THE NEED FOR EARLY AND THOUGHTFUL WORKPLACE INVESTIGATIONS
When a former Uber employee posted about Uber's alleged failure to investigate her sexual harassment complaints and her perceived punishment for making those complaints, her blog post went "viral." The issue triggered the attention of Uber Board Member Ariana Huffington, with former Attorney General Eric Holder then tapped to conduct the investigation into her allegations, which Uber promises to publicly disclose even though they relate to traditionally private personnel matters. Such public attention could lead to additional claimants coming forward, result in increased costs for the investigation, and negatively impact Uber's ability to recruit women employees.
Several states require early and thorough investigation of sexual harassment complaints. Even when not "legally" required, the lesson learned from Uber is that failure to timely and properly investigate such complaints, and to work with the complaining employee to timely and respectfully address his/her concerns, can lead to public disclosures materially affecting the company's public image, relationships with vendors and/or customers, and liability exposure. While not every complaint may have merit, every claim and claimant should be treated with dignity and respect. Legal counsel or consultants should be used in potentially challenging matters to confirm the company's serious approach to the issues being raised.
THE NEED FOR TRUTHFUL RECRUITING EFFORTS
Many employers, including Uber, have sought to recruit new employees through various media resources, including media governed by the Federal Trade Commission (FTC) (Internet/newspaper/radio/television/print media). The FTC determined that Uber's advertisements improperly inflated the claimed median income of drivers in New York City and San Francisco by approximately 33% and falsely asserted that its vehicle financing program provided the best interest rates and unlimited mileage. As a result of these violations, Uber has been hit with fines and settlements totaling $20 million.
Two primary lessons can be learned from Uber's fines and settlement. First, state and federal regulators are willing to engage in enforcement actions when recruiting efforts conducted through publicly available media channels contain false or misleading claims. Consumer protection and "unfair business practice" statutes can be used by regulatory agencies, as well as private plaintiffs, to assert claims resulting in costly legal fees, fines, penalties, and damages. Second, such enforcement actions often gain public attention in a manner that can trigger derivative wage and hour claims based on expansive views of protective labor laws. Thus, recruiting efforts should be carefully supervised to ensure that a company can fully stand behind all representations made to prospective employees regarding income and benefit issues, recognizing that these forms of "advertising" can often benefit from reviews by individuals skilled in media compliance standards to avoid undue exposures.
THE NEED FOR PROPER CLASSIFICATION
Companies can meet their staffing needs with employees or independent contractors, including individuals obtained through staffing agencies. These decisions can impact obligations to pay overtime, taxes, benefits, and expenses associated with business operations. In an effort to avoid these types of business expenses, Uber is alleged to have "misclassified" its drivers as independent contractors. Uber is defending its classification of drivers as independent contractors in class action wage and hour and individual unemployment cases throughout the country, even after it entered into a tentative $100 million settlement agreement ultimately rejected by the court. While Uber recently scored a significant victory in private arbitration, where the arbitrator ruled that the driver was correctly classified as an independent contractor, that decision is only binding with respect to that one driver and does not guarantee ultimate success in vindicating the company's classification.
As Uber defends its classification at great financial expense and exposure, a lesson to be learned is that even when the classification might be correct, there is no guarantee against costly and disruptive claims. Employers should therefore always attempt to ensure that employee classifications, job descriptions, contracts, and actual services performed are in keeping with governing legal standards for independent contractors. The objective evidence should show limited supervision, a general ability of the person to set his/her own schedule, and the individual's responsibility for providing the basic tools for performing services. Given increased regulatory investigations in this area (cities/states have an interest in collecting additional payroll and business taxes), as well as the increase in independent contractor misclassification lawsuits, it is prudent to have independent contractor relationships periodically reviewed to ensure that they are not properly considered "employer-employee" relationships, which, if challenged, can result in financial exposures and significant disruption to a business.