Category Archives: Non-Employee Workers

08.12.19
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Can Your Business Be Liable for Sexual Harassment by an Independent Contractor?

Independent contractors sexual harassment

Damage can come from unexpected places.

Earlier this year, Brock Holt of the Boston Red Sox landed on baseball’s Injured List after his two-year old son poked him in the eye. Baseball players accept the risk of injury, but that’s not a way you’d expect to get hurt.

I think you see where I’m going here. Don’t let an independent contractor become Brock Holt’s son. Yes, a business can be liable for harassment by a contractor — if it fails to respond appropriately to a complaint. If one of your employees complains of harassment by a contractor, pay attention.

According to the Equal Employment Opportunity Commission (EEOC), businesses can be liable for harassment by non-employees if the business knows about the harassment and fails to take reasonable steps to prevent it. EEOC Guidance says:

The employer will be liable for harassment by non-supervisory employees or non-employees over whom it has control (e.g., independent contractors or customers on the premises), if it knew, or should have known about the harassment and failed to take prompt and appropriate corrective action.

That means you can’t just say, “It’s not our employee so we can’t do anything about it.” Investigate. Interview witnesses. Take statements. If there’s something there, act upon it.

If the bad actor is a contractor, options may include:

  1. Terminating the independent contractor relationship, 
  2. Limiting the contractor’s access to your facility,
  3. Poking out the contractor’s eye (or both eyes, if the harassment is particularly egregious), or 
  4. Any other steps to prevent bad behavior. 

My wife, who is in HR, says #3 is not an appropriate response, so I stand corrected. Don’t do #3. The other options are still good though.

As for #4, you should not discipline an independent contractor, but you can issue a stern warning to that contractor that the relationship will be terminated if there are any further complaints. Just don’t call it “discipline.” Disciplinary action is a sign of control, which can be used as evidence that the contractor might really be an employee. The last thing you need if one of your employees is being harassed by a contractor is to convert that contractor into your employee. 

Whatever you decide, do something.

While businesses might not expect that they could be held liable for bad acts by a contractor, the risk is real. Employers have a responsibility to provide their workers with a workplace that is free from harassment. If you allow a contractor to create a hostile work environment, your business can be liable for allowing that environment to persist. The employer’s responsibility is to take “prompt and appropriate corrective action.” 

For Brock Holt, terminating the relationship with the wayward eye-poker was not an option. (His wife reportedly vetoed that proposal. She is probably in HR.) But for businesses whose contractors are accused of harassing employees, terminating the relationship may be the best decision. 

So the answer is yes. Business have a responsibility to provide a workplace that is free from harassment, and the failure to do so may result in liability, even if the harassment is coming from a non-employee. Busiensses can be liable for harassment by contractors if the business knows or should know about the harassment and fails to take prompt and appropriate corrective action.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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08.05.19
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How Do I Run a Background Check on an Independent Contractor?

How do i run a background check on an independent contractorAfter the events of this past weekend, I don’t have to say anything about the risks involved in allowing dangerous people onto your premises. Before retaining an independent contractor who will have access to your business’s facilities, people, or information, it makes sense to know who you are inviting into your house.

An employment-style background check is often appropriate, but there are a few important differences between background checks being run before hiring an employee and before engaging a non-employee contractor.  [We’re talking here about 1099 contractors, not staffing agency employees.]

If the background check is being run by a third party, then the federal Fair Credit Reporting Act (FCRA) is likely to apply. But the rules are different for pre-employment background checks and non-employment background checks.

For pre-employment background checks, certain disclosures must be made before the background check is obtained, and additional disclosures have to be made before you take an “adverse action” based on the result of the background check, such as revoking a conditional offer or not hiring someone. These additional requirements apply only for background checks being run “for employment purposes.”

Ok, Todd. These don’t sound too burdensome. Can’t I just follow the more burdensome pre-employment rules just to be safe?

Yes, sort of. But a few words of caution are in order.

First, your User Agreement with the background check company requires you to certify to the background check company the purposes for which you will be requesting background checks. Review your agreement to see whether you certified that you would only run background checks “for employment purposes.” 

Since this is not a background check being run “for employment purposes,” you need to have another permissible purpose under the FCRA. The law lists several alternatives. Two are likely to apply:  You may obtain a background check (1) “in accordance with the written instructions of the consumer” or (2) if you have “a legitimate business need for the information in connection with a business transaction that is initiated by the consumer.” Here, the “consumer” would be the individual contractor.

You may need to amend your agreement with the background check company before  you run any background checks on potential independent contractors. You never want independent contractors to be considered your employees.

Second, check the federal forms you give to the individual before you run the background check. You do not want to give an independent contractor a Disclosure form or an Authorization form that says your company will run a background check “for employment purposes.” Many generic forms include that phrase because it’s a term of art used in the FCRA. For background checks being run on independent contractors, you don’t want to have the contractor sign a document that can be used to argue you were creating an employment relationship, rather than an independent contractor relationship.

Finally, check the state law forms you are using. If your background check company supplied you with a suite of forms, those forms likely include various disclosures required under state laws. States with additional pre-employment background check requirements include California, Minnesota, New Jersey, New York, Oklahoma, and Washington State, among others. Almost all of the required state law disclosures, however, apply only to background checks being run “for employment purposes.” Be careful not to use forms with language that could be used to argue you were creating an employment relationship, rather than a contractor relationship.

Final thoughts:  Running a background check on an independent contractor can be a good idea and can bring you and your business some piece of mind. Be careful, though, that you don’t solve one problem by inadvertently creating another.

Background check pitfalls can be prevented if you use the correct forms and documents ahead of time. It’s not that hard to do this correctly, but it requires a some extra attention and care.

If you’d like more information, you can review two earlier blog posts I’ve written on this topic, here and here. Or feel free to contact me directly at tlebowitz@bakerlaw.com.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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07.29.19
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Do Over for California’s ABC Test? Retroactivity Issue is Headed Back to the State Supreme Court

Independent contractor ABC Test cow

“Placido Domingo’s pretty great, but I also love Pavarotti.”

In Hampshire, England, there is a veterinarian who sings opera to cows.

Now if your spidey-sense is as tingly as mine, you’ll immediately realize there is something wrong with this picture. It’s obvious, right? It should be an opera singer who sings opera to cows, not a veterinarian. Vet school does not include the proper classical training.

While this Hampshire vet has apparently not realized he is out of his lane, the Ninth Circuit Court of Appeals last week did acknowledge it was operating out of its lane in a major case involving independent contractors. The Ninth Circuit is withdrawing a major decision it released in May 2019 and sending that issue to the California Supreme Court instead.

In May, we wrote about the ruling by the federal Ninth Circuit Court of Appeals that’s being withdrawn. In that case, the Ninth Circuit ruled that California’s ABC Test (the Dynamex Test) for deciding the Independent Contractor vs. Employee question would apply retroactively. (You can read my seething critique of that ruling, Vazquez v. Jan-Pro, here.)

The Dynamex decision is the one in which the California Supreme Court made up an ABC Test as the new standard for determining whether someone is a contractor or an employee under California’s wage and hour laws (claims of overtime, minimum wage, meal and rest breaks, etc.). The ramifications are enormous for California businesses.

Now back to the May 2019 Vazquez ruling. In that case, the Ninth Circuit ruled that California businesses should have been applying the ABC Test that was made up in Dynamex, even though that test did not yet exist. Seems pretty unfair, doesn’t it? Very unfair.

Last week, the Ninth Circuit withdrew its ruling in the May 2019 Vazquez case. This is half good news, not all good news.

The Ninth Circuit didn’t concded that its May 2019 decision was wrong (even though it was, heh heh). Rather, the Ninth Circuit decided that — like a veterinarian singing opera to cows — it had been operating out of its lane. The Ninth Circuit now says that the California Supreme Court — not the federal Ninth Circuit Court of Appeals  —  should be the one to decide whether the ABC Test applies retroactively.

The California Supreme Court case is definitely one to watch. Industry groups from around the country are likely to weigh in. Many will file amicus briefs (non-party “friend of the court” memos) to try to persuade the court that retroactivity would be unfair and would have significant negative effects on California businesses and the state’s economy.

For now, the question of whether the Dynamex ABC Test applies retroactively is again unresolved. That means there is a period of a few years extending back from April 2018 in which nobody knows what the test is for determining whether someone was then an employee or an independent contractor under California’s wage and hour laws.

That’s important because the are a lot of lawsuits alleging that independent contractors are misclassified. Some have been decided, some have not. Could some cases that were already decided be reopened?

We’ll keep an eye on this case as it makes its way through the California Supreme Court. We’ll also be watching for new developments among bovine opera aficionados. I want to know whether the cows think this veterinarian singer is any good.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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07.08.19
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Will NY Lawmakers Create a New Class of “Dependent Contractors”? If So, It Could Be a Work of Art.

Horse no shadow - independent contractor misclassification - dependent contractor - Todd Lebowitz

This piece of art hung in the bedroom at the apartment I rented on my recent vacation in Paris. See the shadow of the dog? Yep. See the shadow of the horse? Yep. See the shadow of the rider?

Oops. I expected it to be there. Chalk up another win for bad art.

Art requires creativity and, sometimes, a different perspective. Things are not always the way we expect them to be. That can be due to oversight (such as with bad art) or due to creativity. New York lawmakers are looking at new ways to approach the Independent Contractor vs. Employee question, and under one recent proposal, lawmakers could get creative.

A proposed bill would create the status of dependent worker, allowing gig workers to form quasi-unions to negotiate fees and directing the state to hold public hearings exploring ways to provide other rights to gig workers, such as minimum wage and anti-discrimination protections.

The bill was withdrawn just before summer recess, but the question will be revisited in the next legislative session. 

Some worker groups say the bill does not go far enough. Many worker advocates would like to see a new law that presumes all gig workers to be employees, unless the hiring party can prove an exception. ABC Tests are one example of that type of law. Business groups seem more open to the proposal, recognizing that labor laws probably need to start recognizing a middle ground between employees and independent contractors. (You can read more about that movement here, in last week’s post.)

We’ll have to wait until the fall, when New York lawmakers return to Albany, to see how this plays out in New York. In the meantime, if anyone is looking for something fun to do during summer break, I know of at least one amateur French painter who could use some tutoring.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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06.10.19
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A New Low for California’s Independent Contractors? ABC Test May Be Adopted for the Whole Labor Code

Death valley for independent contractors - california dynamexCalifornia is the home of both the highest and the lowest points in the continental U.S. — Mt. Whitney at 14,495 feet and Death Valley at -282 feet. As far apart as these two sites are on the altimeter, they’re less than 100 miles apart on the odometer.

That’s a lot of up and down. If you follow California’s developing law on Independent Contractor vs. Employee tests, you’ve also seen a lot of ups and downs recently. If a pending bill passes (as expected), businesses using independent contractors may be about to experience a new low.

Remember the Dynamex case? As explained here, that’s the California Supreme Court decision that enacted a strict ABC Test for determining whether someone is an employee or an independent contractor under California’s wage orders. As we discussed here, though, the ABC Test only applies to certain state law employment claims. Other less stringent tests still apply when analyzing whether a contractor should really be considered an employee under other state employment laws.

But that may be about to change.

Assembly Bill 5 would adopt the Dynamex ABC Test as the way to determine whether someone is an employee under all parts of the California Labor Code and under state unemployment law.

In its current form, the law would exempt certain licensed professions from being subject to the ABC Test. Extensive lobbying efforts are underway by various trade associations to carve other trades out of the law as well. For those professions excluded from the law’s reach, the test for determining whether a contractor is really an employee would be the S.G. Borello balancing test, a much less stringent standard than the Dynamex ABC Test.

The bill is now pending before the state senate. If it passes, it will become even harder to be a legitimate independent contractor in California. The state with one of North America’s highest peaks will become a virtual Death Valley for contractors trying to maintain their independent status.

We’ll continue to follow the status of this bill.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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05.20.19
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Say It Like You Mean It! NLRB Says Uber Drivers are Independent Contractors

All You can Eat Seats - Independent contractor misclassification

Section 223 looks delicious!

I was in Phoenix last week and saw this sign at a Diamondbacks Game. The seats in Section 223 were probably plastic and hard to chew but otherwise looked pretty tasty. Still, I don’t think I could eat more than a few at a time.

Ok, I know what the sign intended, but my reading is a fair one too. Right? The message wasn’t quite clear.

The NLRB was much more clear in the message it sent last week in an Advice Memorandum from the Office of the General Counsel. The Board opined that UberX and UberBLACK drivers were independent contractors, not employees of the ride-share app.

The opinion letter applies only to federal labor law (the NLRA), not to wage and hour law, employee benefits law, tax law, or the vast potpourri of state laws, but it’s another sign that the current administration is intent on protecting independent contractor relationships — if the relationships are properly structured.

The memo applied the same Right to Control Test for determining Independent Contractor vs. Employee that the Board used in January in its SuperShuttle decision. In SuperShuttle, the Board ruled that a group of airport van drivers were independent contractors, not employees, under the National Labor Relations Act. The ten-factor Right to Control Test used by the Board is explained here.

This NLRB Advice Memorandum arrives less than three weeks after a similar opinion letter from the Department of Labor (DOL). The DOL’s April 29 letter concluded that service providers who use “virtual marketplace” apps to find customers are independent contractors, not employees. While the letter doesn’t identify the app it reviewed, the DOL’s analysis seems to apply to Uber and other ride-share apps and to the service providers (drivers) who use these apps to find customers. The DOL’s letter addressed only the Fair Labor Standards Act (FLSA), which applies a six-factor Economic Realities Test for determining Independent Contractor vs. Employee. Different law, different test. 

Here are four takeaways from the two letters, viewed together:

  1. Different tests apply to different laws, even for similar circumstances. That’s been a consistent theme in this blog, and these two letters — one interpreting the NLRA and the other interpreting the FLSA — reinforce the different approaches. Click here for a chart showing the different tests for Independent Contractor vs. Employee, as of January 2019.
  2. The current administration and its executive agencies are much friendlier toward independent contractor relationships than their Obama-era predecessors. The Obama DOL and NLRB were outright hostile toward independent contractor relationships (see examples here for DOL and here for NLRB), so this is a major change.
  3. These are not court decisions and do not bind the federal courts, even as to NLRA and FLSA cases.
  4. These opinions apply only to the NLRA and the FLSA — two of the many federal laws that apply only to employees, not independent contractors. The opinions do not directly impact federal tax law or employee benefits law, and they do not impact any of the myriad state laws. In other words, the states don’t care.

The area of independent contractor misclassification and the never-ending quest to determine Who Is My Employee? continues to evolve at a pace that should keep readers on the edge of their seats. Just don’t sit too close to the edge, because if you abandon your seat, someone at a D-Backs game might try to eat it.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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05.02.19
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Going Mobile? DOL Endorses Independent Contractor Model for Virtual Marketplace Apps

Opinion letter mobile app

Long before mobile apps were a thing, Pete Townsend and The Who were already going mobile. In the 1971 song, Townsend sings about the virtues of life on the open road, living in a mobile home. I’m an air-conditioned gypsy.

In an important opinion letter released this week, the DOL went mobile too, lending support to businesses in the “on-demand” or “sharing” economy. The letter is the first significant ruling that supports independent contractor status for service providers who obtain work through virtual marketplace apps.

A virtual marketplace app is a matchmaking service. It connects consumers who need a service (driving, housekeeping, handyman, anything) with service providers who do the work. Virtual marketplace companies (VMCs) are frequently the target of misclassification claims. In these types of claims, service providers — and the plaintiffs’ lawyers who love them — file lawsuits claiming that the service providers are really employees of the VMC. Frequent targets have been Uber, Lyft, Doordash, and Grubhub.

In Monday’s letter, the DOL opined that service providers are indeed independent contractors of the VMC, not its employees, at least under the facts of this particular case. The letter does not identify the specific VMC at issue, but the facts in the letter are going to be generally applicable to lots of VMCs.

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04.11.19
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Can You Offer Paid Vacation to Independent Contractors?

Can you offer paid vacation to independent contractorsVacation is all the Go-Go’s and their misplaced apostrophe ever wanted. Vacation, had to get away. Vacation, had to be spent alone.

Employees want vacation too, and so do independent contractors. Should your company’s vacation policy apply to independent contractors too? Can you grant your independent contractors a certain amount of paid vacation?

Not a good idea.

In the various tests for Independent Contractor vs. Employee, one of the recurring themes is that a contractor is in business for himself/herself.  The contractor is supposed to be able to work when he or she wants, so long as deadlines are met.

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04.08.19
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Slip Slidin’ Away? Truckers’ Fall Short in Bid to Overturn California’s Dynamex Standard (Plus: Bonus Quiz for Paul Simon Fans)

Truckers Western States dynamex independent contractor misclassificationIt seems a little presumptuous that when Paul Simon released the single, “Slip Slidin’ Away,” he released it as one of two new songs on his 1977 Greatest Hits, Etc. album. How is it a greatest hit before it’s been released? But sure enough, the song rose to #5 on the Billboard charts. Today’s Challenge: Ten bonus points will be awarded to anyone who can name the other new song that debuted on Simon’s 1977 Greatest Hits, Etc. compilation. The answer is at the end of the post.

In July, we wrote about “Convoy,” a 1975 song about a fictional trucker rebellion, as a way to introduce a new lawsuit filed by the Western States Trucking Association. The lawsuit seeks to invalidate California’s burdensome ABC Test (the Dynamex test), which is now used to determine who is a contractor and who is an employee under California wage and hour law.  The truckers argued that the law — as applied to truckers — was preempted by federal laws that seek to promote uniformity in the interstate transportation industry.

Based on a recent decision in a California federal court, the truckers’ hopes of invalidating Dynamex may be Slip Slidin’ Away.

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03.25.19
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Independent Contractor Misclassification Claim Fails, in Part, Due to Plaintiff’s Goat Farm

Goat independent contractor misclassification

The face that sunk a lawsuit?

In my house, we sometimes have bizarre but short conversations about job functions.  A recent example:

Lindsay: I think I want to do a job that helps people.

Andy: Doesn’t every job help people?

Me: Not executioner.  

This post is about a case involving directional drilling consultants.  And while that sounds like the job title of a scene director in the porn industry, it’s actually a job involving subterranean oil and gas exploration.  Directional drilling consultants (DDs) advise drilling companies how to aim their directional drills when drilling a well that starts down a vertical path, then switches to horizontal.  This allows the company to drill discretely in areas away from home.  Like Josh Duggar.  

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