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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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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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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Exotic Dance Marathon Ends with $4.5 Million Misclassification Award

Dollar independent contractor misclassification millionsThe Penthouse Club of Philadelphia was hit with a $4.5 million jury award for having misclassified its dancers as independent contractors. This case was filed in 2013, and the federal court just recently entered the judgment order.

For those of you seeking business lessons from stripper lawsuits, today is your lucky day!

The dancers had alleged that they were treated as employees but not paid as employees. For example, they alleged that the club required them to work a set number of hours and days each week, required them to comply with physical appearance guidelines, and took deductions from their tips for what we’ll call special kinds of dances.

The Club fought hard for five years but could not overcome the negative facts in the case. Remember, the determination of whether someone is an employee or a true independent contractor is not based on what the parties agree. It’s based on the facts of the relationship.

This was primarily a Fair Labor Standards Act lawsuit, and so the Economic Realities Test is used. Other laws apply a Right to Control Test. Some states use a more difficult ABC Test.

Independent contractor misclassification lawsuits can be a tremendous liability, and businesses using contractors should be proactive and set up the relationship in a way that will withstand a challenge. When a business maintains control over hours, days of work, worker appearance, location of work, and other aspects of how the work is performed, the relationship starts to resemble employment.

In this case, the Club not only is on the hook for $4.5 million. They had to pay their attorneys’ fees, they’ll continue to pay their attorneys’ fees if they appeal, and they had to slog through six years of painful, time-consuming litigation that was undoubtedly a distraction from the business of running whatever type of classy joint they have going there. [Note to wife: I did not do any onsite investigation.]

We’ve seen lots of activity lately in the field of “exotic dancing.” I mean misclassification activity, and lawsuit activity, just to be clear on what I’ve been “seeing.” See other multi-million dollar misclassification awards here and here, all of which are SFW.

Businesses that use independent contractors need to evaluate the facts of the relationship and need to be proactive in setting up the facts to support true independent contractor status. Those who fail may get an extra long high-heeled kick in the rear.

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

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Do ABC Tests Matter if my Business is not in California? (Yes!!!)

ABC Test Califoirnia Dynbamex Massachusetts other states

According to Michael Jackson and his brothers (don’t forget Tito), ABC is easy as 1-2-3, and it’s also easy as do-re-mi. According to Julie Andrews, in Do-Re-Mi, once you know the notes to sing, you can sing most anything. This is not technically true, as once demonstrated by William Hung.

ABC may sound easy, and some people might think they can sing anything.  But actual compliance with ABC Tests is not easy — and yes, every business needs to think about how it would comply with ABC Tests. (For background on What is an ABC Test?, read here and here.)

ABC Tests are not just in California. Massachusetts uses an ABC Test to determine who is an employee under state wage law. New Jersey uses an ABC Test to determine whether someone is an employee or independent contractor for state wage law. Unemployment too.

For unemployment purposes, lots of states use ABC tests to determine whether someone seeking unemployment coverage was your employee or an independent contractor. These states include Connecticut, Delaware, Illinois, Indiana, Massachusetts, Nebraska, Nevada, New Hampshire, New Jersey, Vermont, Washington, and West Virginia. There are more but I started prioritizing my list by number of electoral votes.

Because ABC Tests are stricter than ordinary balancing tests (like Right to Control or Economic Realities tests), your company may be required to make unemployment contributions for individuals who are independent contractors under most laws but are employees under your state’s unemployment compensation law. You could owe back assessments and penalties for failing to pay into the state unemployment insurance fund.

New York, Pennsylvania, and D.C. use ABC Tests for work performed in the construction industry.

Some states use even tougher multi-factor tests to determine whether an individual presumed to be an independent contractor is really an employee. Maine has an ABCDE Test, meaning each of five factors must be met (plus another 3 from a list of 7, creating a veritable menu of family-style Chinese take-out for misclassification). New Hampshire uses an ABCDEFG Test to determine whether someone is an employee subject to its workers compensation and wage and hour laws.

Congressional Democrats, including Bernie Sanders and his hair, have introduced a bill that would use an ABC Test to determine whether someone is an employee under the NLRA. The bill has no chance to become law unless (until?) the Democrats control both houses of Congress and the Presidency, but for now, it’s worth noting that there is a desire among some lawmakers to adopt sweeping changes to the definition of employee.

The point is that ABC tests are prevalent already — and they are expanding. The California decision adopting an ABC Test was issued three years after the New Jersey Supreme Court adopted a similar (but less stringent) ABC Test for its state wage and hour laws.

With more state legislatures and state supreme courts considering changing the tests, we can expect this trend to continue. We can expect more states to adopt ABC Tests, especially in states where the courts (like in California) make up ABC Tests without legislative input. For a legislature to pass an ABC Test, it takes some work, bicameral support, and usually the signature of a governor. For courts to make up new ABC Tests, however, it’s easy as 1-2-3, do-re-mi.

Business should be thinking proactively about whether their contracts, relationships, and public-facing statements (such as in websites) will allow them to support independent contractor status when an ABC Test is used to determine WhoIs My Employee?

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

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