In today’s news and commentary, Harvard’s graduate student union wins in the First Circuit, AI data trainers initiate multiple suits to be classified as employees, and Trader Joe’s is found liable under ERISA. 

On Tuesday, Harvard University lost its appeal in the First Circuit to exclude psychology PhD students from the Harvard Graduate Student Union (HGSU-UAW Local 5118). A 2023 arbitration decision had held that Harvard had violated its collective bargaining agreement by misclassifying the student workers as ineligible to join the union. The university’s arguments, which also failed in the District Court for the District of Massachusetts, included that the students should not be classified as employees under the NLRB and that the decision violated public policy in favor of letting workers select their own union. The court cited the high standard of deference to arbitration decisions. The union went on strike this past spring in its bid for a renewed contract, and as of today, it is engaged in a strike authorization vote to potentially return to the picket line.

Meanwhile, a wave of lawsuits from workers who train artificial intelligence systems is testing whether AI companies have wrongly misclassified them as independent contractors. Firms face allegations that they intentionally mislabeled data annotators, engineers, and other workers to avoid paying minimum wage, overtime, and benefits. At least five such cases are pending in California and one in Texas. The plaintiffs did work tied to clients such as Google, Meta, and OpenAI. Lawyers for the workers are borrowing strategies from battles against gig companies like Uber, Lyft, and DoorDash. This time, plaintiffs plan to point to constant electronic monitoring, automated scheduling, and performance tracking as evidence that the workers lacked real independence, which some experts believe will be an important edge. Reclassifying hundreds or thousands of workers could upend the companies’ staffing models and expose them to large back-pay and tax liabilities. California’s “ABC” test, which presumes workers are employees unless the company proves otherwise, makes the state a particularly risky venue for employers. Elsewhere, discovery is expected to be pivotal, since the work happens remotely on digital platforms. 

Finally, on Monday Judge William G. Young of the US District Court for the District of Massachusetts ruled that Trader Joe’s violated federal retirement law by failing to keep recordkeeping costs in check for its 401(k) plan. The grocery chain owed $1.2 million to employees under the Employee Retirement Income Security Act. After trial, the judge determined that the company’s oversight of recordkeeping fees was both imprudent and disloyal since Trader Joe’s never sought competing bids for the services or pressed its existing providers to lower their prices. However, the plaintiffs did not walk away with completely victorious: they had sought over $9 million and had been the first to test a novel theory in federal trial court that employers act unlawfully by using forfeited 401(k) funds, left behind by departing employees, to cover their own plan contributions. Judge Young decided for Trader Joe’s on this point, although the argument remains pending in several circuits.