Is History Repeating Itself?

For the last few weeks, we’ve been blogging on the Federal Reserve’s initiative, Investing in America’s Workforce.  The initiative identifies the issues employers and employees are facing under the current economic conditions based on conversations each of the Fed regional branches has had with people in their areas.  The responsibility of the Fed is to make sure the United States has a strong economic system so for the Fed to address workplace issues when they normally don’t is sending a very strong message that it’s time to do things differently.  As the policy analyst from the Boston Fed pointed out, if something isn’t done to address these employer-employee issues, it will impact the entire U.S. economy.

On the website, Investing in America’s Workforce, there is a report with a summary of what was learned from each of the Fed’s regions.  What was really surprising wasn’t that each region had their own set of problems but each region was identical to the problems they were facing in regard to employers and employees.  Employers were having problems finding workers and workers, especially unskilled workers were having difficulty in finding that quality job we identified in one of the recent blogs.

There were many recommendations in the report including workers should be viewed as an investment instead of a cost and workforce needs and economic development needs need to be more closely aligned.  Yet the report neglected to identify what personnel from MIT’s Sloan School for Management and others saw as a significant issue, particularly for unskilled workers, and that was the inability of unions to have influence on worker issues.  They said both automation and globalization have certainly played a role in the decreased size of unions, and because unions don’t have the power they once did, it has caused stagnant wages and benefits and a loss of voice in the workplace.

Another very good and recent example of union struggles is at the Volkswagen plant in Chattanooga, Tennessee.  United Auto Workers has tried multiple times to organize the plant.  Outside interest groups, politicians and others launched massive attacks against the union which didn’t help the outcome of the vote for the union.  The next time UAW tried to organize was with a smaller group of the skilled trades people.  That group voted for the union but management refused to recognize the it unless the entire plant voted for the union.  That may happen as another attempt is going to be made.  Just this last week, UAW filed a petition with the National Labor Relations Board to vote again for plant organization.

The sad part about the Volkswagen plant is the very people who are supposed to be representing ordinary Americans were the ones fighting against better wages for people and creating a workplace voice for them.  Volkswagen managers who were familiar with work councils were willing to establish one at their plant so both labor and management could work together to tackle the issues they faced.  They, like the companies on the Kansas City Fed website, knew the importance of  investing in workers.

Any  company, union or non-union,  knows providing worker voice helps them be successful.  As the policy analyst from the Boston Fed said when workplaces invest in workers they will see greater productivity, decreased turnover and an overall greater return for their profits.  The owner of one of the companies we have worked with says the same thing.  He’s been able to expand his business and also provides benefits back to the employees through such things as greater financial incentives and increased benefits.

Before we end, let’s reflect on life in America and how it relates to the Fed’s initiative.  More jobs are available with the increase of technology.  Skilled and unskilled workers alike are able to get a job.  Cities are constantly moving and evolving which helps to expand that job creation. It’s a land of equal opportunity as people come to seek refuge from political or religious persecution and escape poverty.  Other countries love to invest in the United States because the economy is strong and robust.  There are new media outlets that are very popular with people and that’s created its own competition.  While all of this sounds like life is wonderful,  there are some major underlying issues.  Those jobs that are employing so many people are those that don’t  pay very much or people have to work long hours and many days to pay bills and feed families.  Work environments have become less safe.  Workplace accidents are occurring more often.  Breaks are almost non-existent in some workplaces.  Business owners are unwilling to raise wages and fight off unions.  Wealthy individuals appear to be increasing their wealth and political unrest is taking place because of those who have and those who have not.

That description of life in America sounds a lot like America today doesn’t it? It’s not.  That was life in America before the 20th century during the so called Gilded Age and by 1895, there was a severe panic in the financial markets.  The financial system of the United States was about to collapse.  Luckily one person was able to come in to prop it up for a few years before another one occurred.

The question is, do we want that to happen again?  We saw what happened during the Great Recession in 2008.  Is history repeating itself?  Unlike 1895, we now have the Federal Reserve to watch over the economy and the Fed is saying it’s time to change.  Are we willing to change our ways and work together to avoid a repeat of history?

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Is There Adequate Worker Representation Today?

For the last couple of weeks, we have been blogging about the Federal Reserve project, Investing in America’s Workforce.  It’s an ongoing initiative to help improve the workplace issues impacting both employers and employees.  Some of the issues the project has been addressing include wage inequality, skills gap, and scheduling.    Last week we looked at workforce investment from the employer perspective.  This week we look at it from the employee perspective.

A few other groups have also partnered with the Fed to provide some valuable information regarding workforce investment.  One of the groups the Fed has partnered with is the Massachusetts Institute of Technology, Sloan School of Management.  They conducted a study in conjunction with other groups and that study has provided some valuable information for the project.

The study was conducted in 2017 across the U. S. and surveyed a variety of different types of workers such as full-time, part-time, contracted workers and so on.  The survey asked questions about various workplace issues including worker voice.  When it came to having a voice on workforce investment topics such as compensation and benefits, training, job performance, promotions and job security, most of the workers said they had very little opportunity to give their opinions.  Those who conducted the study said automation and globalization contributed to the lack of voice because both of those factors had helped in the decline of unions which really is the cause for workers to lose a voice in the workplace.

The reduction of union representation has also created a significant decline in income since the 1970s.   Productivity may have been but it didn’t help workers.  Shareholders benefited more because corporations decided to provide for them instead.  This wasn’t just a U. S. problem.  It happened in many other countries, too. The only workers who saw a benefit were those in underdeveloped countries.  The loss of unions didn’t just affect workers in organized organizations but it hurt workers in non-organized facilities as well.  One study showed that non-union workers lost more than $3,000 over one year.  The ability to have a good job was lost.

Because unions have decreased in numbers, other non-union worker groups have formed to help workers have a voice with workplace issues.  The Kansas City Fed identified a couple of those organizations such as coworker.org or Direct Caregivers Coalition in New Mexico.  The MIT initiative also identified OUR Walmart or united4respect as a group formed to help Walmart workers.

A non-union group has stepped up to help to help a group of workers that excluded from union representation.  Domestic workers have not been allowed to join unions since labor laws were written in the 1930s because southern lawmakers feared what African-American domestic workers would do if they organized which is a very sad and unacceptable part of history.  Today, the group, The National Domestic Alliance, works with domestic workers to help them on their workplace issues.  These workers nannies, housekeepers, caregivers, cleaning people and others face many obstacles.  Without the ability to have a contract many of these workers have no job security.  Their employment is solely based on the whim of the employer. Thanks to National Domestic Alliance domestic workers now have opportunity to obtain benefits they were not able to get before and they have a Bill of Rights in several states to help with some issues such as wage theft, paid time off, and retaliation or harassment.  Although the National Domestic Alliance is listed as an allied group of AFL-CIO, they can’t organize them because of outdated labor laws. The AFL-CIO can only help raise awareness of their issues.

But there is a group who has been able to gain a voice through a union and they’re very happy about it.  This group is the people who fish for lobster for a living.  They were upset with the fishing industry and decided to talk to a union.  That union was International Association of Machinists, or IAM.  IAM had to figure out how they could best help them.  They didn’t want to turn them down but IAM had never represented a group like this so they had to learn about the fishing industry from the Maine lobster fishing group.  The fishing group is very happy they became IAM members because they now have representation to help with state legislation that can have an impact on their ability to maintain their jobs and make a living.

These are great examples of how workers have gained a voice to raise concerns and, in some cases, receive better benefits so they can improve their lives but, with the exception of IAM and the lobster fishing group, the groups who assist workers gain a voice are somewhat limited what they can do because, as the people at MIT pointed out, there is uncertainty on how those non-union groups can sustain themselves if they don’t have funding sources.

Unions, on the other hand, can do a lot more for work groups.  In one of the articles on the Boston Fed’s site, a union representative told how they organized a group of workers who were making minimum wage with no benefits but thanks to collective bargaining efforts the workers will make $20 per hour with full benefits in the near future.  That’s how unions can create a good job.  Not only can they provide a voice, they can negotiate wages and benefits.  Organized labor has the experience, the expertise and laws behind them to successfully help workers have a good job.

There’s no doubt unions need to look at new and different ways of doing things but they are such as IAM taking on a group that’s totally different than those they normally represent.  Unions are also looking at the automation and globalization issues and how can they better assist workers facing those issues.  Unions, too, are finding new ways to use technology to help them.  But it takes more than looking for new and different ways of doing things.  It also takes updated labor laws which the domestic workers would probably agree.

Most important for any employee is unions do make a difference for ALL workers not just with pay but with a voice.  When you watch labor and management groups work together on some of the most difficult issues, and that includes bargaining for wages and benefits, it becomes hard to understand those who look at unions as an enemy.  When you take away the titles and the labels that are created in the workplace, it comes down to most of us wanting the same things – job security, economic well being and a safe environment so we can home to our families when our work is done.

There’s a section in the Representation article on the Boston Fed site where an economist says unions have two faces.  One face is for worker voice which is good but the other face is viewed as the monopoly face where unions set higher wages than the competition allows and that’s bad he says.  Well, I have questions for him:  Does he want to make a livable wage?  What about executive pay that rose almost 20% in 2017 while average workers’ pay rose only .3%?  What about in 2017 the overall ratio of executive pay to worker pay was 312 to 1, and in 1965, before unions started to decrease in numbers, that same ratio was 20 to 1.  What about that?

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The Problem Isn’t Sooner or Later, It’s NOW!

Last week we blogged about the Fed’s series, Investing In America’s Workforce.  The issue of income inequality has reached a point where something has to be done.  The Federal Reserve has said if something isn’t done it will eventually hurt the overall economy.  Each of the 12 regions has focused on this issue, particularly about workforce investment, as it pertains to each of their locations and needs.   Some of them provide really good information such as the Boston and Kansas City regions that offer perspectives from the employer, employee, or both regarding the issue.  All, if not some of the regions continue to speak out about workforce needs because it is a critical time.  The Richmond Fed, for example, has an upcoming event, Renewing The Promise of the Middle Class, in May.

This week on the blog, we’re going to look at this issue from the employers who have made that investment but also address why some employers may not be able to do it and what needs to happen.

Before we learn about the employer’s viewpoint,  it’s important to establish a quality job that demonstrates what it means to invest in the workforce. The Fed calls that quality job a good job and the Boston Fed does an excellent job of defining it.  A policy analyst from the Boston Fed says their research about good jobs shows wage levels of an organization and the benefit structure that is available.  A good job also includes the environment of the workplace.  That includes scheduling which is something that affects a lot of low-wage workers so they know when they will work, or so they will have it ahead of time to make plans for financial and family needs.    Other items that can also be included are safe working conditions, no discrimination, and the ability to have a voice about  issues affecting them and the  workplace.  The analyst does say a good job can be different for different people but he focuses on the basics most people would say make a good job.

The Boston Fed policy analyst says he’s looked at research and it validates employers who invest in those types of good jobs receive a return on it, too, which is what we at CALMC have always said, everybody wins when there is a strong partnership between employers and employees.  The policy analyst explains a little more how employers actually gain by investing in good jobs.  Employers who provide better wages and benefits and create a great work environment will have increased sales and productivity plus lower turnover which only result in higher profits.

The Kansas City Fed highlighted two companies that actually did invest in those good jobs.  One company said they first look at the character of a potential new hire before determining if they have the skills for the job.  They are more concerned about a person being a good fit for their workplace and prefer to train people for the job instead of trying to find someone that already has the necessary skills.  The company provides good wages, benefits, and profit sharing that has provided more than $30,000 annually for each individual hourly employee.  They also provide educational assistance and assistance with financial planning because they understand  the financial concerns employees can have both in the present and future.  It’s important, the company rep said, people look at creating good jobs as an investment and not a cost.  It’s a basic philosophy that people need to have and they have found it works!

The other company was very similar to the first company in regards to wages and benefit structure.  This company makes use of apprenticeship programs and provides regular meetings for employees on the company’s financial status.  The president of the company said teams are empowered to make daily decisions and he advocates it does take some patience because developing teams is not something that can be done in the short-term but over time there are substantial payoffs.  He also says if an employer is interested in starting a worker voice or employee engagement environment it’s best to begin with an “open book” approach.  It helps employees understand the business of the organization.  They learn about profit, sales and quality as well as receiving the organization’s financial information.   The president agreed with the person from the other company and said it is a process that works and his company is doing quite well from it.

Many of the employers we, too, have worked with also see positive success when they invest in their  employees.  There can be a wide range of differences that can determine that success and it depends on the existing relationship and the environment both inside and outside the workplace.  Some have a first of just developing  regular communication while others are ready to problem solve on issues impacting the organization.   It’s important not to distinguish what may appear to be small success versus large success stories.  Sometimes those that appear to be small, such as learning to communicate with each other,  can be big wins for an organization.  It can help lead to working together on problems and that verifies the statement from the president in the Kansas City example when he said it’s not an overnight process.  It does take time and it has to be continuous.  It’s not a fad, it’s not a stop and start process.

We’ve blogged before about diesel repair shop on the south side of Columbus.  This is a non-union facility who had so many workplace accidents it was about to put them out of business.  The owner had tried just about everything when we started with him to develop a safety committee.  He decided it was time to make an investment like the examples from the Kansas City Fed and he is very happy he did.  That process began over 10 years ago but in that time the only accidents they have had are one this year and one last year and both were related to other things.  The business has expanded, profit sharing has been provided annually to employees and their benefit plan has also improved.  The owner says the process works because it’s the employees creating a safer workplace.

In a unionized environment, the employer saw tremendous success when they worked on scheduling issues with employees.  Customers were having difficulty getting their issues resolved because the workplace had a set schedule.  Employees wanted a more flexible schedule to help with family issues.  By working together they were able to extend customer service hours and resolve productivity problems as well as flex schedules so family issues could be resolved.  In addition, the employer saw an upcoming skills gap as the needs of the workplace were changing.  To help workers become more aware of the problem and to encourage them to update their skills, union leadership at the workplace organized an educational fair during work hours so employees could gather the information they would need on schools, financial assistance and other items that would help them develop their skills.  The union was also able to provide tuition assistance which also encouraged employees to upgrade their skills.  This helped the employer save on costs and maintain a consistent, knowledgeable workforce that would yield greater productivity, less turnover costs and be better able to service the needs of their customers in the present and the future.

But not all employers can invest in the workforce.  While these examples are great and many employers would like to do some of the same things from the examples, some of them face stiff competition all the time and that competition is driving down wages.  That immense pressure employers have from competition can determine their decision about workforce investment.  They have to face a real dilemma especially if they’re interested in doing the right thing.  Do they pay low-wages and no benefits or do they increase pay and benefits and risk shut down which could put people out of work altogether?

It also means we all have a decision to make.  Do we continue doing  the same thing we’ve always have done for the last 25 years or longer or do we start to make improvements?  For things to improve we may need more policy and regulation to help raise wages.  Are we willing for that to happen?  Or do we want to continue to see people struggle and use safety net programs as their benefit plans which eventually will cause the programs to suffer because they’re not designed to be benefit programs?  The choice is ours.  We must make a decision because it’s not sooner or later it will affect ALL of us, it’s affecting us NOW.

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We Might Be Turning A Corner

This last week I just happened to find an incredible series of articles about workforce investment on the website of one of the Federal Reserve branches, the Federal Reserve Bank of Boston.   The Boston website led me to the link of the Kansas City Fed where I found similar articles and webinars.  It was on the Kansas City website I learned this is something the Federal Reserve is doing to help with the wage inequality problem.   The Federal Reserve has started a project to look at the issue.  The website, investinwork.org,  tells about this project and the partners they have been working with to look at wage inequality.  They recognize the economy is doing good but there are still significant problems out there that both employers and workers face.

What I liked most about what they said is that we need to treat workforce development as an investment instead of a social issue.  This sounds very much like what we used to do with economic development.  I was very much dismayed this week when I learned most  community-funded  programs are focusing more on traditional community problems such as food, healthcare and shelter and not so much on helping people achieve better living standards through, or what the Fed calls, good jobs.  It’s not that I am against helping with food, shelter and healthcare because we need that safety net but it only perpetuates the problem.  We have a huge problem with low wage jobs and we need to focus on ways to have those good jobs.

On the website of the Boston Fed they explain even further as to why it’s necessary to look at this problem as an investment instead of a cost.  So many of the people with low-wage jobs are having to rely on public subsidies because their income is below federal poverty guidelines.  That can be terribly demoralizing especially if you’ve lost your good-paying job and now have a job that pays significantly less.  Plus, by continuously relying on subsidies, it  does nothing to help workers or the systems they end up relying on.    As the person in the Boston Fed article says we start to use our public safety net programs as the benefit plans for the low-paying jobs because not only do they not pay enough, they provide no benefits.  Can we continue to afford doing that?  That, the Fed says,  is something policymakers have to address.

Income inequality is a big concern of the Fed.  They say if we are to be economically stronger as a nation, we need to invest in our workforce and that’s why they have done a number of initiatives to address it.  One of the initiatives was to listen to the needs of both the employer and the worker.  Listening sessions were held across the country to identify some of the issues that were impacting both workers and employers.  These included skills gaps, educational issues, transportation and child care issues, technological changes and other things that were hurting both workers and employers.  Some local areas, too, just had a basic problem of low-quality jobs that decreased any upward financial opportunity for workers.

Recommendations to help with this frustrating problem also came out of the listening sessions, too.  Some had been tried before but some new ideas were offered to help improve them.  Also within the recommendations it was said that many workforce development programs had gone away or federal funding had been reduced by as much as 20%.  Many of those in the listening sessions felt those programs or funding should be reinstated or even increased.  There were a lot of other recommendations  that included bringing the goals of both economic development and workforce development closer together, more apprenticeships, more incumbent working training, making sure adequate trainer funding is available, and change employer behaviors to create good jobs.

One other thing that could help was on the Boston Fed website and they suggested more needs to be done to increase worker voice.  That could be updating labor laws or encouraging more union representation or more new worker groups.  The Boston Fed also provided a conversation they had with the author of a Massachusetts Institute of Technology report on worker voice.  Tom Kochan from MIT Sloan School of Management  is a great fan of worker voice and said it represents a democratic process but he also said if workers aren’t able to have a voice at the workplace it not only could hurt workers but our country as well.

Of course we at CALMC agree about worker voice.  It may be a democratic process but there’s also some other positives from it that can help both workers and employers.  If employers enable worker voice at their workplaces it can help to create those jobs the Fed refers to as good.  The Fed identified lots of reasons why worker voice is important and said it can help create a strong economy nationally and locally.

From our perspective, we’re seeing a little bit more movement in the right direction for worker voice.  This week we started a project that  allows workers to speak out about their workplace and that is a workplace climate assessment.  A workplace climate assessment provides workers an opportunity to express their opinions on various items associated with the work environment.  We ask workers not to put anything identifiable on their opinion sheets and we also tell them we will keep them completely confidential so we can hopefully get a more accurate picture of the workplace climate.

We also have heard from brand new groups who think training is important to get started on the right foot as they start to work together.   There are also other groups who feel they need a refresher because they have new members or new leadership or other things have happened which may caused them to slip backwards.  Both of these types of groups are willing to spend their time in training because they’re tired of the traditional adversarial behaviors of the last several years.  The other thing, too, and this is important thing, is  those wanting a refresher recognize it’s better to work together and they recognize when they’re slipping and need help.

It gives some hope that the Fed is pushing for workforce development and economic development approaches  to be aligned and they are encouraging employers to involve workers in every day decisions.  They, too, have highlighted the benefits that working together can provide employers.  In the coming weeks, we’ll be blogging on these articles from the different branches of the Federal Reserve.

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WHEN WORKERS ARE DEEMED EMPLOYEES ENTITLED TO OVERTIME

This week we have some great information for you courtesy of Columbus attorney, Colleen M. Arnett, from Livorno-Arnett Law Firm.  The question of whether a worker is an independent contractor or an actual employee has created some controversy.  Colleen helps to distinguish which is which in this week’s blog.  Thanks, Colleen!

WHEN WORKERS ARE DEEMED EMPLOYEES ENTITLED TO OVERTIME

By
Colleen M. Arnett
Livorno and Arnett Co., LPA
1335 Dublin Road, Suite 108-B
Columbus, Ohio 43215
Telephone: 614-224-7771
carnett@livornoandarnett.com

The question of whether a worker is an employee, or an independent contractor, seems to be arising more often. The distinction is very important. If the worker is an employee, he/she is covered by the FLSA (overtime laws) and other laws relating to benefits for employees. If the worker works more than 40 hours per week, the worker is entitled to overtime. If the worker is an independent contractor, those laws, including the overtime laws, do not apply. The worker does not get paid overtime, regardless of the number of hours worked.

In Acosta v. Off Duty Police Services, Inc., decided on February 12, 2019, the Sixth Circuit Court of Appeals dealt with the issue of whether safety forces working special duty through a private firm were employees or independent contractors. Safety forces at times may work special duty. The special duty may be provided through their public employer, but other times it may be arranged through a private entity. If they are working through a private company, the question is whether they are employees of that private company, or are they independent contractors.

The Court held that all of the workers for a company called Off Duty Police Services, Inc. (ODPS) were considered “employees” under the Fair Labor Standards Act (FLSA).

ODPS offers private security and traffic control services in Louisville, Kentucky. Most of ODPS’s workers are sworn officers, which means they work for some law-enforcement entity in addition to working for ODPS. Darrell Spurgeon, the founder and vice-president of ODPS, collects assignments for the workers by contracting with businesses in and around Louisville. He uses “schedulers” to keep track of these customer’s work requests, and also classifies the “schedulers” as independent contractors. Workers can choose to accept or decline a job, although witnesses testified that Spurgeon would discipline them if they declined work.

ODPS tells workers where to report, when to show up, and whom to speak with when they arrive. ODPS sometimes provides the workers with supplies and equipment, including stop and go signs and reflective jackets. However, they must pay for other equipment. Sworn police officers usually drive their police cruisers, but nonsworn workers must buy a “police style vehicle” with their own money.

Workers follow the customer’s instructions, comply with ODPS standards, and occasionally submit to the supervision of other ODPS workers. Both Spurgeon and Frank Medioeros, who helps manage the business, sometimes visit job sites to monitor workers’ compliance with ODPS policies. In some instances, workers have been disciplined for failing to comply with the ODPS dress and grooming policies.

Following a completed assignment, workers send Spurgeon their invoice with the number of hours spent on the job. ODPS ordinarily uses these invoices to pay workers an hourly wage, though sometimes they are paid per project. The practice of using invoices started only after the Department of Labor (DOL) began investigating ODPS’s recordkeeping practices.

Workers sign an “independent contractor agreement. ODPS considers all these workers to be independent contractors and has never paid them overtime wages.

The Court looked to the “economic reality” test to determine whether a worker, even when labeled as an “independent contractor” is as a matter of “economic reality” an “employee.” This test considers six factors:

1. The permanency of the relationship between the parties; 2. The degree of skill required for the rendering of services; 3. The workers’ investment in equipment of materials for the task; 4. The worker’s opportunity for profit or loss, depending upon his skill; 5. The degree of the alleged employer’s right to control the manner in which the work is performed; 6. Whether the service rendered is an integral part of the alleged employer’s business. None of these factors is determinative on its own. Each must be considered “with an eye on the ultimate question-[the worker’s] economic dependence on or independence from” the employer.

The Court addressed each of the six factors when analyzing this case.

  1. Integral Part of Business: ODPS built its business around the security and traffic control services provided by its workers, and therefore could not function without the services its workers provide.
  2. Degree of Skill Required: Although some of the employees are licensed police officers, the services provided by ODPS generally do not require the skill or training of a licensed police officer. This is demonstrated by the fact that some of ODPS’s workers have no background in law enforcement and its workers are only required to attend a four hour training session before they begin work.
  3. Investment of Specialized Equipment: While nonsworn workers were required to obtain police-style clothing and vehicles, which requires some investment, sworn workers already had the necessary items and required little to no capital investment. Additionally, the vehicles-which they simply parked and sat in for hours at a time-required no specialized mastery. Therefore, the limited investment in specialized equipment favors employee status for sworn and unsworn workers.
  4. Permanency of Relationship: Although workers accepted jobs intermittently, they often worked for ODPS for years, or decades at a time. For multiple nonsworn workers ODPS had been their sole employer for years at a time, and many sworn workers reported working consistently for ODPS throughout the year. In addition to length, the regularity of the workers’ relationship with ODPS favors employee status.
  5. Opportunity for Profit or Loss: While the decision to accept or reject work is a type of managerial action, the relevant question is whether workers could increase profit through managerial skill. ODPS workers had no such opportunity. Assignments required workers to be present for set periods of time, regardless of what skills they exercised. Therefore, workers could not increase profit through managerial skill because “[t]here was no way [workers] could finish a shift more efficiently or quickly in order to perform additional paid work.” Likewise, workers don’t appear to have been at risk of a loss based on their decision to work or not work.
  6. Right to Control: ODPS has a “policies and procedures” document stating that a worker’s noncompliance with the policies would “result in immediate termination.” ODPS also set the rate at which the workers were paid, would tell the workers where to go for the job, when to arrive, and whom they should contact when they got there. The workers were also periodically supervised by Spurgeon and Medieros and were required to comply with certain dress and grooming policies. However, according to the testimony, the level of control and supervision was exercised over nonsworn workers rather than sworn workers for the most part. This makes is hard for the Court to conclude whether or not all workers were “employees” as to this particular factor.

When balancing all six factors, the Court concluded that five of the six economic reality factors support finding an employment relationship between ODPS and all its workers. Taking these factors into consideration, the Court determined that ODPS workers, both sworn and nonsworn, were employees and entitled to overtime wages under the FLSA.

Acosta provides the framework for deciding whether individuals working for a private entity are employees or independent contractors of the private firm.

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Guest Blog: When Workers Are Deemed Employees Entitled To Overtime

This week, we feature a guest blog written by Colleen M. Arnett from the law firm Livorno and Arnett Co., LPA, a CALMC member. The issue of whether workers are employees or independent contractors is becoming increasingly common as some employers prefer the financial savings and flexibility offered by using contract employees. They are often used to circumvent labor contracts or benefits.

Ms. Arnett examines a facet of this issue, the eligibility of employees or contractors to receive overtime pay. We thank her for sharing her insights with us and allowing us to share it with you;

_____

The question of whether a worker is an employee, or an independent contractor, seems to be arising more often. The distinction is very important. If the worker is an employee, he/she is covered by the FLSA (overtime laws) and other laws relating to benefits for employees. If the worker works more than 40 hours per week, the worker is entitled to overtime. If the worker is an independent contractor, those laws, including the overtime laws, do not apply. The worker does not get paid overtime, regardless of the number of hours worked.

In Acosta v. Off Duty Police Services, Inc., decided on February 12, 2019, the Sixth Circuit Court of Appeals dealt with the issue of whether safety forces working special duty through a private firm were employees or independent contractors. Safety forces at times may work special duty. The special duty may be provided through their public employer, but other times it may be arranged through a private entity. If they are working through a private company, the question is whether they are employees of that private company, or are they independent contractors.

The Court held that all of the workers for a company called Off Duty Police Services, Inc. (ODPS) were considered “employees” under the Fair Labor Standards Act (FLSA).

ODPS offers private security and traffic control services in Louisville, Kentucky. Most of ODPS’s workers are sworn officers, which means they work for some law-enforcement entity in addition to working for ODPS. Darrell Spurgeon, the founder and vice-president of ODPS, collects assignments for the workers by contracting with businesses in and around Louisville. He uses “schedulers” to keep track of these customer’s work requests, and also classifies the “schedulers” as independent contractors. Workers can choose to accept or decline a job, although witnesses testified that Spurgeon would discipline them if they declined work.

ODPS tells workers where to report, when to show up, and whom to speak with when they arrive. ODPS sometimes provides the workers with supplies and equipment, including stop and go signs and reflective jackets. However, they must pay for other equipment. Sworn police officers usually drive their police cruisers, but nonsworn workers must buy a “police style vehicle” with their own money.

Workers follow the customer’s instructions, comply with ODPS standards, and occasionally submit to the supervision of other ODPS workers. Both Spurgeon and Frank Medioeros, who helps manage the business, sometimes visit job sites to monitor workers’ compliance with ODPS policies. In some instances, workers have been disciplined for failing to comply with the ODPS dress and grooming policies.

Following a completed assignment, workers send Spurgeon their invoice with the number of hours spent on the job. ODPS ordinarily uses these invoices to pay workers an hourly wage, though sometimes they are paid per project. The practice of using invoices started only after the Department of Labor (DOL) began investigating ODPS’s recordkeeping practices.

Workers sign an “independent contractor agreement. ODPS considers all these workers to be independent contractors and has never paid them overtime wages.

The Court looked to the “economic reality” test to determine whether a worker, even when labeled as an “independent contractor” is as a matter of “economic reality” an “employee.” This test considers six factors: 1. The permanency of the relationship between the parties; 2. The degree of skill required for the rendering of services; 3. The workers’ investment in equipment of materials for the task; 4. The worker’s opportunity for profit or loss, depending upon his skill; 5. The degree of the alleged employer’s right to control the manner in which the work is performed; 6. Whether the service rendered is an integral part of the alleged employer’s business. None of these factors is determinative on its own. Each must be considered “with an eye on the ultimate question-[the worker’s] economic dependence on or independence from” the employer.

The Court addressed each of the six factors when analyzing this case.

  1. Integral Part of Business: ODPS built its business around the security and traffic control services provided by its workers, and therefore could not function without the services its workers provide.
  2. Degree of Skill Required: Although some of the employees are licensed police officers, the services provided by ODPS generally do not require the skill or training of a licensed police officer. This is demonstrated by the fact that some of ODPS’s workers have no background in law enforcement and its workers are only required to attend a four hour training session before they begin work.
  3. Investment of Specialized Equipment: While nonsworn workers were required to obtain police-style clothing and vehicles, which requires some investment, sworn workers already had the necessary items and required little to no capital investment. Additionally, the vehicles-which they simply parked and sat in for hours at a time-required no specialized mastery. Therefore, the limited investment in specialized equipment favors employee status for sworn and unsworn workers.
  4. Permanency of Relationship: Although workers accepted jobs intermittently, they often worked for ODPS for years, or decades at a time. For multiple nonsworn workers ODPS had been their sole employer for years at a time, and many sworn workers reported working consistently for ODPS throughout the year. In addition to length, the regularity of the workers’ relationship with ODPS favors employee status.
  5. Opportunity for Profit or Loss: While the decision to accept or reject work is a type of managerial action, the relevant question is whether workers could increase profit through managerial skill. ODPS workers had no such opportunity. Assignments required workers to be present for set periods of time, regardless of what skills they exercised. Therefore, workers could not increase profit through managerial skill because “[t]here was no way [workers] could finish a shift more efficiently or quickly in order to perform additional paid work.” Likewise, workers don’t appear to have been at risk of a loss based on their decision to work or not work.
  6. Right to Control: ODPS has a “policies and procedures” document stating that a worker’s noncompliance with the policies would “result in immediate termination.” ODPS also set the rate at which the workers were paid, would tell the workers where to go for the job, when to arrive, and whom they should contact when they got there. The workers were also periodically supervised by Spurgeon and Medieros and were required to comply with certain dress and grooming policies. However, according to the testimony, the level of control and supervision was exercised over nonsworn workers rather than sworn workers for the most part. This makes is hard for the Court to conclude whether or not all workers were “employees” as to this particular factor.

When balancing all six factors, the Court concluded that five of the six economic reality factors support finding an employment relationship between ODPS and all its workers. Taking these factors into consideration, the Court determined that ODPS workers, both sworn and nonsworn, were employees and entitled to overtime wages under the FLSA.

Acosta provides the framework for deciding whether individuals working for a private entity are employees or independent contractors of the private firm.

____

If you have questions or thoughts for Ms. Arnett, please post them here and we will forward them to her. We want to thank Colleen for providing this information and her insights.

We also invite any of you who have information related to their work with labor and management to share their ideas with our readers. Just email them to us in Word or text format.

 

 

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A New Beginning!

Last week we attended a spectacular event.  It was the third graduation of  the 12-week Building Futures Pre-Apprenticeship Program.  This program is designed to give low-income citizens of Columbus and Franklin County a pathway to a skilled-trades apprenticeship career that offers good wages and benefits, ongoing training, and job security.  Franklin County, IMPACT Community Action and Columbus/Central Ohio Building Trades Council have all partnered to create this program that provides great jobs as well as pay back to citizens and the community.

The skilled trade jobs are very much in demand.  Following natural disasters, such as the recent hurricanes in Texas and Puerto Rico, it has been difficult for reconstruction because there have not been enough skilled trade workers.  Part of that is because of the stigma that has been around awhile about skilled trade jobs.  There was more of a push for local schools to prepare students  for four-year college educated jobs instead of  trades-related jobs.  A lack of funding, too, caused local schools to drop “shop” classes that helped steer students to jobs such as carpentry and other trades.  In addition, tech jobs have  been very enticing to students which could be done through the electricians skilled trade apprenticeship too.

Young people don’t always realize the benefits of skilled trade jobs.  Many of them think the work is not  “glamorous” or the work is hard without perks or an ability to earn a good paycheck.  There are a couple of things that are helping to counter that, at least locally.   Ohio legislation was recently passed that will allow skilled trade unions to reach out to high school students to help change that perception.  In previous blogs, we’ve written about a new initiative we’re  working on for sixth through eighth grade students to help them be more aware of these jobs.

The one thing the kids are correct about is the work can be hard.  The apprenticeship programs are rigorous.  Absenteeism must be kept to a minimum.  Apprentices also are required to work during the day and go to school in the evening but they’re getting paid and paid well!  Education is included and it can lead to a four-year degree that may also paid through the program.

Those graduates from the Building Futures program will probably see their annual income rise to a median of over $50,000.  That’s a heck of a lot better than the minimum wage paying job or the low-paying job that kept them in a low income bracket.

How does that also help communities?  Communities benefit in lots of ways.  Some through the tax dollars that will be coming in or the purchasing power of  the workers who are no longer scrimping to make ends meet.  With a higher income, new cars can be bought which helps auto workers.  New homes can be purchased or built.  Even retail stores can see an uptick in the purchasing power these workers will now have.  It’s all that trickle down effect.

There also is a social benefit for these graduates.  Those that have needed to work more than one job to make ends meet can now spend more time with their families rather than balancing multiple work schedules.  They won’t have the fear or shame if they can’t pay their bills . They’ll now have a much better secure economic future.    It also makes them feel better about themselves as they are truly able to accomplish a big task.  Some of the graduates walked around with their little babies or children who were in the audience.  It was quite emotional to watch these proud parents who made it through this big first step.

What also was exciting to hear two graduates already obtained jobs before graduation and two graduates from previous classes had been named employees of the month at their workplaces.

If we don’t support workers or work to increase wages in this country it will end up hurting all of us.  But we can turn that around.  As Harvard Business Review reports raising wages can benefit workplaces, too.  It can increase productivity and decrease turnover.  The Economic Policy Institute also says higher wages help to improve business performance which can help  the economy overall and continue to create jobs.  Programs like Building Futures can help to turn things around especially in the local area.  Like  other areas,  Columbus and Franklin County has a severe disparity between those earning higher incomes and the number of people in poverty.  Helping to raise wages or encouraging those with lower paying jobs into higher skilled, higher paying jobs is one way to change that.  Building Futures has been a win-win for everybody.

It also shows what can happen when labor and management work together.  Construction companies  have a skilled labor force which helps them to build their businesses.  They are able to build solid and strong reputations as well as being competitive even with the higher wages.  Both  construction management and trade unions have high standards which help to provide quality work that help make that quality product.

The Building Futures program is a good example of how unions help others who are less fortunate and work to create strong communities.  It’s what they’re all about.  Those that have painted unions as fist pounding thugs must not have had anything to do with a union or know anything about them.  We’ve blogged before  about the George Meany banquet and the people that are recognized for their help to others and the community.    We’ve also blogged about unions helping communities like Flint with their water crisis or the unions that provided free services immediately following the 9/11 attack or those that helped Puerto Rico after the hurricane.  Unions aren’t just about bargaining to get decent wages and benefits or to improve working conditions.  They help, to paraphrase a current slogan, make America great, not again, but now and in the future.

The benefits of the Building Futures program and a unionized skilled trades apprenticeship job are endless.  If you know someone in the central Ohio area that could benefit from the Building Futures program, have them contact IMPACT Community Action or Central Ohio Building Trades.  If you’re interested in starting something similar for your community, contact either organization.

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2019 – Trends Impacting Labor, Management, and the Workplace in 2019 – Part Two

A few weeks ago, we presented a list of labor, management, and workplace trends we see for 2019. This week we want to conclude our list and examining some other developments for the upcoming year.

 

The pressure for “Right to Work” will expand through attacks from the courts. While right-to-work advocates predict wins in state legislatures, several states have refused or repealed these laws. Cases from Kentucky and other states will challenge right to work.

In 2019, we will also learn more about the impact of the Janus decision on public-sector unions, while other states are considering new legislative and ballot initiatives regarding this practice.

 

The decline in Union membership will continue, but at a slower rate. The Bureau of Labor Statistics reported union membership dropped by 0.2 percent from 2017. While this was still a decline, it was less than in preceding years. 6.4% of private-sector workers were union members compared with 33.9% of public employees.

The report also showed union workers had median weekly earnings of $1,051 in 2018 while median weekly earnings for nonmembers were $860. This is an obvious reason many employers avoid unionization.

We expect the decline in union membership will continue to slow, although the impact of the Janus decision is still uncertain.

 

Companies will be forced to focus on retraining current workers in order to meet their needs.  The Wall Street Journal reported 3.4 million Americans quit their jobs in the first half of 2018, which is twice the amount of those who were laid off from jobs, This costs employers millions. Difficulties in finding workers has forced businesses to place increased importance on worker retention.

For example, the restaurant industry has long paid wages at or near the minimum wage, justifying this by citing the number of young people they employ. However, Brian Todd, president of The Food Institute, reports last year, only 19 percent of teens aged 17 to 19 were working, compared to the 80 percent that were part of the workforce in 1968.

As a result of increasing difficulties in recruiting new workers in this and other fields, employers have begun initiatives that have included college tuition assistance, better parental leave benefits, and paid sick days for part-time employees.

Many employers have increased training opportunities for incumbent workers, recognizing well-trained workers are happier and more likely to stay in their jobs. We expect this trend to increase in 2019.

There will be increased opportunities for real employee engagement. We also predicted this last year, and have begun to see more engagement occurring. We have written several times about the benefits of effective employee engagement for both employers and employees, and it appears others increasingly recognize these opportunities. The G2 Learning Hub predicts businesses will increase their employee engagement spending by 45% in 2019, and we agree with this prediction.

Research has repeatedly verified companies benefit from increasing employee engagement opportunities. Employees who have these opportunities feel more valued resulting in increases in dedication and enthusiasm for their jobs and employers grow. As a result, employee retention, performance, and productivity increase.

The G2 study found 57% of HR employees strongly agree that employee engagement initiatives will help their company retain productive staff. The majority of employees surveyed overall believe that employee engagement is important for a thriving company culture. When employees are engaged, everyone wins.

Employee engagement strategies will result in increased flexibility in the workplace. HR Strategy reports, “Flexibility in the workplace is no longer a request by moms and/or Gen Xers.  Both genders and every generation are looking for workplace flexibility for their own reasons. To stay competitive, organizations will need to figure out how to accommodate these requests for flexibility such as flexible starting and ending times and options to work from home as needed—perhaps even adjusting the normal work day to a 5 – 6 hour day.” Effective employee engagement opportunities will provide workers a voice in determining the changes that can be made cost-effectively that will increase employee satisfaction and retention.

Labor-management relations will improve as both sides realize the need to work together.  We believe the pendulum is swinging back from management domination toward labor-management cooperation. Employee engagement strategies can only work if both management and unions are equal partners in organized workplaces. In some cases, employers appear to realizing the benefits they derive from collaboration with their unions. CALMC is seeing some new initiatives from organizations that had been resistant to joint labor-management efforts, and hope this trend continues.

Zero-tolerance drug policies will come under increasing scrutiny. Make no mistake, we support efforts to keep drugs and impaired employees out of the workplace. We also recognize the impact societal changes will have on employer drug policies.

For example, many states have legalized the use of marijuana for medical reasons or recreational use. If a substance cam be used legally, what impact will this have on drug policies? As a result, some employers have stopped testing for marijuana in their pre-employment screening and ongoing testing. Others are looking for answers in this quickly changing area.

Some employers have relaxed drug testing in order to be able to hire more employees who would previously been screened out. “Anecdotally, there are some employers who have relaxed their standards. It’s unclear how widespread it is,” said Rick Farrant, a spokesman for Northeast Indiana Works, a nonprofit workforce development organization.

Another aspect of this issue is the impact it will have on new employee hiring. Since marijuana use has barred many individuals from being hired in some companies, will the new policies permit hiring these individuals, or will employers still want to keep these restrictions?

One last trend – CALMC will continue to provide news and information of interest to labor and management during 2019. We hope you will continue to join us each week.

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Do You Know Why Community Wide Labor-Management Committees Are Important?

We’ve blogged before about the important role community-wide labor-management committees, such as CALMC, can have on local workplace issues and economic development. At a recent meeting, board members once again discussed some issues that had an impact on  labor, management and the community.  It continues to demonstrate the need for community labor-management committees and councils and it’s not just us at CALMC saying that.

Some think tanks are advocating for stronger worker voice and they believe creating environments where partnerships can be created will help with issues such as income inequality and other problems both labor and management face.   The community-wide labor-management committees are those partnerships that can help everyone not just labor and management.

The Center for American Progress says labor laws need to be updated which will not only help build a stronger system for workers but will also help to build a stronger economic system overall and that helps everybody.  They believe collaborative efforts can provide workers with extra strength and businesses can become more competitive.

Establishing collaborative efforts, they say,  can help with industry-wide standards that will benefit workers and businesses.  Standards can be done for  wages, benefits, job skills and experience. Training standards can also be accomplished. All of these can help make a more productive workforce.

At our board meetings, board members have discussed most of those standards identified by The Center for American Progress.  At one meeting, a couple of board members talked about their benefits plan to another board member who went back to initiate changes in his organization’s benefit structure. One management board member has talked about the need for industry standards because if not he can’t compete with those businesses that have lower standards.  Both he and his union counterparts work together to develop better industry standards that help not only them but consumers as well.  Management and labor have also discussed issues involving wage theft and workers’ compensation that require legislative efforts which pertains to the labor law updates the think tank said were needed.

Sometimes board members talk about issues that initiate action.  That action is  like the example above on the benefits changing at one organization.  Sometimes it can be opportunity for someone to ask for ideas on how to address particular workplace issues or it might be starting the thought process on how to approach legislators about new, upcoming or current legislation.  And sometimes it can simply be networking.

It’s the networking that sparked the discussion at our recent board meeting that helped both labor and management members.  Before the meeting, a couple of board members worked together to get services to workers who had just been laid off.  During the meeting, they talked about it which prompted other members to name workplaces that were hiring. Some of the workplaces were going to need lots of workers and paid good wages and benefits.  One management member said he would be interested in talking to those being laid off because his organization was having a difficult time filling jobs as many of their workers were retiring.

That wasn’t all that happened at this meeting. One member wanted a sample of some contractual language to help make workplace improvements.  Another member was able to provide the sample.

And finally, there also was discussion about a new role CALMC is going to have in the community to help prepare junior high age children for possible careers in the skilled trades fields. Skilled trades jobs are going to be in demand for some time and it’s difficult now to fill a lot of those jobs.  For some children, this will be an opportunity to escape poverty with a job that pays well, has good benefits and continuous training.  It also can help them to understand union jobs may not be a bad choice.  Both management and labor members are eagerly volunteering to help with the project.  It’s something we’re all very excited about and we’ll be blogging more about this in the future.

All of these examples cited by both CALMC and The Center for American Progress are why  community wide labor-management committees are important.  It’s what we do.  We reach out to each other for help and to help.  We create a voice for workers and strengthen our workplaces and communities.

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In Memory of a Leader We Lost

I’m going to interrupt our series about trends in labor-management to talk about a loss we suffered since my last blog post.

Mark Tackett was a member of several labor-management groups with which we have worked over the years. He worked for over 24 years in the field of human resources and labor relations for the state. He was a consummate professional, and an advocate of cooperative labor-management relationships and demonstrated this belief.

Unfortunately, Mark passed away February 6 at age 45. He leaves behind his wife and 4 children. His passing will leave a void for them and others. At the time of his death he was serving as the Deputy Director of the Ohio Office of Collective Bargaining, a role he referred to as his dream job. He was responsible for negotiations between the State and its bargaining units, a process he completed shortly before his death, as well as the process of enforcing and interpreting those contracts on a day-to-day basis.

What struck me about Mark was that he maintained a sense of fairness, looking for positive solutions whenever possible. The nature of his job made him the person who had to say “No” in many instances, but it always seemed his reasoning was solid. This was shown by his ability to maintain positive relationships and often friendships with the union staff and leaders with whom he worked. One union leader mentioned the ability to disagree with him over workplace issues then have a drink or dinner after the session. Many involved in the labor-management work cannot do this in a process that can become adversarial, but his desire to have a cooperative relationship between the parties benefitted everyone.

Mark served as a management representative on some of the labor-management committees we trained and facilitated, sometimes in difficult settings. His involvement benefitted those groups.

Mark was a management member of the CALMC Board of Trustees. I was very pleased when he joined our board, and his efforts on our behalf did not disappoint. His ideas, participation, and sense of humor will be missed. His skills will be difficult to replace for the Office of Collective Bargaining.

Our best wishes go out to his wife, Shelly, and the children. She was the management co-chair on some of the most effective committees with which we have worked, so knowing her makes the loss even more difficult.

Thanks, Mark, for all of your work on behalf of labor and management. You will be greatly missed.

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