Uber Sues After City Oversteps Boundaries In Governing Employment And Independent Contractor Agreements

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Uber Sues after City Oversteps Boundaries in Governing Employment and Independent Contractor Agreements

Uber recent filed suit against the city of Seattle, arguing that the city overstepped its rulemaking authority by interfering with employment and independent contractor agreements between the companies and its drivers.

Specifically, the city’s proposed rules—which were poised to go into effect last month—created collective bargaining opportunities for both transportation network and cab company drivers (including those who drive for Uber and Lyft). Uber is now arguing that the rules are arbitrary and capricious, and fail to properly consider the facts and circumstances of the drivers and the industry, as well as labor law precedent.

The City’s Law & Challenges

Seattle is the first city to pass a law like this. It establishes a process allowing independently contracted drivers the opportunity to form a nonprofit organization to collectively bargain on their behalf. First challenged in court by the US Chamber of Commerce in August 2016, the judge declared that the lawsuit was not yet ripe to bring at that time—i.e. not until the city moved forward with the law’s (or rules’) actual implementation. Following this decision, the city published its rules online, specifying which drivers it would allow to unionize, which working conditions were subject to bargaining, and how organizations could become certified to represent drivers.

Uber’s complaint alleges that the law is inconsistent with fundamental labor laws, which are designed to ensure that every worker has a voice in whether or not they should or would like to be represented by a labor organization. The complaint calls the approach taken by the city “piecemeal,” failing to engage and provide the public with the ability to comment on the proposed rules before they went into effect, as well as omitting representation for thousands of drivers who allegedly won’t be able to vote under the law. The company also alleges that there are significant gaps in the rules, such as guidance concerning unlawful coercion and interference, as well as how future for-hire drivers will be included in the process.

Uber has requested that the Court immediately suspend implementation of the rules and declare them invalid. A hearing on the lawsuit has been scheduled for March 17^th.

Birmingham & Mobile, Alabama Attorneys Dedicated To Representing Businesses

One of the most common types of business disputes are employment-related disputes, thus, it is crucial that businesses in Alabama ensure that their businesses are established and run so as to prevent a broad spectrum of potential conflicts.

At Cloud Willis & Ellis, we have a proven track record of assisting businesses with any and all corporate legal issues such as employment agreements, business plan development, business entity formations, human resources issues, and any and all legal issues related to business law. Contact our offices in Birmingham and Mobile, Alabama for assistance today.

Resources:

law360.com/articles/881820/uber-sues-seattle-to-stop-new-driver-unionization-rule

scribd.com/document/338591732/Uber-lawsuit-against-Seattle?content=10079&campaign=Skimbit%2C+Ltd.&ad_group=&keyword=ft500noi&source=impactradius&medium=affiliate&irgwc=1

How Will Changes To Regulations Affect Corporate Law & Governance?

On January 30^th, President Trump reiterated his intentions of rolling back Dodd-Frank regulations put in place seven years ago, stating that the law has been a disaster for “the American dream.” While many have focused on provisions in the law which require banks to monitor liquidity and their ability to withstand financial shock, the law actually also has effects on U.S. businesses and corporate governance.

Trump also signed an executive order requiring federal agencies to identify two regulations that would be cut whenever requesting a new regulation, another action that will have a strong impact on U.S. businesses. Many are now asking how the new administration will affect business and corporate law in general.

Dodd-Frank

Passed in 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) changes the existing regulatory structure by creating agencies dedicated to streamline the regulatory process, increasing oversight of specific institutions—such as banks—regarded as a risk, amending the Federal Reserve Act, and enacting a host of other changes. One of the main intentions of the law was to provide supervision to protect consumers, the economy, and businesses. The law reportedly had an effect on small banks, as some were forced to end certain business practices such as mortgages and car loans in response to the regulations.

Executive Order on Business Regulations

Described as a “two-out, one-in” approach, this executive order mandates that government agencies specify two regulations to drop if/when they request a new regulation, and places the Office of Management and Budget in charge of managing the process. In terms of implementation, the order assigns a significant amount of deference to the director, who decides how costs are measured, what qualifies as “new” and “offsetting” regulations, and overall categories exempted from the order.

Thus far, many businesses have voiced their concerns about the order, noting that it is vague and lacking in important details. Several businesses—including Goldman Sachs, Ford, Facebook, Google, and Airbnb—have indicated that they do not support the move. Others—such as the National Federation of Independent Business—have applauded it as a good first step. Some have also speculated that one of the first regulations to potentially be repealed is the stream protection rule, which bans coal companies from dumping debris associated with mountaintop removal into nearby streams.

Birmingham & Mobile, Alabama Corporate Attorneys

Starting and running a new business can be extremely challenging: you have to ensure that you are complying with countless laws and regulations at the local and federal level. If you have any questions about business or corporate law, or are seeking legal guidance on how to adjust your company’s legal infrastructure given these impending changes, the experienced business litigation attorneys at Cloud Willis & Ellis can help. With offices based in Birmingham and Mobile, Alabama, we’ve helped corporate clients navigate a broad spectrum of issues. Contact us today.

Resources:

nytimes.com/2017/01/30/us/politics/trump-dodd-frank-regulations.html

yahoo.com/news/trump-executive-order-slash-regulations-151135855–business.html

sec.gov/about/laws/wallstreetreform-cpa.pdf

npr.org/2017/01/30/512445032/trump-acts-to-roll-back-regulations-on-businesses

bbc.com/news/business-38800090

Buy-Sell Agreements in Alabama

If you are a co-owner of a business, or are considering starting a business with a partner in Alabama, developing a buy-sell agreement is a very important step to take. A buy-sell agreement (BSA) is an agreement between business partners outlining what will happen to an owner’s share in the business if they leave for some reason. Owners leave their businesses for a variety of different reasons including death, disability, retirement, or the desire to pursue a different career. Because these departures are sometimes sudden, it is very important to have a buy-sell agreement in place that dictates the terms and conditions under which the remaining owners will be allowed to purchase the leaving owner’s share of the business. Working out a buy-sell agreement when a business is first formed is a very prudent thing to do because this can help the parties involved negotiate rationally in anticipation of issues rather than emotionally after issues arise. Involving an impartial corporate law attorney who can draft the agreement and help estimate the value of the company is also a great idea. You can also achieve some of the same results within the company’s operating agreement.

Why Create a Buy-Sell Agreement?

According to USLegal.com buy-sell agreements are generally created for three different reasons:

To establish the business’ value for death tax purposes.
To avoid continuing the business with a deceased co-owner’s heirs.
To prevent partial ownership of the business from falling into an “outsider’s” hands.

In order to realize these various objectives, buy-sell agreements come in several different forms. For example, a buy-sell agreement can take any of the following shapes:

Stock Redemption Agreements or Stock Retirement Plans: These buy-out agreements are formed between the business and the individual owners.
Criss-Cross Agreements: A buy-sell agreement between the owners of the business.
Third Party Business Buy-Out Agreement: These buy-out agreements are formed between the business’ owners and another key person, such as a family member.
A Combination: A buy-out agreement can also be a combination of the forms listed above.

Mistakes Commonly Made When Drafting Buy-Sell Agreements

Although buy-sell agreements are very commonly developed by closely held business owners, according to the Cannon Financial Institute there are several mistakes that are commonly made when drafting these agreements. A few of these mistakes include:

Waiting Too Long to Draft the Agreement: It is important to draft your buy-sell agreement well before it is needed. In fact, it’s never too early for your business to develop a buy-sell plan. However, it is important to remember that a business’ needs change over time and that you may need to change provisions in the agreement at some later date.
Using a Fixed Valuation: Buy-sell agreements often contain a fixed dollar amount that operates as a purchase price in the event that a triggering event occurs. This fixed amount will probably need to be updated every couple years as the business grows, and can be problematic as many business never actually update their buy-sell agreement.
Inadequate Funding: New business are often low on cash, and therefore buy-sell agreements are often not funded appropriately. While life insurance policies are often used to fund buy-sell agreements, it is important to make sure that the insurance coverage is sufficient, even after the business has grown.

What Can We Do to Help?

Drafting a buy-sell agreement that meets the individual needs of your business is critical to the long-term health of your organization. Employing a law firm that has experience drafting corporate documents, such as Cloud Willis & Ellis, LLC, will help ease your mind and ensure that the future of your company is safely in order. Our corporate law attorneys are happy to assist you and can be reached at our office in Birmingham (205-322-6060) or in Mobile (251-545-4844).

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