Why Labor Law Matters: Due Diligence Updates from the Perspective of a Transportation Industry Labor Lawyer

Introduction

This is my first submission since joining Practus – In doing so, I and this article will highlight the pervasiveness of changes in employment and labor law and provide some guidance in how to plan and adapt to them, not just in everyday decisions, but in the broader context of business change, whether in acquisitions or sales, mergers, or more fundamental decisions about how to manage and classify employees to minimize risk.

In our industries, such changes, whether they emerge from the courts or legislatures define our work for our client, especially so in the modes ATLP encompasses.

By way of summary, this article’s theme is to identify, and issue spot these areas. Thus, consider worker classification of drivers as in the case of the Dynamex and AB5 independent contractor and gig worker arenas; related areas such as pre-emption by federal law, as is presently at issue in terms of truck driver status at the Ninth Circuit Court of Appeal (and a pending appeal en banc and a likely certiorari petition); by the actions of the new administration in Washington rolling back executive orders of the previous administration, or shifts in official position underway at the United States Department of Labor and the National Labor Relations Board. It also includes the complex world of pandemic response and return to work, exemplified by the latest EEOC guidance on vaccinations but extending to controversies over so-called “vaccine passports” at the state and international level. OSHA retaliation claims have been a bellwether of retaliation and citations enforcement in the wake of Covid and pending guidance is under consideration at the national level and well as in the states. Even traditional labor is impacted when workers find themselves turning to union organizing to control an employer’s putative decisions and mandates on returning to a physical place of work.

This Highlights article makes the conscious choice to frame this update in the context of business change because the present effort to massively expand national funding for infrastructure work will trigger the need to evaluate all of these factors – especially trenchant for those of you who function in the role of general counsel or outside general counsel for ATLP members.

  1. I.                    Truckers and classifying them for wage and hour purposes

California Trucking Association v. Rob Bonta (“CTA v. Bonta”)

https://cdn.ca9.uscourts.gov/datastore/opinions/2021/04/28/20-55106.pdf

California courts and its legislature adopted (Assembly Bill 5 (AB5)) an independent contractor test that putatively applies to motor carriers and independent owner-operators conducting business in the state notwithstanding an extensive underlying federal regulatory framework that permitted that status. The core test was Part B, which required the worker performs work that is outside the usual course of the hiring entity’s business, i.e., delivering freight.

Although broader challenges included preemption by the supremacy and commerce clauses in the U.S. Constitution, the core challenge is the nature of the direct conflict with the Federal Motor Carrier Safety Act and the Federal Aviation Administration Authorization Act of 1994 to the extent the FAAA insulates a motor carrier right to set prices, routes and services including, in this case, wages and working conditions.

The Ninth Circuit concluded AB5 was a labor law minimum labor standard and not preempted by the FAAA “because AB5 is a generally applicable labor law that affects a motor carrier’s relationship with its workforce and does not bind, compel, or otherwise freeze into place the prices, routes, or services of motor carriers.”

This perspective could be tested by an en banc appeal to the full Court and ultimately by a certiorari petition to the United States Supreme Court. At that level, the Court would be asked to resolve a split with a contrary decision at the First Circuit (Schwann v. FedEx Ground). In that case, preemption would lie because such “regulatory interference” would not be “peripheral” and would “pose a serious potential impediment to the achievement of the [FAAAA] objectives because a court, rather than the market participant, would ultimately determine what services that company provides and how it chooses to provide them.…significant[ly] impact[ing].. . the actual routes followed for the pick-up and delivery of packages.”

At the High Court, the justices will have to assess the concept of a state based minimum labor standard at the state level (something long viewed as not pre-empted by the Fair Labor Standards Act) with the fact that some drivers are engaged in interstate commerce necessarily requires that the FAAA pre-empts state law standards of drivers who operate solely within a state. Those in the modes are aware that many other safety and drug testing related requirements can be viewed as necessary to a federal scheme and as such, the legal decision of regulatory preemption (i.e., disruptive interference) will be at issue.

  1. II.                  Federal Regulatory Updates:  Selected Executive Orders, Actions and Opinion Letters

 

(1)    Raising the minimum wage of federal contract workers to $15 an hour in early 2022, up from the current $10.95. Eliminates the tipped minimum wage, $7.65 an hour, by 2024. Requires a $15 minimum wage for federal contract workers with disabilities.

 

(2)    Revocation of an executive order creating an industry-led apprenticeship program.

 

(3)    Revocation of an executive order affecting protecting workplace discrimination based on sexual orientation or gender identity.

 

(4)    Withdrawal of FLSA opinion letter 2021-4 as to whether a restaurant may institute a tip pool that includes both servers, for whom the employer takes a tip credit, along with hosts, for whom the tip credit is not taken.

 

(5)    Withdrawal of FLSA opinion letter 2021-8 as to whether certain distributors of a manufacturer’s food products are employees or independent contractors.

 

(6)    Withdrawal of FLSA opinion letter 2021-9 as to whether requiring tractor-trailer truck drivers to implement safety measures required by law constitutes control by the motor carrier for purposes of their classification as employees or independent contractors and whether certain owner-operators are accurately classified as independent contractors.

 

(7)    Modification of the DOL’s Jan. 6, 2021 Final Rule clarifying the standard for employee versus independent contract classification under the FLSA .

 

(8)    Modification and/or withdrawal of FLSA Opinion letter 2020-19, WHD pay of home-to-office travel time for an employee who chooses to work from home for part of the day from the office for part of the day, with sufficient time in between those working periods to perform personal tasks as part of the “continuous workday” rule. Also, at issue is how and when an employer tracks and counts as hours worked any work-related interruptions to meal or sleep periods, and counts the entire sleep period as hours worked if such interruptions prevented the worker from getting the required minimum of sleep time per and whether “prepaid” overtime (based on anticipated hours would fulfill any overtime obligations.

 

(9)     Whether a motor carrier can order tractor-trailer truck drivers to implement legally required safety measures without jeopardizing the drivers' independent-contractor status and whether distributors of a manufacturer's food products are employees or independent contractors under the FLSA. In both instances, the DOL proposed an economic-reality test to determine employment classification, primarily considering the nature and degree of control over the work and the worker's opportunity for profit or loss based on initiative and investment. This test has vitality under some state law, but not under the AB 5 rationale, especially if a nationwide 'ABC' test is enacted.

 

(10) Withdrawal of a trucking industry letter published in 2019 regarding compensation for time spent in the sleeper berth. The now-withdrawn opinion concluded “time sleeping in a sleeping berth is generally and presumptively non-compensable, as long as it is of sufficient length, in adequate facilities, the employee is relieved from all duties and the employee can effectively use that time for his/her own purposes.”

 

  1. III.                The Broader Impact of an Impending Return to a Labor Oriented National Labor Relations Board on Joint Employer, Successorship, and Union Organizing as well as the Pending Enactment of the PRO (“Protecting the Right to Organize”) Act

 

(1)    National Labor Relations Board (NLRB) General Counsel Peter Robb was the first General Counsel terminated before his term expired. Although union lawyer Gwynne Wilcox was nominated to a seat on the National Labor Relations Board, the five-member board currently has a 3-1 Republican which will not change until a new vacancy open in August of 2021.

 

(a)    Thereafter, there can be anticipated changes in Board decisional direction. One of the most significant may be in the standard of what constitutes an appropriate bargaining unit; either a bargaining unit composed of employees that perform the same job at the same facility (Specialty Healthcare), or whether organizing efforts can target a smaller group of employees at a company, sometimes called “micro units.” As advocated by Professor Charles Morris – the original author of Traditional Labor Law, the seminal treatise in the field.

 

(b)    Joint Employer Analysis – Business expansion, contraction and joint venture decisions often require analysis of whether union obligations and bargaining obligations transfer with the transactions and, as such are a risk factor requiring due diligence analysis. NLRB evolved tests play a large part. The Obama Board was very active, in the McDonalds cases, in the owner/franchisee relationships. In Browning-Ferris Industries the right to control employees, even if indirectly reserved, could trigger as bargaining obligation. It should be noted that state and local laws, especially in the airport and logistics industries, impose such obligations, including, at one airport in San Francisco, the opportunity for competing unions to obtain employee information with which to collectively bargain.

 

(c)     The Pro Act –Congress could act to expand the freedom to organize with structural changes that favor unions. This would, for the first time, give the NLRB the power to fine companies up to $50,000 per violation. It would also award workers’ compensation for the damages they experience when they are retaliated against, not just back pay and reinstatement, as they are currently entitled to. Beyond that, NLRA amendments could directly change the rights of independent contractors to organize as if employees. In a related potential change, the status of supervisors to participate in a bargaining unit. Other changes under consideration include workers’ rights to opt out of union dues and fees, a characteristic of so-called “right to work” laws in some states; enhancing the federal mandate for owner-union agreements to mandate union project labor or labor peace agreement that would mandate that nonunion companies agree to follow union contract to work on, for example, a federally funded infrastructure project. A related set of issues arise from union market share proposals that control who may work on projects. The “skilled and trained” workforce proposals mandate that workers must be enrolled or graduated from a state or federally approved apprenticeship program.

 

  1. IV.                The Return to Work – Guidance and Change at the EEOC and OSHA - EEOC Issues Updated Guidance to Employers Related to COVID-19 Vaccines

On Friday, May 28, 2021, just before the holiday weekend, the United States Equal Employment Opportunity Commission (EEOC) released its first technical assistance guidance since December 2020 related to COVID-19 and the Americans with Disabilities Act (ADA), the Rehabilitation Act, and Other Equal Employment Opportunity (EEO) Laws.  This guidance is in response to inquiries from employers about employee vaccination requirements and incentives to employees for receiving the COVID-19 vaccination.

It is important to note that the EEOC’s jurisdiction is federal EEO laws, and state and local laws may diverge significantly -- from jurisdictions experimenting with so-called vaccine passports, to states seeking to prohibit them.  California, for example, is considering voluntary mask mandates as between those who are vaccinated, and those who are not.  Moreover, it is also important to note that the EEOC guidance relates to the worker-employer relationship, but businesses may also have requirements that extend beyond this relationship and are impacted by requirements applicable to members of the public and customers.  These distinctions will necessarily vary by industry, and employers should consult legal counsel with experience in their industry when designing any implementation strategy.  The guidance does not provide a drastic shift for many employer policies and practices.  Nor does it specifically provide any immunity against claims.  Moreover, the Occupational Safety and Health Administration (OSHA) has yet to release its new guidance related to pandemic issues.  This matters because the EEOC’s jurisdiction does not extend into areas where many employers are facing claims of retaliation and related litigation the EEOC’s guidance cannot address.  Moreover, the trauma of a year under a pandemic is already catalyzing return-to-work stress related incidents, which can play out under multiple legal scenarios, including wage and hour claims and union organizing. 

(1)    What Does the Guidance Say, in a Nutshell?

EEO laws permit an employer to require all employees physically entering the workplace be vaccinated for COVID-19, but again reiterates this is subject to certain exceptions for employees with disabilities, pregnant employees, and employees with sincerely held religious beliefs, practices, or observances.  The guidance also cautions against policies that may have a disparate impact upon certain employer groups.  While the updated guidance provides new insight about the application of these exceptions and considerations, these situations each still require an individualized assessment and form the basis for many employer voluntary vaccination policies and practices. 

The EEOC guidance also provides information about pre-screening questions for employer-provided vaccinations, what employers may ask employees about vaccinations, whether and when employers may require documentation or confirmation of vaccinations, and confidentiality requirements for vaccination information.  The guidance states that vaccination records are confidential medical records that should be kept separate from the personnel file, but it still does not address employer policies requiring employees to visually self-designate if they are fully vaccinated.  Thus, employers who elect to adopt policies requiring employees to visually indicate to others if they are fully vaccinated may run afoul of the ADA and other EEO laws.  The updated guidance provides new information related to employer incentives provided to employees who receive the COVID-19 vaccination.  The guidance explicitly provides that employers may offer an incentive to employees who voluntarily provide documentation or other confirmation that they or a family remember received a vaccination from a third party, and that employers may offer an incentive to employees for voluntarily receiving a vaccination administered by the employer or its agent if it is “not so substantial as to be coercive.”  However, the updated guidance did not address how incentive policies apply to employees with disabilities, pregnant employees, or employees with sincerely held religious beliefs, practices, or observances.  Thus, employers who intend to provide incentives to employees who receive the COVID-19 vaccine (both rewards and penalties) should consult with legal counsel to fully analyze the advantages and risks of such a program.   

Finally, in its preamble related to vaccinations, the EEOC recognizes the May 13, 2021 updated CDC guidance for fully vaccinated individuals, exempting them from masking requirements “except where required by federal, state, local, tribal, or territorial laws, rules, and regulations, including local business and workplace guidance,” then states that the EEOC is “considering the impact of this CDC guidance on EEOC’s COVID-19 technical assistance provided to date.”  Thus, while the updated guidance last week does provide some discussion of masking requirements in conjunction with vaccination policies and the ADA analysis, we anticipate the EEOC technical guidance may be further updated in the future with respect specifically to employer masking requirements for employees.  

Conclusion and Summary

This is a time of flux – home ground for labor lawyers, as this area of practice is often the petri dish from which trends emerge in many other industries. Stay tuned.

 


 

Robert Fried Partner, Practus LLP. Robert may be reached at [email protected] or at 510 295-0019 (www.practus.com) Fellow labor team partner, Molly Aspen, provided additional insight on current issues on vaccinations and return to work. [email protected] or 918.694.6970.

Share this post: