The Ruby Files: Transition and the Fight for Bathroom Equality

Eric E. Packel, Matt Todd, William S. Robbins,

Lynn Trevino-Legler, Garrett C. Parks

Ruby’s Year So Far

Hospital Supervisor who was misclassified

D.O.L. Complaint and Investigation

Bank Compliance Department – privacy issues

Sexual harassment complaint and investigation

Immigration issues and compliance

Temporary Agency – Misappropriation of Trade Secrets and Non-Disclosure Agreement

Coffee Shop Conversation

Barista: Welcome to “Real Coffee”, we serve real coffee. Can I take your order?

Ruby: I would like a light, non-fat, two pump Chai Latte’ with foam and non-fat whipped cream. Oh, and frosted pumpkin spice. Lightly frosted.

Barista: Ma’am?

Rachel: Just give me a cup of coffee.

Rachel: So what are you going to do now, Ruby? Ruby: I don’t know. Aren’t you working for that “Open Gym” place?

Rachel: Kind of. Our company provides their customer service. But we don’t really work for Open Gym.

Ruby: Do they have Personal Trainers?

Rachel: Yes, some work there.

Ruby: Hmmm. Maybe I can be a Personal Trainer there too. Can you introduce me to someone?

Rachel: Sure I guess.

Barista: Ma’am, here’s your non-fat, three pump Chai Latte’ with foam and non-fat whipped cream with pumpkin spice.

Ruby: I ordered two pumps of Chai, not three.

Rachel: Ruby, I have to get to work. I can’t wait any longer for your Latte’.

Ruby: But you’ll get me that interview?

Rachel: Yes but don’t cause any problems Ruby.

Ruby: Rachel… Me?

Setting

Rachel works for a company who provides outsourcing Customer Service for Open Gym franchises.

Open Gym is a franchise operation, with franchisees throughout the country.

Ruby is going to work as an Independent Contractor Personal Trainee at one of the franchises.

Basic Employer/Employee Franchise Issues

Risk of Joint Employer Status

– NLRB issues complaints against McDonalds and its franchisees for alleged violations of the National Labor Relations Act

– If successful, McDonalds (franchisor) could be liable for management decisions of its franchisees

Basic Employer/Employee Franchise Issues

Old Standard

– Employers share or codetermine matters concerning terms and conditions of employment

– Joint employer meaningfully influences employment relationship (e.g. hiring, firing, supervision, direction of work)

– Control over employment matter is direct and immediate

Basic Employer/Employee Franchise Issues

New Standard – Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015)

– Joint Employer if:

• There is a common-law relationship with employees; and

• The putative joint employer possesses sufficient control over employees essential terms and conditions of employment (e.g. direct or indirect control)

Basic Employer/Employee Franchise Issues

Joint Employer Liability Exposure

– Fair Labor Standards Act

– National Labor Relations Act

• Unfair labor practices

• Representation Elections

– Discrimination statutes

Is Ruby an Independent Contractor or an Employee?

IRS 20-Factor Test / “Right to Control” Test: Behavioral Control, Financial Control, Type of Relationship

1. Level of Instruction. If the company directs when, where, and how work is done, this control indicates a possible employment relationship.

2. Amount of Training. Training workers suggests an employment relationship since the company is directing the methods by which work is accomplished.

3. Degree of Business Integration. Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees.

4. Extent of Personal Services. Companies that insist on a particular person performing the work assert a degree of control that suggests an employment relationship. In contrast, independent contractors are free to assign work to anyone.

5. Control of assistants. If a company hires, supervises and pays a worker’s assistants, this control suggests a possible employment relationship.

6. Continuing relationships. A continuous relationship between workers and companies indicate that employer-employee relationships exist. However, a contractor arrangement can involve an ongoing relationship for multiple, sequential projects.

7. Set hours of work. The establishment of set hours of work by a company indicates control typical for employees.

8. Full-time required. If workers must devote full time to company’s’ business, the company has control over the worker’s time. Independent contractors are free to work when and for whom they choose.

9. Need for On-Site Services. Control is indicated if the work is required to be performed on the company’s premises, especially when it can be performed elsewhere.

10. Order or sequences set. Control is indicated if workers are not free to choose their own patterns of work but must perform services in the sequences set by the company.

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Is Ruby an Independent Contractor or an Employee?

IRS 20-Factor Test / “Right to Control” Test:

11. Requirements of reports. Control is suggested if workers must submit regular oral or written reports to company.

12. Method of payment. Hourly, weekly or monthly pay schedules points to an employer-employee relationship,

provided that this method of payment is not just a convenient way of paying a lump sum agreed on as the cost of a

job. Independent contractors are usually paid by the job or on straight commission.

13. Payment of business and/or traveling expense. Companies paying workers’ expenses of this nature suggests

an employer-employee relationship.

14. Providing tools and materials. If a company furnishes significant tools, materials, and other equipment, it

suggests an employer-employee relationship.

15. Significant investments. Contractors typically invest in and maintain their own work facilities. In contrast, most

employees rely on their employer to provide work facilities.

16. Realization of profit or loss. Workers who receive predetermined earnings and have little chance to realize

significant profit or loss through their work generally are employees.

17. Working for multiple companies. If workers perform services for a number of unrelated persons at the same

time, they are usually independent contractors.

18. Availability to public. Workers are usually independent contractors if they make their services available to the

general public on a regular and consistent basis.

19. Control over discharge. A company’s unilateral right to discharge workers indicates that the workers are

employees. In contrast, a company’s ability to terminate a worker generally depends on contract terms.

20. Right to terminate. Workers are employees if they have the right to end their relationships with a company at any

time without incurring liability. Contractors cannot terminate services without liability, except as provided in their

contract.

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U.S. Department of Labor: “Economic Realities” Test:

A multi-factored “economic realities” test is commonly applied to determine whether an employer “suffers or permits” work creating an employment relationship triggering the FLSA. The July 15, 2015 Administrator’s Interpretation discusses six factors:

1. Is the work an integral part of the employer’s business?

2. Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?

3. How does the worker’s relative investment compare to the employer’s investment?

4. Does the work performed require special skill and initiative?

5. Is the relationship between the worker permanent or indefinite?

6. What is the nature and degree of an employer’s control?

Many state laws, such as state overtime laws, unemployment insurance, worker’s compensation, implicate different tests for classifying independent contractors and employees. Thus, an independent contractor relationship should be assessed on a state-by-state and law-by-law and basis.

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Is Ruby an Independent Contractor or an Employee?

Phone Call

Rachel: Hey Ruby.

Ruby: Hey Rach.

Rachel: Ruby, I’m hearing that you are stirring things up? What’s this about a Union??

Ruby: I’m just trying to help, Rachel. I did some googling and I’ve talked to other Customer Service Reps. You guys need to unionize.

Rachel: But Ruby I don’t work for Open Gym. I told you that. We just do their Customer Service stuff.

Ruby: Rachel, Google it. Doesn’t matter. You can form a Union at Open Gym.

Phone Call

Rachel: I don’t want to be in a Union.

Ruby: Well girlfriend, you’re in the Unit. I looked it up.

Rachel: What Unit?

Ruby: Just keep an eye out for Union literature. You’ll thank me.

Rachel: Mmmhmm.

Union Issues - Outsourcing

Browning – Ferris

– BFI subcontracted various task to Leadpoint, staffing agency

– BFI set out tasks for employees

– Leadpoint interviewed, hired, fired, supervised, evaluated, disciplined and terminated employees

– Teamsters (trying to organize Leadpoint employees) filed Representation Petition naming BFI as “joint-employer”

Union Issues - Outsourcing

What did BFI do:

– Required Leadpoint employees to pass drug screening prior to starting work at BFI

– Prohibited Leadpoint from hiring anyone ineligible for rehire by BFI

– Reserved unilateral right to discontinue use of temp employee

– Controlled Leadpoint employee’s day-to-day activities

– Required Leadpoint employees to comply with BFI’s safety policies

– Prohibited Leadpoint from paying its employees more than BFI employees paid for performing similar work

Union Issues - Outsourcing

What this all means – NLRB Quickie Election Rules

• Faster the election, the greater the chance the Union wins

• Cuts down time for election (occurring almost 13 days faster than before rules went into effect)

– Joint employer’s employees would be included in the bargaining unit and given chance to vote in election

– If Union wins election, joint employer would be expected to sit at negotiating table with franchisee/temp agency to negotiate wages and other terms and conditions of employment

– Joint employer found liable for unfair labor practices committed by franchisee/temp agency

Conversation

Ruby: Hello.

Rachel: Ruby, you’ve been acting different. I’m not the only one who noticed. What’s up?

Ruby: Different? What do you mean?

Rachel: Ruby are you ok?

Ruby: Not really. I’ve been thinking about making a change. It’s very hard though. You wouldn’t understand.

Rachel: A change? Another job??

Ruby: No – it’s personal. More personal than that.

Rachel: Talk to me. What is it?

Ruby: I’m thinking of changing my name to Rudy…

“Sexual orientation” and “gender identity” are not explicitly protected categories

Early cases – Title VII does not protect transgender individuals

1984 – Price Waterhouse – claims under Title VII based on sex stereotyping

Title VII and Gender Identity

Prohibits sexual orientation or gender identity discrimination

– Federal contractors and subcontractors

December 9, 2014 DOL changed OFCCP’s regulations

– Amended regulations effective April 8, 2015

Executive Order 13672

EEOC focused on gender identity and sexual orientation

“EEOC interprets and enforces Title VII's prohibition of sex discrimination as forbidding any employment discrimination based on gender identity or sexual orientation. These protections apply regardless of any contrary state or local laws.”

EEOC versus State/Local Laws

In Macy v. Dep't of Justice, EEOC Appeal No. 0120120821, 2012 WL 1435995 (April 20, 2012), the Commission held that intentional discrimination against a transgender individual because that person's gender identity is, by definition, discrimination based on sex and therefore violates Title VII.

Lusardi v. Dep't of the Army, EEOC Appeal No. 0120133395, 2015 WL 1607756 (Mar. 27, 2015) - Applying Macy, EEOC also held that an employer's restrictions on a transgender woman's ability to use a common female restroom facility constituted disparate treatment.

Jameson v. U.S. Postal Service, EEOC Appeal No. 0120130992, 2013 WL 2368729 (May 21, 2013) - Intentional misuse of a transgender employee's new name and pronoun may constitute sex-based discrimination and/or harassment.

Complainant v. Dep't of Veterans Affairs, EEOC Appeal No. 0120133123, 2014 WL 1653484 (Apr. 16, 2014) - An employer's failure to revise its records pursuant to changes in gender identity stated a valid Title VII sex discrimination claim.

Not Yet for Private Employers…

Hively v. Ivy Tech Community College, 7th Cir. 2016

– “Our circuit has, without exception, relied on those precedents to hold that the Title VII prohibition on discrimination based on “sex” extends only to discrimination based on a person's gender, and not that aimed at a person's sexual orientation.”

– “Our holdings…reflect the fact that despite multiple efforts, Congress has repeatedly rejected legislation that would have extended Title VII to cover sexual orientation. Moreover, Congress has not acted to amend Title VII even in the face of an abundance of judicial opinions recognizing an emerging consensus that sexual orientation in the workplace can no longer be tolerated. “

Conversation with Our Favorite

S.I.: U.S. Department of Labor, Wage and Hour Division, Senior Special Investigator Robbins speaking.

Ruby: Hi Special I. It’s me, Ruby!

S.I.: Ruby Beaker?

Ruby: You’re so funny. Ruby Breaker. You’ve been so good to me this year I wondered if I could pick your brain?

S.I.: You have another complaint?

Ruby: Oh no. I’m no chronic complainer.

S.I.: Well what is it? Hang on, let me get my Form 222-A4 to fill out again.

Ruby: Oh we don’t need a form. See, my Aunt died and left me controlling stock in a business.

S.I.: So what do you want? My soup is getting cold here, so…

Ruby: I’m going to spend a couple months learning this business but I wanted to see if you could help me with any compliance issues that might come up. You know how difficult some

employees can be nowadays. S.I.: I’m a Senior Special Investigator, Ms. Beaker. I’m not a Consultant.

Ruby: So cute. I’ll give you a call in a couple of months and run some ideas by you.

S.I.: Oh, for…ummm…ok Ms. Beaker, if you have a need to call, go ahead. Right now my soup is getting cold and I’m late for my weekly bowling league.

Ruby: What’s your high score?

S.I.: Goodbye Ms. Beaker. Have a nice winter.

Ruby: Talk to you soon!

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