Clever unionizing tactics such as changing independent contractors to employees and presenting employers with package deals are part of the new labor landscape, says attorney David Fortney.
Fortney is a co-founder of law firm Fortney & Scott, LLC in Washington, DC, and is editor of Federal Employment Law Insider. He made his remarks about new NLRB issues at the Eastern Region meeting of the Employers Counsel Network, held recently in Old Saybrook CT.
The Employers Counsel Network is comprised of the attorneys from all 50 states and Canada, who write the 50 state employment law letters published by BLR/M. Lee Smith.
Tactic # One—The Package Deal
One tactic is for the union to find a situation in which there is a shortage of trained workers. The union sets up a training operation, trains workers, and then offers employers a package—you need trained workers and we have them. By the way, you have to take the union along when you hire them.
Tactic # Two—The Independent Contractor Switch
Another tactic is for the union to find a situation in which there is a large number of independent contractors. The union works to get the contractors declared misclassified. They become employees, and then the union can organize them.
The union may try do get the reclassification done directly, or, in some cases, for example in Maryland, they may try to get a law passed that tightens the rules for independent contractor status.
The states have a particular interest in misclassified independent contractors, because they see the possibility of additional revenue if the workers can be reclassified as employees. Yes, in theory, independent contractors pay the taxes, but they are notoriously hard to track and to tax.
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The Big NLRB issues
Fortney offers several new NLRB issues for employers to consider:
New regulation. Look out for the new regulation that will allow “lightening strike” elections. (The new regulation was essentially written by the AFL-CIO, Fortney says.) By the time you find out what’s happening, it will be too late to do anything about it.
Social media. The NLRB General Counsel’s report on social media cases is mandatory reading for HR managers, Fortney says.
Posting requirement. By January 31, virtually all employers must have posted the new NLRB poster that some call “the roadmap for union organizers.”
Of course, Fortney notes, the Board may be out of business as of the beginning of the year due to lack of a quorum.
Over the Fence
Another development that is making times harder for employers is that federal agencies are cooperating with each other and with state agencies. If OSHA finds a potential misclassification, for example, it will throw it over the fence to Wage and Hour Division, and when they’re done, over the fence it goes to IRS and also down to the state level.
This should be enough to get employers to pay attention, Fortney says.
Another development is that if employees bring up a problem and the employer ignores it, and DOL subsequently decides that it was a violation, the agency will try to call the employer’s actions “willful.”
Similarly, when the FLSA “Right to Know” regulations come out, (that is, the expected regulations that will require employers to justify employee/independent contractor decisions and exempt. non-exempt decisions) if what you put down on the form is wrong, (which is inevitable, Fortney says) that mistake will be considered “willful” because the employer consciously considered and decided.
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Chamber of Commerce Might Help
Fortney offers one possible bright spot. The Chamber of Commerce does have a litigation team, he says, and if your case is interesting, and if you are a small or medium-sized employer, (and if you’re a member) they might help you out.
Voluntary Classification Settlement Program
The VCSP is available for taxpayers who want to voluntarily change the prospective classification of their workers. The program applies to taxpayers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to prospectively treat the workers as employees.
A taxpayer participating in the VCSP will agree to prospectively treat the class or classes of workers as employees for future tax periods. In exchange, the taxpayer:
- Will pay 10 percent of the employment tax liability that may have been due on compensation paid to the workers for the most recent tax year
- Will not be liable for any interest and penalties on the amount; and
- Will not be subject to an employment tax audit with respect to the worker classification of the workers being reclassified under the VCSP for prior years.
In tomorrow’s Advisor, preparing your supervisors for social media slights, and an introduction to a unique checklist-based audit system.
If the DOL declares a misclassification “willful,” would that serve as conclusive evidence of a violation of the new California law that imposes a $25,000 penalty for willful misclassification?
would this new unionization affect city state and federal employees. if so please explain?