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Most companies are familiar with the great amount of publicity and litigation involving the classification of workers as employees or independent contractors.  But companies may not be aware of a rarely publicized concern, the concern being that under the companies' policies, employees are entitled to various benefits, such as healthcare coverage and possibly retirement and other benefits.  Thus, if a worker is determined to be an employee rather than a contractor, a company's potential liability for employment benefits can be large. 

A closely-watched case dealing with these issues is now pending before the federal Sixth Circuit Court of Appeals, in Jammal v. American Family Insurance Company, No. 17-4125, Petition for Rehearing 2/26/19.  A three-judge panel of the Sixth Circuit had determined that about 7,200 insurance agents were independent contractors not entitled to employment benefits, based on an analysis suggested by the factors set forth in the U.S. Supreme Court ruling in Nationwide Mutual Insurance Co. v. Darden.  A lower court judge had ruled that the company was wrong to classify the agents as independent contractors, but the Sixth Circuit had reversed that decision.  The plaintiff insurance agents want all of the Sixth Circuit judges to rehear their case, giving them another opportunity to prevail.

Editor's Note: The determination of whether purported independent contractors might be found to be employees and thus covered by company benefit policies may be determined by contractual principles, often relying on criteria set forth in the relevant benefit plan documents.  Companies should be careful how these plan documents are drafted in order to lessen exposure to this type litigation.  Further inducement for employers to examine their contractor relationships, are announcements during March that Swift Transportation has agreed to pay $100 million to end a long-standing suit alleging that it makes its workers faux "owner-operators" to avoid federal and state wage laws, and that Uber Technologies has agreed to pay $20 million to drivers to settle a lawsuit claiming the ride-hailing company misclassified those drivers as independent contractors. 


At least seven Democratic candidates for President have cosponsored The Protecting the Right to Organize Act, a bill introduced on May 2, 2019 in the Senate by Patty Murray (Wash.) and in the House by Bobby Scott (VA.).  Among other things, the bill would do the following:

1.      The NLRB could fine employers as well as allow equitable relief like back pay.

2.      Workers would be allowed to take their employers to court for unfair labor practice violations rather than just to the NLRB.

3.      Employers would be prohibited from hosting "captive audience" meetings with workers when they seek to join unions.

4.      Employers would be limited in their rights to require mandatory individual arbitration of employee claims, and prohibiting employers from forcing their employees to waive their right to bring class action claims.

5.      The bill would support public sector unions by allowing employers and unions to enter into contracts where unions can collect "fair-share" fees from non-union workers.

6.      The bill also would expand the definition of employee to discourage the misclassification of workers as independent contractors.

Among those co-sponsoring this bill are Senators Kamala Harris (Cal.), Bernie Sanders (VT.), Elizabeth Warren (Mass.), Cory Booker (N.J.), Kirsten Gillibrand (N.Y.), and Amy Klobuchar (Minn.) and Rep. Tim Ryan (Ohio).  The Coalition for a Democratic Workplace, supported by various industry groups, calls the bill "an attempt to increase union membership at any cost."  In a related development, Bernie Sanders has entered into a collective bargaining agreement on behalf of his campaign staff with the United Food and Commercial Workers Union.


Employee protests at technology companies have gone beyond common employee issues and expanded to important company business decisions.  As workforces become more skilled and unemployment drops, certain industries have become more tolerant of outspoken employees.  Over the last year, workers have protested at companies over military contracting, sexual harassment, and the treatment of temporary and contract workers.  At Microsoft, employees are demanding that the company abandon a $480 million contract with the U.S. Army.  Hundreds of Microsoft workers have signed a petition criticizing a contract with U.S. Immigration Customs Enforcement.  At Facebook, employees are protesting use of staffing firms to supply some 15,000 content reviewers.  At Google, workers staged sit-ins over a dozen offices protesting retaliation against workers involved in activism.  Some 15 shareholder proposals at Amazon come from its own employees covering topics from food waste and facial recognition to the environmental effects of company locations. 

These developments put company CEOs in a dilemma.  Executives have duties to shareholders, which must be balanced against employee desires.  Further, companies and CEOs themselves may generate some of this employee activism by "CEO activism" on certain public issues.  Thus, CEOs and their companies can face backlash from employees and even from consumers who disagree with their point of view on current social and political issues.  In this environment, CEOs should not be surprised when customers or employees disagree with their positions on issues.  Careful planning is necessary so that CEOs won't be blind-sided on certain issues.  CEOs should consider a public relations or corporate communications team to plan such responses to the next big issue.


The Bureau of Labor Statistics announced on February 8, 2019, that they were 20 major work stoppages in 2018 that involved almost one-half million U.S. workers.  The total number of workers who participated was the highest since 1986.  There were actually 167 total work stoppages, with major work stoppages defined as those involving 1,000 or more workers.

The first and second largest work stoppages were by school teachers in Arizona and Oklahoma.  Educational services, health care, and social assistance industry groups accounted for approximately 90% of those participating in work stoppages.  This year, there was a major strike among Stop and Shop workers that shut down 246 grocery stores in three states, reportedly over employer-sought concessions on healthcare coverage, pensions, and premium pay on Sundays and holidays.  The 31,000 unionized retail workers struck on April 11, 2019 and picketed outside the Stop and Shop stores in Connecticut, Rhode Island and Massachusetts for 11 days, until a tentative agreement was reached on April 22, 2019.  Reportedly, the 11-day strike cost the company approximately $100 million.  Stop and Shop says it is New England's only remaining fully unionized large supermarket company, and said it sought concessions to remain competitive with other non-union stores.  The company reportedly is proceeding to control its costs through self-checkout registers and even robots.

A recent development is the growth of work stoppages even among non-union employers.  In 2014, thousands of workers at Market Basket, a New England grocery chain, mounted a strike to demand the company reinstate the recently fired CEO.  Coworker.org is a network of employees with tools suggesting how employees can push for changes in their working lives.  Petitions are being more widely circulated among employees seeking changes, such as the 20,000 signatures for dress code changes at Publix.  Further, the internet allows workers to go public with experiences that trigger public reaction.  Some experts feel that employees are seeking more of a voice on their job conditions but not necessarily a traditional union.


The courts have been in conflict in recent years as to whether gay and transgender people are protected from discrimination on the job, an issue the Supreme Court agreed to review on April 22, 2019.  Title VII of the 1964 Civil Rights Act prohibits job discrimination because of "sex."  The traditional interpretation of Title VII does not expand the word "sex" to include sexual identity or transgender status.  However, in 1989 the U.S. Supreme Court held that discrimination on the basis of sex encompasses "sex stereotyping," and this interpretation has been utilized in some cases where LGBT have alleged that they were discriminated against because they did not conform to the stereotypes of their gender.  Others are urging the courts to adopt a more modern understanding of "sex" that encompasses job bias against a worker who is gay, lesbian, bisexual, or transgender.  A number of states and localities have enacted their own laws that protect LGBT workers from discrimination.  The federal government itself has taken different views on the issue, as the EEOC argues that the federal civil rights law protects workers against sexual orientation discrimination while the Justice Department takes the opposite position. 


Social Security "no-match" letters generate a great deal of concern in the employer community as to how to handle such issues.  Immigration and Customs Enforcement (ICE) has in the past taken the position that receipt of one of these notifications creates an affirmative duty to investigate and potentially take action, at least to avoid a potential finding of constructive knowledge of illegal employment.  On the other hand, the Immigration and Employee Rights Section (IER) of the Department of Justice has strict rules as to whether employers are going too far in their employment verification duties.  At one time, federal regulations provided a safe harbor procedure for handling these issues, but the Obama Administration rescinded the regulation and suspended the issuance of Social Security mis-match letters in 2012.  Thus, this year will be the first time in seven years that employers will receive Social Security no-match letters when the government has discovered that the W-2 records submitted by the employer do not match the government's records on employee names and Social Security numbers (SSNs).

In the past, ICE has taken the position that an employer must take affirmative action upon discovering a Social Security discrepancy, but the discrepancy is only "evidence" of constructive knowledge of unauthorized employment.  In 2011, the predecessor to IER provided specific "dos and don'ts" related to no-match letters.  The most important suggestions in the IER guidance are as follows: 



1.  Check the reported no-match information against your personnel records.

1.  Use the receipt of a no-match notice alone as a basis to terminate, suspend or take other adverse action against the employee.

2.  Inform the employee of the no-match notice and ask the employee to confirm the name/SSN reflected in your personnel records.

2.  Attempt to immediately reverify the employee's employment eligibility by requesting the completion of a new I-9 form based solely on the no-match notice. 

3.  Advise the employee to contact the SSA to correct and/or update SSA records.

3.  Follow different procedures for different classes of employees based on national origin or citizenship status.

4.  Give the employee a reasonable period of time (no specific time period is listed) to address a reported no-match with the local SSA office.

4.  Require the employee to produce specific I-9 documents to address the no-match.

5.  Periodically meet with or otherwise contact the employee to learn and document the status of the employee's efforts to address and resolve the no-match.

5.  Require the employee to provide written evidence from SSA that the no-match has been resolved.

6.  Submit any employer or employee corrections to the SSA.


SSA began issuing letters called Employer Correction Requests in March 2019.  These letters do not include the names or SSNs of employees.  Instead, the letters ask employer to register online with SSA's business services unit to obtain the no-match information.

Editor's Note:  The author recently had a review by IER of a client's immigration practices.  IER pressed our client to avoid any type of adverse action against their employees solely because of a no-match letter.  This position leaves employers in the dark as to what they should do.  In general, employers must investigate, at least to show some responsive action.  They would not necessarily have to terminate each employee that is the subject of a no-match.  Note that ICE audits normally request employer records concerning no-match letters.  The big issue is when or if an employer is required to terminate an employee who has failed to show a correction of the mismatch issue by the SSA.  There appear to be more Social Security mismatches than there are unauthorized immigrants, and multiple reports of a mismatch often involve the same Social Security number.  The mismatch notices themselves have often disclaimed reliance on them as the sole basis to terminate an employee.  Further, SSA itself often takes 120 days and sometimes more to correct a mismatch.

In this situation, employers need legal counsel as to what approach to take when no confirmation from SSA of a correction is received.  A reasonable option is to give employees plenty of time to confirm the correction, such as 60 to 120 days, and another controversial option is to allow employees to provide other identity and work authorization documents sufficient to complete a new I-9 form in appropriate situations.

Wimberly, Lawson, Steckel, Schneider & Stine

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