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Corporate Legal Accountability Quarterly Bulletin - Issue 30, March 2019

Welcome to our Corporate Legal Accountability Quarterly Bulletin -- highlighting a specific topic each quarter, as well as key developments in corporate legal accountability.  The Corporate Legal Accountability hub on our website provides objective, concise information about lawsuits against companies in which human rights abuses are alleged .
This bulletin and previous issues are available in English, ChineseFrench, GermanRussian and Spanish.
Quarterly highlight

Legal developments New translations

New blog posts
Other news
Quarterly highlight

Accountability for Misclassification of Workers in the Gig Economy

The gig economy is an important and growing global trend which is revolutionising the traditional concept of employment. Businesses are increasingly turning to the use of freelancers, “gig” workers and on-demand workforce, who are classified as “independent contractors”. While on-demand work arrangements serve an important function for people who prefer flexible working hours or locations, as opposed to the rigidity of full-time employment, they raise important concerns regarding the rights and protections of workers.
Conventional employment is typically characterized by secure, regular work, and the provision of legally mandated benefits and protections, including a minimum wage, workers’ compensation, paid leave and overtime, unemployment insurance and the right to collectively bargain. By comparison, labour laws do not afford these same protections to independent contractors. According to recent estimates, it would cost companies an average of 20-30% more to classify workers as employees instead of independent contractors. This blatant attempt to lower overhead costs and maximize profit at the expense of workers’ rights is not new, nor is it limited to the gig economy. However, the legal, practical and economic implications are becoming increasingly serious in this rapidly growing economy.

1.    Litigation as a tool to assert labour rights

As a result of this protection gap, an increasing number of non-conventional workers are asserting their core labour rights in courtrooms, suing employers to redress grievances and improve working conditions. The plaintiffs’ central claim is that the defendant has misclassified them as an independent contractor, and thus deprived them of various legal rights and protections. In these cases, workers tend to seek remedies for underpayment, lack of benefits and re-admission to work after wrongful termination on the basis of being an independent contractor.

Uber, for instance, has faced misclassification lawsuits in the UK (Aslam et al. v. Uber) and the US (Razak et al. v. Uber Technologies) regarding the minimum wage and other benefits. And in Nigeria, two Uber drivers filed a proposed class action seeking health insurance and pension benefits. Similar misclassification lawsuits have been filed by Uber drivers in FranceCanada and Brazil.

In the Netherlands, a former Deliveroo rider sued the online food delivery company for wrongful termination, and sought reinstatement under local labour law stipulations. Similar misclassification claims were made against the food delivery enterprise GrubHub (Lawson v. GrubHub), and courier services Postmates (Vega v. Postmates), and Dynamex (Dynamex Operations West v. Superior Court of Los Angeles).

2.    Who is considered an employee in the eyes of the courts?

Though the specific claims of the various lawsuits differ, they all revolve around the issue of determining exactly what, or who, is considered an employee according to the law. When alleging misclassification, plaintiffs need to demonstrate that they meet the legal criteria for classification as an employee. One factor that appears to be consistent across jurisdictions in the determination of employee status, is the consideration given to the degree of control that the company has over the worker, and the level of independence that the worker has in performing the job. 

In Dynamex Operations West v. Superior Court of Los Angeles, the California Supreme Court found that there is a presumption in favour of employee status, and established the ABC test for determining worker classification. The test places the burden on the company to prove non-employee status, by satisfying certain criteria relating to its control over the worker, as well as the freedom and flexibility of the worker in performing the job.

Similar considerations informed the decision of the UK Employment Tribunal, which ruled that Uber drivers are not independent contractors, but workers providing skilled labour that helps generate company profits (Aslam et al. v. Uber). In Brazil, Uber drivers were found to be regular employees based on contractual obligations such as punctuality, payment schedules and attendance requirements. In this case, Uber was required to issue a formal employment contract and to provide certain benefits.

In other misclassification lawsuits, the courts have decided in favour of the defendants. The District Court for Eastern Pennsylvania agreed with Uber’s characterisation of itself as a “modern day yellow pages”, and as not being an employer under the US Fair Labour Standards Act (Razak et al. v. Uber). The New York Supreme Court ruled that couriers for the online delivery company Postmates were not employees, because the alleged company “control” asserted by the plaintiff (establishing pay rates, tracking deliveries) amounted to merely “incidental control”, and did not constitute substantial evidence of an employer-employee relationship.

3.    Concluding observations

Workers and lawyers around the globe are fighting the culture of corporate impunity, consolidating their power, and turning to the courts to assert core labour rights, including through class action lawsuits. Litigation is a key tool in this fight, which has resulted in some important wins for workers, and has helped set positive precedents for other workers in similar situations. Courts continue to play a crucial role in testing legal norms against new labour realities, prompting governments to amend and fill in the gaps in existing labour legislation, and creating important opportunities for the emergence of new employment standards through caselaw.
For a more in-depth analysis of how workers, civil society, lawmakers, governments and companies are negotiating the future of work (both inside and outside the court room), stay tuned for our upcoming Annual Briefing “The Future of Work: Litigating New Labour Relationships”, which will be published on 25 March 2019. Don’t miss the report and sign up for our Corporate Legal Accountability publications, here.
Legal developments

New case profiles

Lawsuit by California Independent Petroleum Association against environmental groups (re drilling permissions & vulnerable communities): In 2016 the city of Los Angeles adopted new oil drilling requirements to end discriminatory practices affecting vulnerable communities. The new requirements were adopted in response to legal proceedings brought against the city by local youth groups and the Center for Biological Diversity. In 2018, the California Independent Petroleum Association (CIPA) countersued the city, the youth groups and the Center, arguing that the new requirements raised drillers’ costs without due process. The organizations assert that CIPA’s countersuit is a strategic lawsuit against public participation (SLAPP). 
Lawsuit against Lafarge (re complicity for crimes against humanity in Syria): In November 2016, 11 former Syrian employees and two NGOs filed a lawsuit in France against the cement company, Lafarge, for alleged abuses committed in Syria by its subsidiary, Lafarge Cement Syria (LCS). The charges contend that LCS maintained its activities during the Syrian Civil War and allegedly paid terrorist groups to continue to operate during this time. On 28 June 2018, Lafarge was indicted for complicity in crimes against humanity. 

Updates to existing case profiles

Lawsuit against BHP Billiton & Vale (re dam collapse in Brazil): In December 2018, an Australian judge ruled that a shareholder class action lawsuit against BHP Billiton could proceed. 

Lawsuit against Ford (re military dictatorship in Argentina): On 11 December 2018, an Argentinian court convicted two former Ford Motor executives over abduction and torture of 24 company workers during the 1976-83 military dictatorship.

Lawsuit against Intl. Finance Corp. (IFC) lawsuit (re financing of coal-fired plant in India): On 27 February 2019, the US Supreme Court ruled that the IFC is not immune from proceedings in US courts and can in fact be sued when it is acting as a private player in the market. The case will return to the lower courts.
Lawsuit against KiK (re liability over factory fire in Pakistan): On 10 January 2019, a court in Dortmund, Germany rejected the lawsuit brought by Pakistani victims and their families on the basis that the statute of limitations had expired. The plaintiffs will appeal the decision. 

Lawsuit against Nevsun (re forced labour in Bisha mine, Eritrea): On 23 January 2019, the Supreme Court of Canada assessed whether the case against Nevsun Resources, over alleged forced labour and torture at a mine in Eritrea, should proceed to trial in Canada. No date was provided as to when a decision will be made. 

Lawsuit by Resolute Forest Products (re alleged racketeering & defamation by environmental organizations, USA): On 22 January 2019, a US District Judge dismissed the racketeering claims against Greenpeace, Greenpeace Fund, Greenpeace International,, and five individual defendants. The defamation and unfair competition claims against Greenpeace, however, were allowed to proceed. All claims against were dismissed.  

Lawsuit against Shell (re complicity in killings in Nigeria): On 7 January 2019, the US Supreme Court declined to review a Second Circuit decision that barred the widow of Mr. Kiobel, a Nigerian activist, from obtaining legal documents used by Shell’s lawyers in the US lawsuit for her lawsuit in the Netherlands. On 12 February 2019, a Dutch court heard the lawsuit against Shell over its alleged complicity in the killings of Ogoni activists in Nigeria. Shell denies the allegations. A decision is expected on 8 May 2019. 

Lawsuit by Thammakaset against migrant workers (re labour exploitation in Thailand): On 15 January 2019, the Supreme Court of Thailand ordered the immediate payment of 1.7 million Thai Baht (about USD 52,000) to reimburse past wages of 14 migrant workers. The award was based on a previous determination made by the Lopburi Department of Labour Protection and Welfare in August. 

Lawsuit against Tonkolili Iron Ore (re complicity in violence against villagers and protesters in Sierra Leone): In December 2018, an English High Court judge ruled that African Minerals was not liable.  

Lawsuit against Vedanta Resources (re water contamination, Zambia): On 15-16 January 2019, a hearing was held before the UK Supreme Court to determine the issue of jurisdiction. A decision is expected in April 2019. 
New translations

In French 

In German 

In Spanish 

New blog posts

Australia: Tackling modern slavery now a matter of legal compliance, Amy Sinclair, Business & Human Rights Resource Centre, on Law Society of New South Wales Journal (Australia), Mar 2019

Will Germany become a leader in the drive for corporate due diligence on human rights?,
Saskia Wilks & Johannes Blankenbach, Business & Human Rights Resource Centre, 20 Feb 2019

A supply chain of complicity: Labour exploitation in Qatar and migrant workers' access to justice, Linde Bryk, European Center for Constitutional and Human Rights (ECCHR), 12 Feb 2019 

Governments can help make business more diligent on human rights, Dr Irene Pietropaoli, British Institute of International and Comparative Law & Phil Bloomer, Business & Human Rights Resource Centre, 17 Dec 2018  

New business and human rights treaty takes shape, Maysa Zorob, Business & Human Rights Resource Centre, on Open Global Rights, 13 Dec 2018

If you are interested in contributing to a guest post on corporate legal accountability, please contact us. 
Other news

From Business & Human Rights Resource Centre

New interview of lawyer fighting for corporate accountability 

Reports, articles & guidance by leading experts & organizations

Open Letter re New Lawsuits Brought by Thammakaset Company Limited Against Human Rights Defenders, 89 International & national organizations, 14 Feb 2019

Accountability for forced labor in a globalized economy: Lessons and challenges in litigation, with examples from Qatar, Linde Bryk & Claudia Müller-Hoff, European Center for Constitutional and Human Rights (ECCHR), 5 Feb 2019

A win for advocacy: Court dismisses SLAPP suit against environmental activists, Sarah Aron, Center for International Environmental Law (CIEL), 24 Jan 2019 

Companies Operating in a Conflict or Post-Conflict Country: Exercise Leverage or Stand Ready for Litigation, Anna Triponel, on Rights as Usual, 22 Jan 2019 

Protect the Protest Task Force - Submission to the UN Human Rights Committee on US Compliance with the Intl. Covenant on Civil and Political Rights, Protect the Protest, 14 Jan 2019

Supply chain liability under the law of negligence: What does Jabir and Others v KiK Textilien und Non-Food GmbH mean for European companies with supply chains in the sub-continent and other common law countries?, Lucja Nowak & Jonas Poell, Hogan Lovells, on JD Supra, 10 Dec 2018
Business & Human Rights Summer School, Human Rights International Corner (24-28 Jun, Rome. Application deadline: 25 Apr)

Business & Human Rights Young Researchers Summit, Institute for Business Ethics - University of St. Gallen (11-12 Apr 2019, St. Gallen)

International-level dispute resolution for mass claims / human rights claims, British Institute of International and Comparative Law (4 Feb 2019, London) 

Winter Academy: The UN Guiding Principles on Business and Human Rights: From Theory to Practice, Asser Institute (28 Jan-1 Feb, The Hague)

The Chevron case in the Amazon: Implications concerning the fight in Europe against ISDS and for binding rules for transnational corporations, Committee for the Abolition of Illegitimate Debt (29 Jan, Brussels)
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