Who Pays for Reasonable Accommodations to Staffing Agency Workers? Ask Shorty.

Limb lengthening reasoable accommodation

Suppose you’ve got a staffing agency worker (we’ll call him Shorty) who’s a bit vertically challenged and is self-conscious about it. He tells you he’s gonna need some time off because he found this:

A limb-lengthening clinic in Las Vegas claims it can make you a few inches taller through minimally invasivce surgery. According to this article on OddityCentral.com, here’s how it works:

“We cut the leg bones – either femur (upper leg bone) or tibia (lower leg bone) – and insert a device that slowly stretches them out which makes you taller permanently.”

“I insert a device that responds to an external remote control that the patient will control at home. Once the device is set, I place screws at the top and bottom of the device to lock into position. This is done on each leg.”

The doc says you then just press a button at home and you’ll stretch by 1 mm a day. Just like nature intended.

So, back to Shorty. Suppose he has this surgery one weekend and comes back to work a bit achy from all the stretching. He wants some extra breaks to get him off his feet. Or he wants you to provide him a stool so he can rest more often from his station on the assembly line. Do you have a reasonable accommodation obligation?

If you’re in HR, you know that weird stuff happens, so maybe you hadn’t considered limb-lengthening, but let’s use this as an excuse to think about relationships with staffing agency workers and what your obligations might be for medical issues.

This is unlikely to be a disability situation, unless Shorty’s stature is due to a medical condition. But you’ll undoubtedly have staffing agency workers who do have disabilities and who do need reasonable accommodations.

That brings us to today’s Tip of the Day:

Consider adding to your staffing agency contracts a clause requiring the agency to pay the expenses for any reasonable accommodations provided to qualified staffing agency employees to allow them to perform their job functions.

Accomodations can sometimes be expensive, and it’s not unforeseeable that staffing agency workers will need accommodations at some point. Plan ahead, and build this contingency into the contract.

A clause like that may lengthen your contract a bit, but this lengthening can be done in a sentence or two — with no surgical intervention, no cuts in your femur or tibia, and no insertion of a stretch button in your leg. That’s the kind of lengthening I’d be much more inclined to try. I’ll leave my limbs just the way they are.

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© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Gator in Your Basement? Nope, That’s Just the NLRB Sharpening Its Joint Employer Test

NBLRB joint employer new regulation 2020

“Be careful as you go down the stairs, officer. An alligator lives in my basement.”

Police in Madison Township, Ohio, last week found a 5-foot gator penned in the basement of a family home. The family said that “Alli” was a pet they’ve raised for 25 years, since purchasing him as an adorable little tot at a reptile shop. (My, how they grow.)

The family accepted responsibility and avoided legal liability because they allowed to police to remove the animal.

A larger battle over responsibility and legal liability was also decided last week, but this battle was over the meaning of “joint employment” under the National Labor Relations Act (NLRA).

Here’s a quick Q&A to get you up to speed on the new regulation.

What happened?

On February 26, 2020, the National Labor Relations Board (NLRB) published a new regulation that changes the rules for determining whether a business is a joint employer under the NLRA.

What do you mean by joint employer?

When one business hires another business to provide services, the business providing the services is the primary employer. We see this often in staffing agency arrangements. The staffing agency is the primary employer. The primary employer is responsible for treating its workers as W-2 employees and doing all the things an employer is supposed to do.

If the business receiving the services exercises sufficient control over the workers, it can be deemed a “joint employer” of those workers. The workers would have two employers simultaneously.

Why should I care if I am a joint employer under the NLRA?

Being a joint employer creates rights and obligations under the NLRA on issues such as collective bargaining, strike activity, and unfair labor practice liability:

  • If the employees are represented by a union, the joint employer must participate in collective bargaining over their terms and conditions of employment.
  • Picketing directed at a joint employer that would otherwise be secondary and unlawful is primary and lawful.
  • Each business comprising the joint employer may be found jointly and severally liable for the other’s unfair labor practices.

Does the new rule make it harder or easier to be deemed a joint employer?

Much harder. The new rule significantly narrows the circumstances when a business can be deemed a joint employer.

What’s the new test?

Under the new regulation, a business can only be a joint employer of another employer’s employees only if it exercises “substantial direct and immediate control” over the “essential terms and conditions” of the workers’ employment.

What are essential terms and conditions?

Wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

Can you give me an example of how that works?

No.

Please?

Ok. I was just messing with you.

Let’s look at wages. You retain a staffing agency. You negotiate a cost-plus arrangement. You negotiate the rate you’ll pay the staffing agency per worker per hour, but the staffing agency determines the rate of pay each worker will receive. That’s not substantial and direct control because the staffing agency sets the wages of the worker.

Let’s consider discharge. You want to remove a staffing agency worker from the project. You instruct the agency to remove the worker. That’s not substantial control over whether the worker is discharged from employment. It’s up to the agency what to do with the worker next — reassign the worker, discharge the worker, tar and feather, etc.

How does this affect background checks and other terms in my contract with the primary employer?

Commonplace and routine clauses, like requiring the agency to perform background checks, are not evidence of joint employment.

In a dispute over whether there’s joint employment, who has the burden of proof?

The party asserting that an entity is a joint employer has the burden of proof.

Is the NLRB’s new joint employer regulation the same as the DOL’s new joint employer regulation?

Of course not. That would make this way too easy, and you wouldn’t need your lawyers as much.

In January 2020, the Department of Labor published a new regulation that sets up a new test for determining whether an entity is a joint employer under the Fair Labor Standards Act (FLSA). There are similarities in the tests. Both tests require the actual exercise of control for there to be joint employment. Previously, the mere right to exercise control was enough. But the tests are different.

You can read more about the DOL test here.

So now there are two tests for joint employment — one under the FLSA and one under the NLRA?

Ah, so naive. Who’s coming up with these questions, anyway?

Nope, there are lots of tests for determining who is a joint employer; and the tests differ based on which law we’re looking at — and based on who’s looking at it.

The DOL announced its new regulation for determining joint employer status under the FLSA, but unless you’re in a DOL audit, that doesn’t mean much. No court has adopted the new regulation yet, and we don’t know whether courts will defer to the regulation or disregard it. There will be litigation over whether the DOL has the right to redefine “joint employer” and limit the scope of a statute (the FLSA) passed by Congress.

The states have their own tests for determining joint employer status under state employment laws. Some states might defer to the regulations, but many states won’t.

But the NLRB regulation is here to stay, right?

Maybe, maybe not. In late 2018, the D.C. Circuit Court of Appeals ruled that the NLRB has no right to redefine “joint employment,” since the question of whether someone is an employee under the NLRA is governed by the common law test of agency — essentially, a right to control test.

But the NLRB chose to disregard that decision and issued its new regulation anyway.

But how can the NLRB enforce a new regulation defining “joint employer” when a federal court has said it can’t do that?

Because the NLRB will just do it anyway. There are 12 federal circuit courts of appeal, and they often disagree. The NLRB has a longstanding practice of ignoring rulings by the federal courts of appeal, except as to the specific case and the specific parties before that specific court. The NLRB takes the position that it must follow rulings by the Supreme Court, not the federal circuit courts of appeal.

So what’s the real status of the new NLRB regulation?

The NLRB will apply this new regulation in all of its proceedings. The new regulation takes effect April 26, 2020, which is 60 days after its publication in the Federal Register.

If NLRB rulings are appealed to a court, it remains to be seen whether some courts will apply the new regulation. The D.C. Circuit Court of Appeals probably will not.

Is the new regulation permanent?

It’s intended to be. There are at least three ways it could be undone.

  • Future NLRB members with a more pro-worker orientation could enact a new regulation that changes the definition.
  • Congress could pass a statute that redefines joint employer status. The statute would override the regulation.
  • The Supreme Court could rule that the NLRB has no authority to create a joint employer test.

Until one of those three things happens, the new test will stick around for a while, like a pet alligator. The Board will apply the new test to NLRA issues.

What happened to the alligator?

It has been relocated to an animal sanctuary in Myrtle Beach, South Carolina. Despite its new residence, the gator was deemed ineligible to vote in last Saturday’s primaries.

© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Here’s a Simple Way to Self-Audit Your Company’s Independent Contractor Misclassification Risk

yawn

The most boring concert I ever went to was Genesis, in the Orange Bowl, Miami, 1987. The sound quality was terrible, and the band just didn’t seem that into it. My dad, who was there with me, was so bored he pulled out a newspaper. (Yes, that means he anticipated being this bored and brought a newspaper, but he was not a Genesis fan. He went for me, which is something a good dad just does.) [Also: Hi, Dad, I know you’re reading!]

Three years earlier, Phil Collins released Against All Odds (Take a Look at Me Now). The song did really well, but he did not play that song or any other solo songs at the 1987 concert. I know this because… wait for it…  the internet! Yes, the set list from that March 1, 1987 show is posted here.

Segue please? Ah yes, take a look at me now.

One of the simplest ways to check your exposure to independent contractor misclassification claims is to perform a self-audit. (Take a look at me now!)

Get a printout of all 1099s your company issued last year. Is the list mostly LLCs? Or individual names? Focus on the individuals’ names, especially the ones who were paid the most. What kind of services did these individuals perform? Did they do something similar to what your W-2 employees do? Did they work side-by-side with your W-2 employees?

Have they been providing services for years? Did they used to be W-2 employees of your company?

Do they have contracts with your company? Are those contracts any good? Are they specific enough, and do they memorialize the good facts (those that support independent contractor status)?

It’s labor-intensive to do a comprehensive self-evaluation of your risk of independent contractor misclassification claims, but for rough back-of-the-envelope estimating, this can be a pretty useful exercise.

I hope it helps.

That’s All.

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© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Lost Chicken, Very Friendly: 2020 IRS Tips on Independent Contractor Status Are Now Available

Years ago, I signed up for the Next Door app, thinking it might be helpful to hear about things going on in my neighborhood. Most of the posts I see are useless — Can anyone recommend a good restaurant? Is it gonna snow tonight? Does Solon have any good proctologists?

I was ready to unsubscribe but just hadn’t gotten around to it. But then, last week, I got the post that made it all worthwhile:

36204067-6829-41E5-8647-D9C3FF88FABC

I should have clicked “Thank,” because I really do want to thank D. from South Central Solon for that post. The best part, of course, is the armchair psychoanalysis of Lost Chicken’s personality: “Very friendly.” (Lost Chicken also scores high for empathy and teamwork.)

Also known for being “Very friendly” is the IRS. New for 2020 is the Employer’s Supplemental Tax Guide, also known by its catchier, more taxlike moniker, Publication 15-A. Please don’t take my copy. You can get your own here.

Publication 15-A includes a section on independent contractor misclassification. It reminds employers that the IRS uses a Right to Control Test, which evaluates factors related to behavioral control, financial control, and the type of relationship of the parties. The specific factors are listed.

To improve readership, the IRS offers several helpful hypotheticals to illustrate the Independent Contractor vs. Employee conundrum, using memorable characters such as Vera Elm, an electrician; and Helen Bach, an auto mechanic. (But I see Helen Bach as more of a resurrected doomsday cult leader. I’m going to assume that the person who wrote this hypothetical pulled one over on the supervisor who approved it. Well played, IRS writer. Well played.)

Publication 15-A provides other helpful tips for employers at tax time. Get yours now, while supplies last. I’m going to offer a few extra copies on the Next Door app.

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© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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If I Told You Once, I Told You 55,000 Times! These NYC Employment Laws Now Apply to Contractors

NYCHRL independent contractors 8-107(23)A Twinsburg, Ohio man received a statement in the mail for his daughter’s student loan. And then another. And another. And another. The lender sent him 55,000 identical letters filling 79 bins at the post office.

Even better, all of the statements were wrong. They provided an incorrect payment amount.

A recent change to New York City’s Human Rights Law (NYCHRL) doesn’t need to be explained 55,000 times. But it does need to be explained once. Correctly.

Effective January 11, 2020, the protections under the NYCHRL now apply to independent contractors, including freelancers. That means, under NYC law:

  • It is now unlawful to discriminate, harass, or retaliate against an independent contractor, based on any protected class;
  • Businesses must provide reasonable accommodations, including for needs related to pregnancy, lactation, religious observances, sexual offenses, or stalking;
  • Businesses must engage in a “cooperative dialogue” with any contractor seeking an accommodation and must provide a written determination of any accommodation that was granted or denied;
  • Businesses must follow the Fair Chance Act requirements before taking any adverse action based on the results of a criminal background check, including providing a written Artcile 23-A analysis;
  • Businesses cannot inquire about salary history;
  • Businesses cannot perform a credit check (maybe; this is unclear); and
  • Businesses may need to provide sexual harassment training to contractors, depending on the number of hours worked.

For those keeping score at home, the change is to Section 8-107(23) of the NYCHRL. This one little sentence does all the work: “The protections of this chapter relating to employees apply to interns, freelancers and independent contractors.” Boom!

The law applies to businesses in New York City that had four or more workers, including independent contractors, at any time in the previous 12 months.

The law does not apply to wage and hour issues like minimum wage and overtime payments, and the law does not change the test for determining whether someone is an independent contractor or an employee.

The Commission has published some additional guidance on how this will work, especially the sexual harassment training part. You can read it online. Thankfully, the Commission didn’t send it 55,000 times to every business in the mail.

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© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Bring Forth the Tiger-Dogs! Here’s a Quick Status Check on the Challenges to California’s New Independent Contractor Law

Tiger independent contractor dynamex california

Not an actual tiger. Or a dog.

When outside forces pose a threat to people’s livelihood, people will go to great lengths to fight back.

For example, when monkeys began ravaging the crops of a farmer in Karnataka, India, the imaginitive farmer painted his dog to look like a tiger, to scare away the pesky invaders. [Photo here.]

Business owners in California are taking more conventional measures to fight back againt the tyranny of Assembly Bill 5, the new California law that seeks to reclassify many of the state’s independent contractors as employee. Here’s a quick summary of the resistance:

  • Owner-operator truckers claim the new California law cannot be applied to them because of a federal law (FAAAA) that prohibits states from enacting their own laws that affect the “price, route, or service of any motor carrier with respect to the transportation of property.” They won a preliminary injunction last month, temporarily preventing the law from applying to them.
  • Freelance writers and photographers are challenging the law too. The law has an exception for freelancers, but the exemption goes away if freelancers submit 35 or more pieces to a single publication. In other words, they’re independent contractors for submissions #1 through #34, but they instantly become employees with submission #35. They argue that the exemption is arbitrary and violates their First Amendment and equal protection Rights.
  • Rideshare and food delivery apps filed their own lawsuit, alleging that the exemptions are arbitrary and violate their equal protection and due process rights.
  • Five gig economy app companies have contributed $110 million to a ballot measure that will be voted upon in the November 2020 election if the measure collects 625,000 signatures. The law would exempt app-based gig economy drivers from the new test if the companies provide workers with specific levels of pay, benefits, and rights, which are defined in the proposal.
  • Republican lawmakers have proposed a constitutional amendment (A.C.A. 19) called the “Right to Earn a Living Act,” which would overturn Assembly Bill 5 and enshrine in California law “the right to pursue a chosen business or profession free from arbitrary or excessive government interference.” The amendment would reinstate California’s S.G. Borello balancing test for determining whether a worker is an independent contractor or an employee.

Meanwhile, the California Supreme Court is considering whether the 2018 Dynamex decision, which first imposed the ABC Test for wage and hour claims, applies retroactively. If it does, then businesses can be liable for failing to comply with a test that did not yet exist. Really.

That’s a lot of action, and we’ll continue to watch for new developments. Meanwhile, California businesses that use independent contractors should tread carefully, follow the status of legal challenges, and paint their dogs to look like tigers — just in case that turns out to be effective.

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© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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When The Rules Do Not Apply: Freelancers’ Lawsuit Challenges California’s New ABC Test

piano IMG_2111

I was headed to an appointment last week when I came upon this sign. Sometimes the people who make the rules just assume the rules don’t apply to them. Or sometimes people don’t even think about the rules and whether they make sense.

I was tempted to take the sign off the piano, in the interests of following the directive on the sign. But I just took a picture instead.

This post is about when the rules should apply.

Since California’s new ABC Test law (Assembly Bill 5) went into effect January 1st, the legal challenges have been rolling in. (See this post, for example.) The latest groups to challenge the new law are freelance writers and photographers.

Wanna know something absurd? Of course you. We all do. That’s why we read the internet on our phones during meetings. Under the new law, freelancers are exempt from the ABC Test — and can likely remain independent contractors — if they make 35 or fewer submissions to a publication in a year. But with the 36th submission, the ABC Test suddenly applies, meaning that same freelancer would more likely become an employee, retroactive to the first submission.

What is so special about the 36th submission that would convert a freelancer from an independent contractor to an employee? All together now: “Nothing!” This law is ridiculous. A newly filed lawsuit asks a court to invalidate that limit on the basis that it is arbitrary, which it absolutely is. The lawsuit alleges that the arbitrariness violates the freelancers’ Equal Protection and First Amendment Rights.

Freelancers don’t want to be employees for two reasons.

First, works created by contractors are owned by the contractors, who can license the works and earn a fee. That’s how they make money — and is the reason why freelance journalists are all so rich. (That’s for my daughter, who’s in journalism school and doesn’t eat ramen noodles. Yet.) In contrast, under the U.S. Copyright Act, works created by an employee are owned by the employer. That means the freelancer who created the work loses the rights to it. So, if we apply the new rule, that would mean Submission #36, which likely converts the freelancer to a retroactive employee, also converts ownership of Submissions #1-35 to the employer. No way that’s fair.

Second, for every action there’s a reaction. Publishers are not stupid. They don’t want freelancers to become their employees either. So what will they do once a freelancer hits the 35-submission limit? They won’t accept any more submissions. That hurts the publication and the freelancer. Or maybe they will want some freelancers to become their employees so they can commandeer ownership of Submissions #1-35. Either way, this is absurd.

If you’d like to read more, here’s a copy of the complaint. The lawsuit is pending in federal court in the Central District of California.

And please don’t place anything on top of the piano.

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© 2020 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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