State & Local Employment Law Developments: Q2 2021

The second quarter of 2021 continues the trend of increasing regulation of the workplace by state and local governments. Several new and revised state and local workplace regulations became effective or will soon be effective, including a trend towards a broader inclusiveness in leave laws. This update reviews these new requirements and recaps Q2 state and local employment law developments to help you and your organization stay in compliance.

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DOL Proposes New Rule Clarifying the Test for Classification of Workers

On September 22, 2020, the U.S. Department of Labor (DOL) issued a new proposed rule that would substantially simplify the test for determining whether persons are employees or independent contractors under the Fair Labor Standards Act (FLSA).

Because the FLSA does not actually define “employee,” courts have traditionally filled the void by applying an “economic realities” test that balances several factors. But in issuing a new proposed rule, the DOL noted that the current balancing test is difficult to apply, creates confusion, and is out of step with modern technology and working relationships.

For the full alert, visit the Faegre Drinker website.

Retaining Independent Contractors in New Jersey Just Got Even Riskier

On January 21, 2020, New Jersey Governor Phil Murphy signed into law three bills that increase the potential pitfalls for businesses that rely on independent contractors. One new law adds to the penalties for misclassifying employees as independent contractors. Another new law imposes liability on businesses ─ including potential liability on individual managers ─ that use staffing companies that misclassify workers. The third new law adopts new posting requirements and anti-retaliation provisions.

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Do You Have Independent Contractors in California?

If so, you should be on alert about California Assembly Bill 5 (AB5), a bill based on the California Supreme Court’s decision in Dynamex v. Superior Court.* If it becomes law, AB5 will have wide-ranging repercussions for companies that rely on independent contractors in California.

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New Texas Rule Classifies Gig Economy Workers as Independent Contractors

Under a new administrative rule adopted by the Texas Workforce Commission (the TWC), effective as of April 29, 2019, many Texans working in the ever-growing “gig economy”—that sector of the labor market in which workers provide on-demand services, typically connecting with customers using digital platforms hosted by companies such as Uber and Lyft—are likely to be treated as independent contractors rather than employees. The new rule insulates companies that provide such digital platforms from paying unemployment taxes, since the individuals comprising their workforces will not be treated as employees under the Texas Unemployment Compensation Act.

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Arbitration Provisions: Applicable to Independent Contractors or Not?

A group of security workers for the National Football League urged Judge Andrew L. Carter, Jr. of the Southern District of New York to deny the NFL’s motion to arbitrate the group’s claims, arguing they never agreed to arbitrate statutory employment rights with the league. In Foran, et al. v. National Football League, et al., the group of security workers sued the NFL in November 2018 for unpaid overtime wages under the Fair Labor Standards Act (FLSA), among other claims, alleging the NFL misclassified them as independent contractors. The NFL moved to compel arbitration arguing the security workers’ claims are covered by the arbitration provision in their independent contractor agreements. The plaintiffs, in opposition, contend that unless the arbitration provision specifically includes a waiver of statutory claims under the FLSA, the NFL cannot compel arbitration of the claims. The motion remains pending before Judge Carter.

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