Source: https://denverlaborlaw.com/category/labor-law/
Timestamp: 2019-04-24 10:55:19+00:00

Document:
Last week the Republican-majority National Labor Relations Board overturned its 2014 independent contractor test expanding labor law rights to more workers under the National Labor Relations Act. This unsurprising move reflects the Trump administration’s hostility towards administrative regulation and workers’ rights. The revised test will open the door for employers to classify workers as independent contractors to further erode worker rights and compensation.
Under the National Labor Relations Act and its later amending acts, a worker obtains labor rights under the NLRA if the worker is classified as an employee. The problem is that the statutory language, like many labor and employment laws, lacks a clear mechanism to determine who is an employee under the statute. Courts and administrative agencies often rely on one of several common law tests. These tests weigh factors related to important components of the employer-worker relationship.
Historically the NLRB applied the common law agency test first focusing on the employer’s control over the worker and later shifting to focusing on the entrepreneurial opportunity for gains or losses. Ten years ago a challenge to the independent contractor classification of drivers at Fedex led to the D.C. Circuit applying the ten factor common law agency test and focusing on the entrepreneurial opportunity for gains or losses. (Fedex I.) The D.C. Circuit in FedEx Home Delivery v. NLRB, 563 F.3d 492 (D.C. Cir. 2009) reviewed the NLRB’s historical application of the test and applied the test to hold the drivers were independent contractors and not employees.
The NLRB applied this refined test to find another set of drivers are employees. Agast, Fedex appealed the decision. The D.C. Circuit again insisted its pro-business interpretation was correct and the NLRB should have expected the same result. (Fedex II.) Nevertheless the NLRB refused to walk back its refined test.
The NLRB’s 2014 refinement of its independent contractor test makes tremendous sense in light of current trends in employment. Employers increasingly shift jobs from employee to independent contractor to avoid labor and employment laws and reduce labor costs. Jobs shift to supposed independent contractors who do not operate independent businesses, only work for a single employer and have their work substantially controlled by that employer. Few disinterested and rational individuals would look at these relationships as anything less than employer-employee.
In 2018 a complaint was filed by franchisee drivers at DFW Airport alleging, under the NLRB’s refined test, that they are employees eligible to unionize under federal law. The employer was quick to point out Fedex II and the now Republican-majority NLRB agreed. It overturned the 2014 refinement returning to the ten factor common law agency test.
The majority claims it does not give entrepreneurial opportunity heightened consideration or raise it as a super-factor (as the court does in Fedex I) but it certainly devotes considerable space to that single factor before addressing in less detail any other. It’s difficult to imagine the majority did this unintentionally or that the board will not proceed with heavily weighing the entrepreneurial opportunity over other factors–at least in these contractor relationships.
In between 2014 and 2018 the NLRB rule gave employers pause from believing independent contractor classifications rid them of worry about unionization; but that pause is certainly over. Returning to a rule that makes it easier to avoid labor law concerns in the workplace does more than help employers sleep better at night or trim their legal budget for labor law attorneys. It incentivizes employers to structure jobs as independent contractors which in turn means fewer worker rights and less pay.
At the end of June the Supreme Court dropped its expected ruling in Janus v. AFSCME which garnered minimal discussion in mainstream press despite likely having an enormous impact on our political system and many employees. Janus is in many ways a demonstration of the cumulative effect of the past twenty years of right wing politics in this county and its continued war on labor unions. Although the case mostly flew under the radar for most of the nation’s press, labor law observers have paid close attention and mostly uniformly predicted the Court’s conclusion. Let’s talk about the labor law issue involved and what impact the case will likely have for Colorado and its employees.
The issue in Janus involves state laws requiring employees of a public employer (such as the City and County of Denver, or a Colorado school district) who are part of a bargained unit but not union members to pay partial fees for the benefits received from the union’s bargaining activity. Let’s break this down.
Under federal labor law, employees in covered employers can elect a union to represent the workforce as a unit to bargain over the conditions and benefits of employment. Labor law defines groups of employees eligible for representation by a single representative union as a bargained unit. These are employees who share work duties for which it makes sense to have a single representative. For example, all teachers in a school district might be a bargained unit or the machinists in a manufacturing shop might be a unit while the office staff is a separate unit. If the employees within the unit vote in favor of union representation then the union represents all employees within the unit–even if all employees do not voluntarily join the union.
States handle this aspect in a couple ways. In supposed “right to work” states employees do not have to join the union or pay union dues even if the union represents them and the employees receive all the benefits of the collective bargaining agreement struck by the union and employer. In “closed shop” states the employees within a bargained unit must be dues-paying members of the union. Although this can seem unfair, keep in mind that employees receive the benefits of the union’s bargaining of the CBA plus continued representation when issues arise under the agreement. The union has no choice under the NLRA but to represent all employees. So either state law requires the employees to pay for the benefits received from the union or the union eats the cost of helping its dues-paying members.
As a compromise solution in right to work states, unions can charge non-members within their bargained units agency fees. Agency fees are a reduced payment from full dues paid by non-union employees in the bargained unit to cover the costs incurred by the union for work performed on behalf of the non-members. Payment of agency fees means the union receives at least compensation for work performed but does not collect full dues that might also be used for other union purposes such as lobbying for employee-friendly laws or campaigning in representation elections in other bargaining units. These agency fees are at issue in Janus.
The Supreme Court first approved the use of agency fees in public employment in Abood v. Detroit Board of Education in 1977, which itself draws from case law twenty years earlier holding the same position under the Railway Labor Act. A series of cases since that time confirmed their constitutionality in light of the First Amendment. Writing in an opinion years later, Justice Alito questioned the constitutionality of the agency fees, signaling to right wing allies that it might be a good time to raise a new suit challenging them.
Janus is an employee of a state agency in Illinois who worked in a bargained unit and paid agency fees under state law. With the backing of right-wing and anti-union groups, Janus filed suit to avoid payment of agency fees. The primary thrust of the lawsuit alleged the agency fees violated Janus’s First Amendment rights because the state law requiring agency fees is a government action requiring him to give money to a group that takes political action against his particular views. In other words, it is compelled speech. The lawsuit alleged that there is no way to really distinguish between how the union uses money collected from agency fees and union dues so he is forced by state law through his public employment to finance the union’s other political activities.
The lawsuit further alleged the agency fee issue is a matter of importance that rises to a First Amendment issue because the union’s bargaining is a matter of public importance. When unions bargain on behalf of public employees the union affects government decision-making and financing; therefore, the issue of agency fees is one of public concern and rises to the significance of speech protected by the First Amendment.
With a conservative majority, labor law observers expected the Supreme Court to overrule Abood and strike down agency fee laws, which is exactly what the Court did. The Janus majority opinion reads as a barely disguised criticism of public unions and sets up what is the beginning of a broader attack on unions under the First Amendment. The conservative majority on the bench have spent the past six years inching towards this position and finally get their win.
The majority casually overrules forty years of precedent with merely a handwaiving towards any concern about stare decisis. The bulk of Justice Alito’s majority opinion is spent making equally casual dismissals of Abood‘s reasoning and a union’s legal duty to represent non-members without payment of fair-share fees.
Now casually dismiss all the reasons why agency fees might not violate the First Amendment.
Justice Kagan’s dissent dismantles the house of cards constructed by the majority to explain why Abood must be overruled; but its strength lies in attacking why claiming state budgets are federal constitutional issues is a ridiculous standard. Justice Kagan correctly points out that if public employment budget issues elevate agency fees to First Amendment protections then the same would have to be true for any other public employment budget issue. Any time an employee or group of employees raise compensation or workplace issues and suffer criticism or discipline (real or perceived) the employees could launch First Amendment lawsuits which will cause financial harm to states and interfere with their ability to act as employers–inconsistent with decades of other Supreme Court precedent.
Or–what will inevitably happen–the reactionary majority will carve out a union-only rule that only attacks unions.
It’s hard to consider Janus anything more than a political favor to conservative political forces. The majority asserts one reason why the agency fee issue is of political importance is that states and cities are experiencing budgetary shortfalls for which public employee benefits are a significant issue. Although true, the vulnerability of public employees to budgetary issues is one reason why public employees and their unions have become important to protecting their own jobs. The drive to undermine public employee benefits and wages has led to greater growth in the importance and activity of public unions.
The divide between political forces seeking to cut public employee compensation and public unions is blatantly partisan. One only needs to look at the standoff only a few years ago between Wisconsin Governor Scott Walker and the state teacher’s union for the most visible example. By drawing funding away from the unions the Supreme Court majority puts its thumb on the scales for their political allies.
The reach of Janus is not just political for public unions. Diminishing the power and visibility of public unions will have the same effect on private employer unions. It will diminish resources available for other union fights like raising minimum wage and protecting employee benefits. Disabling public unions will allow politicians to cut state agency employment which in turn will make regulatory enforcement of important laws less effective. It will also allow them to cut public employee pay and benefits which in turn will lower compensation across all employers. In short, this is bad for employees everywhere.
Janus is another step forward for the reactionary Court majority which uses the First Amendment as a tool to rollback democratic forces in the country. The majority took its first big step with Citizens United–equating money with speech–and extends that forward here with Janus. We will likely continue to see the Supreme Court use the First Amendment as a tool to dismantle public accountability in the political system and further dismantle opposition to right wing political forces.
The larger effect for unions is equally as obvious. Public unions in states with agency fee laws will lose out on not just immediate funding from the agency fees. The absence of any fees to receive the benefits of representation without paying a fair share for it will entice free riding and further reduce the union’s dues-paying membership. As a result, the ability for unions to successfully represent and lobby for working people will decline.
Although this suit deals directly with public union issues, the majority’s First Amendment analysis is so broad that it calls into question significant private employer issues under the National Labor Relations Act (NLRA) involving the federal law’s requirement for employees to pay agency fees under the same premise. The majority is, at least, signaling to private employers and their allies to take a shot at whittling away at private unions as well.
Observers on both sides of the issue have asserted unions will have to work harder to be accountable to their members and do a better job pitching why employees in bargained units why their should join the union. Although true, this is hardly a solution to the political and labor scale-tipping provided by the Supreme Court. Unions certainly could do a better job in many instances but in practice this does not happen and in a union-hostile environment it’s not always easy to sway people to pay dues when they can get many of the benefits for free. We certainly see that in right to work states where union membership is low. Moreover, the Janus decision sets up decades of undermining unions which will hardly be met by more persuasion in the workplace.
We’re closing in on the end of the first quarter of 2018 which means the Colorado legislature is a little over halfway through its legislative session and the state courts are in full swing for the rest of the year. We’ve already seen a flurry of employment law activity in both the legislature and judiciary with more likely to come. Most employment law watchers have their eyes on the labor law appeals at SCOTUS but Colorado has a lot on the schedule for labor and employment law as well.
Immigration status. The House is currently perusing a bill to extend legal work status to undocumented workers in the state that meet specific requirements proving the worker’s history in this country has been positive.
FMLA insurance. Another House bill seeks to introduce an FMLA insurance program for wages. Under the proposed architecture small employee contributions would fund a wage replacement program for Colorado employees who take unpaid family and medical leave. Given the challenges created by the way the Colorado legislature designed its state FMLA statute to sit on top of the federal FMLA passage of this program could create new complications in the state’s family and medical leave law.
Non-compete exception for physicians. Physicians are generally better protected from overreaching non-compete agreements under Colorado law; however, they can be liable for damages caused by terminating the agreement. This Senate bill would create an exemption to damages for physicians to continue to provide care to patients with rare conditions.
Minimum wage waiver. In one of the more ridiculous legislative offerings a House representative offered a bill that would (1) require employers to notify job applicants of the right to negotiate minimum wage and (2) to negotiate a minimum wage less than the Colorado Constitution requires. The House committee quickly laughed at and destroyed this awful legislation.
Right to work bill. Not to limit their terribleness to just one bill, House Republicans introduced a bill to make Colorado a “right to work” state that allows workers to decline representation or membership in a union as a condition of employment. These bills are introduced by the GOP virtually every session but as usual this bill failed to reach a floor vote.
Gig workers are contractors. The Senate passed a bill last week that makes workers who find part-time jobs through online job marketplaces are contractors rather than employees. While many of these workers likely are contractors this bill seems more of a first step in expanding state law to make all workers in the gig economy contractors–surely a move backed by larger players in the field like Uber and Lyft who have been hit with misclassification lawsuits around the country.
If March is any indication how the Colorado Supreme Court feels about employment law it’s not a good sign for employees. This month Colorado’s highest court ruled against employee rights on small but important issues.
The Colorado Supreme Court overturned an appeal on public school teacher rights to a hearing before being placed on unpaid leave. The teachers’ union asserted the Teacher Employment, Compensation and Dismissal Act of 1990 (TECDA) required a hearing before a teacher may be placed on unpaid leave. TECDA limits a teacher’s exposure to termination to specific reasons of just cause after a hearing, if the teacher completed the three year probationary period. The teachers’ union argued this created a due process right to a hearing on unpaid leave.
The court disagreed, holding that TECDA does not create a contract between the state and teachers, therefore the teachers lack a property interest in benefits and salary. Without a property interest the teachers do not have a violation of due process rights to assert. The result will be that school districts will obtain greater flexibility to eliminate teachers or force out teachers.
In a case with broader implications, the Colorado Supreme Court also interpreted the Colorado Wage Claim Act (CWCA) to reduce the limitations period for claims of wages due upon termination. In Hernandez v. Ray Domenico Farms the court resolved the ambiguity over how far back an employee could seek unpaid wages due upon termination.
The CWCA sets a two year limitations period (extended to three if the violation is willful) for claims brought under the statute. (C.R.S. § 8-4-122.) Among the statutory claims is the right to be paid all due and unpaid wages upon termination. (C.R.S. § 8-4-109). The plaintiffs in this case, along with some Colorado courts, argued the limitations period reset with each instance of unpaid wages so the unpaid wages owed could extend as far back as the beginning of the employment relationship.
The Colorado Supreme Court disagreed, interpreting the CWCA similar to federal interpretations of limitations periods under the Fair Labor Standards Act (FLSA). The court held the limitations period only reaches back two years (or three if willful) before the date of termination. The court noted that the limitations period begins to run with each set of wages due; so it is possible that an employee could pursue a claim under C.R.S. § 8-4-109 as late as three years after the date of termination. The Supreme Court did not clarify this point but it appears to be the intended interpretation of the court’s opinion.
What should we expect for the rest of 2018?
The rest of the year will likely be a mixed bag for employees, particularly with the SCOTUS decisions that will weigh on federal labor law issues. As usual movement on the legislative and judicial fronts will be incremental with judicial decisions drawing narrow interpretations of existing statutes and employer-friendly lawmakers pushing through small changes. Most of these smaller changes receive little attention which allows a long but effective pro-employer shift in labor and employment law.

References: v. 
 v. 
 v. 
 v. 
 § 8
 § 8
 § 8