In the past three years we have seen a surge of legislation and case decisions which have changed the employment landscape across the country. These changes narrow the type of individuals that can be classified as independent contractors, expand the definition of employer, increase minimum wage and salaries, and aim to restrict the manner in which some companies can change work schedules. For most employers, keeping up with these changes is a challenge, while for others it can be discouraging.
The most visible current controversy is the legal challenge filed against Uber and Uber-like companies such as Washio, Shyp and Postmates arguing that individuals providing services through such on-demand companies are “employees” instead of independent contractors.
Coming under scrutiny, companies have sought to settle their claims in an effort to mitigate possible repercussion. Uber is back at the bargaining table after a federal judge threw out a $100 million settlement between the parties.
Determining who is an employer is also a complex question. In 2015, in a case involving Browning-Ferris Industries of California, Inc., the National Labor Relations Board (NLRB) upended decades of precedent in deciding that Browning-Ferris was a joint employer with Leadpoint, a staffing agency used by Browning-Ferris.
In reaching its decision, the NLRB did away with the “actual control” standard previously applied and concluded that a business can be a joint employer with an unrelated entity if it retains indirect control over employees in matters governing essential conditions and terms of employment. Legal pundits have commented that the NLRB’s expansion of the definition of employer opened the door to finding joint employment in areas such as franchising and construction.
The commentators are not overstating the possible fallout of Browning-Ferris. In 2014, the NLRB’s General Counsel asserted that franchisors may be jointly liable for the unfair labor practices committed by franchisees. Since then, the NLRB and McDonald’s have been sparring over whether the franchisor is responsible for the labor practices of its franchisees. Earlier this year, Browning-Ferris appealed the NLRB’s decision to the United States Court of Appeals in Washington, D.C. The Court’s decision – either way – will most likely be further appealed to the Supreme Court.
The doctrine of successor liability has also seen changes. Successor liability, when applied, holds a succeeding business liable for the liabilities of its predecessor, such as in a sale and purchase of a business. For instance, in Blachana, LLC v. Bureau of Labor and Industries, employees of a closed sports bar filed a claim for unpaid wages against the purchaser of the assets of the defunct bar even though none of the former employees worked for the purchasing entity.
In holding the new company liable, the Oregon Court of Appeals noted that the two entities operated under similar names, used much of the same equipment, and both operated a bar and restaurant. The Court also noted that only 47 days had passed between the closure of the previous company and the opening of the new one. The Court’s holding adds a heightened level of complexity in the business asset purchase context, making it more likely that a subsequent asset purchaser may be held liable for the wage claims of a predecessor company.
In addition to these cases, new regulations and laws changing the employment landscape have also been plentiful. By now, most employers should be aware of the Department of Labor’s upcoming increase to the minimum salary requirement for Executive, Administrative, and Professional workers. Under the updated regulation, these workers will be required to be compensated at a rate of $913 per week(double the previous salary amount)to qualify as exempt. The increase to the minimum salary requirement will significantly change the manner in which small businesses compensate their management level employees.
States across the country have also made significant increases to minimum wage. Oregon, for instance, passed new legislation that will increase the State’s minimum wage to $14.75 in Portland Metro by 2022, with different rates for standard and nonurban counties. Cities like Seattle, New York, and Los Angeles have enacted laws which will gradually increase the minimum wage to $15 per hour.
Another wave making its way across the country is paid sick leave. Oregon now requires employers with 10 or more employees (6 if the employer has a location within the City of Portland) to provide protected, paid sick time of up to 40 hours a year. Across the river, Washington State residents will be voting on Initiative 1433 later this year, which would require employers to provide workers with up to seven days of paid sick leave a year beginning in 2018.
Work schedule regulations also are starting to gain momentum. Fair work schedule policies aim to narrow the manner in which certain employers publish or make changes to an employee’s work schedule, and require payment in instances where an employee’s schedule is changed.
In March 2016, San Francisco issued final rules requiring chain stores to offer their current employees extra hours before hiring new employees, publish work schedules two weeks in advance, and pay employees a premium of one to four hours of pay when their schedules are changed with less than seven days’ notice. Picking up the ball, Seattle is currently considering similar laws, and the City Council is expected to vote on the new law in mid-September.
Samuel Hernandez is an attorney with Barran Liebman LLP. He provides compliance advice to employers and represents management in employment law litigation. Contact him at 503-276-2175 or at shernandez@barran.com.
