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By Matt Daus
Protecting your business from potential lawsuits, claims, or other risks is always essential, but during a period of work—and cash flow—stoppage, a lawsuit, whether frivolous or legitimate, from a disgruntled client or chauffeur could strike a death knell for your business. It’s important that you are aware of labor laws and civil rights issues in order to protect yourself, especially during this pandemic.
Matt Daus of Windels Marx
Worker Classification Lawsuits & Labor Department Enforcement
Each state differs in how ICs are classified and have standards to determine if the purported employer is exercising control over the drivers. For example, in New York, the determination of whether an employer-employee relationship exists turns on whether the alleged employer exercises control over the method or means by which the worker performs the job. No single factor is determinative, and courts will examine all factors relevant to assessing the degree of control exercised by the purported employer. One factor the courts look at is whether the employer provides equipment or supplies for the worker to use to perform the work. To avoid worker classification issues, businesses whose chauffeurs are ICs should allow them to be absent from work without prior permission. Businesses should review IC agreements; those without should utilize such agreements.
Civil Rights, Employment Discrimination & Consumer Laws
It’s been reported nationwide that drivers are refusing to accept trips from passengers—especially those considered Asian. That’s discrimination. In NYC, it’s key that operators be aware that the city’s Human Rights law makes it illegal for a TLC-licensed driver to refuse service because of a passenger’s actual or perceived “race, creed, color, national origin, age, gender, disability, marital status, partnership status, sexual orientation, uniformed service or alienage, or citizenship status.”
While surge pricing is certainly legal, and may even be appropriate during the pandemic, New York’s General Business Law § 396-r prohibits “unconscionably excessive prices” for essential goods and services during an “abnormal disruption of the market” or other cause of an abnormal disruption of the market which results in the declaration of a state of emergency by the governor.” Transportation providers should review their policies and pricing guidelines to ensure compliance with such anti-discrimination laws, or any provisions enacted during emergencies.
Layoffs
Transportation businesses in all sectors are facing the immense economic pressure to “downsize” their workforce as they reduce services to meet the diminished ridership demands. Before deciding upon a reduction in the workforce, employers should consider whether other, less problematic, measures would achieve the necessary savings. These may include hiring freezes, salary freezes, elimination of discretionary bonuses, or reductions in work hours with proportionate pay cuts. Employers may also consider reducing or eliminating certain fringe benefits and requiring employee contributions to benefit costs. As alternatives to layoffs, businesses could assess whether expected job attrition will address the organization’s needs or permit affected employees to transfer to other vacant positions within the organization to address departmental budgetary issues. Businesses may consider furloughing employees. Furloughs allow for cash savings, while providing the impacted employees with access to benefits. Furloughs are a temporary remedy that allows for fast re-hiring when circumstances improve and also maintains some level of employee morale.
When necessary, layoffs should be appropriately planned. Ordinarily, the Worker Adjustment and Retraining Notification Act (WARN Act) would require advance notice of 60 days. In circumstances such as this COVID-19 pandemic, there is a strong argument that exceptions to the notice requirement apply. Business may consider first terminating employees with substandard performance grades, terminating recently-hired employees during introductory periods before benefits are awarded, or terminating temporary and part-time workers, transferring their duties to existing full-time employees. Finally, to avoid company-wide layoffs, some employers devise early retirement programs or request volunteers for separation with incentives to encourage acceptance such as enhanced severance benefits. Although less drastic, such actions present their own legal complexities and demand appropriate planning to achieve the desired savings and avoid the pitfalls associated with standard layoffs. Care should be given to avoid discriminatory layoffs, including both intentional and unintentional disparate treatment. Severance, in exchange for a release, is recommended.
Click here for an information sheet from the Department of Labor regarding employee rights during these times.
Matt Daus is a partner with law firm Windels Marx and the former commissioner of the New York City Taxi & Limousine Commission. He can be reached at mdaus@windelsmarx.com.
[03.30.20]
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Rockville, Md.—The Transportation Alliance (TTA) is urging companies in the for-hire transportation industry to send a letter to their respective governors asking that their companies be designated "essential businesses" to help during the COVID-19 crisis.
Nine states have already declared transportation companies as "essential businesses." TTA's suggested letter to governors points out that:
- The industry continues to provide paratransit and non-emergency medical transportation (NEMT) to bring those with severe health issues to life-saving doctor appointments. Among these are daily or weekly trips to dialysis centers for people with kidney disease or chemotherapy treatment for cancer patients; the transportation of low-income citizens living in food deserts to grocery stores and pharmacies; transportation for those struggling with substance abuse and mental health issues to the care they require; and services for the disability community with our industry's ample supply of wheelchair vehicles meeting ADA requirements.
- Instead of transporting special needs students, schools are now depending on the industry to deliver subsidized meals to the homes of low-income children.
- Taxi and livery services are increasingly being called upon to offer food delivery from grocery stores and restaurants.
- Given the current trajectory of the virus, ambulance fleets could quickly be overrun with hospital trips. The transportation industry is needed to transport those patients who, while ill, do not require an ambulance.
- Larger vehicles, such as shuttles and buses, are already being used to ferry health care workers to the front lines of the coronavirus battle: our hospitals and health care facilities. These vehicles offer the ability to safely distance passengers per CDC-recommended guidelines.
- Airline and railroad crews continue to need transportation services as they move goods and people across the country.
- As transit services are reduced, the industry helps meet citizens' unscheduled transportation needs.
"In order for us to fight this invisible threat, all private sector transportation companies are at your disposal," the letter reads. "Each vehicle represents an essential piece of equipment in our state's toolbox as we work together to end this deadly virus."
TTA is sending copies of its own letters to the U.S. Department of Homeland Security and the U.S. Department of Health and Human Services seeking federal "essential business" designation for members.
TTA recently joined six other major passenger ground transportation trade associations in signing an unprecedented industry letter to President Trump and Congressional leaders outlining an eight-point plan to rescue their member companies. The request included a broad array of requests such as cash infusions, zero-interest loans, deferments on existing loans, and assistance in opening a pipeline to cleaning products, among others.
Collectively, the industry moves 3 billion passengers a year, approximately the same total number of passengers moved by the equally vital airline industry. Hundreds of thousands of drivers—most of them independent, small American companies—affiliate with transportation companies for their livelihood.
Visit thetransportationalliance.org for more information. The letter template can be found here.
[03.25.20]
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The CARES Act, a third-round stimulus package that offers $2.2 trillion in emergency relief with a focus on individuals and small businesses, was passed unanimously by the Senate on 3/25, the House on 3/27, and signed into law by President Trump. Here are the details.
No industry-specific relief
On an American Bus Association (ABA) webinar on 3/25, President & CEO Peter Pantuso informed members that there was no specific relief for the motorcoach industry in this latest round of federal aid, although he has heard from Senator Pat Toomey’s office about including the industry in the next round. So far, there has been relief for airlines, public transit, and AMTRAK, although Pantuso noted that “motorcoaches move more people in two weeks than Amtrak does all year,” according to data from the ABA Foundation. The travel-related associations are working together and will be ramping up efforts to keep the industry top of mind to members of Congress, especially when the Senate goes on recess. The fight isn’t over; make sure you are continuing to contact your representatives! Click to find contact information for your Senator or Congressperson.
Small business relief
The package did put an emphasis on small businesses, especially regarding payroll and access to emergency funding. The NLA works with Cornerstone Government Affairs, which provided the following:
- $350 billion for new Paycheck Protection Program, which would provide small businesses eight weeks of cash-flow assistance. The portion of the loan used for payroll support (employee salaries, paid sick or medical leave, and other overhead like mortgage interest, rent, and utility payments) would be forgiven if employees and salaries are retained.
- Defines eligibility as businesses, nonprofits, veterans’ organizations, and Tribal businesses up to 500 employees and includes self-employed, independent contractors, and sole proprietors.
- Additionally, $17 billion for SBA to cover six months of payments for small businesses with existing SBA loans.
- SBA loans are expected to be processed through private lenders and the income threshold is expected to be relaxed, defining small business by employees rather than income, according to the ABA. Click here for an info guide and checklist.
- Maximum loan amount is $10,000,000 or four times the average total monthly payments by the applicant for payroll, mortgage or tent, and debt obligations incurred during the one-year period before the date of the loan, whichever is less, according to Matt Daus of Windels Marx.
- Delays payment of employer payroll taxes allowing employers and self-employed individuals to defer payment of the employer share of the social security tax they otherwise are responsible for paying to the federal government with respect to their employees. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022, according to NPR.
Unemployment
An additional $600 per week in federal funds would go to workers collecting unemployment, which is on top of their state benefits, for four months. There is also language to extend the period a person can collect for an additional 13 weeks above their state benefits (currently ranges per state from 12 to 28 weeks), which will be paid with federal monies.
Housing
The package temporarily bans rental evictions and foreclosures of those with federally backed mortgages.
According to CNN:
- Those facing a financial hardship from coronavirus shall be given a forbearance on a federally backed mortgage loan of up to 60 days, which can be extended for four periods of 30 days each. The legislation says that servicers of federally backed mortgage loans may not begin the foreclosure process for 60 days from March 18.
- The bill also does not allow fees, penalties or additional interest to be charged as a result of delayed payments.
- Those with federally backed mortgage loans who have tenants would also not be allowed to evict tenants solely for failure to pay rent for a 120-day period, and they may not charge fees or penalties to tenants for failing to pay rent.
Stimulus checks
Those with AGIs of $75,000 or less (based off of 2018 or 2019 tax returns) will receive a one-time payment of $1,200; couples filing jointly up to $150,000 AGI will receive $2,400. It’s tiered through individual AGIs and caps at $99,000 and $198,000 for couples. Tax credits for children and under is $500 per child, although there are income restrictions on this, too.
If you have time to kill, you can read all 880 glorious pages of the Senate bill here.
[03.26.20]