In 2017, the National Labor Relations Board (NLRB) made a ruling without much fanfare. The case of Handy Technologies has an eerie similarity to the Mortgage Field Services Industry. And as opposed to the diametrically opposed ruling with Uber, the Handy ruling may be the quintessential ruling to allow Labor a seat at the bargaining table. Handy Technologies was an upstart in the Gig Economy. Formed in 2012 by three college students, Handy would partner up people whom needed cleaning done with people willing to provide it, and Handy took its money off the top as a middleman — think financial institutions whom need distressed assets serviced go to a middleman like Handy whom provides them with the people to perform the services. Here is how Slate put it while Handy was still embroiled in litigation and before the NLRB issued their ruling,
As for the cleaners, many have enjoyed the business the Handy platform has brought them. But others have felt exploited by the company’s policies. They face harsh penalties for missed jobs. They must maintain exceptionally high ratings to earn the most competitive wages and to keep getting gigs. And as contractors, not employees, they enjoy few if any traditional workplace protections.
Obviously, Handy settled the litigation and eventually the NLRB ruled that those providing services to Handy were employees. Now, with respect to the two firms whom actually did battle, they are noteworthy. The Littler law firm represented Handy Technologies with respect to the NLRB and the Lichten Liss-Riordon law firm represented the Plaintiffs. With respect to the Littler law firm, I have had occasion to speak with they about their position upon the State of California’s recent AB-5 law. California Assembly Bill 5 was legislation enacted to codify the California Supreme Court’s ruling in Dynamex. Dynamex, in essence, converted millions of Californians to employees and did such virtually overnight. The crux of the ruling and legislation deals with employee misclassification. The Litchten Liss-Reardon law firm is most famously known due to the successful litigation pursued by Shannon Liss-Riordon with regards to Uber, et al. WBUR News put it this way,
Liss-Riordan is best known for leading a class-action suit by workers against Uber that began in 2013. The ride-hailing giant settled with its workers for $20 million earlier this year. The attorney has also won cases against Starbucks, Harvard University, FedEx and American Airlines.
While it is impossible to accurately calculate state claims, with respect to Uber, there are over 60,000+ arbitration claims; with respect to Lyft there are over 3,500 arbitration claims, and tens of thousands of others are pending within the Gig Economy framework. In fact, in New Jersey where the ABC Test originated, the State recently hit Uber with a $650 Million fine for employee misclassification and failure to pay taxes. And as Vanity Fair put it last November,
[…] Uber doubled down on its resistance. The company said that it didn’t believe it would have to comply with the California law—supposedly because Uber drivers are not a core part of the company’s business—and is still negotiating for an exemption, as well as plotting a proposed ballot measure to put the issue to California voters. But New Jersey’s newest action means Uber now has a bicoastal issue on its hands that carries a multi-million dollar price tag. Uber may have deep pockets and an unwavering belief that its classification is correct—but as the company and the gig economy at large faces a brewing national resistance, will that be enough?
Employee misclassification will become more of the norm than the exception when it comes to Industry litigation in 2020. And as the chargebacks increase and as firms such as Five Brothers continue to promulgate memos curtailing the timelines — the US Department of Housing and Urban Development denied Five Brothers’ claims in an email — the reality is what few Field Service Technicians whom remain in the preservation sector may actually decide they have nothing to lose when it comes to organizing. HUD states there are SEVEN calendar days allowed, not the five days stated by Five Brothers. Here is what a Senior HUD Official had to say,
I’ve confirmed with HUD OCPO staff that there haven’t been any modifications/changes issued on the existing FHA REO M&M Contracts relative to the initial securing time frame. The PWS allows for a total of 7 calendar days to perform all initial services, which would include the initial securing. While it is true that HUD can and does in some instances issue chargebacks to the FSM prime contractors when initial services are not performed timely and damages are incurred as a result of negligence, there is no blanket policy that I’m aware of that would automatically require a chargeback. Additionally, our FSM prime contractors are only assessed liquidated damages in the event that properties are identified as being in a “Ready to Show” condition prematurely, and HUD obtains inspection evidence to the contrary.
It should come as no surprise that virtually every National Order Mill runs in house crews to perform bid work submitted from contractors, preservation services, and inspections. And the model of those firms currently consolidating and being purchased by large boutique firms are going to go more heavily with a W2 model. All it would take is one complaint to the US Department of Labor’s (DoL) Wage and Hour Unit (WHU) in order to force an audit to ensure prevailing wage compliance. Last year, I would have given it a 50 – 50 odds of success. In 2020 I would place it in the eightieth percentile of succeeding.
Applicable Law: 28 U.S.C. § 1332
Cause: 28 U.S.C. § 1332 Diversity – Petition for Removal
Nature of Suit: 442 Civil Rights: Jobs