Lessons From Cambodian Dancing Arrests: Don’t Draw Extra Attention to Your Independent Contractors

Tips for avoiding independent contractor misclassification claims

Screenshot from telegraph.co.uk

Ten European tourists face up to a year in Cambodian prison after being arrested for “pornographic dancing,” according to The Telegraph. Apparently, they went to a villa barbeque party and took pictures of themselves, clothed, dancing in suggestive poses.

Readers take notice: When barbequeing in Cambodia, do not draw unneeded attention to yourself by simulating sex positions and posting the pictures on social media.

When dealing with independent contractors, it’s also a good idea not to draw unnecessary attention to the situation. Some kinds of activities create particular risks of a misclassification claim, in which the independent contractor could be deemed an employee.

For example:

  • Giving your contractor a company email address can create the impression that the contractor is your business’s employee. Try to avoid that.
  • Requiring your contractor to wear a company uniform or badge should be avoided when possible. If it’s necessary to show your contractor’s affiliation with your business (such as for a delivery person), try using different attire that specifically identifies the person as a contractor.
  • Converting an employee to a contractor can draw the IRS’s attention in a 1099 audit. When an individual gets a W-2 and a 1099 in the same year, that can raise an eyebrow.

And, finally, a cautionary note to contractors: If the business that retained you is holding an employees-only villa barbeque dance party in Cambodia, it’s best not to attend.

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For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27, or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

NLRB Smells Something Rotten, Seeks Input on Major Misclassification Decision

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Screenshot from metro.co.uk

A flight from Dubai to Amsterdam made an emergency landing last week after a fight broke out over a passenger’s excessive flatulence. The two Dutchmen sitting next to the flatulator asked him to cut it out, but he wouldn’t (or couldn’t) stop spreading his perfumery around the cabin. A fist fight broke out and the pilot diverted the flying stinkship to Vienna, where several passengers were removed. Read more here.

Something smells rotten to the NLRB as well, four months after an Administrative Law Judge (ALJ) ruled that independent contractor misclassification, by itself, can be an unfair labor practice, in violation of the NLRA. Read more about that decision here.

Last week, the Board posted a public invitation for any nonparties to file briefs on the issue, arguing why misclassification should be — or should not be — an automatic unfair labor practice or, if not automatic, under what conditions misclassification should be considered an NLRA violation.

Briefs are due April 16, with response briefs due April 30. Any organization or business can weigh in by filing a proper legal brief, even if they have nothing to do with the case that is being reconsidered.

The Board seems to think that the ALJ’s decision stinks, and the Board wants to reconsider the ruling, taking into account all points of view. With a soon-to-be-Republican majority Board (as of today, it’s 2-2 and the 3rd R is waiting to be confirmed), it is reasonable to expect that the ALJ’s ruling will be grounded.

We’ll see, but we can expect the full Board to issue a decision later this summer on whether misclassification, by itself, is an automatic violation of federal labor law. This is one to watch. Or, even better, you can participate by contacting your lawyer and filing a brief to weigh in.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27 or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Gig Economy Workers Aren’t Saving for Retirement. That Might Cause You to Get Sued.

Gig economy savingsThe Drifters wanted listeners to save the last dance for them. Grand Funk Railroad wanted to save the land (album: E Pluribus Funk!!!). The Sex Pistols wanted to save the queen. Or they wanted God to do it for them. Lazy Sex Pistols.

But what about saving money? Not enough action there. A recent report from the Economic Policy Institute found that the median (50th percentile) working-age family had just $5,000 in retirement savings. (Warning: It’s boring Boring BORING, but click here if you dare.)

Workers classified as employees can get a nudge from their employers to save through 401(k) match programs or other incentive plans. Independent contractors, though, don’t have the same opportunity.

Last week, a Congressional Committee (HELP) heard testimony on the savings crisis among gig economy workers. Participants urged the creation of plans that would allow independent contractors to join organized retirement savings programs.

Some states, like Washington, have experimented with programs designed to help gig workers save, but nothing appears to be on the Congressional horizon.

Why does this matter for businesses? Because one of the many areas of exposure for a business that misclassifies workers as independent contractors is that the workers were denied employee benefits, such as a 401(k) match, employee stock ownership, stock options, or other financial rewards that companies offer its employees (but not its contractors). If your contractor was misclassified and is really an employee, the worker could be owed all of the economic benefits you’ve been providing to your employees.

Businesses evaluating their exposure to independent contractor misclassification claims should remember the potential damages that can stem from failing to provide benefits to workers who might turn out to be employees. (Hint: Do you have a spare $97 million?)

Making sure you have carefully classified your independent contractors may end up saving your business big headaches and lots of cash.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27 or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Python vs. Boa: Does the GrubHub Misclassification Ruling Really Matter? (Don’t Believe the Hype!)

Python vs boa - independentr contractor misclassification and grubhubPythons and boa constrictors usually do not fight each other. At least that’s what I learned in herpetology school. The reason they don’t fight each other is that there’s too much risk. The boa risks getting bitten by the python’s lethal fangs. The python risks being constricted to death because that’s how constrictors work.

For roughly the same reason, independent contractor vs. employee disputes rarely go to trial. There’s too much to lose. A company that relies on independent contractors for its business model cannot afford a ruling that all of its contractors are really employees. That’s why these cases almost always settle.

The GrubHub case, however, which was decided late last week, is different. It actually went to trial. That’s why you may have heard about it (such as here).

But how much does the GrubHub case matter? Many bloggers are treating this decision as if it has widespread ramifications. I’m not so sure. Let’s take a look.

What happened?

Raef Lawson, and aspiring actor/writer/producer/delivery driver, signed up to drive for GrubHub in Los Angeles in 2015. He almost definitely planned to sue before he even started, hiring a lawyer and then gaming the system mercilessly so he would get paid even for blocks of time when he barely made any deliveries. A few months later, he filed a lawsuit claiming that he should have been classified as an employee, which would have entitled him to myriad benefits under California wage and hour law.

He tried to bring a class-action on behalf of all 4,000 GrubHub drivers in California, but ultimately this case was decided on an individual basis. There was probably only about $600 at issue.

GrubHub, to its credit, tried the case.

On February 8, after a bench trial, the judge ruled that Lawson was an independent contractor, not an employee.

So this is great news all around for businesses who use independent contractors, right? They are all vindicated? Not exactly. Contrary to what many other bloggers have been writing, I don’t think this case means a whole lot. Or maybe it does. Let’s take a look.

This case matters a lot. This decision vindicates GrubHub’s business model. It shows that an independent contractor delivery driver model can work and can survive a challenge that the drivers are misclassified as employees. It shows that, if done right, using independent contractors can be a viable business model.

This case doesn’t matter. This case was decided on the specific facts relating to GrubHub and Lawson, including how he used the app and how GrubHub ran its delivery business. The ways that GrubHub’s app and delivery driver relationship work are highly specific to GrubHub and therefore this decision will have only a minimal effect on other companies using independent contractors.

This case matters a lot. The facts in this case provide a roadmap for other businesses who want to have successful independent contractor arrangements. GrubHub did not supervise, train, discipline, or monitor Lawson. It did not require him to wear a uniform, did not require a specific kind of vehicle (bike is ok!), and did not control the days or hours he chose to work. GrubHub had a carefully drafted independent contractor agreement. It was long and specific about what GrubHub could not control. It was not an off-the-shelf agreement.

This case doesn’t matter. This case was decided under California law, not federal law. And California law might be about to undergo a facelift. This case was decided under the
S. G. Borello test, which is California’s state-specific version of a right to control test with 8 secondary factors that must also be considered. Picture a right to control test with an octopus on top of it. No other states have that test.

As we wrote here, however, California may be about to abandon that test in favor of a much more difficult to meet ABC test. The ABC test being considered by the California Supreme Court would start with the presumption that a worker is an employee and would require a business to meet each of three distinct tests to establish that the worker is actually an independent contractor. This would be a major change in California law. In fact, Lawson’s attorney asked the judge not to rule in this case until California Supreme Court decides whether to change the test. Had the ABC test been in effect instead of the S.G. Borello test, the outcome in this case might have been different.

This case matters some. At the end of the day, I am ambivalent.

Parts of the GrubHub model could be useful for other businesses as a roadmap, but the facts for another businesses are not going to line up the same. Also, this case was decided under a uniquely California test which might be about to change. Remember, different laws apply different tests for determining whether someone is properly classified as an independent contractor or should be an employee. A person can be an independent contractor under some tests (like the S.G. Borello test) but an employee under another test (like an ABC test, maybe).

Regardless of whether you decide this case matters for your business or doesn’t matter, independent contractor misclassification remains a high risk endeavor. Much like a fight between a python and a boa constrictor.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27 or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

After the NLRB Ruling, Is Joint Employment Still a Concern?

What is joint employment - imageLast month in the Hy-Brand decision, the NLRB raised the bar for determining whether a business is a joint employer. So now what? Is joint employment still a concern for businesses?

To paraphrase Tina Fey paraphrasing Sarah Palin paraphrasing Margie in Fargo, Ya! You betcha!

While the recent NLRB decision dropped the alert to Def-Con 4 in labor relations, the joint employment landscape under wage and hour laws is getting worse for employers, not better, thanks to the Fourth Circuit Court of Appeals. Businesses should remain on high alert for joint employment liability under wage and hour law.

Why does joint employment matter (in the wage and hour context)? Because if your staffing agency fails to properly pay its workers, your business is jointly liable under federal wage and hour law. In other words, you pay for their mistakes. It doesn’t matter that you played no role in making those mistakes. If the workers are your joint employees, the FLSA holds you responsible for making sure they are paid correctly for all hours worked.

There are lots of ways staffing agencies can inadvertently violate the Fair Labor Standards Act (FLSA). Here are a few:

  • failure to pay minimum wage
  • failure to pay overtime
  • failure to properly calculate overtime
  • failure to pay for all hours worked (working off the clock)
  • inexact timekeeping practices
  • offsides*

*ok, that’s not true.

The fact that the NLRB made it harder to find joint employment under the NLRA has no effect on the joint employment test under the FLSA.

That’s an important point that businesses should not overlook.

The tests for whether a business is a joint employer are different under federal labor law (NLRA) and federal wage and hour law (FLSA). That means your business might not be a joint employer under the NLRA (e.g., union organizing and bargaining) but, at the same time, can be a joint employer under the FLSA.

In this post, we examined the current standards for determining whether a business is a joint employer under the FLSA. The tests vary depending on where you live. Really. That’s actually true. Even though it’s the same federal law, the interpretation of that law — and its joint employment test — change depending on which state you’re in.

Don’t forget about state laws too. The states impose their own tests for whether a business is a joint employer under their own state laws. California, for example, has AB 1897 (catchy moniker! Can I get that on a t-shirt?), which assumes that staffing agency workers performing work in the usual course of a company’s business are that company’s joint employees, and the business using those workers is strictly liable for the staffing agency’s violations of California’s cornucopia of maddening wage and hour laws.

The bottom line for businesses:  Joint employment is still a big concern. Different laws have different tests. The welcome change in the NLRA standard has no effect whatsoever on the other employment laws, most of which impose joint liability for the mistakes of others.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27 or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Is Your Independent Contractor Agreement Like an Emotional Support Peacock?

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Image from The Jet Set

My favorite news story from last week was United Airlines’ decision not to allow a woman to fly with her emotional support peacock. Peacocks are pretty, strutting their feathery stuff to attract the smokin’ hot peafowl ladies, but they’re not cuddly, and they don’t belong in the tight quarters of commercial aircraft.

I did my research here, and I can confirm they’re not even good house pets. According to an Information Leaflet published by the Wrexham County (U.K.) Borough Council, peafowl have not taken well to modern methods of human transport. The Leaflet warns potential peafowl pet owners, “Peafowl for some reason are fond of cars and enjoy standing on them. They will also attack their reflection in cars and cause damage by scratching and pecking them.” They also have a “very loud high-pitched meow like call.”

None of this sounds like what I want in a seatmate on a commuter flight out of Newark.

Anyway, the point here is that looking pretty isn’t enough. The same is true for independent contractor agreements. Too many agreements have pretty off-the-shelf language, proclaiming for the world that both parties agree the worker is a contractor, not an employee, and threatening to emit a very loud high-pitched meow like call toward anyone who alleges otherwise.

But none of that is particularly helpful when trying to defend a claim of independent contractor misclassification. It’s the facts of the relationship that matter, not the labels.

Who is my employee? The determination of Independent Contractor vs. Employee is made by applying the facts to one of a multitude of tests, depending on which law applies.

  • To see if someone is an employee under federal tax, discrimination, or employee benefits law, a Right to Control Test is applied.
  • To see if someone is an employee under federal wage and hour law (minimum wage, overtime), an Economic Realities Test is applied.
  • To see if someone is an employee under unemployment law or workers compensation law, an ABC Test might be used. Or a Right to Control Test. Or some other variant.
  • State laws use still further tests.

My point is that you should not gain emotional support from a pretty contract. Make sure the facts of the relationship are consistent with employee status, no matter what your contract says. And never bring peafowl on a plane. (Or snakes.) [Click here for TV-version of classic line, ruined by censors.]

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27 or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Like a Drunken Possum, NEW GIG Act Fails Again.

NEW GIG act possum

Screenshot from DailyDot.com, 12/3/2017

I feel bad for this little guy. This possum apparently broke into a Florida liquor store, knocked over a bottle of bourbon, and got sauced. Wildlife rescue picked him up and checked him into rehab (no, not that kind). Full coverage here at DailyDot.com.

I applaud the critter’s effort, though.

He probably feels a little like Senator John Thune (R-SD), who has repeatedly introduced a bill called the NEW GIG Act — designed to simplify tax law for independent contractor misclassification scufflaws. Every time he gets close, though, someone knocks him over the head with a bottle. Or something like that.

The NEW GIG Act has been introduced in Congress several times. If passed, it would Continue reading