Category Archives: Gig Economy

03.16.17
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Contractors Gone Wild! Are You Covered?

independent contractor vs. employee thieves-2012538_1280When an employee embezzles money, a company may look for insurance coverage under a crime policy, for employee theft. When an independent contractor steals money, a general commercial liability may cover the loss. But when an independent contractor acts like an employee, performs services typical of an employee, then steals money — neither coverage may apply.

That’s the harsh lesson recently learned by an Indiana company. Telamon Corporation retained an independent contractor to provide services through a series of consulting agreements. Eventually, the company made her a Vice President (please don’t name your independent contractors “Vice Presidents,” then claim they are not employees!) and put her in charge of recovering old telecommunications equipment to sell it to salvagers. She had other ideas, however. She recovered the equipment and sold it to salvagers, but she kept the money for herself. $5.2 million of it.

That eventually landed her in prison, where she won free use of an orange jumpsuit for five years. I know, she could have afforded a blinged-out $5 million jumpsuit, but she took the free one from the state.

Telamon, meanwhile, tapped its insurers to try to recover the cash.

Continue reading →

03.13.17
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Independent Contractor vs. Employee, Hit List by Industry, 2016-2017

img_1044Are you on the hit list?

The highest concentration of independent contractor misclassification lawsuits during the past 12 months seem to be in these areas:

  • Agricultural workers
  • Beauty consultants (sales)
  • Cable installers
  • Car services (passengers, ride-hailing services)
  • Computer programmers
  • Construction workers
  • Consultants (various industries)
  • Couriers
  • Delivery drivers (food, goods, freight)
  • Exotic dancers (strippers)
  • Freelance writer/reporters/other journalism
  • Information technology workers
  • Installers (cabinets, appliances, windows, furniture)
  • Insurance sales representatives
  • Janitorial franchise owners (individuals)
  • Maintainance workers
  • Newspaper carriers
  • Performers (actors, cheerleaders, wrestlers)
  • Physicians
  • Property inspection services
  • Repair technicians
  • Sales representatives
  • Travel agents
  • Truck drivers
  • Yoga instructors

This list should not in any way suggest that the categories of workers in this list should be employees. That determination will depend on the facts in any given situation. All of these types of workers, however, have been plaintiffs in recent lawsuits alleging that they were misclassified as independent contractors and should have been deemed employees.

Companies who retain these types of workers as independent contractors should take proactive steps to evaluate the facts in these relationships, particularly under the variety of federal and state law tests that may apply. Companies should also remember that because different tests apply to different laws, workers may be properly classified as independent contractors under some laws and some tests, but may be deemed employees under other laws and other tests.

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

03.09.17
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Joint Employment Tests Are All Wrong, Says Federal Appeals Court

Fourth Circuit Adopts More Liberal Joint Employment Test Than NLRB’s Browning-Ferris Decision

IMG_1045(This article originally appeared in Corporate Counsel on March 1, 2017. Click here to view the original.)

Are 59 years of joint employment rulings all wrong? Yes, says a federal appeals court in a landmark Fair Labor Standards Act (FLSA) decision issued in late January.

Relying on a 1958 Department of Labor (DOL) regulation, the Fourth Circuit Court of Appeals has rewritten the test for joint employment, defining the concept so expansively that every outsourced and staffing agency relationship might be deemed joint employment under the FLSA. The decision in Salinas v. Commercial Interiors, issued unanimously by a three-judge panel (all Obama appointees), takes a more radical position on joint employment than even the NLRB took in its controversial 2015 Browning-Ferris decision.

The Court of Appeals concludes that everybody – including the DOL itself – has been misinterpreting the DOL’s joint employment regulation for 59 years.

Is that possible? Can the Court literally mean that? Or is this an example of the adage, “bad facts make bad law”? The facts in Salinas suggest there was probably a joint employment relationship under any test. It remains to be seen how this test will be applied and whether decades of court decisions and DOL guidance will truly be disregarded.

Meanwhile, employers in North Carolina, South Carolina, Maryland, Virginia, and West Virginia are immediately and directly impacted, since these are the states that the Fourth Circuit covers.

What Happened?

Continue reading →

03.06.17
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D.C. Court Doesn’t Fall for NLRB’s Lollipop Trick, Deems FedEx Drivers Independent Contractors

img_1042Act I, Scene 1

Location: Anywhere, USA

Boy: Can I have a red lollipop?

Mom: No, we’re eating dinner in half an hour.

Boy: (eats blue lollipop)

Mom: What are you doing? I said no!

Boy: I only asked about the red lollipop.

Too cute by half, right? Mom is no fool and easily sees through the simple trick. The boy is grounded.

Act I, Scene 2

Location:  D.C. Court of Appeals

NLRB: These FedEx drivers in Massachusetts are employees, not independent contractors.

D.C. Circuit (2009): No, they’re independent contractors.

NLRB: Ok, Connecticut then. The FedEx drivers in Connecticut are employees, not independent contractors.

D.C. Circuit (2017): Are you kidding me? We already ruled they are independent contractors.

NLRB: Last time I only asked about the drivers in Massachusetts.

Continue reading →

02.28.17
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Tip of the Day: Beware of the Million Dollar Unemployment Claim

money-finance-wealth-currency-68148

If your former contractor files for unemployment, pay attention!

When a former employee files for unemployment, it hardly matters to the business whether the individual gets unemployment coverage. Unless the individual had voluntarily quit, benefits are usually allowed. No big deal.

When an independent contractor files for unemployment, however, beware. Unemployment insurance coverage is available only to employees, not to independent contractors. For a contractor to obtain coverage, the state must first determine that the contractor was an employee.

This determination can have far-reaching economic consequences to the business, extending well beyond the individual contractor.

First, if your contractor was misclassified and is deemed an employee, you were not paying into the state unemployment insurance pool for that contractor — or for all contractors who are similarly situated. The state wants your money and may issue back assessments (and penalties and interest) for having failed to pay into the system — not just for that individual but for all other individual contractors who performed the same type of work.

Back assessments can stretch back years and can add up quickly, particularly for businesses that retain a large number of individual contractors.

Second, the impact of a misclassification finding can quickly snowball beyond the land of unemployment insurance.

Continue reading →

02.23.17
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Sticks & Stones: What Not to Call Your Independent Contractors

sticks-and-stones-names-independent-contractor

“Sticks and stones can break my bones, but names will never hurt me.” Au contraire. That old adage may have rang true on the playground — or more likely, it probably got you beat up if you actually said it on the playground — but it does not ring true when speaking  about your independent contractors. Words matter. A lot.

Remember, any court or agency evaluating whether your independent contractor relationship is properly classified (and is not employment) will look to the facts. The facts include whether the parties refer to the relationship in ways that resemble employment. Avoid using terms that sound like employment.

Here are 14 things not to say about your independent contractors: Continue reading →

02.20.17
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Boom? Is the California Supreme Court About to Blow Up the Test for Independent Contractor Relationships?

california-independent-contractor-dynamex-boomThe California Supreme Court may be about to rewrite the test for Who Is My Employee? under California wage and hour law.  [Note 4/30/18: It just happened. Read more here.]

Independent contractor relationships that have stood the test of time may be in jeopardy.  And I don’t mean the (mildly?) entertaining Alex Trebek kind of Jeopardy. We’re talking real economic upheaval and uncertainty — worse than Schwarzenegger taking over Celebrity Apprentice.

Here’s the issue: Continue reading →

02.13.17
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Why Your Standard Agreements with Staffing Agencies Are Risky Business (Starring Tom Cruise)

broken-glass-joint-employment-agreementIt’s Valentine’s Day. You and your sweetie want to get away for the weekend. Your high school offspring will stay home. They seem responsible, promise not to break the law, and promise if they break anything they will pay for it. So you’re good, right?

Come on, wake up. Have you seen Risky Business? American Pie? House Party (very underrated movie, by the way)? Continue reading →