Category Archives: Government

Is The NEW GIG A New Bargain For Workers?

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

Lost among the din of Twitter feuds and even more serious reporting on tax reform, is attention to a tax bill about gig economy workers that could impact more than just tax policy.

The New Economy Works to Guarantee Independence and Growth Act (NEW GIG Act) essentially allows firms such as Uber to withhold income taxes for workers without that withholding being construed as evidence of an employee-employer relationship. Boston College of Law Professors Shu Yi Oei and Diane Ring perceptively point out that the NEW GIG Act will help define how gig economy workers are classified for purposes of laws that cover employees like anti-discrimination laws, unemployment insurance, wage and hour laws and possibly workers compensation laws. Their argument is that NEW GIG allows companies like Uber to define their workers as contractors within the tax code and that helps creates a presumption of independent contractor status.

Though NEW GIG creates a safe harbor for gig economy companies that collect income taxes, NEW GIG does not abolish the common law test that distinguishes an employee from an independent contractor. The common law test rests on an employer having control over the method and means of work. But the tax code is a critical piece to classification of workers. True contractors are able to deduct their expenses from their taxes because legally they are running a business. Courts hold that when a driver or any other worker is essentially running their own business, they are an independent contractor. NEW GIG uses the tax code to encourage workers to take deductions for expenses and hence self-classify as contractors rather than employees.

Federal employment laws like the Fair Labor Standards Act depend on the so-called common law test distinguishing between contractors and employees. State wage and hour laws, fair employment laws and workers compensation laws may not always rely on those definitions. In cases where a state doesn’t use a common law test to distinguish between employees and contractors, the question would be whether NEW GIG would pre-empt those state lawsNEW GIG does not appear to have an express preemption clause, so courts could tend to uphold state employment laws that would conflict with NEW GIG. Lack of express pre-emption language in NEW GIG may also mean that courts wouldn’t pre-empt state employment laws that rely on the common law test distinguishing contractors from employees. If courts read NEW GIG as just a way for gig economy companies to collect income tax from their workers without creating an employee-employer relationship, then its impact could be muted on state laws and possibly on federal laws.

NEW GIG is sponsored in the Senate by John Thune (R.-South Dakota). Thune has recently criticized Uber for customer data breaches and sexual harassment allegations within the company. Those concerns have been echoed by Senator Mark Warner (D-Virginia) who is a leading proponent of the gig economy. (11) The fact that supporters of the gig economy appear to be questioning the practices of Uber could show the gig economy companies may not have an easy time in fundamentally altering the relationship between companies and their workers.

But Uber is not the only gig economy company and public statements by our elected officials don’t always match up with their actions. Even if NEW GIG is just a tax bill there is power in the perceptions and presumptions that would be created if NEW GIG were passed. Advocates for employee rights would be well advised to keep a close watch over the NEW GIG bills in the House and Senate.

Uber: A Tale of Two Cities

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

While London’s ban of ride-hailing service, Uber, seems poised to continue for the forseeable future, Lincoln, Nebraska may soon lessen formal regulation for Uber drivers.

The Lincoln City Council is scheduled to vote on an ordinance on October 16th that would formally eliminate a requirement that Uber and Lyft drivers pass a physical, background check and test about Lincoln that taxi cab drivers currently have to pass in order to drive a taxi in Lincoln.

According to city officials, this requirement is not currently being enforced. The ordinance has the public support of Mayor Chris Beutler and at-large City Councilwoman Leiron Gaylor-Baird. Supporters of the ordinance cite a decrease in drunken driving from ride hailing as well as a decrease in traffic and increase in downtown parking.

Taxi cab companies state the ordinance lets unqualified drivers on the street and presents unfair competition to traditional taxi cab companies. What hasn’t been eluded to in the debate over ride hailing litigation in Lincoln, but has played more prominently in the London debate, is the fact that ride-hailing companies treat their drivers as contractors which excuses them from paying basic employee benefits like unemployment and workers compensation insurance. This allows services like Uber to undercut traditional taxis on price.

The City of Lincoln doesn’t have a workers’ compensation ordinance. But allowing Uber competitive advantages over taxi cab companies indirectly impacts workers compensation because if Uber takes market share away from traditional taxi cabs fewer drivers will be covered under workers compensation.

Lincoln does a have a human rights ordinance that covers more employees than either state or federal anti-discrimination laws. By allowing Uber a competitive advantage over traditional taxi cab companies, Lincoln is potentially excluding workers from coverage of that ordinance since Uber denies it is an employer. Traditional taxi cab companies are subject to Lincoln’s human rights ordinance.

Many business observers have argued that Uber’s biggest innovation is “regulatory arbitrage.” Regulatory arbitrage is a fancy word for lobbying. Uber hired former Obama advisor David Plouffe. In the United Kingdom, Uber’s chief lobbyist is the godfather to one of the children for former Prime Minister David Cameron. It’s safe to state that a lot of Uber’s supposed innovation stems from old-fashioned lobbying.

Other cities, most prominently Austin, Texas, have attempted to regulate Uber by imposing the same requirements on ride hailing drivers that they do on taxi drivers. Uber was able to successfully lobby the Texas Legislature to pass a state law that preempted municipal regulation of ride-hailing services.

Though the tech sector is regarded by some as an advocate for LGBT rights, Uber was willing to accept an amendment to the Texas preemption legislation that promoted discrimination against transgender individuals.

Department of Labor Weighs In on New Age of Salary Servitude for ‘Executives’

Today’s post comes from guest author Roger Moore, from Rehm, Bennett & Moore.

Most of the U.S. workforce has the right, provided by the Fair Labor Standards Act, to be paid overtime for working more than 40 hours in a week. Before the federal government set rules for overtime, most employees worked longer hours, and millions of Americans worked six or seven days a week, as Chinese factory workers do today. Salaried workers also have the right to be paid a premium for overtime work, unless they fall into an exempt category as a professional, an administrator, or an executive. Exempt employees must be skilled and exercise independent judgment, or be a boss with employees to supervise. However, many companies have worked to get around these overtime rules by classifying employees like cooks, convenience store employees or restaurant workers as “managers,” “supervisors,” or “assistant managers or supervisors,” so that their employer can deny them overtime under this exception. 

In May 2016, the Department of Labor issued its final rule establishing a new minimum salary threshold for the white-collar exemptions (executive, administrative and professional) under the Fair Labor Standards Act. This new threshold of $913 per week ($47,476 annualized) more than doubles the current minimum weekly salary threshold of $455 per week ($23,660 annualized).  While that may seem like a huge increase, the old threshold level is only $2 a week above the poverty level for a family of four. Twenty-one states have filed suit to challenge this rule, citing the rule will force many businesses, including state and local governments, to unfairly and substantially increase their employment costs. 

The old rule allowed companies to put employees on “salary” at a low rate and require them to work sometimes significant overtime. The fact that so many government entities are concerned about this new rule substantially increasing their employment costs underscores the extent to which even government entities have taken advantage of employees in this fashion. Can you imagine earning $25,000/year and having to work 50, 60 or 70 hours a week? Even at 50 hours a week, that equates to an hourly wage of only $8.01!

In the first year, the department estimates that the new rule may affect, in some manner, over 10 million workers who earn between $455/week and the new $913/week threshold.  

The median worker has seen a wage increase of just 5 percent between 1979 and 2012, despite overall productivity growth of 74.5 percent (Mishel and Shierholz, 2013), according to the Economic Policy Institute. One reason Americans’ paychecks are not keeping pace with their productivity is that millions of middle-class and even lower-middle-class workers are working overtime and not getting paid for it. Before this rule change, the federal wage and hour law was out of date. This change purports to correct this modern day servitude that the law – for the last 30 years – has carved out a huge exception, allowing workers to be taken advantage of simply by assigning them a title and paying them a salary.  



Medicaid Cuts Will Cause More Nursing Injuries

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

While efforts to repeal the Affordable Care Act and cut Medicaid appear to have stalled for now, any successful effort to cut Medicaid will adversely impact workplace safety for nurses and nurse’s aides.

Studies by the National Institutes of Health show that reductions in Medicaid funding leads to less staffing at long term care facilities and that lower staffing leads to more injuries for nursing employees. Since most nurses and nurse’s aides are covered under state-based workers compensation laws the additional costs of work injuries from Medicaid cuts may not be fully accounted for on a federal level.

At least in Nebraska nursing employees have some ways to protect themselves when advocating for safer working conditions even if they do not belong to a union.

Nebraska has a whistleblower law that applies specifically to health care workers, including nurses. The benefit of this act is that it allows employees to recover for damages similar to what they could collect under the Nebraska Fair Employment Practices Act, including front pay and possibly attorney fees, without having to exhaust administrative remedies. Additionally, health care workers would have four years to bring a suit under the health care whistleblowers law, rather than the much shorter and complicated statute of limitations under the Nebraska Fair Employment Practices Act.

Nebraska has a broad general whistleblower law that allows employees to oppose unlawful conduct by their employers. Nebraska law requires that nursing homes to be adequately staffed. Federal law also requires that employers provide a workplace to be free of recognizable hazard. Inadequate staffing would certainly be deemed be a recognizable hazard in a nursing home. The only drawback to Nebraska’s whistleblower law is the short and potentially uncertain statute of limitations.

Nebraska law would also allow nurses reporting inadequate staffing to be protected from retaliation under a public policy claim that also has a four year statute of limitations.

Will The Supreme Court’s Attack On State Courts Affect Workers’ Compensation?

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

One of the biggest and least understood developments of the current session of the Supreme Court session is how the Supreme Court has undercut the power of state courts to decide cases. This development may also impact the traditionally state law centered world of workers’ compensation.

In Bristol Meyer-Squibb v. Superior Court the Supreme Court held that non-California residents could not join a class action against Bristol Meyer-Squibb in California state court. In Tyrell v. BNSF the Supreme Court held that North Dakota residents could not sue the BNSF in Montana state court in an FELA case.

Despite Bristol-Meyer and the BNSF having a substantial number of employees and doing a substantial amount of business in California and Montana respectively, the Supreme Court held that it would violate due process to subject defendants to litigation in those states. State court litigation should be limited to states where a defendant is incorporated, where they are headquartered or where the events in the case took place..

Bristol-Meyer and Tyrell both rely on the Daimler v. Bauman case that was decided in 2014. In her dissent in Daimler, Justice Sonia Sotomayor wrote that the effect of Daimler was “to shift the risk of loss from multinational corporations to the individuals harmed by their actions.” Essentially Sotomayor believes that the rule that a corporation can be sued in any state court where they have substantial contacts has been repealed. Sotomayor was the lone dissenter in both the Tyrell and Bristol Meyers case.

The constitutional basis for limiting state court jurisdiction is the due process clause of the 14th Amendment. The use of the due process clause to weaken the ability of states to regulate corporate conduct has echoes of the so-called Lochner era where state laws that impeded on contracts were overturned unless they were based on general police powers.

So-called forum shopping gets a bad rap from tort reformers. Terms like “judicial hellhole” have coined by pro-corporate legal advocacy groups. But the ability to pick a forum to  bring a legal case is inherent in a federal system like we have in the United States. Lawyers have a duty to bring cases in a forum where they think it is most favorable to their client. Corporate and management interests also engage in forum shopping. In November business interests persuaded a business-friendly federal judge in Texas to block enforcement of the so-called blacklist rule that would have prevented employers who violated workplace safety and fairness laws from receiving federal contracts.

Workers’ compensation laws were enacted during the Lochner era and were held to be constitutional because they were enacted under state police powers under the 10th Amendment. But the mere fact that workers’ compensation laws were enacted under 10th Amendment authority of the states does not mean corporate friendly federal courts can not find a way to strip states of jurisdiction over certain workers’ compensation claims. This is particularly true for workers who may be able to claim workers’ compensation benefits in multiple states.

In Magnolia Petroleum v. Hunt, the Supreme Court ruled that an employee who was injured in Texas but lived in Louisiana could not claim workers’ compensation in his home state of Louisiana because he had already accepted benefits in Texas. The court held that the Hunt could not collect benefits in Texas because of the full faith and credit clause of the U.S. Constitution.

Justice Hugo Black’s dissent in the case that pointed out that the only reason that Hunt received workers compensation benefits in Texas was signing a form in the hospital after the accident. Black also forcibly denounced the idea that Hunt was double- collecting benefits in Texas and Louisiana for two reasons. First, Louisiana offset the benefits that Hunt received in Texas. Secondly, Black stated “the aggregate of the awards from both states, if added together, would be far less than the total loss suffered by respondent. The Texas allowance scarcely amounts to a “recovery” in the sense of giving full compensation for loss, and has been described by a Texas court to be “more in the nature of a pension than a liability for breach of contract, or damages intact.”

Black’s description of the benefits available to injured workers who could claim benefits in two states is as true as it is now as it was 73 years ago when Magnolia came out.

In Magnolia, Black also drew parallels between how the due process and full faith and credit clauses could be used to protect corporate interests.

“For more than half a century the power of the states to regulate their domestic economic affairs has been narrowly restricted by judicial interpretation of the federal Constitution. The chief weapon in the arsenal of restriction, only recently falling into disrepute because of overuse, is the due process clause. The full faith and credit clause, used today to serve the same purposes, is no better suited to control the freedom of the states.”

Three years later Magnolia was distinguished by the McCartin decision. In McCartin the Supreme Court allowed an employee to collect benefits in Wisconsin who had first collected benefits in Illinois to collect benefits in both states because unlike Texas, Illinois had no laws stating accepting workers’ compensation benefits in Illinois ruled out a claimant from receiving benefits in another state.

In 1980, the Supreme Court applied McCartin in Thomas v. Washington Gas and Light to rule that an injured employee could collect benefits in Washington D.C. and Virginia.

But the decision in Thomas was far from the enthusiastic endorsement of multi-jurisdiction workers’ compensation claims voiced by Justice Black in his dissent in Magnolia. Three concurring Justices criticized McCartin but upheld the award of benefits to Thomas based on the legal doctrine of stare decisis. Two justices, including William Rehnquist, dissented ruling that Magnolia should still govern multi-jurisdictional claims. Current Chief Justice John Roberts clerked for Rehnquist and holds a great deal of respect and affection for his former boss.

Considering how eager the majority of the Supreme Court is to limit the jurisdiction of state courts, I would be very concerned if the constitutional of multi-jurisdictional workers compensation claims were reviewed by the Roberts’ court.

Trump Dumps Workplace Safety

Today’s post comes from guest author Thomas Domer, from The Domer Law Firm.

When FBI Director James Comey calls President Trump a liar, the world takes notice, but when Trump lies about workplace safety, the world takes little notice.  Trump’s administration has recently provided significant “relaxation” in the government’s approach to occupational safety.  The administration recently delayed action on a rule that would require the employer to electronically report workplace injuries so they can be posted for the public.  OSHA has also put off enforcement of an Obama-era standard for silica, a mineral linked to a disabling lung disease and cancer.  I’ve dealt with many silica exposure claims in Wisconsin particularly coming from the Kohler Corporation in Kohler, Wisconsin where silica is a necessary ingredient in many bathroom fixture manufacturing processes.  The administration has also proposed changes in beryllium exposure limits.  After 40 years of development a new rule under the Obama administration was set to lower workplace exposure to beryllium a mineral linked to a lung disease estimated to kill 100 people annually.  The nation’s largest beryllium producer had agreed to back the new restrictions.  A few weeks ago as the rule was going into effect the new administration proposed changes that many expect may exempt major industries from this tougher standard. 

When asked about the Trump administration’s approach to workplace safety a White House spokesman said “The President and his administration care very much about worker safety…”  Yet another lie.  See also Under Trump, Worker Protections Are Viewed With New Skepticism

Trump’s Budget Cuts and Social Security Disability: Is “Fraud Suspicion” Underlying the Cuts?

Today’s post comes from guest author Thomas Domer, from The Domer Law Firm.

Budget Director Mick Mulvaney echoed the mantra of many conservative Republicans who suspect that folks who are Social Security Disability recipients are fraudulent.  “If you are on disability insurance and you’re not supposed to be, you are not truly disabled, we need you to go back to work.”  This conservative trope reflects, without any evidence to substantiate it, the same kind of misinformation about employee fraud that pervades perceptions of workers’ compensation fraud. 

As I have often written about in the past, the public’s perception of injured individuals (whether collecting workers’ compensation or Social Security Disability benefits) is vastly overinflated.  The statistics indicate only about one-sixth of one percent of injured workers in Wisconsin are fraudulent.  That’s about 2 in 10,000.

The Trump administration budget proposed up to $64 billion in cuts to Social Security Disability Insurance expenditures, directly contradicting Trump’s campaign promises not to cut Social Security.  The cuts stem mostly from new program rules and processes, and requirements for mandatory participation by program applicants to move disabled beneficiaries from SSDI to work.

While returning to work is always a laudable goal (for both workers’ compensation and Social Security Disability), the last eight times that budget proposals have initiated programs to promote return to work “none of the findings reported to date show they would likely lead to a substantial reduction in case load sizes.”

Through their contributions to Social Security, workers earn a measure of protection against disability retirement and death.  (Disability insurance protects a worker against loss of earnings due to a significant work limiting impairment, and workers earn this protection by having worked and contributed to Social Security.)  Many of my work-injured employees ultimately end up on Social Security Disability and this protection is particularly important to older Americans.  Most people receiving Social Security Disability benefits are in their 50s or early 60s and most had only unskilled or semi-skilled jobs.  Without a college degree, benefits are not significant (averaging about $1,200 per month).  However, over half of Social Security beneficiaries rely on these benefits for 75% or more of their total income. 

The proposed budget cuts to Social Security are another slap in the face to injured workers.

Portability, The Gig Economy And Workers Compensation

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

Changing employment laws to encourage so-called “portable benefits” is an idea that goes hand in hand with finding new ways to classify gig economy workers. These proposals are being pushed in a  growing number of states. These proposals also enjoy support from Democrats and Republicans in Congress. These proposals could also radically alter workers’ compensation in the United States.

The idea of third classification of worker between employee and independent contractor is to give so-called “gig economy” workers some protections and benefits without employers having to bear the full costs of employment – including unemployment, workers’ compensation and health insurance. Sometimes this third class of workers is described as “dependent contractors.

Portable benefits are usually discussed in the context of contractors because traditionally benefits such as unemployment, workers’ compensation and health insurance have been provided by employers. So-called portable benefits, are detached from employers. The Affordable Care Act increased portability of health insurance benefits through the use of exchanges Portability of health insurance was touted as a way to help create new businesses because potential entrepreneurs were not tied to an employer for health insurance.

The idea of portable benefits and a new classification for gig employers is also touted as a way to reduce litigation against companies such as Uber for how they classify employees. But former National Labor Relations Board member Craig Becker pointed out that creating a new class of workers may actually create more litigation when employers try to re-classify employee as dependent contractors. Becker and others pointed out that this is what happened in Italy when Italy created a third class of worker that was neither employee nor independent contractor.

Becker and others point out that the drive to create a new class of workers is being driven by tech companies such as Uber as a way of reducing labor costs. The real risks of creating a new classification of workers is shared even by some who promote the sharing or gig economy. Gene Zaino, founder and CEO of MBO Partners, a firm that provides services to independent workers, stated that any new classification of independent workers should only include workers who earn more than $50 per hour. Under such a scheme lower-paid workers would still retain the benefits and protections of the employment relationship.

Though states are pondering portability and dependent contractor laws, there is a push for federal legislation so that laws can remain uniform across the country. Any federal push for portable benefits for so-called independent workers would clash with state-based workers’ compensation laws. Workers’ compensation is traditionally a state law concern because when workers’ compensation laws were enacted the power of the federal government to implement laws regarding workplace safety were limited. During the New Deal-era, that interpretation of the interstate commerce clause changed to allow broad regulation of the workplace.

Advocates for state-based workers’ compensation laws likely have little constitutional grounds to overturn any federal legislation that would substitute “portable benefits” for so-called “independent workers” for state-based workers’ compensation benefits. Some critics who argue, correctly, that many state-based laws inadequately compensate injured workers could also be open to or even welcome a federal substitute for  insufficient state workers’ compensation laws.