Posts

Not a Trump Card? Shuttle Drivers are Independent Contractors Under NLRB Test Emphasizing Entrepreneurial Opportunity

By Janet A. Hendrick
January 28, 2019

Focusing on “entrepreneurial opportunity” available to shared-ride drivers, the Republican-majority National Labor Relations Board handed employers a victory on January 25, 2019 by holding that Dallas-Fort Worth area SuperShuttle drivers are independent contractors, rather than employees who may unionize. The decision, which overturns a 2014 decision that favored workers, will make it easier to classify workers as independent contractors, but has no effect on state or federal wage and hour laws.

In SuperShuttle DFW, Inc. and Amalgamated Transit Union Local 1338 (Case 16–RC–010963), by a 3-1 party-line vote, the employer-friendly Board continued with its reversal of Obama-era decisions that favored employees.  The case arose when the union sought to represent a unit of shuttle drivers, including about 90 franchisees.  In August 2010, the Board’s Acting Regional Director found the franchisees were independent contractors, not employees, and dismissed the union’s petition for representation. The union appealed and last week’s decision was the final nail in the coffin for the union.

The decision is a good overview of how the NLRB analyzes whether a worker is an employee, who may unionize, or an independent contractor, who may not. The Board applies a 10-factor test (which differs from other agency tests, such as the IRS 20-factor test), none of which is controlling:

  1. Extent of control by the company over the detail of the work;
  2. Whether the worker is engaged in a distinct occupation or business;
  3. The kind of occupation and whether the work is usually performed with or without supervision;
  4. Required skill in the particular worker’s occupation;
  5. Whether the company or the worker supplies the tools and place of work for the worker;
  6. The worker’s length of tenure with the company;
  7. Whether the worker is paid by time or by job;
  8. Whether the work performed by the worker is part of the regular business of the company;
  9. Whether the parties believe they are in an employer-employee relationship; and
  10. Whether the principal is or is not in the business.

There is no “bright-line rule” and no “shorthand formula” for determining whether a worker is an employee or not, and the total factual context must be assessed and weighed.

The SuperShuttle Board returned to the traditional common-law test for determining independent contractor status and overruled the Obama Board’s 2014 decision in FedEx Home Delivery (361 NLRB 610) (“FedEx II”), which the federal court of appeals for the D.C. Circuit vacated.  In FedEx II, the NLRB held that FedEx drivers were employees, declining to adopt an earlier court decision that involved the same parties and held that the drivers were independent contractors.  That earlier decision viewed the common-law factors “through the lens of entrepreneurial opportunity,” rather than focusing on “an employer’s right to exercise control” over the workers’ job performance.  The Board in SuperShuttle found the FedEx Board “impermissibly altered the common-law test” to one of “economic dependency,” a test Congress specifically rejected.

Noting that the NLRB has long considered entrepreneurial opportunity as part of the independent contractor analysis, the SuperShuttle Board analyzed the common-law factors to find in favor of SuperShuttle, shutting down the union’s efforts to represent the drivers.  The key factors in the Board’s decision were:

  • The franchisees’ significant initial investment in their business by purchasing or leasing the primary instrumentalities for their work—a van (as well as gas, tolls, and repairs) and the dispatching system–and execution of an agreement with SuperShuttle (Unit Franchising Agreement), which states in bold capital letters “FRANCHISEE IS NOT AN EMPLOYEE OF EITHER SUPERSHUTTLE OR THE CITY LICENCEE”;
  • The franchisees’ almost unfettered opportunity to meet or exceed their overhead, as they have total control over how much they work, when, and where and they keep all fares they collect;
  • Analogy of the shuttle drivers to taxi drivers, whom Board precedent holds are independent contractors, largely because they retain all fares they collect and the cab companies lack control over the manner and means by which the drivers conduct business;
  • The franchisees’ agreement to indemnify SuperShuttle against all claims relating to their actions, greatly lessening SuperShuttle’s motivation to control the franchisees’ actions;
  • Although the franchisees are subject to several requirements, including dress and grooming standards and van inspections, these requirements are imposed by state-run DFW Airport, not SuperShuttle;
  • The franchisees’ near-absolute autonomy in performing their work;
  • SuperShuttle does not provide benefits, sick leave, vacation, or holiday pay to the franchisees, or withhold taxes or payroll deductions;
  • Five of the franchisees are corporations.

Although some of the factors indicated employee status (such as no particular skill/specialized training and the fact that the drivers’ work is an integral part of SuperShuttle’s business), the NLRB found that none of these outweighed the factors supporting independent contractor status.

The SuperShuttle Board explained that entrepreneurial opportunity is not “a trump card” in the independent contractor analysis, but rather a “prism” through which to evaluate the 10 common-law factors “when the specific factual circumstances of the case make such an evaluation appropriate.”  So, where a qualitative evaluation of common-law factors shows significant opportunity for economic gain and significant risk of loss, the worker is likely an independent contractor and not permitted to unionize.

Although the SuperShuttle decision is without doubt a victory for employers, employers should remember the decision is not binding on other agencies, such as the Department of Labor, which enforces federal wage and hour laws.


Janet Hendrick Profile portrait

Janet A. Hendrick

If you have questions about this decision, contact Janet Hendrick,who represents and counsels employers on issues including proper classification, in the Dallas office of Phillips Murrah at (214) 615-6391 or at jahendrick@phillipsmurrah.com.

Supreme Court Holds Independent Contractor Drivers Subject to Exemption from Arbitration

In a unanimous opinion (except for Justice Kavanaugh, who was recused from the case) expected to have broad implications for the transportation industry, the Supreme Court delivered a blow to employers that seek to arbitrate claims filed by drivers and other transportation workers classified as independent contractors.

SCOTUS opinion link

CLICK IMAGE TO VIEW OPINION.

The high court affirmed a decision from the First Circuit Court of Appeals that an exemption in the Federal Arbitration Act for interstate transportation workers applies to all workers, whether classified as employees or independent contractors.  The employer, New Prime Inc., an interstate trucking company, sought to compel arbitration of claims by one of its drivers, Dominic Oliveira, who filed a class action in federal court alleging New Prime violated the Fair Labor Standards Act by denying its drivers lawful wages.

After the district court and the First Circuit sided with the driver, New Prime petitioned the Supreme Court to overturn the First Circuit’s May 2017 ruling that the term “contracts of employment” in the Section 1 exemption of the FAA includes not only employees, but also independent contractors.  New Prime’s broad arbitration agreement included a “delegation clause” that gave an arbitrator authority to decide whether the parties’ dispute is subject to arbitration.

The Supreme Court nonetheless agreed with the First Circuit that a court, rather than an arbitrator, should determine whether the contract in question is within the coverage of the FAA, citing the Court’s 1967 Prima Paint decision. Turning to the interpretation of “contracts of employment” in the FAA exemption, the Court employed the “ordinary meaning” analysis of the statute’s language to conclude the term is not limited to employees because at the time Congress enacted the FAA in 1925, “contract of employment” described “any contract for the performance of work by workers.”  Justice Ginsburg filed a short concurring opinion.


Janet Hendrick Profile portrait

Janet A. Hendrick

If you have questions about this decision, contact Janet Hendrick, who regularly represents employers in court and arbitration, in the Dallas office of Phillips Murrah at (214) 615-6391 or at jahendrick@phillipsmurrah.com.

Texas Appeals Court Sends Noncompete Dispute to Arbitration

Non compete agreement

Reversing a decision that an employee’s lawsuit to declare her noncompete agreement void was not subject to arbitration, the First Court of Appeals in Houston held yesterday that the lawsuit fell within the scope of the parties’ arbitration agreement. Sue Ann Lopez was a sales representative for IPFS Corporation, which provides insurance premium financing, before she left to work for a competitor.

When IPFS threatened to sue her for breaching a non-solicitation agreement, Lopez filed a declaratory judgment action to have the non-solicitation covenant declared void.  Since Lopez had signed an arbitration agreement, IPFS filed a motion to move the lawsuit to arbitration.  Lopez opposed that motion, arguing that her claim was not a “legal claim” subject to arbitration, because she was seeking equitable relief.  The trial court sided with Lopez and denied IPFS’ motion to compel arbitration and IPFS appealed.

The issue on appeal was whether Lopez’s claim fell within the scope of the arbitration agreement. The appeals court emphasized that the arbitration agreement, which was governed by the Federal Arbitration Act, included a broad scope of covered claims and only three exclusions:  claims for workers’ compensation or unemployment benefits; claims for temporary equitable relief; and administrative proceedings before the U.S. Equal Employment Opportunity Commission.  Because Lopez did not bring any of these excluded claims, the Houston appeals court easily found in favor of arbitration, reversed the trial court, and remanded for dismissal and entry of an order moving the case to arbitration.

This Texas decision is another reminder of the strong policy in favor of enforcing arbitration agreements and finding claims subject to arbitration absent an express intention to exclude them.


Janet Hendrick Profile portrait

Janet A. Hendrick

If you have questions about this decision, contact Janet Hendrick, who regularly handles Texas noncompete matters in court and arbitration, in the Dallas office of Phillips Murrah at (214) 615-6391 or at jahendrick@phillipsmurrah.com.

ALERT: Austin Court of Appeals: Austin Paid Sick Leave Unconstitutional

November 16, 2018

Today, the Austin Court of Appeals held that the Austin paid sick leave ordinance, which would require private employers to provide an hour of paid sick leave to employees for every 30 hours worked beginning on the first day of employment, violates the Texas Constitution because it is preempted by the Texas Minimum Wage Act.

The City of Austin enacted the ordinance in February 2018.  A group of employers and business associations filed a declaratory judgment action seeking injunctive relief and the district court denied a temporary injunction.  The appeals court reversed and remanded to the district court to issue the requested temporary injunction, prohibiting the City from enforcing the ordinance, and for further proceedings.

Although there may be more paid leave legislation on the horizon, for now private Texas employers have no obligation to provide paid sick leave.

Janet A. Hendrick, Director
Phillips Murrah P.C. – Dallas
214.615.6391

Phillips Murrah

Phillips Murrah Director Janet Hendrick mentioned in Power Players: Women Leading in Law

Phillips Murrah Director and employment attorney Janet A. Hendrick was mentioned in the October edition of Power Players: Women Leading in Law newsletter, published by University of Texas at Austin School of Law‘s Center for Women in Law.

Phillips Murrah Women Empowered

Click to view at full size

The mention was regarding Janet’s move to Phillips Murrah’s Dallas office.

Janet is deeply committed to the advancement of women in the legal profession. She has been an active member of the National Association of Women Lawyers and the Dallas Women Lawyers Association, and is a thought leader and sought-after speaker on gender diversity in the legal profession.

With the addition of Janet, over 40 percent of Phillips Murrah’s Directors are women, more than twice the national average for large law firms. A significant number of women fill leadership roles at the Firm, including three of the four positions on the Executive Committee.

“I am impressed with the dynamic people at the Firm, especially the leadership,” Janet said of her motivation to join Phillips Murrah. “I’m also excited about the plans for the Dallas office and thrilled to be a part of building the future of the Firm.”

 

 

Dallas employment attorney Janet A. Hendrick tells Law360 why she joined Phillips Murrah

On Oct. 10, Law360, an in-depth legal industry publication, published an article about Phillips Murrah Director, Janet A. Hendrick, who recently joined our Firm in the Dallas office.

Janet is an employment attorney with almost two decades of experience. She is deeply committed to the advancement of women lawyers and is a thought leader and sought-after speaker on gender diversity in the legal profession.

From the article:

She told Law360 on Wednesday that she was impressed by the firm’s leadership.

Phillips Murrah opens Dallas office“When I met the folks at the firm and understood their commitment to women, and retaining talented women, and putting women in leadership roles with the firm, it was really unparalleled,” she said. “Forty percent of our directors are women, which far surpasses the national average. That’s just something that’s extremely important to me.”

The full-service platform offered by Phillips Murrah — compared with her prior firm’s employment focus — and its competitive rates have prompted positive responses and feedback from clients, she said. Another draw in coming to Phillips Murrah, she said, is the firm’s desire to grow its Texas footprint and the fact that she would have a hand in helping “build something new.”

“Absolutely, the firm is committed to growing the firm in the Dallas office, so we are in discussions with additional individuals now,” she said. “We don’t have a set number, but we plan to bring additional attorneys to fill client needs.”

Janet aggressively defends clients in state and federal courts and in arbitration on a range of matters, and provides counsel on a variety of issues that employers face, including best employment practices and compliance, audits and investigations, employee training, and cutting-edge legal issues surrounding the rapidly expanding gig economy.

Click to read our full release about Janet joining Phillips Murrah.

Phillips Murrah welcomes Janet A. Hendrick to Dallas office

Phillips Murrah welcomes Dallas employment attorney, Janet A. Hendrick, to our Dallas office.

Phillips Murrah welcomes Dallas employment attorney, Janet A. Hendrick, to our Dallas office.

Phillips Murrah P.C. is pleased to announce that Janet Hendrick has joined the Firm in its Dallas-based office. Janet is an employment attorney with nearly 20 years of experience. She brings the number of Phillips Murrah attorneys serving the Texas market to twelve.

“We are excited that Janet has joined Phillips Murrah as we continue to expand our Dallas office,” said President and Managing Partner, Thomas G. Wolfe. “She is a brilliant lawyer with a first-class resume.”

Janet represents employers in several capacities, including proactively counseling clients on best employment practices and compliance, advising on cutting-edge legal issues surrounding the rapidly expanding gig economy, handling audits and investigations, and conducting training. She aggressively defends clients in state and federal courts and in arbitration on a range of matters including employee defection, fair employment practices, and nonsubscriber employee injury defense.

“I like to understand a client’s objectives and what it considers to be a victory,” she said, adding that communicating initially and then often with clients to understand their business needs is fundamental to being a strategic partner.

Janet is deeply committed to the advancement of women in the legal profession. She has been an active member of the National Association of Women Lawyers and the Dallas Women Lawyers Association, and is a thought leader and sought-after speaker on gender diversity in the legal profession. With the addition of Janet, over 40 percent of Phillips Murrah’s directors are women, more than twice the national average for large law firms. A significant number of women fill leadership roles at the Firm, including three of the four positions on the Executive Committee.

“I am impressed with the dynamic people at the Firm, especially the leadership,” Janet said of her motivation to join Phillips Murrah. “I’m also excited about the plans for the Dallas office and thrilled to be a part of building the future of the Firm.”

Janet has been recognized as one of the Texas Diversity Council’s Dallas Top 50 Women in Law and the National Women’s Council’s Top 15 Business Women in Dallas. Additionally, she is a member of the North Texas GLBT Chamber of Commerce Governance Committee, the American Bar Association Labor and Employment Section, the Dallas Bar Association Labor and Employment Section, and the Collin County Bar Association.

Prior to joining Phillips Murrah, Janet practiced with Fisher Phillips, a national labor and employment firm, in Dallas. She also previously practiced with Jones Day in Dallas, New York, Washington DC and London.

See post about Law360 coverage here: Dallas employment attorney Janet A. Hendrick tells Law360 why she joined Phillips Murrah 

Phillips Murrah – Dallas Office:
3710 Rawlins Street, Suite 1420
Dallas, Texas 75219

Main: (214) 238-2525
Direct: (214) 615-6391
Fax: (214) 434-1370