We’re Blogging about Logging! (I know, lame headline, but true)

Logger Ohio workers compensation independent contractor

The lyrics, “Come fly with me, come fly, come fly away” are instantly associated with Frank Sinatra (although, troublingly, the Michael Buble version appeared higher in my google search for a link to the lyrics). It is a little known fact* that the original version of the song was an ode to woodsmen and forestry workers and went something like this: “Come log with me, come log, come log away.”

In the original* lyric, Ol’ Blue Eyes invites a fellow logger to chop wood with him — not for him. That same distinction (with, not for) made all the difference in a recent court decision denying workers compensation benefits to a logger.

In 2013, logger James Chapman was cutting trees somewhere in Gallia County, Ohio. Chapman needed some help and asked James Green, another experienced logger, to cut down some of the trees at a rate of $80 a day. Green agreed.

Three days after embarking on this great adventure, a tree fell on Green. It is unclear whether anyone was around to hear it or whether it made a sound. Green hurt his neck, back, left hip, and head.

Green filed a workers’ comp claim, alleging that Chapman hired him and that the injury was incurred in the course of that employment. Ohio’s Bureau of Workers’ Compensation denied the claim, finding that Green was not an employee of Chapman. Green appealed and lost again.

Like other states, Ohio requires an employer-employee relationship for workers’ compensation coverage to be available. Ohio uses a Right to Control Test to determine whether someone is an employee or an independent contractor.  (Other states use other tests.)

Here, the court ruled that Chapman merely told Green which trees to chop down. Come chop with me, not for me.  Chapman didn’t tell Green how to cut down the trees or when to do it. Chapman didn’t supervise him either. Green was an experienced logger and was told at the outset that he was not being retained as an employee. He was being given a task — cut down those trees over there — and then it was up to Green to use his experience and judgment to determine how to accomplish that task. Those facts, the court ruled, are indicative of an independent contractor relationship, not employment.

Green’s workers’ compensation claim was therefore denied, which made Green sad, and which could have been the inspiration for Sinatra’s 1962 recording of “Pick Yourself Up.”**

*Not a fact.

**Also not a fact.

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

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Free Smells! Jimmy John’s Avoids Franchisor Joint Liability

Joint employment jimmy john’s overtime litigation

The famous bank robber Willie Sutton supposedly once said that he robs banks “because that’s where the money is.” I doubt he said that since it seems rather incriminating. (“I’m sorry, your honor. What I meant is ‘If I did it…” See, Simpson, O.J.). But that’s the legend anyway. You can read more here on whether it’s true.

The strategy for plaintiffs in overtime cases is much the same. Sue the deepest pockets. That’s where the money is. When the deepest pocket is not your employer, allege joint employment.

That’s what happened in the recent overtime lawsuit against some Jimmy John’s franchise owners (the direct employers) and the franchisor (corporate Jimmy John’s). The lawsuit is cleverly titled In Re: Jimmy John’s Overtime Litigation. Like many lawsuits, the case has dragged on for four years. It has not been freaky fast.

Finally, in late June, a federal judge in Illinois ruled that — under the facts of this case — the franchisor is not a joint employer and cannot be responsible for any overtime violations.

In franchise situations, joint employment is a serious concern. When you order the #14 Bootlegger Club, you expect it to taste the same at every Jimmy John’s store. That’s the essence of franchising. An individual business owner signs a franchise agreement granting it the right to use a company’s intellectual property and requiring it to use the company’s business format and brand standards. The court summarized the Franchise Agreement like this:

The Franchise Agreement provides the franchisee with the license to use Jimmy John’s Intellectual Property, as well as the Jimmy John’s business format, which includes the methods, procedures, signs, designs, layouts, standards, and specifications for Jimmy John’s branded stores. In exchange, Jimmy John’s franchisees are obligated to: (1) make payments to Jimmy John’s, specifically, a certain percentage of their gross sales as a royalty and a separate percentage as a contribution to a national advertising fund; and (2) uphold the “Jimmy John’s Brand Standards” that are essential to the quality and consistency of the Jimmy John’s customer experience.

Does that uniformity make the franchisor a joint employer? The court here said No, but only after four years of intensive discovery as to the level of involvement the franchisor has in the terms and conditions of employment for franchisee employees.

Different courts use different tests for determining whether someone is a joint employer. In the Seventh Circuit (which includes Illinois), the standard for whether someone is a joint employer under the Fair Labor Standards Act (FLSA) is: “A joint employer relationship exists where each alleged employer exercises control over the working conditions of the employees.”

The court then tried to answer that question by applying a four-part test, analyzing whether the franchisor:

(1) had the power to hire and fire employees,

(2) supervised and controlled employee work schedules or conditions of payments,

(3) determined the rate and method of payment, and

(4) maintained employment records.

The court acknowledged that other factors could be considered, but these were the most important.

Dear reader, allow me to interrupt this compelling tale with a reminder about our legal system: Not helpfully, different courts will use different factors to determine whether there joint employment under the FLSA (and courts in the Fourth Circuit will apply a different test entirely). So this test might or might not apply to you.

The court extensively analyzed these factors and ruled that the franchisor was not a joint employer because it did not involve itself in the day-to-day individual employment decisions would be required to find joint employment. (If you want more detail, you can read the decision here or a more extensive analysis by my colleague Greg Mersol here.)

The franchise model remains under attack. The International Franchise Association has been active in trying to promote reform of the U.S. joint employment standard. They want a test that helps assure franchisors that they can sign franchisees without subjecting themselves to lawsuits any time the individual business owners make employment law errors.

Efforts are underway in Congress to pass clarifying legislation, and the NLRB is beginning the process to change the standard through rulemaking, but none of this will happen freaky fast.

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

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How Best to Describe the Effect of Dynamex? Led Zeppelin Songs

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A lot has been written about the Dynamex case, but not enough has been written about it using references to Led Zeppelin songs. I am here to fill the void. Here is a musically-themed update. We’re Going to California. You’re welcome.

Dazed and Confused. Last week, a gaggle of California businesses and trade associations sent a letter to Gov. Brown and the Cal. Legislature, asking for relief from the Dynamex decision and its court-created ABC Test for independent contractor misclassification claims. The letter correctly says, “With one judicial opinion, nearly 30 years of established law has been overturned virtually overnight.”

Communication Breakdown. The letter argues that any change in the standard for determining Who Is My Employee? should be made by the legislature, not the courts. The Industrial Wage Commission, which wrote the wage orders at issue in the Dynamex case, was defunded 15 years ago, before mobile apps existed and before the gig economy took off. So why is a new rule applicable to the new economy coming from a court, instead of the legislature?

When the Levee Breaks. The letter argues that the impact of the Dynamex decision may be massive, disrupting well-established industries and independent contractor relationships. The decision “hinders California as a national leader in the innovation economy.” Businesses feel Trampled Under Foot.

Babe I’m Gonna Leave You. Businesses relying on independent contractor models may leave California. This ruling makes it even more difficult to do business in the Wacky Republic.

What Is and What Should Never Be. Assuming that is a question, the answer is: The Dynamex ruling. (Another acceptable answer would have been: People who walk really slow in airports.)

Hey Hey What Can I Do. The letter asks the legislature to pass a law that eliminates the ABC Test and re-introduces a common sense balancing test like in S.G. Borello.

That’s all I have for now. But before I go, I feel compelled to give a hat tip to my favoritely (?) named Led Zeppelin song, Boogie with Stu.

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

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What Do Rabbits, Swedish Massage, and this Misclassification Study Have in Common?

Independent contractor miscalssification study Georgia State UniversityAccording to the DailySignal.com, the National Institute of Health recently spent $387,000 to determine the health effects of Swedish massage on rabbits. I have not read the study, but I independently conclude that the massages were relaxing and helped to decrease some of the daily stresses faced by small burrowing mammals.

And that brings us to a study being conducted at Georgia State University, partially funded by a similarly wasteful $250,000 grant from the Department of Labor. It’s a study on independent contractor misclassification.

The study is examining 12,000 federal court decisions between 2008 and 2015 to try to determine “the ways in which federal district courts draw the line between employee and independent contractors.” Using text mining and big data tools, the study hopes to uncover “the legal tests that courts used [and] the factors that exerted the most influence on judges’ decisions.”

This is dumb.

This is like watching 12,000 baseball games to try to figure out why umpires sometimes call runners out and sometimes call runners safe. We don’t need to watch 12,000 baseball games to figure that out. We can just look at the rule book instead. The rules explain how to determine when the runner is safe or out. The rules tell you the factors to look at.

Misclassification law works the same way. There are different rules that apply to different laws in different states in different circumstances. When a misclassification claim arises, we just have to look at the proper rule, which tells us the factors to consider. Then we look at the facts and apply the rule and the factors.

The point is, we already know the rules. And we already know the factors. They’re in the rules. We don’t have to examine 12,000 cases to try to reverse engineer the rules and the factors. Just look them up.

Perhaps my frustration is misplaced. Maybe they’ll uncover something new. I doubt it. Meanwhile, I am still thinking about whether it’s even possible to massage a rabbit.

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

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Misled: Gov’t Study Claims Contingent Workforce is Shrinking. False.

Contingent workforce study resultsDespite what you might think from having attended myriad weddings, bar mitzvahs, or other parties, Kool & the Gang has songs other than “Celebration.” (I had to look this up to verify.) One such song is called “Misled.” It includes lyrics like, “She’s as heavy as a Chevy” and “So enticing, he’s sure to take a bite.”

The video hilariously begins with our hero washing his face in the sink – a surefire way, if there ever was one, to heighten suspense and draw the audience in.

Also to draw you in, the Bureau of Labor Statistics (BLS) headlined its just-released study on the contingent workforce by concluding that the number of contingent workers is declining compared to 2005. Whah?

Don’t be misled. (She is not, in fact, as heavy as a Chevy.) BLS’s methodology is flawed and confusing. The study counts only people’s primary jobs. So the hundreds of thousands of people who hold regular jobs and drive for ride sharing apps on the side? Not counted.

Why not? Great question. BLS published a whole page of Q&A, but BLS did not tackle that question, the most obvious of them all.

What does this study tell us? Not much.

We know that the number of workers in the gig economy is vastly greater than in 2005. The year 2005 was before Uber and before Lyft (and before the release of the 2007 studio album Still Kool). The contingent workforce has not shrunk since the gig economy emerged. So if you read a headline that includes the surprising conclusion that the contingent workforce is shrinking, don’t be misled.

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

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Hoisted! Worker’s misclassification claim dooms his own lawsuit

Independent contractor claimThe phrase “hoisted with his own petard” is a Shakespearean idiom used in Hamlet, meaning “to cause the bomb maker to be blown up with his own bomb.” I know this because Wikipedia.

Sometimes this can happen in a lawsuit. Plaintiff Kyle Johnson, retained by a South Carolina firm to perform consulting services, claimed he was misclassified and should have been an employee. He alleged wage violations, wrongful termination, and various other employment law claims, most of which relied on his central premise — that he was really an employee, not an independent contractor.

His claim with the best acronym, however, was his SCUTPA claim — South Carolina Unfair Trade Practices Act. A SCUTPA claim exists where someone has taken money through deceptive trade practices in a way that negatively impacts the public interest. Johnson alleged that the defendant violated SCUTPA because it misclassified him “in order to avoid payroll taxes, overtime pay and other employment-related expenses.” This, he claimed, was against the public interest.

Not so, said the court.

If he’s an employee, as he claimed, then he can’t make a SCUTPA claim. Employer-employee disputes are private, not matters of the public interest.

Had Johnson gone along with his classification as an independent contractor, he would have had a business-to-business relationship, and he might have been able to bring his SCUTPA claim. By alleging he was misclassified and really an employee, he blew up his own claim.

A “petard” is a small bomb used for blowing up gates and walls when breaching fortifications. In Johnson’s case, it can also be used to blow up one’s own lawsuit. Boom.

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

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You can’t pay for English whales (the queen owns those), but you should pay summer interns – as employees, not contractors

Whale summer internships paid unpaid employee independent contractorSome things you can’t pay for. All of the whales and sturgeon that live in English waters, for example, belong to the queen. Under an English statute from 1324, “The king shall have wreck of the sea throughout the realm, whales and sturgeons taken in the sea or elsewhere within the realm, except in certain places privileged by the king.”

So if you wanted to buy an English whale this summer, you may be out of luck. U.S. business should be spending their money elsewhere — like on summer interns! Yes, let’s talk about summer interns. Paid or unpaid? Employee or independent contractor? Have I captured your attention? I knew it. Read on.

Paid or unpaid? The rules have been changing to make it easier to have unpaid interns, provided the internships have educational value and are not for the benefit of the business. This post provides some guidelines. The bottom line, though, is that it’s safest to pay your summer interns.

Employees or independent contractors? If you’re going to pay your summer interns, they’re probably your employees. It’s ok to have short-term, part-time employees. Even if your intern is working a sporadic schedule, a few days a week, a few hours a day, and just over the summer while school is out, your best move is to treat the person as your employee — not an independent contractor. That means you should withhold taxes, and the intern should complete an IRS Form W-4. (The high school kids will give you unforgettable blank stares when you ask them to declare their allowances on line 5. Try it, just for fun. Trust me.)

Your interns are learning the business. They aren’t in business for themselves. They probably meet none of the requirements for establishing independent contractor status — not under ABC Tests, not under Right to Control Tests, not under Economic Realities Tests. Not in a boat, not with a goat.

Summer is great for whale watching and internships. But be sure your interns are properly classified and properly paid. And make sure they know what they can and cannot do. They do not, for example, have “wreck of the sea throughout the English realm,” so update your onboarding materials accordingly.

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

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