Why curtailing Auer deference could be bad news for gig economy companies

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Newly confirmed Supreme Court Justice Brett Kavnaugh expressed concern about deference to administrative agencies

Last week ride-hailing app., Lyft became the first major gig economy company to go public. Listing shares on the stock exchanges has forced gig economy companies to disclose risks to investors. One of the biggest risks to the  profitability of Lyft and other gig economy companes are “regulations” such as wage and hour laws, unemeployment insurance and workers’ compensation.

Gig economy companies have opened a new front in their lobbying efforts to undermine basic workplace protections. But these companies may have an unexepcted nemesis — conservative-leaning Supreme Court justices.

Last week the New York Times reported that Tusk Ventures, a lobbying/venture capital firm, is starting to lobby state regulatory agencies to exempt gig economy workers from state laws regulating employment. The move by gig employers to undermine workplace laws by administrative fiat was prompted by their inability to effectively lobby state legislatures.

Meanwhile last week, the Supreme Court heard oral argument in Kisor v. Wilkie which could curtail or even eliminate so-call Auer deference. Auer deference is the deference that courts give to how an administrative agency interprets their own regulation. Administrative agencies are often in charge of enforcing laws made by legislatures.

In oral argument, Justices Kavanaugh and Gorsuch were very skeptical of the Auer deference. Gorsuch is notoriously skeptical of other types of judicial deference as well. This skepticism is rooted in a view that adminisatrive rule making and interpreation of can run afoul of seperation of powers principles.

So how does this all fit together? Well, even if lobbyists succeed in persuading some state agencies to exclude gig economy workers from employee protection laws, state supreme courts may be less likely to defer to those decisions if challenged, if the Supreme Court further disapproves administrative deference.

Any future judicial challenges to state administrative agencies excluding gig economy workers from laws like worker protection laws could be similar to the successful judicial challenge to the adoption of the AMA Guides in Pennsylvania. In the Protz case, plaintiffs used a non-delegation argument to strike down the use of the use of the AMA Guides to determine permanent disability. Non-delegation is an old argument that dates back to the early 20th century when pro-corporate judges attempted to strike down pro-worker legislation. That conservative argument was refashioned to protect worker’s rights

Similarly, the concept of judicial deference to administrative agencies arose in the immediate post New Deal era. Those agencies were created to protect workers. Judicial conservatives have traditionally opposed administrative deference. But as business interests have infiltrated these agencies, these agencies have been shaped to serve the interests of business. Arguing against administrative deference on a state level would be a way to protect workers’ rights when management-side interests have commandeered administrative agencies.

Either way case law developed to help business interests may be used to protect workers. I am not arguing that the prospective effective end of administrative evidence would be an unmitigated good for employee rights. I understand how administrative deference can help employees and agree that it can be helpful for employees. But I think lawyers need to use every available tool to help their clients whether it’s through litigation or lobbying.

The conflict about how administrative deference could play out in civil rights laws and social insurance laws like workers’ compensation and unemployment is another example of how these laws, enacted for different purposes and different times, can conflict. Ultimately, I believe the best way to “fix” the conflict is to make sure that civil rights laws and social insurance laws are strengthened legislatively.  Courts and administrative agencies can merely fine tune laws that are made by the legislative branch.

So how would an effort to lobby state administrative agencies look in Nebraska and Iowa? In Nebraska, workers’ compensation laws are administered by the judicial branch not the executive branch. The court can still make procedural and evidentiary rules, but I doubt the Nebraska workers’ compensation court would exclude a class of workers from the act by its rule making process.

Iowa is an administrative system for workers’ compensation and I’m not as familiar with the inner workings of Iowa as I am with Nebraska. In both states, unemployment compensation is administered by the executive branch. At least in Nebraska I think it would be difficult for a gig economy company to get the Nebraska Department of Labor to rule that a gig economy worker is not covered by our Employment Security Act. Neb. Rev. Stat. §48-604 is very specific about who is excluded from unemployment and has a challenging standard for employers to meet in order to be exempted from paying unemployment.

Furthermore, Nebraska law doesn’t afford the special deference to interpretations of the law by administrative agencies. Nebraska law also dictates that unemployment law, like workers’ compensation, be given an liberal construction that benefits the workers.  For those reasons I think a Nebraska court would be skeptical of any rule making that exempted gig economy workers from unemployment benefits. In my mind, I am not sure if any federal court rulings would change how a Nebraska court would rule on the issue.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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