The Future for Ground Transportation - Labor and

Employment IssuesJames N. Foster, Jr., Esq.

McMahon Berger, P.C.2730 N. Ballas Rd., Suite 200

St. Louis, Missouri 63131(314) 567-7350 – Telephone(314) 567-5968 – Facsimile

foster@mcmahonberger.com

This material has been prepared for informational purposes only and does not constitute legal advice. It is not intended tocreate, and receipt of it does not constitute, an attorney-client relationship. Readers should seek professional legal counselbefore acting upon any information contained herein.

Average Additional Cost of Labor When Joint Employer Found

•20% or more on average added for:

• FICA

• Unemployment taxes

• Workers compensation

• Benefits

Federal Statutes Implicated by Single and Joint Employer Liability

• The National Labor Relations Act (NLRA)• Federal discrimination laws (such as Title VII, the Age Discrimination in

Employment Act, and the Americans with Disabilities Act),

• The Workers Adjustment and Retraining Notification (WARN) Act• The Family and Medical Leave Act (FMLA)

• The Employee Retirement Income Security Act (ERISA)• The Occupational Health and Safety Act (OSHA)• State laws and taxes, FICA, unemployment, workers compensation etc.

Simple Traditional Tests of Long Ago

1. Common Ownership;

2. Common management;

3. Interrelationship of operations;

4. Centralized control over labor relations; and

5. The IRS Test of “Right of Control.”

Since 1935 – NLRA Has Been Evolving –Employer - Employee

• Employer• Single Employer• Joint Employer• Alter Ego• Joint Venture• Predecessor Employer• Successor Employer• Independent Contractor• Disguised Continuance• Double Breasted• GIG economy workers• Shared services/ride• App workers And it continues…

Like the “At-Will” Doctrineexceptions only occurred once the Doctrine was

announced

Newer Versions

• Franchisor/Franchisee

• Communication Company/App Based Worker

• Knowledge Company/Self Employed

• GIG economy workers

• Shared services platforms

Cost Consequences - Huge• Taxes

• Benefits

• Liabilities

• Insurance

• Who can be the targets of:• Pickets

• Strike

• Handbilling

• Boycotts

NLRB 2015 – Browning Ferris Decision(362 NLRB No. 186-2015)

• The 2015 Test:

1. Whether a common-law employment relationship exists; and

2. Whether the putative joint employer “possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful bargaining.”

• No longer requires “Direct and Immediate” control;

• Would consider both “reserved” and “indirect control”;

• Regardless if Right to Control is ever exercised.

Browning Ferris cont.

• Criticized as vague and impractical but…

Partially upheld by Browning Ferris v. NLRB (D.C. Dec. 2018) – and remanded to NLRB to explain…

In Uber TechnologiesNLRB Advice Memorandum (April 16, 2019)

• Following Transdev’s Super Shuttle Decision 367 NLRB No. 75 (Jan. 25, 2019) the Board explained:

Applying the common-law agency test, we conclude that UberX and UberBLACK drivers were independent contractors.

a. The extent of control which, by the agreement, the master may exercise over the details of the work.

b. Whether or not the on employed is engaged in a distinct occupation or business.

c. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.

In Uber TechnologiesNLRB Advice Memorandum (April 16, 2019)

cont.d. The sill required in the particular occupation.

e. Whether the employer or the workman supplies the instrumentalities, tool, and the place of work for the person doing the work.

f. The length of time for which the person is employed.

g. The method of payment, whether by the time or by the job.

h. Whether or not the work is part of the regular business of the employer.

i. Whether or not the parties believe they are creating the relation of master and servant.

j. Whether the principal is or is not in business.

On February 26, 2020 – 194 page rule by NLRB issued – effective April 27, 2020

And now: February 26, 2020

• NLRB issues Joint-Employer Final Rule.

• Restores Pre-Browning Ferris Rule with clarity.

2020 NLRB Joint- Employer Final Rule cont.

• To be a joint employer under the final rule, a business must possess andexercise substantial direct and immediate control over one or moreessential terms and conditions of employment of another employer’semployees. The final rule defines key terms, including what are considered“essential terms and conditions of employment,” and what does, and whatdoes not, constitute “direct and immediate control” as to each of theseessential employment terms. The final rule also defines what constitutes“substantial” direct and immediate control and makes clear that controlexercised on a sporadic, isolated, or de minimis basis is not “substantial.”

2020 NLRB Joint- Employer Final Rule cont.

• Evidence of indirect and/or contractually reserved control over essentialemployment terms may be a consideration for finding joint-employer statusunder the final rule, but it cannot give rise to such status without substantialdirect and immediate control. Importantly, the final rule also makes clearthat the routine elements of an arm’s-length contract cannot turn acontractor into a joint employer.

2020 NLRB Joint- Employer Final Rule cont.

• The joint-employer standard under the NLRA is a matter of consequencebecause it determines whether a business is an employer of employeesdirectly employed by another employer altogether. If two entities are jointemployers, both must bargain with the union that represents the jointlyemployed employees, both are potentially liable for unfair labor practicescommitted by the other, and both are subject to union picketing or othereconomic pressure if there is a labor dispute.

All of this is to be EffectiveApril 27, 2020

(If not stopped by litigation)

NLRB New Rule Effective April 27, 2020• Impact of the Final Rule

• A joint employer finding has significant implications for rights and obligations under the NLRA relative to collective bargaining, strike activity, and unfair labor practice liability:• If the employees are represented by a union, the joint employer must participate in

collective bargaining over their terms and conditions of employment.

• Picketing directed at a joint employer that would otherwise be secondary and unlawful is primary and lawful.

• Each business comprising the joint employer may be found jointly and severally liable for the other’s unfair labor practices.

Joint-Employer Standard Overview• Specifies that a business is a joint employer of another employer’s

employees inly if the two employers share or codetermine the employees’ essential terms and conditions of employment;

• Clarifies the list of essential terms and conditions: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction;

• Provides that to be a joint employer, a business must possess and exercise such substantial direct and immediate control, over one or more essential terms and conditions of employment of another employer’s employees as would warrant a finding that the business meaningfully affects matters relating to the employment relationship;

Joint-Employer Standard Overview cont.

• Specifies that evidence of indirect and contractually reserved but never exercised control over essential terms and conditions, and of control over mandatory subjects of bargaining other than essential terms and conditions, is probative of joint-employer status, but only to the extent that it supplements and reinforces evidence of direct and immediate control;

• Defines the key terms used in the final rule, including what does and does not constitute “substantial direct and immediate control” of each essential employment term;• Makes clear that joint-employer status cannot be based solely on indirect influence

or a contractual reservation of a right to control that has never been exercised.

For Franchisors

• The NLRB argued in favor of expanding joint employer liability to franchisors, noting that some can and do control employees of franchisees by, among other things:• Tracking the sales, inventory and labor costs of franchisees;

• Calculating or imposing numbers for the labor needs of franchisees;

• Setting or overseeing employee work schedules;

• Tracking franchisee wage reviews;

• Tracking how long it takes for employees to fill customer orders;

• Requiring franchisees to use labor scheduling technology and point of sale systems that track any of the above; and

• Accepting employment applications for franchised locations through the franchisor’s system and screening applicants through the system.

DOL – Joint Employer Rules

• January 12, 2020 – 60 days

• Effective March 16, 2020

DOL RuleEffective March 16, 2020

Four Factor Balancing Test:

• Hires or fires the employee;

• Supervises and controls the employees work schedule or conditions of employment to a substantial degree;

• Determines the employee’s rate and method of payment; and

• Maintains the employee’s employment records.

DOL Explained for FLSAEffective March 16, 2020

These factors do not make Joint Employer more liklely:

• Operating as a franchisor or entering into a brands and supply agreement, or using a similar business model;

• The potential joint employer’s contractual agreements with the employer requiring the employer to comply with its legal obligations or to meet certain standards to protect the health or safety of its employees or the public;

• The potential joint employer’s contractual agreements with the employer requiring quality control standards to ensure the consistent quality of the work product, brand, or business reputation; and

• The potential joint employer’s practice of providing the employer with a sample employee handbook, or other forms, allowing the employer to operate a business on its premises (including “store within a store” arrangements), offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer, jointly participating in an apprenticeship program with the employer, or any other similar business practice.

Coming Attractions!

Coming to a computer screen near you:

• EEOC’s Joint Employer Rules

Now for the rest of the story….

•QUESTIONS?