The U.S. Department of Labor has proposed a final rule stepping back from the Obama administration’s damaging effort to stretch the definition of “joint employer” so as to tag companies with liability over the employment actions of many franchisees, subcontractors and even suppliers. “The new rule beats a retreat from the past administration’s aim ‘to force much more of the economy into the mold of large-payroll, unionized employers, a system for which the 1950s are often (wrongly) idealized.’ That very same goal is at the root of California’s unfolding debacle with AB5, a law that tries to force many lines of freelancing into a direct-employment model and is already harming large numbers of workers it had purported to help.” I explain in a new Cato post.
“California’s new employment law has boomeranged and is starting to crush freelancers” [Elaine Pofeldt, CNBC] “As with many of my colleagues today, because I live in California, I was just told that I can no longer hold a paid position with SB Nation.” [Rebecca Lawson, Mavs Moneyball; Whitson Gordon thread on Twitter] “Separately, there’s some bit of irony in the fact that just a few months ago, Vox itself had a headline celebrating AB5 calling it a ‘victory for workers everywhere.’ Except, I guess, the freelancers who worked for Vox.” [Mike Masnick, Techdirt] “These were never good jobs,” claims the measure’s sponsor, Assemblywoman Lorena Gonzalez (D-San Diego), but lots of freelancers have made clear they disagree [Billy Binion] “Mainstream politicians and pundits love to cite ‘unintended consequences’ when their preferred policies cause harm in the exact ways libertarians said they would.” [Elizabeth Nolan Brown, earlier]
More: impacts on music, theater, and the performing arts make AB5 a creative-unfriendly law [Joshua Kosman and Carolyn Said, San Francisco Chronicle]
- “Bernie Sanders and Bad Justifications for Minimum Wage Hikes” [Cato Daily Podcast with Ryan Bourne and Caleb Brown]
- Oregon senator wants to give CEOs a pay incentive to automate, contract out, or otherwise eliminate low-compensation jobs faster than they would otherwise [Hans Bader]
- “Mayor Pete Wants To Destroy the Gig Economy in Order To Save It” [Nick Gillespie on Buttigieg plan to limit independent contractor status] More on California independent contractor battles [Federalist Society podcast with Bruce Sarchet, earlier here, etc.]
- Not many states do this: “New York State Passes Bill Allowing Employees to Place a Lien on Employer’s Property For Accusation of Wage Violations” [Employers Association Forum]
- With hand-made tortillas no longer economic, the Upper West Side restaurant began going downhill [Jennifer Gould Keil, New York Post]
- The myth of stagnant real wages [Scott Sumner]
- After Target, under pressure from activists, announced a $15 companywide minimum wage, “workers say they’ve had their hours cut and lost other benefits, such as health insurance.” [Eric Boehm, Reason]
- New Chicago scheduling ordinance is “the ultimate intrusion of government in the workplace.” [Chicago Tribune editorial; Allen Smith, SHRM; Fisher Phillips]
- “As predicted, the $15 wage is killing jobs all across the city” [New York Post editorial; Billy Binion, Reason; Michael Saltsman and Samantha Summers, Crain’s New York letter (defenders of hike playing fast and loose with numbers) ]
- The Federalist Society held a teleforum with Tammy McCutchen of Littler Mendelson on the lower courts’ reception of the Supreme Court’s decision one year ago in Encino Motorcars on FLSA interpretation [earlier]
- By next year I expect Left Twitter to be asserting in the alternative that this famous Seattle restaurant 1) never existed, 2) remains open and has no plans to close, and 3) was sunk by issues unrelated to the minimum wage. [Jason Rantz, KTTH (Sitka & Spruce)] More on restaurants: Legal Insurrection (closure of West Coast chain); Tyler Cowen (NBER working paper on what kinds of restaurants are most likely to be affected);
- “In the past five years, nearly two-thirds of companies have faced at least one labor and employment class action and, overwhelmingly, companies report that wage and hour matters are their top concern in this category.” [Insurance Journal, Carlton Fields Class Action Survey]
A new California anti-gig-economy law sponsored by a labor-organizer-turned-lawmaker is shaping up as a disaster for freelancers — exactly as Virginia Postrel and others predicted it would. “If a freelance journalist writes for a magazine, newspaper or other entity whose central mission is to disseminate the news, the law says, that journalist is capped at writing 35 ‘submissions’ per year per ‘putative employer.'” The law is set to go into effect January 1. [Hollywood Reporter; earlier here, here, etc.]
If driving for a gig economy platform appealed to you because you could wrap the timing of the work around the other obligations in your life, the California legislature sends its sincerest condolences [Megan McArdle, Washington Post/Paducah Sun; Michael Munger, The Hill, Steven Greenhut in July; earlier here, etc.] More: Richard Epstein, Hoover.
Legislation in the California assembly aims at heading off the prospect that private colleges and universities will require adjunct professors to begin operating on time card systems:
In recent years, a number of colleges and universities have settled faculty overtime violation lawsuits filed by the same California law firm — lawsuits that even many adjuncts say are frivolous. Stanford University, for example, last year settled for nearly $900,000 in a class-action suit regarding instructors in its continuing studies program. Attorney’s fees accounted for one-third of the settlement, so adjuncts involved were each entitled to a partially taxable $1,417. Kaplan University also settled, according to public documents. Other suits have been settled more quietly. Public institutions in California, whose adjuncts are generally unionized, have not been affected.
Private colleges and universities have responded to the ongoing legal threat by either making or planning to make their adjuncts document all of their working hours on time cards.
Tinker with its details as one will, wage and hour law necessarily proceeds on the premise of regimenting the workplace by the minute. That’s why the time clock is its symbol. [Colleen Flaherty, Inside Higher Ed]
Complying with wage and hour law these days is no easy matter, whether you’re Sen. Bernie Sanders or running a California offshore oil platform. I explain why in my new Cato post on Parker Drilling v. Newton, decided by the Supreme Court last month. More on Sen. Sanders’s travails here and here, from my Cato colleague Ryan Bourne.
In March and April, the U.S. Department of Labor issued notices of proposed rulemaking on two of the most hotly contested issues of its predecessor Obama department, overtime for junior managers and the joint-employer rule. Tammy McCutchen:
The DOL proposes to increase the minimum salary for exemption from $455 per week ($23,660 annualized) to $679 per week ($35,308 annualized)…. If adopted, the proposed rule would replace the final rule issued by the DOL on May 19, 2016, but enjoined by the Eastern District of Texas just weeks before its December 1, 2016 effective date. The 2016 final rule would have increased the minimum salary for exemption to $913 per week ($47,476 annualized)
Earlier here and here. In addition, DoL is proposing to clarify what times of compensation and benefits employers must include in the overtime calculations.
Separately, DoL’s proposed rule on joint employment
would replace the January 2016 Administrator’s Interpretation on joint employment, which did not go through the notice-and-comment rulemaking process and was withdrawn in June 2017.
Under the FLSA, companies found to be joint employers are jointly liable for all minimum wage and overtime violations. The statute does not include a definition of joint employment and has left this determination to the courts.
The joint employment issue has become increasingly important since the National Labor Relations Board (NLRB) dramatically expanded the definition during the Obama administration in the Browning Ferris decision, recently partially affirmed but remanded to the NLRB by the D.C. Circuit. The Trump NLRB has undertaken a rulemaking of its own, proposing to narrow the joint employer definition under the National Labor Relations Act, so as to restore the law, essentially, as it stood prior to Browning Ferris. The NLRB is currently poring over thousands of comments filed for and against its proposed rule. A final joint employer rule is expected from that agency by year end.
The joint employment concept is important because, among other matters, it determines when one employer (typically larger) can be held liable for the actions of another, such as a contractor or franchisee. The proposal would adopt a definition of joint employer originating in a 1983 Ninth Circuit decision in Bonnette v. California Health and Welfare Agency, which does not sweep as broadly as the later definition adopted by the NLRB in Browning-Ferris and by the Obama administration. More: McCutchen podcast on all three issues.
- Decision time coming up for administration on whether to reverse one of Obama’s worst initiatives, overtime for junior managers [Veronique de Rugy; Robin Shea]
- California observes different rule on overtime for offshore oil workers than does federal government, exposing employers to huge retroactive back pay liability [Washington Legal Foundation, Supreme Court granted certiorari last month in Newton v. Parker Drilling]
- Today in bad ideas: Philadelphia becomes latest jurisdiction to regulate shifts and scheduling in retail, hospitality [Juliana Feliciano Reyes, Philadelphia Inquirer/WHYY, Drinker Biddle/National Law Review, Max Marin/BillyPenn]
- “I’m a restaurant employee in a city with a $15 minimum wage; here’s how it’s hurt me” [Simone Barron, Washington Examiner] Virginia could wind up with a $15 minimum law before long, tough luck for rural parts of state [Hans Bader]
- “Nurses allege Corona, Calif. underpaid them, rounding down their time to the nearest quarter hour. Ninth Circuit: This can proceed as a class action. Five judges, dissenting from denial of en banc review: The only evidence in support of the nurses’ claim is a declaration from plaintiffs’ lawyers’ paralegal, which is plainly not admissible. ‘This doesn’t pass the straight-face test.'” [Short Circuit on Sali v. Corona Regional Medical Center, Ninth Circuit panel, denial of en banc rehearing]
- “The Impact of The New German Minimum Wage” [Ryan Bourne]