Tackling Sex Discrimination in Big Tech: Pinterest and Beyond

The tech industry has a sex discrimination problem. It’s no secret. Like much of the white-collar workforce, men dominate the tech sector. Women hold less than 20% of the technical jobs at some of the largest tech giants. As of 2019, only about 11% of women in tech held supervisory roles. Tech-employed women are paid less than their male counterparts, the subject of (for example) a certified class action against Oracle.

The dearth of women in tech has negative implications for consumers and society at large. Many tech products are designed with men in mind, such as smartphones too large for the average woman’s hands, voice recognition software that understands men better than women, and fitness trackers that don’t count steps while performing household chores or pushing a stroller. Software and artificial intelligence have repeatedly been shown to exhibit race and sex bias.

The male-dominated tech industry has proven resistant to addressing the field’s bias and its wider implications. For instance, Google terminated (it would say “accepted the resignation of”) Timnit Gebru, an Ethiopian-born engineer, after she declined to retract an academic research paper examining the bias risks of Google’s artificial intelligence concerning languages (implicating, for example, predictive text).

One large tech company that came under fire for sex bias, Pinterest (a platform with a predominantly female user base), settled a sex discrimination lawsuit filed by former chief operating officer Francoise Brougher for $22.5 million. Ms. Brougher’s settlement, achieved by Rudy Exelrod Zieff & Lowe, represents a major victory for marginalized women in the tech world. Ms. Brougher’s lawsuit came on the heels of the June resignations of Pinterest employees Ifeoma Ozoma and Aerica Shimizu Banks and their public airing exposing of the explicitly racist and sexist comments they endured at the company, their lower pay, and the retaliatory treatment they experienced when they spoke out. Brougher’s lawsuit similarly alleged that her pay structure was less favorable than that of her male executive counterparts, she was given feedback riddled with gender bias, and she was left out of executive meetings that were necessary for her to perform her job, until she was fired in April 2020.

The publicity following these courageous women’s actions seems to be having an impact on the company. After more than 200 employees virtually walked out in the female former employees’ support, and shareholders sued Pinterest for damaging the company’s reputation and stock value with its toxic work culture, Pinterest added two Black female members to its board of directors, hired a new head of inclusion and diversity, and made other changes to address its culture of bias. Hopefully, Pinterest will listen to these voices rather than cutting them out as they did with Brougher, or as Google did with Ms. Gebru. The $22.5 million settlement for just one high-profile discrimination victim should give Pinterest and other tech companies ample incentive to work to prevent workplace discrimination against countless women going forward. If these companies fail to do so, the settlement should encourage other marginalized women in tech to come forward.

If you are a woman who has experienced sex discrimination in the tech industry, or if you have experienced other discrimination or harassment in the workplace, contact Bryan Schwartz Law. 

WHAT’S NEXT FOR GIG WORKERS’ RIGHTS AFTER PROP. 22?

 

While the COVID-19 pandemic sweeps across this nation, employers are taking advantage of the pandemic-induced recession to, once again, eliminate jobs and transition workers into the gig-economy. A recent New York Times article highlights the uncertainty facing today's workers. The labor market has only recovered 12 million of the 22 million jobs lost this past spring, leaving 10 million formerly employed workers, often in the service-industry, reeling. Many of these jobs may not return once the pandemic is over and the economy improves, as happened after the Great Recession of 2008. While the New York Times notes that these workers often need retraining or additional education to compete for jobs, gig-economy companies continue to hire these vulnerable workers without the employment protections to which workers are – or should be - entitled. In California, the gig-economy companies pulled off a sleight of hand, through the most disproportionately-funded ballot measure in the state’s history, Proposition 22 ("Prop. 22"), for the purpose of potentially continuing to exempt their workers from some of the robust employee protections that California’s legislature, Governor, Supreme Court and lower courts had previously ensured. While the ballot measure succeeded, gig-economy workers should still have claims under the law.

 The roots of today's gig-economy employment crisis began in 2008. At that time, 9 million workers lost their jobs. In its aftermath, workers often found less secure employment and/or relied on alternative work like being an independent contractor in the gig economy. Unsurprisingly, a plethora of gig-economy companies, like DoorDash, Uber, Lyft, Instacart, and Postmates, have risen to be market leaders on the backs of these marginalized workers that they have treated as independent contractors exempt from legal protections. In response to the rise of the gig economy and the precarious position of gig-economy workers, all three branches of California government - the courts, legislature, and executive branch - re-affirmed that many gig-economy workers are employees entitled to the legal protections of the California Labor Code. Such protections include minimum wage (Cal. Lab. Code § 1194, among others), overtime (Cal. Lab. Code § 510), reimbursement for business expenses (Cal. Lab. Code § 2802), and paid sick leave (Cal. Lab. Code §246). Here at Bryan Schwartz Law, we have written extensively about California's efforts to protect gig-economy workers here, here, here, here, and here. In short, the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court held that workers are presumptively employees subject to the straightforward ABC test, which considers (among other things) whether the workers are providing the core services of the business (like those who drive for Uber and Lyft). The California legislature agreed with the Court and codified the ABC test outlined in Dynamex with A.B. 5, which the Governor signed, and went into effect on January 1, 2020. The Attorney General of California has sued Uber and Lyft (People v. Uber and Lyft (Sup. Ct. San Francisco), Case No. CGC-20-584402) to require them to stop misclassifying their workers under A.B. 5, and won a preliminary injunction on August 10, 2020 requiring Defendants to reclassify their drivers as employees during the pendency of the lawsuit.

In response, several gig-economy companies worked to place Prop. 22 on the ballot. Prop. 22 exempts from A.B. 5 any app-based drivers that (a) provide delivery services on-demand through an online application or platform or (b) use a personal vehicle to provide prearranged transportation services for compensation through an online application or platform. In other words, your ride-share drivers and food delivery persons are exempted from A.B. 5's codification of the ABC test. In order to sell Prop. 22 to voters through its advertising blitz, these gig-economy companies promised at least 120% of the minimum wage (which has been estimated to work out to $5.64 per hour after deducting for wear-and-tear) and 30 cents per mile when engaged - not waiting for a fare or order. While Prop. 22's passage is a setback for workers' rights, all may not be lost. Prop 22. may not be retroactive. Prop. 22 appears to be forward-looking and silent as to any worker misclassification claims that arose prior to Prop. 22's passage. When the Court issued its August 10th preliminary injunction, Judge Schulman appeared to suggest that "it would not moot out . . . past violations." (Order for Preliminary Injunction, People v. Uber and Lyft (Aug. 10, 2020), p.8). Furthermore, Prop. 22's provisions regarding healthcare subsidies and mileage reimbursement focus on future dates for payment or calculation. The remaining provisions do not explicitly discuss retroactive application except for Article 9. Article 9 provides that the Legislature may only amend Prop. 22 by a super-super majority - 7/8ths of the Legislature - including any amendments passed since October 29, 2019 (the date the ballot was filed). While it appears amending Prop. 22 will be challenging, this suggests that workers may continue to pursue claims for minimum wage, overtime, and reimbursement for business expenses that accrued prior to Prop. 22's passage. Furthermore, the 9th Circuit in Vazquez v. Jan-Pro Franchising International, Inc. made clear that Dynamex and the ABC test apply retroactively. Thus, workers may have significant misclassification claims that have accrued prior Prop. 22's passage.

Moreover, while Prop. 22 may have exempted gig-economy workers from the protections conferred upon them by A.B. 5 and the ABC test, gig-economy workers may be employees under other relevant tests. The Dynamex court extensively discussed 3 alternative tests (from Martinez v. Combs) for employment under California’s Wage Orders: 1) to exercise control over wages, hours, or working conditions; 2) to suffer or permit to work; and 3) to engage, thereby creating a common law employment relationship. You can learn more about these 3 alternative tests here and the Borello test for common law employment relationships here. The Dynamex court only applied the ABC Test with respect to the second alterative test: to suffer or permit to work. Dynamex (2018) 4 Cal.5th 903, 965. In enacting A.B. 5, the Legislature declared its intent to codify the Dynamex decision that "interpreted one of the three alternative definitions of 'employ,' the 'suffer or permit' definition . . . [and that] [n]othing in this act . . . affect[s] the application of alternative definitions . . . not addressed by the holding of Dynamex. Assembly Bill 5, Section 1(d) and (f), 2019-2020, Reg. Sess. The statute itself takes a more precise alternative in requiring that if a court rules the ABC test does not apply to a particular context, then the common law relationship test from Borello should be used. Labor Code § 2750(a)(3). Thus, A.B. 5's codification of Dynamex and the ABC test does not apply to the first and third alternative tests. Therefore, Prop. 22's exemption from A.B. 5 is limited to the second alternative test. With Prop. 22's passage and A.B. 5's statement that the Borello common law relationship test applies in the event a court exempts a particular situation from the ABC test, it is unclear which test shall be used to demonstrate that gig-economy workers are employees because Prop. 22, not a court, preempted A.B. 5. Workers may be employees under the first and/or third (Borello) tests and therefore entitled to the full protection of the California Labor Code.

Despite Prop. 22's passage, the fight for workers' rights continues. Gig-economy workers may still have misclassification claims moving forward. Workers and their advocates must recognize that while the fight may become more difficult after the misguided passage of Prop. 22, there are still avenues for pursuing these claims.   

I was there the day democracy survived.

 

I was there the day democracy survived, one week and 10,000 refresh-browser-checking-election-returns ago. I patrolled the hundred-foot zone. I held the line. I chased down people who cast provisional ballots. I reported wait times every hour. I bore witness. Every vote counted.

We learned this 20 years ago, when 537 people out of 282 million Americans decided our fate. We need poll observers for democracy to work. Someone has to be there to protect the vote. That someone is me, and thousands like me, standing vigil, to prevent people from being prevented from being counted.

 So, all day I counted at Reed High School, in Sparks, Nevada – the busiest polling place in Washoe County, the swing county in a swing state.

 6:30 a.m. The air was on the cusp of freezing, and I was already pacing purposefully as dozens in Covid masks were lining up, socially distanced. 

I walked up and down the line to keep warm, yes, to work off nerves, too, but mostly to see everything, let nothing escape. I took note of where the 100-foot line was, the zone within which electioneering was prohibited.

 8:06 a.m. Over 150 people are lined up to vote. We tracked a particular guy from the end of the line to the polling place. 1 hour wait...

 8:11 a.m. Police car parked toward the end of the line. No idea why. 8:13 a.m. Apparently he works patrolling the school.  8:14 a.m. The two police officers came in and checked in with Kim the polling site manager, introduced themselves and gave her a card with their names and a number to call if she needed anything. 8:28 a.m. Police car staying parked out front. No one seems intimidated, but it is worth noting.  

 8:29 a.m. Line is moving, about 30 people every 15 min and 150+ in line.

 9:42 a.m. What’s the deal with the Fox News cameraman taking footage of voters voting? He literally has his camera pointing at the visible screen of a voter! That’s not ok, speak to the poll manager.

10:09 a.m. 45-minute wait time now at Reed High.

10:20 a.m. Still 110 people in line. We got the registrar of voters to send help to open extra voting stations. Hope they help.

11:22 a.m. Let the polling place manager know about extended DMV hours, for people needing identification.

12:35 p.m. The shortest line of the day – “only” 60-70 people in line to vote now.

12:51 p.m. 40-minute wait to vote – still long, but not for lack of effort by the polling location staff, who seem to be working without breaks, everyone in masks or face shields. Their efforts are heroic.

12:52 a.m. They are getting another table with a registration machine and a trained person to do intake. There are numerous voting machines available at any one time, but the bottleneck is with processing people so they can go vote.

1:30 p.m. There have been several people decked out in Trump gear who argue with the poll manager when asked to take off their walking billboards within the 100-foot zone. One lady in a Trump hat, shirt, keychain, and mask is shouting at the poll manager, claiming that she took a poll observer course and knows her constitutional rights. (Paul, one of the election workers, comments – “Hmm, I wonder which poll observer course that was…”). Ultimately, the voter complies. She knew she was breaking the rule and decided to test it – she had an extra mask and extra shirt at the ready.

The rule is applied consistently. A young man from “Vote Tripling” – part of Rock the Vote – says he should be allowed within the 100-foot zone because he is “non-partisan.” He backs up across the 100-foot line when the poll manager says, “Do me a favor, just move beyond the zone.” He stands just beyond the marker and thanks people for voting, asking them to commit to finding two others to vote today.

2:38 p.m. The additional intake person has arrived.

2:49 p.m. The wait is like 40 minutes, which is frustrating because there are a ton of empty machines and a long line waiting outside. They could use 3 more people to do intake.

3:13 p.m. There was an observer who said he was there “for the Trump administration,” who made one of the Democratic volunteers uncomfortable by being “pretty agro.”

3:15 p.m. There are Trump SUVs honking through the parking lot – but not within the 100-foot zone.

3:19 p.m. News cameras are pointing at people while they are waiting in line – they can do that as long as they’re not filming over someone’s shoulder while they vote.

3:48 p.m. Was 41 min. from the end of the line to voting, and the line is getting much longer.

3:54 p.m. We are back up to about 110-120 people on the line.

3:56 p.m. The poll boss is currently telling people to go to Sky Ranch, a middle school polling location less than 10 minutes away with no waiting. No one budges.

4:29 p.m. Yes, the good news is voters are staying calm and sticking around, so far. Kim (the boss) is really, really good.

4:38 p.m. It is still an hour-long experience to vote. Despite the discomfort, people are enduring it to exercise their franchise.

5:48 p.m. The line is growing – it is still about an hour wait.

6:21 p.m. A solid hour – people will be waiting long after the poll closes at 7 p.m.

A poll worker went to voters with canes or walkers or wheelchairs to give them special fast passes to the front of the line. As it was growing dark outside, one man over 80 with a walker said proudly he preferred to wait, just like everyone else. He was chatting with his "voting buddy," a young woman he had met in line who said she would make sure he made it in and out of the poll ok.

In the line, there are groups of co-workers from construction sites and EMTs, first-time voters taking selfies, white working-class folks, Mexican families, African-American couples, geeks, hipsters, and rockers – there are, in short, every type of American. In the end, Washoe County voted 50.9% Biden to 46.2% Trump –the nation voted 50.7% Biden to 47.6% Trump. What I saw at Reed High School mirrors what happened in America last Tuesday.

There were four other Democratic volunteers through the day.  There were too many volunteers to count, from “Election Protection – 866-Our-Vote” (sponsored by Common Cause and other non-profits) – they were giving out snacks. One woman from the group was there for over 13 hours, like my wife and me. Like me, she scarcely sat down. I told her I had never seen so many people just waiting to vote and she confessed she had never seen people vote at all- she must have been 19 or 20 years old. There were workers and a food truck from “Pizza to the Polls,” keeping the long line well-fed. Late in the day, more volunteers arrived to help, from Unite Here, a union organization. And, of course, there were always several Republican poll observers. 

One woman who was our "rover" stopping by from the Democratic party to check in through the day, eventually decided to stay with us at around 5 p.m., and she was the last one to leave, after every vote had been counted, hours after the poll had closed – 1,503 votes in all at Reed High School. I knew her maybe 10 years ago as opposing counsel on a case- she is a career employment defense lawyer. It was good to be on the same side now.

This voter protection army should have been there in 2000 when thousands of blacks without criminal records were turned away from the polls in Florida as ex-felons, when hundreds of Palm Beach Jewish grandparents were confused by the ballot into punching their votes for a known anti-Semite who otherwise got about one quarter of one percent of the vote in Florida (Buchanan – remember him?). We should have known that where the candidate's brother was the state 's governor, we needed eyes on the polls. We could have made sure every vote counted, if we were there, long before it got to the partisan Supreme Court, with members appointed by the president-elect's father sealing his victory. So that is what we were doing one week ago, on November 3, 2020. 

Not another travesty. Whoever wins will have to have the most votes, when every vote is counted. They can't steal it if we are there watching, documenting, reporting. Their scowls won't intimidate us. We are an army dedicated to saving democracy. One person, one vote, from the President to the pauper, everyone.

Well, almost everyone. William could not vote. A 19 year-old black man, a U.S. Army reservist, he wanted to cast his first presidential ballot. He was visiting a friend in Reno the last 12 days. His driver's license was issued in Las Vegas. The on-line voting site is only for active duty military and the disabled. He is not disabled – he is fit, on stand-by to fight for America. But he is not a "full-time" soldier. An hour of calls with hotlines, reading the Veterans Administration website and checking Black's Law dictionary - an active reservist probably cannot say he's “active duty.” Sorry, William. Thank you for your service but you cannot vote and be counted today.

“William – get down to Vegas now!” I say, only half joking. “Such a shame to miss this important election. Next time please make it easier on yourself and request an absentee or electronic ballot in advance! …. Speaking of military – think of all the brave soldiers – like you – who have fought to give us this birthright of democracy – where people like us have the power to make changes.” William says, “Your encouragement through pathos has truly inspired me. Bryan, thank you so much for being an amazing human.”

Today, as I celebrate democracy, that we managed to prevail in the nation’s 25^th closest presidential election (2016 was the 13^th closest), by making sure all the votes were counted, I end with a bittersweet note. Tomorrow, on Veterans Day, I will be thinking of William and others who have fought to give us the right to choose our leaders – and will be thinking of those whose votes have not been counted, and of those ominous forces who would seek to rule over us, even without the votes.

I know, first hand, that nobody stole anything in this election. But, Trump is trying, now. Because of what we did, bearing witness, and what Americans did, having faith in democracy, standing for millions of hours, making innumerable special trips to the post office or ballot drop-offs, all across the country, thousands of people counting ballots through the night from Atlanta to Philadelphia, Phoenix to Detroit, Madison to Sparks, Trump will fail, again, just as he failed the last four years to kill what makes us Americans. “We the People,” as President-elect Joe Biden reminded us, will always prevail.

Trump Policy to Stop Covid-19 Relief Found Unlawful

A federal court in California recently struck down the Trump Administration policy that prevented currently and formerly incarcerated individuals from receiving their $1,200 stimulus payments under the COVID-19 lockdown relief bill. The preliminary injunction requires the U.S. Treasury, the IRS, and the United States of America to stop withholding CARES Act stimulus funds from individuals based solely on their incarcerated status. The case is Scholl v. Mnuchin, 20-cv-05309-PJH. 

Because of the decision, thousands of currently and formerly incarcerated folks will now be entitled to the $1,200 check that non-incarcerated Americans have already received. For more information about who is eligible and how to file, please visit  the IRS’s “Economic Impact Payment Information Center.”  

Congress passed the CARES Act to help stimulate the economy during the ongoing COVID-19 pandemic. The Act allocates, among other things, $1,200 to “eligible individuals,” as well as $500 for each qualifying child. An “eligible individual” is defined as “any individual” other than: (1) someone who isn’t an American citizen, (2) any individual who is claimed as a dependent on someone else’s tax return, and (3) an estate or trust. 26 U.S.C. § 6428(d). 

Though the Act did not explicitly or impliedly exclude incarcerated people, the Trump Administration refused to issue checks to anyone currently in prison or jail. In fact, after the IRS sent 84,861 payments to incarcerated individuals, the government required them to return the payments. Plaintiffs Colin Scholl and Lisa Strawn filed a class action on behalf of themselves and other currently and formerly incarcerated persons, asserting that excluding them from the COVID-19 relief was unlawful. 

The court’s injunction rejected the Trump administration’s practice of withholding CARES Act payments from individuals on the basis of their history of incarceration, at least until trial. The court also certified the class, so that all those Americans denied relief in this manner could proceed together. 

The court recognized the current economic reality faced by many incarcerated individuals across the U.S., and subsequently, how refusal of the CARES Act payment has caused and would continue to cause “irreparable harm.” Most individuals who enter prison were economically disadvantaged beforehand. Inmates often must purchase basic necessities to survive while incarcerated, as the court explained:

[P]risons do not provide all basic necessities required by incarcerated persons, including food and hygiene. With respect to food, incarcerated people supplement their food with items from the commissary, especially since … some institutions have reduced the number of calories or meals provided to inmates…. [S]ome penal institutions require inmates to pay for their own soap and personal hygiene items. 

Scholl v. Mnuchin, at 31.

The economic strain on family and loved ones of inmates has only intensified since the pandemic struck. Id at 31. As of October 15th, there are 1,560 cases per 10,000 prisoners in California, which is 623% higher than California overall. In the first three months of the pandemic, more than 10,000 federal prisoners applied for compassionate release, though only 156 were approved. Many states have suspended visitation--including legal visits--all together. The pandemic, as well as the opinion itself, raises concerns about whether America’s prisons are humane, if inmates do not have necessities for survival.

The Court found that the Trump administration’s interpretation of the CARES Act would likely be considered “arbitrary and capricious.” Scholl v. Mnuchin, at 28. “Defendants have not directed the court to any other evidence indicating that the Treasury Department or IRS gave any reason for its decision, much less an adequate one.”  Id. at 34.

Among other things, Trump’s administration claimed that the plaintiffs had shown no injury, but the court found that the denial of CARES ACT payments now, when they are most needed, was a sufficient injury. Id. at 11-12.

For more information about the case, please visit Lieff Cabraser Heimann & Bernstein’s blog post, “Federal Judge Certifies Class, Orders Trump Administration to Stop Denying Pandemic Relief Funds to Incarcerated Persons.” For information about the impact of COVID-19 on incarcerated people, please visit Equal Justice Initiative’s article, “COVID-19’s Impact on People in Prison.” 

Vote No on Proposition 22 to Protect Workers

By now, most California voters have received their vote-by-mail ballots.  One of the most critical issues on the ballot this year is Proposition 22. Prop 22 would reverse the California Supreme Court, legislature, and Governor in order to provide a windfall to ultra-rich corporations like Uber and Lyft. Prop 22 seeks to classify app-based drivers as “independent contractors,” rather than “employees,” denying drivers worker protections that are required by law to be afforded to all employees.

Uber, Lyft, DoorDash, Instacart, and Postmates have spent over $180 million trying to boost their profits at the expense of hard-working drivers, in the Prop 22 campaign. They have tried to mislead voters so that they do not have to pay their workers as the law requires. Voters must look past the barrage of pro-Prop 22 advertising and vote NO to protect workers.   

Here is what is really going on: Prop 22 would exempt app-based rideshare and delivery companies from their responsibilities under A.B. 5 and the Supreme Court of California’s decision in Dynamex, which currently classify drivers as employees. Unlike true independent contractors (like plumbers and electricians who come to fix something in your home or office), employees are guaranteed protections like minimum wage, overtime pay, reimbursement for their expenses, health insurance, and the right to organize. Via Prop 22, the ride-hailing and delivery companies are attempting to avoid providing their drivers with such protections.

 

Bryan Schwartz Law has written about A.B. 5 and Dynamex many times, for example: here, here, here, here, and here. To recap, A.B. 5 was signed into law in September of 2019, and codified the “ABC Test” laid out in Dynamex. Under the ABC Test, a worker is properly classified as an independent contractor if:

 

A)   The person is free from the control and direction of the hiring entity in connection with the performance of the work;

B)   The person performs work that is outside the usual course of the hiring entity’s business; and

C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

 

For Uber, Lyft, and others to avoid paying wages, they are trying to say that driving customers is outside the usual course of what Uber and Lyft do and that the drivers are not central to the companies’ core business. They are just “technology platforms” – not companies that provide rides. Really? We’ve taken some Uber and Lyft rides – sure seems like they’re providing rides, and that the drivers are the way they do it!

 

They are lying, to say that Uber and Lyft drivers are like those contract plumbers and electricians with their own independent businesses. Given the amount of control ride-hailing and delivery companies have over their workers and the drivers’ centrality to their business model, app-based drivers have to be considered employees under the ABC Test.

 

Courts have gotten tired of the companies’ lies and their refusal to follow the law, which is why they came up with Prop 22. For example, in an August 10 order, Judge Ethan Schulman of the San Francisco Superior Court reprimanded Uber and Lyft, writing, "To state the obvious, drivers are central, not tangential, to Uber and Lyft's entire ride-hailing business."

 

According to Ballotpedia, Prop 22 is the most expensive ballot measure ever to appear in California. These companies make billions on the rides the drivers provide, so for them, spending over $180 million to buy your vote with countless television, radio, and digital ads makes sense. Lyft have even sent “Yes on 22” push notifications to customers’ phones and forced them to press “confirm” on a pro-Proposition 22 message, before being able to order a ride.

 

The ads pretend that the issues are “flexibility” and “independence.” The ads say that if Californians vote No on Prop 22, drivers will lose the flexibility to determine their hours. This is a phony argument. Nothing in the current law that Uber, Lyft, and the other companies are breaking prohibits employers from offering employees flexible schedules or part-time work. Many California employers offer that kind of work currently. One Lyft driver, Jerome Gage, put it perfectly when he wrote, “Uber and Lyft claim I want to be ‘independent.’ What I really want is to be safe and paid a living wage. That would give me independence.”

 

What Uber, Lyft and the others are not telling you is that a recent survey of San Francisco ride-hailing and delivery drivers shows that more than 70% of Uber and Lyft drivers work more than 30 hours a week, including up to “50% who work more than 40 hours and 30% who work more than 50 hours a week.” Many drivers are working full time for Uber and Lyft, without the companies respecting any of the protections that apply to employees.  The majority of the drivers say that driving for these companies is their primary or sole source of income. These workers deserve to be compensated like employees of these companies, because that is what they are.

 

Prop 22 purports that drivers will get guaranteed pay equal to 120% of the minimum wage. That rate would be about $15.60 per hour. An analysis by the UC Berkeley Labor Center shows that because of loopholes in Prop 22, the actual hourly pay rate would be closer to $5.64 an hour. You have to factor in unpaid waiting time, unreimbursed waiting time expenses, underpayment for driving expenses, and unpaid payroll taxes and employee benefits. With drivers classified as independent contractors under Prop 22, they would be responsible for costs like vehicle maintenance, gas, car insurance, taxes, and their own health insurance.  These costs eat up any “guaranteed pay” by Uber and Lyft.

 

Uber, Lyft, DoorDash, and Instacart support Proposition 22 because it protects their massive profits, not because they care about drivers. Prop 22 allows these companies not only to avoid fairly compensating their workers, but also to avoid paying payroll taxes and contributing to Social Security, Medicare, and Unemployment Insurance. Every business in California is required to provide baseline protections to their employees. Uber, Lyft, DoorDash, and Instacart should have to follow the law, like other employers.

 

If you believe you have been misclassified as an independent contractor or denied basic employee protections, please contact Bryan Schwartz Law.

Court Strikes Down Trump Administration Rule to Benefit Wage Violators

Recent Trump Administration efforts to chip away at employee protections under federal law faced a setback earlier this month. A federal court in New York struck down a large portion of a January 2020 Department of Labor (“DOL”) rule that changed how to determine whether multiple entities are an individual’s employer under the “joint employer doctrine.” The case is New York v. Scalia.

Non-exempt employees are entitled to a federal minimum wage and overtime under the federal Fair Labor Standards Act (“FLSA”). But sometimes it can be tricky to determine who is supposed to pay these wages when more than one entity directly benefits from the employee’s work—for example, when an employee works at a franchise or is placed by a staffing agency. Prior to the new rule, which took effect in March 2020, the Department of Labor’s guidance instructed that, in circumstances like these, multiple entities could be considered employers of the same individual if that individual economically depended on the multiple entities. The Trump Administration rule scrapped this analysis in favor of an employer-friendly four-factor test based solely on the level of control each possible joint employer exerts over the worker. The factors in the rejected test were whether the possible joint employer:

(i)                Hires or fires the employee;

(ii)              Supervises and controls the employee's work schedule or conditions of employment to a substantial degree;

(iii)           Determines the employee's rate and method of payment; or

(iv)            Maintains the employee's employment records.

This change strongly benefited employers who maintain franchise relationship or rely heavily on contractors or workers staffed by an agency. This corporate windfall would come at the expense of workers, who are far less likely to be able to enforce their FLSA rights under the new standard, if, for example, multiple entities govern their employment so that no one employer meets the new test.

Seventeen states and the District of Columbia sued to block the rule, culminating in the decision striking down much of the rule earlier this month. The Court’s ruling rested on two main reasons. First, the rule improperly relied solely on the FLSA’s definition of “employer,” out of context. The FLSA’s definition of “employer” defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee,” requiring that a court deciding which entities are liable consider the definition of the term, “employee.” The definition of “employee,” in turn, necessitates reference to the definition of “employ.” Accordingly, the Court determined that the DOL should not have taken the word “employer” out-of-context by ignoring the other statutory definitions in crafting its employer-friendly rule. In its analysis, the Court emphasized the background and purpose of the FLSA and noted that the law’s definitions of “employer,” “employ,” and “employee” are intentionally broad in order to provide robust protections for workers.

Second, the Court held that the new rule was too restrictive. The FLSA had intentionally refused to place its focus entirely on control in order to give the law a broader scope. Although control could be sufficient to establish joint employer liability, the Trump Administration rule made control necessary to establish an employer-employee relationship, which was a step too far.

The Court also found procedural deficiencies with the new rule. For one, the rule deviated from past DOL interpretations in 1997, 2014, and 2016 without adequate explanation. In another notable portion of the opinion, the Court observed that the DOL initially did not consider the cost of the new rule to employees when considering the rule—the DOL had merely stated that the rule would not affect wages “assuming that all employers always fulfill their legal obligations,” a position which the Court aptly described as “silly.” Although the DOL ultimately acknowledged that the impact of the new rule on wages before passing the rule, the DOL completely disregarded this impact and ignored an estimate by the Economic Policy Institute that the new rule would cost employees $1,000,000,000 (a billion dollars) per year. This decision laid bare the business community’s bald-faced power grab in passing the new rule, catering to business interests by short-changing their workers.

The ruling was not a complete victory for employees. The court struck down the new rule only as it applies to “vertical” joint employer liability, but not “horizontal” joint employer liability. A “vertical” joint employer relationship involves an employee who has a relationship with both an employer and another business contracting the employee’s services (such as a contractor, subcontractor, staffing agency, or franchise), whereas a “horizontal” relationship involves an employee who employed by two sufficiently related entities (such as a joint venture). The Court left the DOL’s changes to “horizontal” joint employment intact.

If you have been denied minimum wage or overtime due, contact Bryan Schwartz Law.

Judge Orders Uber and Lyft to Treat Drivers as Employees

On August 10, a California judge issued a remarkable order blocking Uber and Lyft from continuing to misclassify their drivers as independent contractors rather than employees. This preliminary injunction from Judge  Ethan P. Schulman of San Francisco Superior Court  comes as part of the litigation brought by the State of California against Uber and Lyft because of the ride-hailing companies’ flagrant disregard for their duties under Assembly Bill 5 (A.B. 5). 

A.B. 5 codified the Supreme Court of California’s decision in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903, and was signed into law in September of 2019. Under A.B. 5 and Dynamex, drivers for Uber and Lyft should be considered employees, not independent contractors. Despite this, Uber and Lyft have continued to misclassify their drivers as independent contractors. Hopefully, the August 10 injunction forces the companies to finally change course.

 

The court highlighted that when companies like Uber and Lyft misclassify their employees as independent contractors, they deprive them of access to basic workers’ rights and protections including minimum wage, overtime pay, meal and rest breaks, workers’ compensation, unemployment insurance, health insurance, paid sick leave, and paid family leave. These worker protections are extremely important to working families and the economy as a whole, especially in the face of the challenges posed by a pandemic. 

 

The court explains that in order to grant a preliminary injunction of Uber and Lyft’s violations of A.B. 5, the government must demonstrate that it had a reasonable probability of prevailing, with a presumption that the nonissuance of an injunction would be harmful to the public. This is different than in an ordinary case with private parties, where the party seeking the injunction faces a higher burden. This is because by enacting a statute, the legislature has already determined that a violation goes against the public interest.

 

In this case, the court opined that the government demonstrated an “overwhelming likelihood” of prevailing and that “substantial public harm” will result without an injunction. According to the court, Uber and Lyft’s violations of A.B. 5 pose, “real harms to real working people.” Under A.B. 5’s “ABC” test, a person is properly classified as an independent contractor if: (A) The person is free from the control and direction of the hiring entity in connection with the performance of the work; (B) The person performs work that is outside the usual course of the hiring entity’s business; and (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

 

The judge in this decision primarily examined element B, which requires that the work performed be “outside the usual course of the hiring entity’s business.” Uber argued, as it has before, that it is a technology company, rather than a company that provides car rides, and that its “actual employees” work in engineering, development, marketing, and operations. Driving, the company insists, is not part of Uber’s usual course of business. The court rejected this argument, instead insisting that Uber could not survive without its drivers. Because drivers are central to Uber and Lyft's business models, they should be classified as employees. 

 

Since the August 10 order, Uber and Lyft have threatened to halt operations in California, and Judge Schulman has denied the companies’ request for an extension of the deadline to appeal. Uber and Lyft have been attempting to delay their compliance with A.B. 5 because the companies are funding a ballot measure, Proposition 22, which would re-classify drivers as independent contractors. In issuing the injunction, however, the judge explained that he could not excuse the companies from compliance with A.B. 5 simply because they are waiting to see if Proposition 22 passes in November.

 

Bryan Schwartz Law has written about A.B. 5 and Dynamex here, here, here, and here. If you believe you have been misclassified as an independent contractor, please contact Bryan Schwartz Law.