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Independent Contractor Misclassification and Compliance News: June, 2018

   |   Nathan Gibson   |   June 28, 2018

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As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It is important for enterprises to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we’ll bring you the latest news stories from around the web.

1. Massachusetts Attorney General Leads Coalition of State Attorneys General Saying Intentional Misclassification Should be a Violation of the National Labor Relations Act (NLRB)

The NLRB is considering whether and when to consider misclassification of employees as independent contractors to be an unfair labor practice under the National Labor Relations Act (NLRA). The NLRA protects the rights of employees to organize, collectively bargain, and engage in actions for mutual aid or protection.

The NRLA does not apply to independent contractors and if independent contractors attempted to organize, at least one court found it would be in violation of anti-trust laws. Proponents of making intentional misclassification an unfair labor practice claim that employers misclassify employees to prevent them from having any rights under the NLRA. Opponents claim that the NLRA was never intended to include misclassification and this would greatly increase the NRLB’s ability to investigate and prosecute employers.

Massachusetts Attorney General Maura Healy led a coalition of 12 state Attorneys General in filing an amicus brief in support of having intentional misclassification of employees as independent contractors be considered an unfair labor practice and a violation of the NLRA. The brief argues that a growing number of workers are misclassified, that these workers are not protected by the NLRA, and that purposeful misclassification restricts workers’ rights under the NLRA.

2. New Jersey Governor Creates Misclassification Task Force

New Jersey Governor Phil Murphy created a 12-person task force to focus on misclassification of employees as independent contractors in New Jersey. Governor Murphy’s task force is tasked with evaluating existing enforcement efforts by executive departments and agencies, developing best practices, reviewing existing laws, and providing advice and recommendations to the governor.

3. Ninth Circuit Revives US Chamber’s Challenge to Seattle Ride-Hailing Union Law

In December 2015, Seattle adopted an ordinance that allows drivers of ride-sharing companies to organize and requires the companies to bargain with the drivers over issues like pay. The United States Chamber of Commerce filed a suit claiming the ordinance violated and was preempted by the Sherman Antitrust Act and the NLRA. The NLRA regulates union activity and the Sherman Act prohibits price-fixing among other practices. The federal district court agreed with the Chamber of Commerce and dismissed the claims.

On appeal, the Ninth Circuit Court of Appeals agreed with the dismissal of the claims relating to the NLRA but reversed the district court’s dismissal of the antitrust claims and returned the case to the district court. The Appeals Court limited its decision to the issues before it but said that it accepted, without reaching the merits of the question, and returned the issue that the ordinance authorizes an antitrust violation to the district court and for the parties to address.

For more information, check out our resources page on misclassification and compliance, or contractor engagement best practices. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.

Nathan Gibson

Senior Director, Risk Management