Uber Class Action Highlights "Sharing Economy" Classification Concerns

By Alexandra Shulman
September 11, 2015

Earlier this month, Judge Edward M. Chen of the Northern District of California granted class action status to the plaintiffs in the on-going litigation against the popular ride-sharing app, Uber Technologies, Inc.  The lawsuit was originally brought on behalf of three Uber drivers who claimed that Uber misclassified them as contract workers and improperly denied them employment-related benefits.  The court's recent ruling expanded the lawsuit from three individual drivers to all Uber drivers in California, with the exception of those who executed a waiver of class action rights.

In opposition to the plaintiffs' motion for class certification, Uber argued that the drivers' employment classification cannot be adjudicated on a class-wide basis.  Uber maintains that its right of control over its drivers, as well as the day-to-day reality of its relationship with them, are not sufficiently uniform across the proposed class.  The court found that there was an inherent tension in Uber's argument -- on one hand, Uber claims that it has properly classified every single driver as an independent contractor, but on the other, Uber claims that each driver has a unique relationship with Uber such that the Court cannot make a class-wide determination of its drivers' proper job classification.

This high-profile decision highlights the increased scrutiny that is being placed on "sharing economy" companies that classify their workers as independent contractors rather than employees.

It's going to be more expensive to do business with the federal government

By Stacey Mark
September 8, 2015

Yesterday, President Obama signed an executive order requiring federal contractors to provide their employees with up to seven days of paid sick leave per year, accruing at the rate of one hour for every thirty hours worked.  The sick leave will reportedly carry over from year to year and will be reinstated for any employee rehired by a covered contractor within 12 months of a separation.  In addition, employers will not be able to require as a condition of using paid sick leave that the requesting employee find a replacement worker to cover the time missed.

The executive order will apply to new federal contracts starting in 2017.  Although the White House has not yet quantified the cost to federal contractors, the administration said the cost would be offset by reduced attrition and improved employee loyalty and efficiency.  The new benefit will affect approximately 300,000 workers currently without any sick leave benefits.

This news comes on the heels of the Department of Labor's (DoL) proposed new overtime regulations that would increase the minimum salary required to qualify for exemption from overtime by more than one hundred percent, from $455 per week/$23,660 per year to about $970 per week/$50,440 per year in 2016.  The proposed rule would set minimum salaries for exempt employees at the 40th percentile for full-time salaried workers.  The DoL also proposes to increase the annual compensation requirement for highly compensated workers to $122,148, which is the 90th percentile of weekly earnings of full-time salaried workers for 2014.  The DoL's proposed new rules would apply to all employers subject to the Fair Labor Standards Act.

Paid sick leave and increased minimum salaries are only two issues on the President's employment agenda.  We will likely see additional changes before the President leaves office.

NLRB decision has implications for companies using staffing firms

By Leslie Bottomly
September 5, 2015

Startups and even established companies have increasingly turned to employee leasing companies, PEOs and staffing firms to supply workers. Some view this practice as a way to minimize potential liability for employment-related claims. The NLRB recently issued a decision changing its interpretation of the standard for "joint employment," potentially opening a company using a staffing firm to liability for the staffing firm's own violations. 

In short, although it may be easier to write a check to a staffing firm and receive services in return, doing so does not effectively absolve the entity of all employment-related responsibilities. Companies need to be aware of this, act accordingly, and be very careful that they hire reputable and compliant employee leasing companies, PEO’s and staffing firms. Arrangements and the underlying contracts should be carefully reviewed for indemnification and insurance provisions. 

Although the NLRB's decision is directly applicable only to the National Labor Relations Act, it reflects a general regulatory trend towards tighter enforcement of employment-related obligations.

Thinking about asking an employee when he or she plans to retire? Better think again....

By Stacey Mark
September 4, 2015

The Ninth Circuit recently found in France v. Johnson that an employee who was repeatedly questioned about his retirement plans was entitled to a trial on his claim for age discrimination. 

Plaintiff, a 54-year old border patrol agent, worked for the Department of Homeland Security. In 2007, the new Chief Patrol Agent for the sector, Gilbert, created a pilot program dividing Assistant Chief Patrol Agents (ACPAs) into two categories with different pay grades, GS-14 and GS-15.  Before the program, all of the ACPAs were at the GS-14 pay grade.

The 24 qualified ACPA candidates who applied for the new position ranged in age from 38 to 54 years old, with plaintiff the oldest.  Candidates were ranked based on their scores from the Border Patrol Agent Competency Based Promotional Assessments.  Gilbert then invited twelve candidates for interviews in Washington, D.C.  The panel selected six candidates for final consideration and Gilbert, who was on the interview panel, recommended four of the six to the Chief Border Patrol Agent, who in turn recommended the same four candidates to the Deputy Commissioner.  The four candidates ultimately selected for the GS-15 positions were the same four candidates recommended by Gilbert.  Those selected were 44, 45, 47 and 48 years old.

Plaintiff sued DHS, claiming that the promotion decision was based on age.  In opposition to DHS’ motion for summary judgment, plaintiff offered evidence that Gilbert had expressed his preference for "young, dynamic agents" to staff the GS-15 positions, and sought to promote younger, less experienced agents.  Plaintiff also submitted proof that Gilbert had repeated retirement discussions with him, despite plaintiff's clear indications that he did not want to retire.  For example, in June 2007, Gilbert asked if plaintiff was interested in teaching firearms as a "rehired annuitant" after retirement, and plaintiff said he did not want to retire. A few months later, Gilbert again asked what plaintiff wanted to do, and plaintiff said that he was not going to retire and intended to apply for the GS-15 position.  Plaintiff recalled that Gilbert had responded that if he were in plaintiff's position, he would retire as soon as possible.  DHS contended that plaintiff lacked the leadership, judgment, flexibility and innovation for the position.  Gilbert stated that plaintiff had a big mouth and did not know when to turn it on or off, and for these reasons failed at the interview.  The district court determined that while plaintiff established a prima facie case of discrimination, he did not establish a question of fact with respect to DHS’ legitimate, non-discriminatory reasons for not selecting him. The district court concluded that Gilbert's discriminatory statements were insufficient to create a genuine dispute of material fact because Gilbert had a limited role in the ultimate hiring decision.

On appeal, the Ninth Circuit first considered whether plaintiff established a prima facie case of failure to promote, which requires a plaintiff to show (1) he was at least forty years old, (2) qualified for the position sought, (3) denied the position, and (4) the promotion was given to a substantially younger person.  The first question was whether the selected candidates, who averaged eight years younger than plaintiff, were substantially younger.  Following a majority of other circuits that have considered the question, the Ninth Circuit adopted the rule that an average age difference of ten years or more between the plaintiff and the employee replacing plaintiff (or hired, as in this case) will be presumptively substantial, whereas an age difference of less than ten years will be presumptively insubstantial.  A plaintiff can rebut the presumption by producing additional evidence to show that the employer considered the plaintiff's age to be significant.

The Ninth Circuit also found that the district court erred in concluding that (1) creating a genuine issue of fact on pretext requires that the person making discriminatory statements be the ultimate decision maker, and (2) Gilbert had a limited role in the hiring decision.  Referencing the cat’s paw theory, the court reasoned that even if a subordinate employee with bias was not the final decision maker, the plaintiff can establish a causal link by proving that the biased subordinate influenced or was involved in the decision or decision making process.  Here, plaintiff provided sufficient evidence to create a question of fact as to Gilbert’s influence over and involvement in the hiring decision, and a reasonable jury could infer that Gilbert's role in the decision making process was significant and influential.  Moreover, the district court erred in disregarding evidence of Gilbert’s repeated retirement discussions with plaintiff in assessing whether Gilbert's articulated nondiscriminatory reasons were pretextual.  Although these retirement discussions, alone, were insufficient direct evidence of discrimination, this evidence was presented along with circumstantial evidence of timing:  the discussions concluded only a couple of months before the new positions, which Gilbert created, were posted. The close proximity in time could allow a reasonable jury to find that plaintiff's non-selection based on grounds other than age was pretextual.  Accordingly, the Ninth Circuit reversed, allowing plaintiff to take his case to the jury.

This case serves as reminder to employers that asking older workers about their retirement plans may be viewed as evidence of age bias.  Unless there is a legitimate reason to inquire, such as succession planning, it is better not to ask the question.  Even then, employers may want to consult counsel about the appropriate way to approach the issue.