NLRB reverses 38-year old precedent regarding property access rights of union organizers

Reversing its 1981 president, Montgomery Ward, the NL RB recently held that non-employee union representatives can be banned from public spaces within an employer’s property, such as cafeterias, if they engage in organizing activities in those areas. The decision signals an equally pro-employer approach will be adopted with regard to the Board’s 2014 decision, Purple Communications, which held employees can, under some conditions, use company email for organizing.

This new property-access decision is likely to be challenging on at least two fronts.

First, it may be difficult to apply. The majority admitted in this new decision that union representatives could still enter such spaces, so long as they do not engage in union organizing activities. In other words, it may be difficult for an employer to expel union representatives who are simply having lunch with employees in the public cafeteria, so long as they are not visibly engaged in organizing activities by, for example, handing out flyers or buttons.

Second, the decision is likely to be relatively short-lived. It will no doubt be reversed, and Montgomery Ward, reinstated, by the next Board appointed by a Democrat president.

Source: UPMC, case no. 06-CA-102465 (6/14/19).

Colorado Supreme Court holds referral service to be an employer, striking independent contractor classification

In contrast with the Trump Administration’s approach to so-called gig-economy cases, the Colorado Supreme Court recently struck one company’s attempt to classify its workers as independent contractors, not employees.

At the federal level, the Trump Administration has, through both the NLRB and DOL, recently held that (at least some) gig-economy companies, like Uber in particular, are technology companies that merely connect consumers with service providers (example, drivers), and as such, they may lawfully characterize — at least for federal purposes — those service provides as independent contractors.

In this case, the Colorado Supreme Court rejected a company’s argument that it was merely a referral source connecting consumers with housecleaners. The Court held the company was, therefore, liable for Colorado state unemployment taxes.

Does the case signal a rejection of the Trump Administration’s approach at the Colorado state level? Or is the case distinguishable from situations like Uber’s paradigm? These questions have yet to be litigated. It may simply be that the Colorado Supreme Court will reject, at the state level, at least for unemployment, if not also workers compensation, the Trump Administration’s approach at the federal NLRB and DOL level.

Alternatively, the case may suggest some key factual distinctions about the particular company in this case. In the Colorado Supreme Court case, the evidence — unlike arguably in other gig-economy cases — was that the referral company did quite a bit more than simply refer. The Supreme Court noted testimony that it assisted cleaners, it trained them, it exercised “quality control,” it even controlled the cleaners’ ability to hire assistants. The Supreme Court held that all of this combined to be “exactly the control and direction” sufficient to convert a company into an employer, in other words, independent contractors into employees.

Another distinction may have been the apparent lack of technology underlying the cleaning company’s business model. As the federal agencies have noted in their gig-economy cases, companies like Uber characterize themselves as, first and foremost, technology companies. They have invested in and run considerable technological platforms to effectuate their referral systems. It is those very technologies that created their business models. The federal agencies noted that running those technologies is, therefore, the business of a gig-economy company, like Uber. In other words, Uber’s real business is running that technology, not driving. Thuse the company and its service providers are, those agencies have said, in two different businesses.

One thing is clear, companies in Colorado that use independent contractors should immediately review those classifications with experienced legal counsel. This case reflects a continuingly narrow approach to independent contractor classifications at the state level.

Additionally, it should be noted that the Colorado Supreme Court did not note that this company had written agreements in place. Both Colorado state unemployment laws and workers compensation laws create a rebuttable presumption of independent contractor status if companies have written agreements that meet particular statutory requirements. In addition to reviewing their independent contractor classifications, companies should ensure they consult with legal counsel to develop compliant written independent contractor agreements, so they can at least assert the benefit of such a presumption in these cases.

Source: Colorado Custom Maid v. ICAO, case no. 17SC350 (Colo. 5/28/19).

Colorado’s workers compensation requirement might be unconstitutional, at least in part?

An interesting case is winding its way through the Colorado courts.

In Colorado employers of three or more must carry workers compensation insurance. In this case, the employer employed typically between two and four individuals. It failed to carry workers compensation insurance for three different periods of time. When that came to the attention of the Colorado Department of Labor and Employment, the company was fined a whopping $841,200.

The company fired back by challenging the constitutionality of the state’s fines. The fines were issued pursuant to the formulas in Colorado workers compensation laws, CRS 8-43-409(1)(b) and Rule 3-6(D), 7 CCR 1101-3. The company, nonetheless, contends that the fines are “excessive” and therefore in violation of the United States Constitution’s Eighth Amendment.

In this decision, the Colorado Supreme Court ruled that the company might have a case. The court first held that the Eighth Amendment does apply to and protects corporations from excessive governmental fines, not just individuals. Next, the Court outlined the test for analyzing whether a fine is “excessive,” in other words, prohibited. Then the Court remanded the case for further consideration by the Court of Appeals under this new test.

In sum, we hold that the Eighth Amendment does protect corporations from punitive fines that are excessive. The appropriate test to apply in assessing whether a regulatory fine violates the Excessive Fines Clause is the “gross disproportionality” test. In assessing proportionality, a court should consider whether the gravity of the offense is proportional to the severity of the penalty, considering whether the fine is harsher than fines for comparable offenses in this jurisdiction or than fines for the same offense in other jurisdictions. In considering the severity of the penalty, the ability of the regulated individual or entity to pay is a relevant consideration. And the proportionality analysis should be conducted in reference to the amount of the fine imposed for each offense, not the aggregated total of fines for many offenses.

Will the company win under this new approach? It’s too soon to tell. Interested readers will want to follow this case as it continues to be litigated.

Source: Colorado Department of Labor and Employment v. Dani Hospitality, LLC, case no. 17SC200 (Colo. 6/3/19).

Adjusting to Pay-History Bans

HR professionals trying to adjust to the growing number of pay-history bans may want to review this interesting article from SHRM. As SHRM notes 15 states have already adopted pay-history bans. One approach the article discusses could be “complete compensation transparency” where the employer posts not only the opening, but also the pay range, job qualifications, job description and any other hiring criteria. Many employers may find that not practical. And even employers for whom it might work will still need to train hiring personnel and managers on the new do’s-and-don’t’s of these laws, for example, what to do if the employee volunteers pay history. Still as employers are considering these new laws, this article may prove a good brainstorming tool for HR professionals.

Supreme Court sides with Tenth Circuit, resolving split in Circuits, holding failure-to-exhaust is a procedural affirmative defense, not a jurisdictional defect

Resolving a split among the Circuits, the Supreme Court sided with the Tenth Circuit‘s recent approach, ruling that an employee’s failure to exhaust the statutory prerequisites for filing claims of discrimination and most kinds of EEO (equal employment opportunity), i.e., Title VII claims, is a procedural affirmative defense, not a jurisdictional defect. This means the defense can be waived by employers who fail to assert it.

Employers should ensure that they review all available defenses and assert viable ones throughout their defense of such claims.

Source: Fort Bend County v. Davis, — Sup.Ct. —, case no. 18-525 (6/3/19).