franchise or McDonald's that jointly employs these people. Why? McDonald's recommends scheduling similar handbooks, similar policies, and they're really indirectly at least controlling the workforce of these franchisees. And then the third way it plays out affects all of us, whether we're in a franchise business or these temporary agency personnel. Anytime we have a subcontractor, are we directing the details of how that subcontractor performs its work? In which case that subcontractor and its employees might be deemed to be jointly employed by the main entity. So those are the ways that, and, and what are the implications to unions or plaintiffs? First of all, you all know plaintiffs like to find a deep pocket to recover money from.
James W. Wimberly Jr. (41:38):
The more people you sue, the more chances you have of upping your settlement of the case are winning a big judgment. Secondly, unions like to join employment concept cause they wanna have the right to pick and choose who gets to vote. If it's advantageous to them to have the subcontractors employees vote in the union election and to include them in a bigger union contract, then they'll want to do that. Look at the secondary boycott laws. This is a very technical subject that we don't have time to talk about, but the secondary boycott laws essentially say that a union shouldn't coerce a third party that's not involved in the labor dispute. But if you're a joint employer, you are involved in the labor dispute. So this would open up but here, here, here's another simplistic way it would apply. It probably makes the most sense from a logical standpoint.
James W. Wimberly Jr. (42:44):
If you have people working for another entity on your premises and you tell that entity, I don't want that person on my premises anymore. That's really a legal defense for both you and other entity. It's a defense for you cause you are an employer of that person's employee. It's a defense for the other agency group cause they just cared out your direction on a non-discriminatory basis not to employ that individual. So unions and civil rights groups don't like that. So there you have how the concepts of joint employer and independent contractor play out from a big picture standpoint. Now I said I'd give you at least one tip at the end. So here it is, here. It's the tip at the end. If you consider somebody independent or you consider somebody a contractor, lemme see a contractor. And if it's a handshake deal, now there are lots of other tests, but I place a lot of significance on having a contract with an independent contractor.
James W. Wimberly Jr. (43:56):
Now here's a practical advantage of it. Not only is it a significant legal defense as far as showing it really is an independent contractor, but you can put in all the magic words, lawyer words, weasel words, if you will, in that contract. Theyll protect you if they ever come after you, rather than the direct person employing those employees. So having written contracts well worded and appropriately legally reviewed with your contractor helps you win both independent contractor cases and joint employment cases. Now all these things have tax implications too. If you've been considering people, non employees and they say they're been employees all along, what about your benefit plans? You owe back benefits to all these people who are deprived of the company pension and health insurance. What about the taxes you should withheld from? These are big issues. I think. Larry, I've only exceeded my time here briefly. So let's open the floor for questions unless you wanna comment on,
J. Larry Stine (45:17):
Let's see, let's see if anybody's got a question first. And I gotta, if we don't, I'll have one or two more comments. But let's see if anybody's got any
James W. Wimberly Jr. (45:25):
Questions, please
J. Larry Stine (45:26):
Send 'em to us in the q and a or the chat and we'll be glad to answer those questions. We don't want to limit it to the matters we've done, but if you have any
James W. Wimberly Jr. (45:35):
Wait, they can't, they ask them what up to
J. Larry Stine (45:37):
No. Okay. Not the way we have it set up. Alright. You notice there's nobody on the screen, but you and me. Okay. So they have to do it by either chat or by q and a, which they can do down at the bottom of the screen. Simply put it up. And as a question, while I'm waiting for that, I wanna make a point, Jim, I recently just saw the a news article come out about the FTC and restrictive coverage. You wanna talk about what, what, what's going on with that? Are you aware of that?
James W. Wimberly Jr. (46:10):
Yeah, I am aware of.
J. Larry Stine (46:12):
It's,
James W. Wimberly Jr. (46:13):
It's a new proposed rule and it's also a case that's already come out involving three different cousins. And let me give you this disclosure, which I'm really proud of. My daughter was head of the appellate branch of the Department of Justice is antitrust division. Now she's senior counsel to the number two person, the Deputy Attorney General. So she's in the middle of some of this stuff. I don't have any influence on her and she's
J. Larry Stine (46:55):
Unfortunately
James W. Wimberly Jr. (46:55):
Applies all the ethical rules and she's never done what I wanted her to do anyway. I actually do something, she'll do the
J. Larry Stine (47:02):
Opposite. Just gotta sound
James W. Wimberly Jr. (47:03):
Like I can't use the influence with her. But the, the antitrust people have become very active and the most aggressive portion of the antitrust people is not the Department of Justice, but the Federal Trade Commission that has a broad mandate to regulate unfair trade practices. And typically their regulation of unfair trade practices has been very narrow. But now they're trying to greatly expand that. They appointed a, a zealot as head of that FTC and they've come out with a proposed rule and some cases employing antitrust concepts to say that many non-compete rules are gonna have the effect of restricting a former employee from going to work for a competitor. And that's anti-competitive and therefore they're taking the position that that may very well be an unfair trade practice. They're going so far and putting it in a a rule. So this is just a significant development.
James W. Wimberly Jr. (48:39):
Some may ask can they get away with this? This is why what Larry said earlier about these major case doctrines and et cetera are so important. So that's where they're trying to head and they've already applied it in three cases. Federal Trade Commission. Yes. Now while I'm on this subject, how this relates to unions too. There's a major merger that's been proposed between Activision who, who Microsoft is trying to acquire Activision and cause these are such big companies, it may have antitrust applications. And this shows you how powerful organized labor can be and how it can affect policy.
James W. Wimberly Jr. (49:36):
What does Microsoft going, they come in and make a deal with the unions that if the deal goes through with your support, we will be more neutral than union organization campaigns and therefore Justice Department, y'all let this merger go through. I call that highway robbery. It has nothing to do with antitrust, it's just cause you're pro-union in some way, they gonna limit the application of laws. I don't think they're gonna get away with this, but that just shows you how organized labor can play a role in everything in California. I've had the misfortune of handling some cases in California where all the union lawyers are environmental lawyers cause they've got so many environmental rules out there. They won't let the companies do anything until they are pro-union and then their environmental problems go away like that.
J. Larry Stine (50:41):
Interesting. Well, we don't have any other questions. So I've got something I was gonna talk about, which is the fairly standards proposed regulation. Just so you understand, permanent labor has, has a rule out about who's an employee from the Trump administration. Biden administration tried to invalidate it. Courts struck down. The validation rule is still in place. The Biden rulers are proposed to change the rule. And it's not a regulation, it's an interpreted bulletin, which means that it, the regulation has a force and effect of law. An interpreted bulletin is given some guidance, the course of amount of interpreting, but they have changed it back and forth so much. They begin to devalue these proposed regulations. When every administration changes the guidance based upon their political views, the courts begin to def refuse to defer because they're just political statements as opposed to, you know, the valued view of the agency.
J. Larry Stine (51:47):
When you see things like this and you hear news reports that they're changing the the rules, you've gotta understand from a legal point of view that we, we make a huge distinction between regulations and interpretive rules and interpretive guidances. And they can be devalued by going back and forth and back and forth, which has happened. In a couple of cases we've reviewed where the court has kind of filled a hand said, we, we don't value what you say anymore. You keep changing it every four years or eight years, therefore I'm not gonna give any value. That's what's going on with the Failure Standards Act. So what's going happen is that you're going into court, some judges are gonna say, yeah, I'm gonna take follow. Other judges are not depending on their propensities of which way they're gonna go, go Anyway, that's the significance of those rules. But the Biden rule has not yet become effective. They're in the process of handling hundred thousand comments on it. It's gonna take them a while to get it. But Jim, do you have anything else you want? Say No, I'm, every
James W. Wimberly Jr. (52:50):
Other thing outta my mouth is a cough. Anyway, <laugh>.
J. Larry Stine (52:54):
Well we hope you enjoyed this webinar and we appreciate your participating and you're not currently participating. We appreciate that you coming to view us after the fact. And we thank you very much and have a good day. Bye.
