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?

The key components of true volunteer work are:

  • Voluntary service
  • Offered freely, without pressure or coercion, direct or implied, from an employer
  • When so motivated
  • For civic, charitable, or humanitarian reasons
  • Without promise, expectation, or receipt of compensation
  • Service is not provided to a for-profit private entity

When these factors are met, the work is being performed for the greater good. It’s most likely volunteer work, not employment, and therefore not compensable.

If all of these factors are not met, be careful. The work might be compensable employment.

It’s never a bad idea to have volunteers sign a Volunteer Agreement in which they agree to all of these items, especially that they have no expectation of compensation for what they are doing.

Now go and watch the movie.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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When to Embrace Joint Employment, and When to Run Like Hell (Pink Floyd, 1979)

Joint employment risks dangers choices joint employer IMG_1101Life is full of serious questions. For example, Should I stay or should I go? (The Clash, 1982). Or, Will you love me forever? (practically every song ever, but for now, we’ll go with Meatloaf in Paradise by the Dashboard Lights, 1977).

When engaging non-employee workers, businesses must also confront a serious question: Embrace joint employment, or try to avoid it? (Frank Zappa confronted a different kind of serious question in Why Does It Hurt When I Pee?, 1979, but that’s beyond the scope of this blog.)

Many of my posts have been geared toward strategies for trying to avoid joint employment. There is another way, though. Sometimes, it may be better to embrace joint employment. But know the pros and cons.

Here are some things to consider:

Pros:

So, you’re thinking of embracing joint employment? That’s certainly an option. If you go in this direction, you can exert all the control you want over your non-employee workers. Tell them how to do the work, supervise them, discipline them, make them follow all your rules. Let them have a company email address and fancy name badge. If the workers are going to be joint employees anyway, there’s no reason to hold back.

You still have the benefit of having another company handling the administrative burdens like payroll and onboarding. You avoid adding to employee headcount, and you probably maintain some extra flexibility in setting staffing levels if your business is experiencing ebbs and flows.

Cons:

The biggest downside to joint employment is the risk of joint liability for errors you didn’t make. Did the staffing agency underpay overtime? Or miscalculate hours worked? Or fail to pay for time worked off the clock? Or hire illegal aliens? Or fail to file proper tax forms?

You get the picture. If you are a joint employer, your business is equally responsible for the consequences of any of these errors, even though you had nothing to do with them.

Yes, you can include an indemnity provision in your contract, but that should provide only limited comfort. Is the staffing agency adequately insured? Will they stand behind their promise? Do you want the hassle of defending an audit or lawsuit, then trying to rely on a contract to recover your losses? (Read more on the dangers of joint employment here.)

Joint employment can still be full of nasty little surprises, even when you go into it with your eyes open to the risks.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Joint Employment Legislation Needs to Be Expansive — If It’s to Be Effective

IMG_1093On Monday, we wrote about the Save Local Business Act — proposed legislation that, if passed, would create a new definition for joint employment under the NLRA and FLSA. But would that law go far enough?

No. Not at all.

On the bright side for businesses, the law would provide some predictability in that staffing agency workers would most likely be excluded from bargaining units. It would also remedy the current unfairness that results when a staffing agency makes payroll and overtime miscalculations but the company using the workers is held responsible as a joint employer.

But much more needs to be done to provide real clarity and predictability for business owners.

First, the law fails to address who is a joint employer under other federal employment laws, including the Family and Medical Leave Act, Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Occupational Health and Safety Act. Vast uncertainty in these areas would remain.

Second, the law does nothing to address the patchwork of standards under state and local laws. Businesses are subject to those laws too, and it’s fairly common that state and local standards for determining joint employment differ from state-to-state and law-to-law.

Businesses that operate in multiple locations would still be subject to different standards under different laws in different locations. The HR Policy Association has recommended that any legislation intended to clear up the messy patchwork of joint employment standards should include federal preemption or a safe harbor provision — something to ensure that businesses can rely on one set of rules to know whether they are a joint employer or not. That would make much more sense.

The newly proposed legislation has a long way to go. It might never even get to a vote. Let’s hope, however, that the introduction of this bill is just a first step, and that through the amendment process or through a Senate bill, its shortfalls will be addressed.

Business deserve the certainty that would come from a more comprehensive piece of legislation.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Congress May Rewrite “Joint Employment” Definition

IMG_1092Congress may finally provide some clarity in determining who is a joint employer. In legislation introduced last week, the House proposed a bill that would rewrite the definition of “joint employer” under federal labor law (National Labor Relations Act) and federal wage and hour law (Fair Labor Standards Act).

The Save Local Business Act — despite lacking a fun-to-say acronym — would create a new standard for determining who is a joint employer under these two laws. The proposed new standard would allow a finding of joint employment “only if such person [business] directly, actually, and immediately, and not in a routine and limited manner, exercises significant control over the essential terms and conditions of employment….”

The definition provides examples of what are “essential terms and conditions,” including:

  • Hiring employees;
  • Discharging employees;
  • Determining individual employee rates of pay and benefits;
  • Day-to-day supervision of employees;
  • Assigning individual work schedules, positions, and tasks; and
  • Administering employee discipline.

No longer would a business be deemed a joint employer for exercising indirect or potential control, as permitted by the NLRB in its 2015 Browning-Ferris decision, which is currently on appeal. (Read more about that here.)

The bill would also overrule a recent decision by the Fourth Circuit Court of Appeals that vastly expanded the scope of joint employment under the FLSA, but only for a handful of Mid-Atlantic states.  Read more on that dreadful decision here.)

As illustrated in this colorful map, the current standard for who is a joint employer varies by which law is being applied and by where you live. The bill, if passed, would provide much-needed clarity in the law — or, at least in some of the laws. The bill would not affect the FMLA, federal anti-discrimination law, or any state or local standards. (In other words, loyal reader, you’ll still need this blog. Ha!)

The bill was introduced by Rep. Bradley Byrne (R-Ala.), but already shares some bipartisan support, with co-sponsors including Virginia Foxx (R-N.C.), Tim Walberg (R-Mich.), Henry Cuellar (D-Texas) and Luis Correa (D-Calif.).

Here’s the current bill.  It’s short, so don’t be afraid to click.

No one knows whether this proposed law will take effect or will even reach a vote (except perhaps Carnac the Magnificent!).  But we can expect significant support from the business community, which may create some momentum toward consiuderation and passage. The National Association of Home Builders has already issued a press release praising the proposed legislation.

If Congress wants to make a positive impact on businesses large and small, this bill could do it. So now let’s all sit back and watch how they screw it up.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Map Shows Joint Employment Tests Are a Mess!

IMG_8284The tests for determining whether a business is a joint employer vary, depending on which law applies. That means there are different tests under federal labor law, wage and hour law, and employee benefits law, to name a few. There are also different tests under different states’ laws.

Further complicating the analysis, there are even different tests when applying the same law — depending on where you live.

Yes, you read that right. Even though the Fair Labor Standards Act (FLSA) is a federal wage and hour law that applies across the country, federal courts in different states use different methods for determining whether a business is a joint employer under that single law.

Same for Title VII. Although this federal anti-discrimination law applies to businesses coast-to-coast, a business can be deemed a joint employer under Title VII on the West Coast and not on the East Coast. Or vice versa. Or yes in Virginia, but no in Pennsylvania. Huh?

We’ve discussed this complication in other posts — such as here and here — but not in graphic form.  Thanks to Richard Heiser, who is in the Legal Department at FedEx Ground, we now have this beauty!

(Heiser testified recently before a Congressional committee on the need for legislation to clear up the confusion.)

The map shows that, depending on where in the U.S. you live, the test for determining whether you are a joint employer varies under the FLSA (color) and under Title VII (pattern).

The map illustrates quite nicely how difficult it is for multi-state employers to determine whether they have responsibilities as a joint employer or not. Editor’s Note: Alaska and Hawaii are not to scale. All U.S. maps are required to say that under federal law. Or not, depending on where you live.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Misclassification settlement strips $6 million from Club Assets

IMG_1090When I was an undergrad at Michigan, any time I would drive to the airport or to Tiger Stadium, I’d see billboards for Deja Vu, a strip club with (apparently) lots of locations. I never visited (not into that sort of thing, thanks for asking), and I never thought much of it. I certainly did not expect to be writing about Deja Vu and independent contractor misclassification 25 years later. But here goes.

When patrons of these fine establishments partake in the traditional lap dance, it’s doubtful they’re thinking about whether these often-single-mom “entertainers” who are just trying to make a living have been properly classified under wage and hour law. More likely, they’re thinking about — never mind.

But that’s an important issue, as Deja Vu recently learned, when it was sued by a class of 28,177 dancers alleging they were misclassified as independent contractors, rather than paid as employees. The class alleged that the clubs intentionally misclassified them as contractors, failed to pay them minimum wage, unlawfully required them to split gratuities, and unlawfully deducted wages through rents, fines, and penalties.

After a fairness hearing in federal court in Detroit, the parties finalized a $6.55 million dollar settlement. In addition to cash compensation, the settlement includes an unusual provision allowing dancers to choose whether to be contractors or employees.

Dancers will receive between $443 and $6,007 each. Their lawyers will enjoy a payout of $1.2 million in fees, which could buy them a lot of — never mind.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Two Key Developments in Joint Employment are Expected This Week

IMG_1091.JPG

This could be a busy week for developments in the joint employment area.

1) Congressional Republicans have begun drafting legislation that could change the definition of joint employment, Bloomberg BNA reports. Presumably the goals of a new bill would be (a) to add clarity to the standards for deciding who is a joint employer, and (b) to make it more difficult for workers or unions to claim they are jointly employed.

The scope of the proposed legislation is yet to be determined. It would most likely roll back the NLRB’s Browning-Ferris decision and restore the prior test for joint employment, requiring more substantial evidence of control. House Republicans have also hinted that they may broaden the scope of the proposed bill and address the standard for joint employment under federal wage and hour law (FLSA) and health and safety (OSHA) as well.

Key supporters of the proposed legislation include Rep. Bradley Byrne (R-Ala.), House Education and the Workforce Committee member, and Rep. Tim Walberg (R-Mich.), chairman of the Education and the Workforce Subcommittee on Health, Employment, Labor and Pensions. The U.S. Chamber of Commerce is involved in this effort as well.

A committee hearing entitled, Redefining Joint Employer Standards: Barriers to Job Creation and Entrepreneurship, has been scheduled for July 12, at 10:15 am.  It can be live-streamed on the web. Click here for more information.

2) On the following day, July 13, hearings are scheduled on the nominations of William Emanuel and Marvin Kaplan to join the NLRB. The hearings will take place before the Senate Health, Education, Labor & Pensions Committee. If recommended by the committee, the full Senate would then vote on the appointments.

If confirmed, these two new members would return the Board to a 3-2 Republican majority for the first time since the beginning of the first Obama administration.

The newly configured Board is likely to roll back the expansive Browning-Ferris decision, which made it substantially easier for workers to claim they are joint employees under federal labor law. Last week’s post about these nomination contains more detail.

I’ll provide further updates as new developments take place.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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