A federal judge in New York sustained a challenge mounted by a group of Democratic attorney generals to a narrow interpretation of the joint-employer rule proposed by Labor Secretary Gene Scalia.

The joint-employer rule seeks to make businesses liable for violations Fair Labor Standards Act by their franchisees. The federal judge held the Department of Labor’s interpretation of the rule was “Arbitrary and capricious.” You can read more about how federal courts view workplace regulations here.

But the reason, I am writing about this decision is to start discussing the role anti-trust law plays or could play in workers’ compensation and employment law. Put another way, this post seeks to introduce my fellow solo and small firm workers’ compensation plaintiff’s lawyers to the scholarship of Sanjukta Paul, Marshall Steinbaum, Veena Dubal and others.  While discussions of anti-trust center on the rise of the gig economy and worker classification, I think a new way of thinking about anti-trust law goes to the core issues of workers’ compensation.

What is anti-trust law

To the extent that plaintiff’s lawyers think at all about anti-trust, anti-trust is thought about as a way to maintain competitive markets. But, as scholars point out, when anti-trust law was created in the late 19^th century, anti-trust was thought of a way to fight economic concentration and support fairer business practices.

The innovation of anti-trust law was that it regulates what Sanjukta Paul describes as “coordination rights.” Coordination rights are the ability of different individuals and enterprises to work towards common ends. Coordination can be cooperation among equals or it can involve one party controlling another.

How anti-trust applies in workplace law.

Going back to the example of the joint-employer controversy, the Trump administration sought to give franchisors more ability to command franchisees without being responsible for complying with wage and hour laws. By case law, this relationship is already codified in existing anti-trust law. This relationship, according to scholars, is what enabled the rise of gig economy companies like Uber and Lyft. Uber and Lyft can largely control drivers without defining them as employees and having to worry about violating anti-trust law.

Of course, workers who are classified as contractors are not covered by workers’ compensation. But the issue of worker classification in workers’ compensation pre-dates the gig economy. Issues about who is covered by workers’ compensation are as old as workers’ compensation statutes themselves.

Most states have a law like Nebraska’s statutory employer law (Neb. Rev. Stat. 48-116) Our statutory employer statute seeks to prevent employers from avoiding workers’ compensation by use of subcontractors. Our statute expressly mentions the use “artifice and schemes” to avoid liability. In other words, the drafters of Nebraska’s workers compensation laws were regulating the coordination rights of employers. 

Statutory employer statutes within workers’ compensation laws are anti-trust laws. Workers compensation and anti-trust laws developed at roughly the same time out of the same impulse to reform a newly industrializing society. It’s not surprising that workers’ compensation laws would include anti-trust concepts or would address coordination rights in a practical way.

Workers’ compensation and coordination rights

But the use of anti-trust law in workers’ compensation extends beyond employee classification issues. Employers often co-ordinate with insurers/claims administrators, nurse case managers and doctors to limit workers’ compensation workers compensation benefits for employees. I sometimes refer to these efforts as the workers’ compensation legal-medico complex. The workers’ compensation legal-medico complex is one example of entities exercising their coordination rights.

In practice the workers compensation medico-legal complex can exercise their coordination rights with impunity. Plaintiff’s lawyers have very limited success in using the civil RICO statutes in fighting these practices.

But a renewed and reformed anti-trust law could give injured workers another outlet to fight coordination between insurers, employers and medical providers. The Federal Trade Commission was created at about the same time as workers’ compensation laws. A re-oriented FTC or a state equivalent could crack down on employer-centered coordination of workers’ compensation claim management as an unfair trade practice.

However a re-orientation of anti-trust would require near political and intellectual revolution. The Epic Systems case decided by the Supreme Court in 2018 limits the ability of workers to coordinate through collective action litigation. The case also seeks to limit protected concerted activity under the National Labor Relations Act strictly to formal union activity rather than more informal collective action. Gig economy companies have also successfully used anti-trust arguments to fight efforts to allow gig workers to unionize.

I am not going to address how anti-trust evolved its anti-worker bent. I think Professor Paul does a good job of describing the intellectual and legal history of the (d)evolution of anti-trust law. Her work is worth reading by plaintiff’s attorneys. The more familiar plaintiff’s become with anti-trust concepts the more likely it is that, to quote Marshall Steinbaum, that we can open up a second front of anti-trust law in the fight over worker classification. I think anti-trust law would also be a way to make workers’ compensation work for injured workers rather than the employer-oriented legal-medico bureaucracy.