Goodbye Uber Class Action, Hello Individual Arbitration

Natalie Alameddine and Caroline Powell Donelan

Last week, in a significant blow to claims that gig economy workers are entitled to pursue disputes on a class or collective basis, and possibly whether those workers will be able to establish that they are employees and not independent contractors, a three-judge panel of the Ninth Circuit Court of Appeals unanimously decertified a class of 240,000 Uber drivers. The decision in O’Conner v. Uber is a victory for the ride-share company, which will now be able to defend claims that it misclassified employees as independent contractors on an individual basis—one arbitration at a time.

For the past five years, there has been an ongoing and contentious dispute over whether Uber drivers (and similarly, Lyft and other ride-share drivers) are independent contractors or employees. If the workers are deemed to be employees, Uber could face hundreds of millions of dollars in alleged California labor code violations and business expense claims. To combat the possibility of having to litigate this issue on a class-wide basis, Uber entered into arbitration agreements with each driver, requiring that any driver’s claims be arbitrated and that each case had to be arbitrated individually (rather than as a class action). Continue reading “Goodbye Uber Class Action, Hello Individual Arbitration”

De Minimis” May Be Down, but It’s Not Out—And What Does It Mean for Employer Rounding Policies in California?

Laura Reathaford, Caroline Powell Donelan, and Caitlin I. Sanders

On July 26, 2018, the California Supreme Court issued its long-awaited opinion in Troester v. Starbucks Corp., __ P.3d __ (2018). In the days that have followed, legal headlines have lamented the presumed “death” of the de minimis doctrine. But is Troester really that simple? And what does it mean for employer rounding policies?

The issue in Troester was whether the federal Fair Labor Standards Act’s (“FLSA”) de minimis doctrine applies to claims for unpaid wages under certain provisions of the California Labor Code. For the better half of the past century, the de minimis doctrine has been applied in the federal wage and hour context to excuse payment of wages under the FLSA for insubstantial or insignificant periods of time. Continue reading ““De Minimis” May Be Down, but It’s Not Out—And What Does It Mean for Employer Rounding Policies in California?”

The Epic Systems Decision: Where Do Employers Go from Here?

Emery Gullickson Richards

The U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis has significant ramifications for the scope of class action waivers in employee arbitration agreements. In each of the three consolidated cases that the Court’s opinion addressed, the plaintiffs were pursuing class/collective actions with Fair Labor Standards Act (“FLSA”) claims for unpaid overtime. Plaintiff Sheila Hobson’s FLSA claim in the Murphy Oil case had been dismissed by the trial court as a result of the arbitration provision in the employment agreement she signed when she started work at a gas station in Alabama. By contrast, plaintiff Jacob Lewis, a technical communications employee, had overcome a motion to dismiss his FLSA overtime class action in the Epic Systems case by arguing that a class action waiver in an arbitration agreement that had been emailed to him by his employer was unenforceable. In the Ernst & Young case, plaintiff Stephen Morris sought unpaid overtime under the FLSA and the California Labor Code for working long hours during audit season. As a result of the Supreme Court’s ruling, after remand, all of these claims now appear destined for arbitration unless they are resolved. The Epic Systems decision represents a broader affirmation, however, that arbitration agreements are enforceable regardless of the nature of an employee’s claim, even if the claims are brought pursuant to employment statutes that explicitly provide for class or collective actions. Continue reading “The Epic Systems Decision: Where Do Employers Go from Here?”

Epic Shift: Supreme Court Enforces Class Action Waivers in Arbitration Agreements

Emery Gullickson Richards

The Supreme Court issued a landmark decision on May 21, 2018, which has widespread implications for all employers. In Epic Systems Corp. v. Lewis, a 5-4 opinion written by Justice Gorsuch, the Supreme Court held that arbitration agreements and class/collective action waivers are enforceable, putting to rest any argument that the National Labor Relations Act prevents or limits their enforceability. The decision provides employers further options for limiting litigation risk, particularly with respect to costly wage and hour collective actions. The decision also contains important implications for employers that maintain or are considering implementing arbitration agreements in the workplace, as there is no longer any identified legal impediment to the concept of an employer requiring its employees to waive the ability to bring a class or collective action under federal, state, and local employment laws. Continue readingEpic Shift: Supreme Court Enforces Class Action Waivers in Arbitration Agreements”

Independent Contractors in California—Misclassification Is Now “Easy as ABC”

Caroline Powell Donelan

California employers are facing a harsh new reality as a result of the state Supreme Court’s recent decision adopting a new test for determining whether a worker can properly be classified as an independent contractor (versus an employee) “for purposes of California wage orders,” which generally impose obligations on employers relating to non-exempt employees’ wages, hours, and working conditions like meal periods and rest breaks.

The underlying claims were brought by two delivery drivers alleging Dynamex, a nationwide same-day courier and delivery service, had improperly classified them and other “similarly situated” drivers as independent contractors. In relevant part, these drivers:

  • were paid a flat fee or percentage of the delivery fee received from the customer;
  • were generally free to set their own schedules;
  • were free to reject or accept jobs assigned by Dynamex;
  • used their own cell phones and vehicles for work;
  • were free to choose their own routes;
  • could perform work for other companies; and
  • were hired for an indefinite period of time.

Under most tests distinguishing independent contractors from employees, these facts would have weighed toward an independent contractor determination. However, in a densely-academic, 82-page opinion, the Court held that the “suffer or permit to work” definition of “employ” contained in the wage orders should replace the more flexible “right of control” test which has been used in California since 1989. Specifically, the Court adopted the “ABC” test as the proper way to distinguish employees from independent contractors. Continue reading “Independent Contractors in California—Misclassification Is Now “Easy as ABC””

Blank Rome Alert—Gig Economy More Employer-Friendly? Ask Uber!

Jason E. Reisman

Spoiler alert! Yesterday, the U.S. District Court for the Eastern District of Pennsylvania handed Uber what the Court described as Uber’s first win on its independent contractor classification for one class of its drivers: “This case is the first to grant summary judgment on the question of whether drivers for UberBLACK are employees or independent contractors within the meaning of the Fair Labor Standards Act ….” The case is Razak et al. v. Uber Technologies, Inc. et al. (Civil Action No. 16-573; 4/11/18).

Wow. Pretty significant progress for the gig economy’s foundational feature—the engagement of workers classified as “independent contractors.” I dare say that, with this decision, the gig economy may have just gotten a little more employer-friendly—at least here in Eastern Pennsylvania and at least as to Uber. Continue reading “Blank Rome Alert—Gig Economy More Employer-Friendly? Ask Uber!”

New York #MeToo Initiatives—It’s No Longer Just an HR Issue

Stephen E. Tisman and Rither Alabre

Propelled by the Harvey Weinstein scandal and the “#MeToo” movement, New York government officials have taken new steps to protect victims of sexual misconduct in the workplace.

  • The New York County District Attorney’s Office has created a special “Work-Related Sexual Violence Team” of prosecutors to investigate reports of work-related sexual violence.
  • The New York Attorney General filed suit, in response to the announcement of the proposed sale of the Weinstein Company, for civil penalties and an order of “restitution” to victims.

These actions make clear that new layers of scrutiny are being imposed to examine how employers handle sexual harassment claims. Importantly, companies and individuals faced with such claims will confront new areas of exposure—outside of traditional human resources procedures and concerns—which must be analyzed and addressed. Continue reading “New York #MeToo Initiatives—It’s No Longer Just an HR Issue”