Monday, May 20, 2019

Uber Drivers: Employees or Independent Contractors? NLRB GC weighs in.

You may recall that the NLRB recently held that employee/independent contractor classification is now resolved using an employer-friendly version of the common law test (SuperShuttle). Now, the NLRB Office of General Counsel has used that new test to recommend dismissal of several charges brought by Uber drivers.

You can read the advice memo here (ht: Bloomberg Law).  The Conclusion really does a nice job of summarizing the NLRB GC's position:
Not official use.
Considering all the common-law factors through “the prism of entrepreneurial opportunity” set forth in SuperShuttle, we conclude that UberX drivers were independent contractors. Drivers’ virtually complete control of their cars, work schedules, and log-in locations, together with their freedom to work for competitors of Uber, provided them with significant entrepreneurial opportunity. On any given day, at any free moment, UberX drivers could decide how best to serve their economic objectives: by fulfilling ride requests through the App, working for a competing rideshare service, or pursuing a different venture altogether. The surge pricing and other financial incentives Uber utilized to meet rider demand not only reflect Uber’s “hands off” approach, they also constituted a further entrepreneurial opportunity for drivers. Although Uber limited drivers’ selection of trips, established fares, and exercised less significant forms of control, overall UberX drivers operated with a level of entrepreneurial freedom consistent with independent-contractor status. In addition, drivers’ lack of supervision, significant capital investments in their work, and their understanding that they were independent contractors also weigh heavily in favor of that status. Although Uber retained portions of drivers’ fares under a commission based system that may usually support employee status, that factor is neutral here because Uber’s business model avoids the control of drivers traditionally associated with such systems and affords drivers significant entrepreneurial opportunity. The other factors supporting employee status—the skill required and our assumption that drivers operated as part of Uber’s regular business, and not in a distinct business or occupation—are also of lesser importance in this factual context. Accordingly, we conclude that UberX drivers were independent contractors.
The memo goes on to reach the same conclusion for UberBLACK drivers.

Of, course, this comes with the usual caveats:

  • Different courts, agencies, and jurisdictions use different classification tests depending on the underlying law at issue; and
  • NLRB precedent is only as binding as the current makeup of the NLRB - and this isn't even an NLRB decision, it's just an advice memo.  

Friday, May 17, 2019

Can plaintiffs recover punitive and liquidated damages under the Pennsylvania Human Relations Act?

Can plaintiffs recover punitive and liquidated damages under the Pennsylvania Human Relations Act (PHRA)? That's actually two separate questions. Let's start with the easy one.

Punitive Damages

The Pennsylvania Supreme Court has clearly said that punitive damages are not available under the PHRA. Hoy v. Angelone, 720 A.2d 745 (Pa. 1998).

Liquidated Damages

Liquidated damages are a little murkier. Some statutes expressly provide for liquidated damages. For example, an ADEA plaintiff can recover liquidated damages equal to their back pay (i.e. doubling their back pay award).

Under the case law, liquidated damages under the PHRA seem like a long shot. The gist of the PA Supreme Court's holding in Hoy is that the PHRA provides remedial damages and not punitive damages. Given that liquidated damages are punitive in nature (and not merely remedial), then courts could (and have) conclude that liquidated damages are not available:
[B]oth the Supreme Court and Third Circuit have held, albeit in the context of the ADEA, that liquidated damages are intended to be punitive in nature . . . . Given these conclusions, Plaintiffs are not entitled to the submission of a liquidated damages charge to the jury on their PHRA claims.
Potoski v. Wilkes Univ., No. 3:06-CV-2057, 2010 U.S. Dist. LEXIS 99731, at *8-9 (M.D. Pa. Sep. 22, 2010).

Some courts, however, have adopted more of a we-don't-know so let's wait and see approach:
[A]nother court within the Third Circuit held that the defendant was not entitled to dismissal of the plaintiff's PHRA liquidated damages claim at the early stage of proceedings because no case law established that "liquidated damages are excluded from 'any other legal or equitable relief' expressly authorized in the PHRA." Craig v. Thomas Jefferson University, Civil Action No. 08-4165, 2009 U.S. Dist. LEXIS 57819, 2009 WL 2038147, at *9 (E.D. Pa. July 7, 2009). Because the issue is not as straight forward as Defendants assert and because Defendants' sparse briefing does not sufficiently address matters this Court considers relevant to deciding the issue, we will follow Craig's path of not striking the demand for liquidated damages at the motion to dismiss stage. 
Bellas v. WVHCS Retention Co., 2012 U.S. Dist. LEXIS 128133, *19, 96 Empl. Prac. Dec. (CCH) P44,642, 2012 WL 3961227 (M.D. Pa. September 10, 2012). Even that is hardly a ringing endorsement.

Friday, May 10, 2019

Rules of Professional Conduct: Setting an effective screen

A few of my colleagues and I recently presented at the Association of Corporate Counsel, Central Pennsylvania Chapter meeting. The theme for the day was "Defending the Corporate House," and our presentation was Navigating Conflicts of Interest in the In-House and Outside Counsel Context.

My particular part of our presentation dealt with setting an effective screen under the Rules of Professional Conduct. If an attorney has a conflict of interest (perhaps it involves a former client), then that attorney may be disqualified from representing a current client in that matter - even if (s)he is in-house counsel. Worse still, one attorney's conflict of interest may be imputed to the entire firm, or even the entire in-house counsel's office! For example, see Dynamic 3D Geosolutions LLC v. Schlumberger Ltd. (disqualifying entire in-house and outside counsel).

If a law firm (for purposes of the Rules of Professional Conduct, an in-house counsel office is generally a "firm") has an attorney with a conflict, there is still hope. The Pennsylvania Rules of Professional Conduct allow for a "screen" - a way to block the conflicted attorney out of any involvement in the matter, and therefore cutting off the imputation of his or her conflict of interest to the rest of the firm:
Rule 1.10. Imputation of Conflicts of Interest: General Rule  
 (b) [T]he firm may not knowingly represent a person in the same or a substantially related matter . . . unless:  
(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and 
(2) written notice is promptly given to the appropriate client to enable it to ascertain compliance with the provisions of this rule.
 When is screening effective? In Pennsylvania, courts look at multiple factors:
(1) the substantiality of the relationship between the attorney and the former client,
(2) the time lapse between the matters in dispute,
(3) the size of the firm and the number of disqualified attorneys,
(4) the nature of the disqualified attorney's involvement and
(5) the timing of the wall. 
Dworkin v. General Motors Corporation, 906 F. Supp. 273 (E. D. Pa. 1995). And then, what makes the screen effective?
(1) the prohibition of discussion of sensitive matters,
(2) restricted circulation of sensitive documents,
(3) restricted access to files,
(4) strong firm policy against breach, including sanctions, physical and/or geographical separation, to determine its effectiveness.
James v. Teleflex, Inc., 1999 U.S. Dist. LEXIS 1961 (E. D. Pa. 1999)(citing Dworkin, 906 F. Supp. at 280).

This is definitely a tricky issue, and it requires some thoughtful analysis to pull off an effective screen.

Tuesday, May 7, 2019

Updated Chart: EEOC Charge Statistics 1997-2018

The EEOC recently released its updated charge statistics for FY2018. You know what that means . . . updated chart!


Charges are down across the board for the second year in a row. Over two years, we've seen some fairly significant drops. For example, race-based charges are down 23.9% since 2016.

What about the #MeToo movement? Has that had an impact on harassment claims? Let's go to the numbers:

Charges Alleging Sex-Based Harassment (Charges filed with EEOC)FY 2010 - FY 2018

2010 7,944
2011 7,809
2012 7,571
2013 7,256
2014 6,862
2015 6,822
2016 6,758
2017 6,696
2018 7,609

We see that the number of charges in 2018 was actually lower than 2010 and 2011. But, we also see a 13.6% jump from last year, and in a year in which all of the types of discrimination in the chart above decreased, that's noteworthy. Also, the percentage of claims filed by men (15.9%) was the lowest on the chart (going back to 2010). I think that's a pretty compelling case that #MeToo has had an impact. 

Tuesday, April 30, 2019

Employee or Independent Contractor? DOL on the Virtual Marketplace

If you love employee classification issues (and who doesn't?), then be sure to check out the U.S. Department of Labor's new opinion letter, FLSA2019-6. The opinion addresses a virtual marketplace company (VMC).
[A VMC] is an online and/or smartphone-based referral service that connects service providers to end-market consumers to provide a wide variety of services, such as transportation, delivery, shopping, moving, cleaning, plumbing, painting, and household services.
Not official use.
This hip new opinion also tosses out trendy phrases like the "on-demand economy" and "sharing economy." And then, of course, it devolves into the convoluted world of trying to discern whether workers are employees or independent contractors under one of the approximately 35,000 (rough estimate) tests.

Under the FLSA, "the touchstone of employee versus independent contractor status has long been 'economic dependence.'” And, of course, the DOL applies . . . wait for it . . . you know its coming . . . a vague, non-exhaustive, multi-factor test, weighing the factors under the totality of the circumstances! Yaaaayy.
(1) The nature and degree of the potential employer’s control; 
(2) The permanency of the worker’s relationship with the potential employer; 
(3) The amount of the worker’s investment in facilities, equipment, or helpers; 
(4) The amount of skill, initiative, judgment, or foresight required for the worker’s services; 
(5) The worker’s opportunities for profit or loss; and 
(6) The extent of integration of the worker’s services into the potential employer’s business.
The DOL includes a lengthy analysis, that you should read for yourself if interested. A major factor here, was that the service providers had the "flexibility to choose if, when, where, how, and for whom they will work."

Disclaimer: Analysis differs depending on the underlying legal issue, jurisdiction, venue, and circumstances. Hence the 35,000 (rough estimate) other tests.

Monday, April 29, 2019

Thoughts on "Preferably Caucasian" job posting

No.

No, no, no, no, no, no, no.

Takeaways: No.

Friday, April 26, 2019

SCOTUS: No class action arbitration from ambiguous agreement

Sorry, I was out yesterday so I'm a day late to this party. On Wednesday, the Supreme Court released its opinion in Lamp Plus, Inc. v. Varela. A hacker stole employee data from Lamp Plus, which was used to file fraudulent tax returns. An employee, Varela, filed a putative class action in federal court.

One problem - the employee had an arbitration agreement. So, the court compelled arbitration. Here's the twist though - the court compelled class arbitration. The courts concluded that the arbitration agreements were ambiguous as to whether the parties consented to class arbitration. Under California law (comparable to most states' contract law I imagine), ambiguous contracts are interpreted against the drafter. So, the lower courts reasoned, Lamp Plus as the drafter could be compelled into class arbitration based on the ambiguous contracts.

The Supreme Court disagreed. "Courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis." Frankly, I'm not sure what this means procedurally. I think the district court will now reconsider the motion to compel arbitration on remand, and presumably conclude that the parties must arbitrate Varela's individual claim.

There are reasons an employer may or may not want to consent to class arbitration. This is just another topic that can be addressed in the language of the arbitration agreement itself though.