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INDEPENDENT CONTRACTOR LEGISLATION IN CALIFORNIA THREATENS GIG WORKERS

The California legislature has passed a bill that has been signed by its governor designed to reclassify many or most contract workers as employees.  The bill goes into effect January 1 of next year, and applies what is known as the "ABC Test" to employment status.  It requires companies that want to treat a worker as a contractor to prove that the worker is independent and free to perform the services provided without company control, that those services are outside the company's usual course of business, and that the contractor works independently in the same type of business as the contracted work.  The bill, known as Assembly Bill 5, directly threatens the business model of gig-economy companies like Uber, as would the legislation promoted by various Democratic Presidential candidates in Congress.  Further, the so-called "red" states across the country are looking at this bill and considering similar legislation.                     

                       

The situation in California leaves many with the question as to what to do after the law goes into effect.  Federal Express reacted to similar issues by abandoning any issues of independent contractor drivers in favor of smaller independent motor carriers, and contracting with corporate entities rather than individuals seems to promote the contractor classification.  Although a company might also consider outsourcing employment to a staffing agency, issues still arise concerning potential joint employment liability.

EEOC GAINS QUORUM AND NEW GENERAL COUNSEL

On August 1, 2019, the Senate approved Sharon Gustafson as the EEOC's new General Counsel and Charlotte Burroughs (D) for a second term as a member of the EEOC Commission.  Gustafson had been awaiting Senate approval for almost 15 months, giving the Administration its first Senate-confirmed General Counsel.  The authority of the EEOC General Counsel is quite significant as the Commission has delegated the authority to the General Counsel to determine which cases to litigate, and some consideration is being given to return that authority to the Commission rather than the General Counsel.

Since the Commission now has a quorum to transact business, it will undoubtedly be addressing some of the controversial issues over which consideration has been postponed due to the lack of a quorum.  Those issues include new policies on sexual harassment and the controversial issues associated with sexual orientation and gender identity.  The Justice Department and the EEOC currently have conflicting opinions as to whether the discrimination laws protect LGBT workers, and a case dealing with that issue is now before the U.S. Supreme Court.  Another controversial issue pending at the EEOC is the Obama-era initiative to require employers to submit pay equity data with their EEO-1 Reports.  There is another nominee for the remaining open Commission position, and the Administration has nominated Keith Sonderling for this position, but as of yet there have been no Senate confirmation hearings. 

PRESIDENTIAL CAMPAIGN STAFFS PLAGUED BY ANTI-WORKER ACCUSATIONS

At least five Democratic presidential candidates have recognized labor unions as representatives of their campaign staffs, including Bernie Sanders, Elizabeth Warren, Cory Booker, Julian Castro, and Eric Swalwell.  Democratic candidates are catering to labor union votes, likely because of President Trump's strong support from union households in the last election.  Surprisingly, results have not always gone the way the presidential candidates would have preferred.

The Bernie Sanders campaign is facing unfair labor practice charges alleging illegal employee interrogation and retaliation.  Apparently, negotiations between the Sanders' campaign and the union representing staffers has not gone over well, although the NLRB has yet to determine whether the charges against the Sanders' campaign have merit.  Charges to the NLRB can be filed by "any person," and they do not have to come from someone directly affected by the alleged violations.

A representative of the UFCW, the union representing the Sanders' campaign staffers, declined to comment, as did the Sanders campaign officials.

More recent information indicated that the charge against the Sanders' campaign was filed by a staffer alleging that the campaign "failed to notify us upon hire that we had a collective bargaining agreement and maintained that we were at-will."  Other allegations include that the campaign broke the terms of its collective bargaining agreement by making staff work additional days and failing to provide days off.

Elizabeth Warren's campaign is also facing an unfair labor practice charge alleging its confidentiality agreement unlawfully prevents them from speaking out on workplace issues.  The charge against Warren was filed by a non-employee who supports another presidential candidate and is targeting the campaign's reported use of unpaid fellowships as well as non-disparagement agreements.  The Warren campaign reportedly requires its employees to not "make any statement that may impair or adversely affect the good will or reputation of the organization."  Other reports indicate neither the Warren nor the Sanders campaign are willing to pay the $15.00 per hour wages that they had campaigned for.

A related development concerning the Bernie Sanders' campaign is that numerous reports indicate that union members are upset with Sanders for his idea of eliminating the current health coverage of union members in favor of a Medicare for all system.  The unions oppose this idea on the grounds that negotiated health care benefits are a key perk of being in a union. 

APPROVAL OF UNIONS AT HIGHEST LEVEL IN MANY YEARS

According to a Gallup Poll on August 28 of this year, the approval rating for labor unions among the American public reached 64%.  This 64% approval rating is up 16 points from the all-time low just ten years ago.  The poll indicated that about 14% of Americans live in a union household.  The survey found an 86% approval rating among those living in a union household, but only a 60% approval rating in non-union households. 

PRESSURES FROM BOTH SIDES CREATED - AND RESOLVED - GM STRIKE

The situation between General Motors (GM) and the United Auto Workers (UAW) seemed a "perfect storm" for a labor dispute.  GM's profits have reached high levels in 2016 and 2017, before falling last year, with expectations for further downturns in U.S. auto sales.  The investment community had the opinion that GM coddled the UAW, and thus avoided necessary cost cutting measures.  The UAW, on the other hand, is experiencing a major membership decline from 1.5 million in the 1970s to around 400,000, partially resulting from lay-offs in Detroit and moving more work to Mexico.  The UAW has been notoriously unsuccessful in attempting to organize foreign-owned car plants in the U.S., such as Nissan, Toyota, and Volkswagen.  The UAW's newly-elected President was inexperienced in labor negotiations, and is himself the subject of a Justice Department investigation into corruption, along with many other UAW officials, some of which have already been convicted of various forms of embezzlement.  The union president is under investigation for a "lavish lifestyle" that includes long stays in luxury lodgings, golf outings and state dinners with champagne and cigars.  In the government raid of his suburban Detroit home, federal investigators seized golf clubs and $30,000 in cash.  Even President Trump played a role by publicly criticizing GM for not building more in the U.S.  It didn't help that the industry was shifting toward electric vehicles and self-driving cars.  The union also resented concessions during the previous GM bankruptcy and wanted pay-backs.

GM was trying to require union members to pay some portion of the healthcare costs, which is currently a ridiculously low 4%, well less than something like the 25%-30% industry average.  The UAW was trying to reduce the current eight-year progression to reach the pay level of $30, as new hires start around $15 and go through a progression.  The UAW also wanted to reduce the number of temporary workers and contractors. 

The situation resulted in a strike of almost 50,000 workers, and occurred at a time when public approval of unions is the highest in 50 years.  The strike is one of the biggest ones in many years.  Over 30 factories in the U.S. were directly affected, resulting in problems for many suppliers as well.

The union seemed begging for a fight and increased its strike pay from $200 to $250 a week, and seemed desperate to show toughness to its membership.  GM, in its effort to hold the line on costs, aggressively publicized its proposals to the entire workforce, a tactic designed to appeal directly to workers. 

Finally, after over a month of striking, a tentative deal has been reached.  GM has apparently promised to invest more monies in the U.S. factories and to keep some of them open that would otherwise have closed or been reduced.  The agreement reportedly includes wage increases of 3% for two years of the contract and a 4% bonus payment in the other two years, and further provides a path to full-time employment for temporary workers.  The healthcare cost issue remains unchanged, and new hires will get improved pay and faster progression to the top rate. 

As usual, everybody lost in the strike.  Some estimate GM's losses as much as $1.5 billion, and the union strikers lost wages that they will never regain.

PRESIDENT TRUMP ISSUES NEW EXECUTIVE ORDERS TO CURB BACK-DOOR REGULATION

President Trump has signed two new executive orders on October 9, 2019 to reduce government regulations without formal rule-making.  At the signing ceremony, he stated: "For many decades, federal agencies have been issuing thousands of pages of so-called guidance documents - a pernicious kind of regulation imposed by unaccountable bureaucrats in the form of commentary on how rules should be interpreted.  All too often, guidance documents are a back door for regulators to effectively change the laws and vastly expand their scope and reach."

One order, called "Promoting the Rule of Law Through Improved Agency Guidance Documents" requires agencies to post all of their guidance documents on a searchable website with the understanding that anything not posted is considered rescinded.  The other order, called "Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication" is an effort to prevent secret or unlawful interpretation of regulations and from unfair or unexpected penalties. 

The two orders would not prevent agencies from prosecuting various enforcement actions, but they state that violations of the law should be based on statutes and legally binding regulations.  It is unlikely that opinion letters will be affected because they are specifically authorized by the Administrative Procedure Act. 


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