Dept of Labor May Redefine Joint Employment with New Rule, Hints Labor Sec’y

DOL may issue new rule for joint employment

Rules are important for avoiding chaos, as I am reminded daily by one of my favorite twitter accounts, @CrimeADay. That’s where I learned that it’s a federal crime to operate a manned (or unmanned) submersible in national park waters without a permit, thereby ruining my weekend plans. (18 USC 1865 & 36 CFR 3.19). I also learned it is a federal crime to bring a child to a cockfight before his or her 16th birthday, thereby ruining my winter plans for father-daughter bonding activities. (7 USC §2156(a)(2)(B) & 18 USC §49(c).)

The Department of Labor (DOL) thinks rules are important too. Taking a page from the NLRB, which last week issued a Notice of Proposed Rulemaking to redefine “joint employment” under federal labor law, the DOL may be about to follow suit.

In a speech to members of the American Hotel & Lodging Association and the Asian American Hotel Owners Association, Labor Secretary Alex Acosta disclosed that the DOL is working on a proposal to redefine joint employment, presumably under the Fair Labor Standards Act (FLSA), which requires the payment of overtime and a minimum wage.

Joint employment is a hot button issue in the hospitality business, where outsourcing functions like housekeeping is commonplace, and where joint employment can mean the hotel operator is liable for for wage and hour violations by other entities who are supplying labor.

As we have discussed in previous posts, the tests for joint employment are different depending on which law is being applied. That means that even if the NLRB revises the definition of joint employment, that new test would not apply to the FLSA. The DOL would need to write a separate rule that would define joint employment under the FLSA.

According to Acosta, that new rule may soon be on the way.

Until then, remember that it is illegal to take a fishing boat into the danger zone of the Potomac near the Naval Surface Warfare Center while they’re firing guns, aerial bombing, using directed energy, or other hazardous operations, unless the patrol boats let you in. (33 USC §3 & 33 CFR §334.230(a)(2).)

Thanks, @CrimeADay!

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

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DOL: Association Health Plans Are Not Evidence of Joint Employment

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For some conditions, medical treatment will not help. For example, in 1979, Robert Palmer had “a bad case of lovin’ you” and no pill was gonna cure his ill. It is unknown whether this condition ever cleared up. At last report, Palmer had become addicted to love.

For those with conditions where pills can cure ills, or for those (like Huey Lewis?) who just want a new drug, medical coverage can be important. A new DOL rule allows small businesses to participate in Association Health Plans without exposing themselves to joint employer liability.

An Association Health Plan (AHP) is a group health plan that allows small employers to band together to purchase the types of coverage that are available to large employers, which can be less expensive and better tailored to the needs of their employees. AHPs can be formed based on common geography or based on a common industry or trade group.

The Department of Labor recently issued FAQs and a lengthy rule about AHPs, but for our purposes, one of the important pro-business features is that participation in an AHP cannot be used as evidence that the participant employers are joint employers under federal wage and hour law or employee benefits law.

The rule also recognizes that businesses may contract with individuals as independent contractors and that jointly participating in an AHP with these independent contractors does not make the business an employer or the contractor an employee.  The inclusion of independent contractors in an AHP is not evidence of misclassification.

The rule takes effect August 20, 2018.

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

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When Sharks Talk to Bears: Beware of Cross-Agency Communications When Defending Independent Contractor Misclassification Claims

Shark independent contractor misclassification information sharing agreements

According to National Geographic, A 20-year old Colorado man has been bitten by a shark, a bear, and a snake.

Either the animal kingdom hates this guy, or he simply tastes delicious.

Formal information sharing across species is probably unusual, but within government agencies, it’s a thing. Businesses need to be aware of cross-agency information sharing when defending audits and defending agency enforcement actions related to independent contractor misclassification.

Federal and state agencies are particularly focused on sharing information about independent contractor misclassification. The Wage and Hour Division of the DOL has signed information sharing agreements with 27 states. The IRS and the DOL have a Memorandum of Understanding. Tax agencies share information too.

This network of cooperation can spell trouble for businesses undergoing 1099 audits or other agency investigations related to potential independent contractor misclassification.

A small assessment by a state agency may not seem like it’s worth fighting, but beware. Information sharing agreements may cause the assessment to multiply. Adverse findings might also be discoverable in litigation if there’s a civil lawsuit.

In other words, you could be viewed as an easy target, having been found already to be in violation.

A finding of independent contractor misclassification by one state agency may feel like a minor snake bite (I don’t know if there is such a thing as a minor snake bite, but stay with me here).  The snake, however, may share information with the shark, who will tell the bear, and before you know it, you’re that guy in Colorado who’s been bitten by all three.

Ouch!

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

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Selling Hot Dogs: Why the DOL Thinks It’s 2008 Again

Dol wage and hour guidance hot dogs

The year 2008 doesn’t seem that long ago. Flo Rida was atop the Billboard charts, No Country for Old Men won the Oscar for Best Picture, and Episode 1 of the 2008 season of Celebrity Apprentice (titled, “Selling Hot Dogs” [yes, really]) featured the judging panel of Donald Trump, Donald Trump Jr., and Ivanka Trump. More on Episode 1 below.

The DOL must be longing for the good old days. Earlier this month, the Wage & Hour Division quietly withdrew its 2014 Fact Sheet advising businesses how to differentiate employees from independent contractors under the FLSA.

Instead, they reposted the 2008 version. In practical terms, there’s probably no real effect. The statute and the regulations that would govern the analysis haven’t changed between 2008 and 2014. But the 2014 version (cached copy here) also included some Obama-DOL commentary, advising that “most workers” are employees under the proper analysis. The old/new 2008 version doesn’t say that.

In any event, what businesses need to know is that courts apply an Economic Realities Test when deciding Who Is My Employee? under the FLSA.

The FLSA is the federal statute requiring non-exempt employees to be paid minimum wage and overtime. It does not apply to independent contractors, which is one reason why misclassification matters. If you thought your worker was properly classified as an independent contractor, then the minimum wage and overtime requirements did not apply. If the worker was misclassified and was really an employee, your business may be held liable for failing to pay minimum wage and overtime.

And for those of you who read all the way to the end of this post hoping to be rewarded with more information about the outcome of Episode 1: Selling Hot Dogs, there’s this from Wikipedia:

Winning team: Hydra, with total sales of $52,286.
Reasons for win: Hydra used their celebrity status to drastically up-sell the hot dogs and Gene Simmons used his contacts to put impressive numbers. Piers Morgan also came up with an idea whereby anyone who paid $100 or more for a hot dog would get to have their picture taken with one of the celebrities, encouraging passers-by to make more substantial donations.

Good job, Piers. You should be proud.

For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in 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.

Free Bird! Dep’t of Labor Rewrites Test for Unpaid Internships

chicks-2965846_1920Lots of things are free in the world of music. There’s Free Bird (Lynyrd Skynyrd), Free Money (Patti Smith), and according to Dire Straits, you can get your money for nothin’ and your chicks for free.

For the most part, though, you’ve got to pay for your interns. Or do you?

On Friday, the DOL announced it was reversing its 2010 guidance on Internship Programs under the Fair Labor Standards Act. Since 2010, the DOL had been taking the position that unpaid interns are employees and must be paid unless each of six factors were present. Here’s the old DOL fact sheet and six-factor test.

The DOL has now changed course, after four U.S. Court of Appeals decisions rejected the DOL’s test as too strict. The DOL now opted for a balancing test. The balancing test asks whether the intern or the business is the “primary beneficiary” of the internship.

The DOL’s new guidance adopts the same balancing test recently favored by the courts.

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Would You Like Some Pepperoni with Your (Oops) Joint Employment?

Joint employment pizza 31E83EC5-E554-428A-A5D6-37F13905C3B9According to pizza.com, “There are approximately 61,269 pizzerias in the United States.” That number seems pretty precise to me, not an approximation, but who am I to question something I read on the internet?

Approximately 4 of the 61,269 pizzerias are owned by a New Yorker named Paola P., who runs each of the 4 under a different LLC. Paola’s employees can be assigned to any of the 4 pizzerias on their workdays. Seems boring so far, but stay with me. Now say this three times fast:

Paola’s practice prompted problems since Paola P’s pizzerias were impermissibly positioning personnel to prevent paying overtime. 

Pity.

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For the Greater Good: When Do You Have to Pay Volunteers?

One of my favorite movies is Hot Fuzz, the story of an overzealous London policeman (Simon Pegg), who transfers to a small town where things are not as they seem. Throughout the movie, various characters declare that something is being done “for the greater good.” Watch the movie. I won’t play spoiler. After you watch, go to imdb.com and read more about all the subtleties you may have missed. Trust me on this one.

Anyway, this is the part of the blog post where I segue from a totally unrelated pop culture reference to something related to employment.

Today we’ll talk about volunteers — you know, those who perform work “for the greater good” (nailed it!).

Where is the line between volunteers and employees, and when must volunteers be paid?

The Department of Labor (DOL) is pretty tough when it comes to determining Who Is My Employee?  As explained here, a worker not in business for himself/herself is usually presumed to be an employee under the Economic Realities Test.

The DOL, however, recognizes an exception for work that is truly volunteer work — so long as it’s not wink wink nod nod really employment.

What’s the difference?

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