Presented by Denis Kenny of Scherer Smith and Kenny LLP at the 2017 PG Customer Summit in Nashville, TN

1. 2017: IC Compliance – One Year Later:
New Legislation, New Case Law & A
New Administration
Denis Kenny
Scherer Smith & Kenny LLP

2. #PGCustomerSummit
Agenda
• Trump Administration
• Update: Misclassification Mythbusters
publication
• State and Local Trends
• Update on Uber and Lyft Class Action
• Recent IC Misclassification Litigation

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Trump Administration
Uncertain Future for IC Misclassification Audits
• After 3 months without a Labor Secretary, on April 28, in a 60-to-38
vote, Senate confirmed Alexander Acosta (Republican) as next
Secretary of Labor.
• Resume:
• Dean, Florida International University (2009–Present)
• Three Presidential appointments: (1) NLRB (‘02-’03), (2)
Assistant Attorney General, Civil Rights Division (‘03-’05), and
(3) U.S. Attorney for Southern District of Florida (’05-’09)
Alexander Acosta

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Trump Administration
• More on Secretary Acosta
• Graduated from Harvard Law School
• Clerked for Supreme Court Justice Samuel Alito when Justice
Alito was a Federal Appellate Judge
• Served as a fellow for the Ethics and Public Policy Center, a
conservative think tank
• Is a member of the Federalist Society
• Is considered a Conservative Republican and is pro-free
market, pro-free enterprise and pro-employer
• Leans left on immigration and diversity issues

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Trump Administration
• Weil’s Administrator Interpretation No. 2015-1
• Weil Memo limited company’s ability to rely on
independent contractor – open question under Trump
Administration
• No new pending legislation or enforcement
initiatives, but budget cuts could impact audits
and enforcement.

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Trump Administration
As of January 2017, DOL has misclassification MOU’s with 37
states:

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Update: Misclassification Mythbusters publication
In August 2016, US DOL issued online publication to educate the public
Misclassifcation Mythbusters
Myth Fact
1 If I am an independent contractor under one law, I
am an independent contractor under other laws.
Even if you are a legitimate independent contractor under
one law, you may still be an employee under other laws.
2 If I am classified as an independent contractor, I am
not eligible for unemployment insurance (UI).
You may still qualify for UI even if you are classified as an
independent contractor.
3 I received a 1099 tax form from my employer,
and this makes me an independent contractor.
Receiving a 1099 does not make you an independent
contractor.
4 It does not make a difference if I am classified
as an independent contractor or an employee.
If you are misclassified as an independent contractor,
you may be denied benefits and protections to which
employees are legally entitled. Misclassification also has
negative effects on businesses.
5 I am an independent contractor because I
signed an independent contractor agreement.
Signing an independent contractor agreement does not
make you an independent contractor.

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Myths cont.
Myth Fact
6 I am not on the payroll, so I am not an employee. Even if you are not on the payroll, you may still be an
employee.
7 I have my own employer identification number (EIN) or
paperwork stating that I am performing services as a
Limited Liability Corporation (LLC) or other business
entity. This means that I am an independent contractor.
An EIN or paperwork stating that you are performing
services as an LLC or other business entity does not make
you an independent contractor.
8 My employer wants me to be an independent
contractor, and that means I am not an employee.
Your employer cannot misclassify you for any reason.
9 I telework or work off-site, so I am an independent
contractor.
You are not an independent contractor simply because you
work off-site or from home.
10 contractor for years; this means I will continue to be an
independent contractor.
Being a bona fide independent contractor in the past does
not mean you will always be an independent contractor.
11 I operate a franchise. This means that I am an
independent business.
Operating a franchise does not make you an independent
contractor.
12 I am an independent contractor because it is established
practice in my industry to classify workers like me as
independent contractors.
“Common industry practice” is not an excuse to misclassify
under the FLSA.

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Updates on Uber & Lyft Class Actions
• Uber Class Actions: on May 4th, Uber filed appeal involving
4 high-profile class actions: O’Connor, Yucesoy, Mohammad,
and Del Rio.
• Recap:
• Headliners still continuing: O’Connor v. Uber (California drivers) and
Yuceof v. Uber (Massachusetts drivers)
• Status: Court rejected proposed settlement of $84M (including $1M for
PAGA claims), $16M contingent on successful IPO, and nonmonetary
relief.

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Updates on Uber & Lyft Class Actions
• Mohamed v. Uber (N.D. Cal)
• Claims: (1) violations of Fair Credit Reporting Act and
various state statutes and (2) PAGA violations
• On December 21, 2016, Ninth Circuit held:
a) FCRA and state claims must be individually arbitrated
b) PAGA claims must be litigated in court

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Updates on Uber & Lyft Class Actions
• Lyft Class Action – Cotter v. Lyft (N.D. Cal.)
• March 16, 2017, Court granted final approval of
settlement:
• Settlement: $27M for California Lyft Drivers between May
2012, and July 2016
• Attorney’s Fees: about $3.6M from Settlement
• Drivers remain classified as “independent contractors”
• BUT: appeals have been filed!!!

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State & Local Trends
• State and local “Opportunity to Work” laws:
• California’s AB 5 (pending): employers with 10 or more
employees must offer additional hours of work to existing
nonexempt employees before hiring additional
employees/subcontractors
• San Jose City Ordinance No. 2016.1: exempts employers with 35
or less
• Washington State HB 2109 (in committee): portable Benefits and
the gig economy
• New York City’s approach: Freelance Isn’t Free
Act (No. 1017-2015) – effective May 15, 2017

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Recent IC Misclassification Litigations
• Postmates.com
• Proposed Settlement with its New York, California, and
Massachusetts couriers to settle IC misclassification
• Terms:
• $8.75M with $100K for California PAGA claims (75% going to state) and attorneys’
fees up to 25% of settlement funds
• Nonmonetary terms: termination for material breaches, appeal rights, company
will arrange for insurance for bicycle couriers at courier’s expense, among other
terms.
• FedEx Employment Practices Litigation
• Filed in 2005! Settled: On April 28 and May 1, 2017, U.S. District
Judge Miller for the Northern District of Indiana approved
settlement of $227M for drivers in 19 states.

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Questions?
Denis Sullivan Kenny
415.433.1099
denis@sfcounsel.com
www.sfcounsel.com