Category Archives: Labor

Gig Workers: An Evolving Trend or a Class Action Waiting to Happen?

Contributed by Rebecca Dobbs Bush, June 4, 2019

The workplace is changing: Millennials, Generation Z-ers, and Baby Boomers looking to supplement their retirement income. These individuals are more interested in autonomy and avoiding bad managers, office politics and lengthy, non-productive staff meetings. Plus, the tax-savvy individual knows the economic advantage of having access to traditional business deductions through a Schedule C, rather than being limited to the standard deduction or itemizing as a W-2 employee would be.

Business concept. Isolated on white

More and more businesses also seem to be interested in the advantages of a gig workforce, also called freelancers, subcontractors, contingent workforce, and more. After all, it allows a business to gain access to skills and talent without having to commit to hiring an individual as a full-time employee. According to Deloitte’s 2018 Global Human Capital Trends study, more than 40% of workers in the U.S. are employed in “alternative work arrangements.” These arrangements include contingent, part-time, or gig work.

So, is it a win-win for all involved? The problem is that current employment laws are simply not evolving at the pace required to keep up with this modern-day independent contractor. With this, a minefield is created for the unwary business. 

Under the Obama administration, the DOL had issued broad guidance suggesting that gig workers were likely to be considered “employees.” That guidance was rescinded with the change in administration. Then, on April 29, 2019, the DOL issued an atypical, 10-page opinion letter on the subject. The opinion letter lays out a detailed analysis of all the relevant factors for independent contractor status and then comes to the conclusion that the gig workers at issue are not employees.

For now, if your business is participating in the trend of the gig worker, you want to make sure the relevant factors are met. Those factors and the analysis change depending on which law the issue is being examined under. Some of the more common factors are: control, permanency of the relationship, integrality to business operations, ability to sustain a profit or loss, accountability for operating expenses, etc. In other words, is the individual truly operating as a stand-alone business? 

If you choose to engage gig workers, make sure to avoid these common mistakes:

  • Do not treat the individuals as employees. Do not even use the word “hire.” Instead, you are “engaging” their services, or “contracting” with them. And, commit to the arrangement in writing.
  • Do not be tempted to offer them benefits. Putting them in your health plan or letting them participate in a 401(k) will jeopardize any argument that they are not otherwise an employee. If it walks like a duck, quacks like a duck….
  • Do not make them sign a non-compete agreement. A critical factor in most cases is whether the individual is free to take on work from others or whether they are completely dependent on your business for work. If the individual is subject to a non-compete agreement and effectively being prevented from working for others, you will not win on this factor.

Because of the amount of exposure involved with a misclassification lawsuit, it is worthwhile to have competent employment counsel review your situation and any independent contractor agreement or contracts that you are using to help you make sure it’s being handled in the best possible manner to strengthen the individual’s status as an independent contractor.

2017 Ending With A Bang: Obama Era NLRB “Micro Unit” Ruling Reversed

Contributed by Jeffrey Risch, December 22, 2017

2017 is coming to an end, and with somewhat of a Bang! for labor relations moving forward under Trump’s NLRB.  In a matter involving PCC Structurals, Inc. and the Intern’l Assoc. of Machinists & Aerospace Workers (19-RC-202188), the NLRB this month overruled its 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934, and reinstated the traditional community-of-interest standard for determining an appropriate bargaining unit in union representation cases.  The essence of the 2017 decision is that the National Labor Relations Act mandates that the NLRB must evaluate, in each and every case, whether the group of employees a union seeks to represent constitutes a unit that is “appropriate” for collective bargaining.

As a reminder… in Specialty Healthcare, the NLRB held that if a union petitioned for an election among a particular group of employees, those employees PRESUMABLY shared a community of interest among themselves.  And so, if the employer took the position that the smallest appropriate unit had to include employees excluded from the proposed unit, the NLRB could not find the petitioned unit inappropriate unless the employer proved that the excluded employees shared an “overwhelming” community of interest with the petitioned-for group.  The practical effect of this ruling made it “next to impossible” for an employer to successfully challenge the union’s petitioned for “micro-unit”.

The Trump NLRB (in a 3-2 party split decision) has now abandoned the “overwhelming” community-of-interest standard stating that “there are sound policy reasons for returning to the traditional community-of-interest standard that the Board has applied throughout most of its history…”

This PCC Structurals case involved a Regional Office’s finding that a petitioned for unit (a “micro-unit”) of approximately 100 welders was appropriate for collective bargaining.  A “micro-unit” is a small and discrete subset of employees at a particular worksite or worksites, which a union seeks to represent.  It is the opposite of a “wall-to-wall unit” that would encompass the majority of an employer’s non-supervisory employees.  Applying Specialty Healthcare’s “overwhelming community of interest” standard, the Regional Director rejected the employer’s contention that the smallest appropriate unit was a wall-to-wall unit of 2,565 employees.

Of course, the more limited that a union defines a petitioned for unit, the less number of employees belong to the unit and the easier it is for the union to “cherry pick” the necessary votes to win an election and get a “foot in the door” of an employer.  We saw this work to the union’s benefit in many cases since Specialty Healthcare (see here).

The Quick Take Away:  Despite this favorable ruling for employers who prefer to remain union-free, it may be temporary due to what political party occupies the White House; and it does not prevent unions from successfully petitioning for smaller units at a place of business that would otherwise meet the “community of interest” standard.  Indeed, smaller units have always been successfully petitioned for by labor unions under this standard.  But, for the time being, big labor may not be able to “cherry pick” a few employees at a time.

The NLRB is Locked and Loaded – Ready to Go

Contributed by Karuna Brunk

The National Labor Relations Board now has five Senate-confirmed members and is “ready to go,” according to Chairman Mark Gaston Pearce.  This is the first time since 2003 that the NLRB has five sitting members.  The pro-union Board has been joined by AFL-CIO attorney Nancy Schiffer and union lawyer Kent Hirozawa.

The Board is particularly focused on facilitating and expediting union organizing.  First, and most notably, the Board is set to implement the ambush or “quickie” election rule, which would reduce the amount of time between when a union files a representation petition and when an election takes place from the average of 40 days to as few as 10 days.  This reduction in time would dramatically limit the issues employers could raise in the pre-election process.  We previously reported on our blog that the ambush rule was no longer in effect because the Board lacked the proper quorum of members when it enacted it.  Now that the Board has the requisite number of members, it can simply vote to re-enact the ambush rule or put in place some other rapid election process.

Second, the Board will probably revisit the notion of micro-unit organizing.  In an August 30, 2011 ruling, the NLRB ruled that a union could seek to organize a group of nursing assistants, despite requests by the employer to include other employees in the unit.  This decision created new standards for the bargaining unit; an employer would have to show that excluded employees should be included.  Needless to say, it is much easier for a union to organize smaller groups of people.

As we said before, the new Board is likely to be extremely active in its rule-making and is seeking to advance union organization and union backed causes.

Bottom line – Take Action Now!

In regards to both the above mentioned changes from the Board, the best course for employers is to be proactive.  Employers should think about how to handle and respond to union organizing now!  Put in place an action plan to diminish the risks with union organizing. This plan includes supervisor training on how to maintain a non-union workforce, and perhaps even certain persuader activity to educate employees on the facts behind “union card check” and other union tactics. To combat micro-unit organizing, examine your company structure and evaluate all classifications of employees.  Finally, even those employers currently with a union workforce will continue to feel the impact of overwhelmingly pro-labor decisions impacting their ability to effectively manage.  Feel free to reach out to qualified labor counsel for special guidance unique to your operations.

NLRB Loses Challenge to Arizona Law Guarantying Secret Ballot Elections

Contributed by Terry Fox

Arizona citizens passed a state constitutional amendment in 2010 guarantying secret balloting in union elections. This citizen initiative was a response to the National Labor Relations Board’s  suggestion it would conduct “card check” elections despite the failure of the Employee Free Choice Act.  When that amendment took effect, the board sued in federal court for a judgment declaring the Arizona Constitutional Amendment was preempted by the National Labor Relations Act. 

The NLRB argued that it alone had the right to determine election issues, and that power was granted by the federal government.  Thus, it asserted the Arizona Amendment was contrary to the National Labor Relations Act because it gave Arizona State courts the right to determine issues in a union election conducted in Arizona. 

In the order issued by U.S. District Court Judge Frederick J. Martone, [2:11-cv-00913-FJM] the court found that the illegality of the Arizona Amendment could not be decided on the face of that amendment.  Instead, the court would require evidence of how, when, and where the Amendment would be invoked.  It pointed out that the NLRB has the discretion to exercise its jurisdiction in election disputes or not.  Arizona argued that its interests in a secret ballot election are “deeply rooted in local feeling and responsibility,” such that a balancing of interests is required to determine if state action offended the regulatory scheme imposed by the NLRA.  That, the court found, requires a factual context.  As such, the court denied the NLRB’s motion for summary judgment and instead entered summary judgment for the state of Arizona. 

Not surprisingly, the Arizona Attorney General Tom Horne issued a press release describing the decision as a “stinging rebuke to an outrageous National Labor Relations Board attack.” To avoid card-check elections organized or sanctioned by the NLRB, states may want to consider enacting similar legislation or constitutional amendment.  Interestingly, three other states passed amendment similar to Arizona’s, but the NLRB only targeted Arizona for litigation. The formal title of the case is National Labor Relations Board v. State of Arizona and Save Our Secret Ballot, et al.

NLRB’s Ambush (Quickie) Election Rule No Longer in Effect (for now…)

As we previously reported in our blog, the NLRB’s ambush (aka “quickie”) election rule went into effect on April 30, 2012.  The rule sought to dramatically shorten the time frame in which a union representation election will take place. In short, the rule limited the issues employers could raise in the pre-election process (i.e. determining which employees are considered supervisors, and which employees constitute an appropriate bargaining “unit” would no longer be permitted before the election took place) and significantly diminished employers’ ability to appeal unfavorable decision-making at the local board level. The net effect forced employers to counter union organizing campaigns in 14-21 days versus the previously set time frame of approximately 42 days. 

Yesterday, May 14, 2012, a U.S. District Court ruled that the NLRB’s Ambush Election Rule is invalid and no longer in effect because no proper quorum of members existed when the rule was voted on and passed.  U.S. Chamber of Commerce et. al. v. NLRB (D.C. Cir. 1:11-cv-02262). 

Effective immediately, NLRB election procedures revert back to how they had been prior to this April 30, 2012 rule making, which means employers can expect an approximate 42 day window before an election, as opposed to 14-21 days.  We expect the NLRB will likely appeal this decision. 

SmithAmundsen’s Labor & Employment Practice Group recently received one of the first quickie election petitions in the United States, and the new rule was indeed decidedly working against employers.  Unfortunately, this issue isn’t quite over… but this is a significant victory for employers who prefer to remain union free in whole or in part.  As always, more detail will follow as new developments arise.

NLRB’s “Quickie” Election Rule Effective Today – April 30, 2012

Contributed by Jeffrey Risch

Today’s the day that the NLRB’s controversial rule to dramatically shorten the time frame in which a union representation election takes place goes into effect. The new rule radically changes the procedures by which the NLRB administers the union election process in the private sector. Through this new rule, union elections will take place in roughly half the time that they have in recent decades.  

In short, the rule limits the issues employers can raise in the pre-election process (i.e. determining which employees are considered supervisors, and which employees constitute an appropriate bargaining “unit” are no longer permitted before the election takes place) and significantly diminishes their ability to appeal unfavorable decision making at the local board level. The net effect will force employers to counter union organizing campaigns in 14-21 days versus the current time frame of approximately 42 days.  

Readers can find more information about the new rule on the NLRB’s official website at:

Needless to say, this move is extremely controversial within the business community. Anticipating the move, on December 20, 2011, the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace filed a federal lawsuit seeking to enjoin the NLRB from enforcing the rule.   

The rule was published in the Federal Registry on December 22, 2011 by Chairman Mark Gaston Pearce (D) and outgoing Member Craig Becker (D) without the agreement of Member Brian E. Hayes (R).   

Because of these new time restraints, employers (who prefer to remain union-free) should immediately contact their labor law counsel and discuss implementing an IMMEDIATE RESPONSE PLAN if and when a labor union petitions for recognition.  Despite legal actions filed to prevent this rule from going forward, this rule is in place for now…

SA’s Labor & Employment Law Group will keep its clients and contacts updated on any significant future developments.

Federal Court Allows New Labor Poster Requirement to Go Into Effect April 30, 2012

Contributed by Jeff Risch

Despite an aggressive and well coordinated legal challenge on behalf of the employer community, private employers subject to the National Labor Relations Act (NLRA) — which is just about every private employer – will soon be required to post written notice to its employees about their rights to organize and form labor unions.  A federal district court judge in Washington, D.C. ruled on March 2, 2012 that the National Labor Relations Board (“Board”) has the authority to promulgate and enforce a rule requiring most private employers to display the new poster entitled “Employee Rights Under the National Labor Relations Act” National Association of Manufacturers v. NLRB.

The rationale behind the bold maneuver by the Board centers on its belief that employees are simply unaware of their rights under federal labor law and employers should be required to inform them. The Board created its own rule on the subject under its statutory authority to adopt “such rules and regulations as may be necessary to carry out the provisions of [the NLRA].”

Fortunately for employers, the Board’s attempt to sanction employers who fail or refuse to post the required posting notice was declared unlawful by the federal district court. The Board attempted to harm employers who failed to display the poster by way of: (1) finding the failure to post the required notice to be an unfair labor practice (i.e. holding that such conduct would be deemed unlawful interference with, restraint, or coercion of employees in the exercise of their rights under the law); and (2) tolling the standard 6-month statute of limitations for filing unfair labor practice charges against employers that fail to post the notice.

However, the district court did not rule out the possibility that failure to post could be considered and used as evidence of an unfair labor practice: “[N]othing in this decision prevents the Board from finding that a failure to post constitutes an unfair labor practice in any individual case brought before it. But the ruling does mean that the Board must make a specific finding based on the facts and circumstances in the individual case before it that the failure to post interfered with the employee’s exercise of his or her rights.”

While other legal challenges still exist and are pending, this recent decision reminds employers to be ready to post come April 30, 2012.