The internet may be a playground and an encyclopedia, but it’s also a living graveyard. For those of you politically inspired, it’s not too late to join up with Dole-Kemp ‘96. Fans of the X-Files, who still await the next episode, can stay caught up at Inside the X. And anyone still looking to join the Heaven’s Gate cult can check out the group’s webpage here. The site is supposedly maintained by two of the only members who did not commit suicide in 1997, so leadership opportunities may be available.
The NLRB is hopping on the retro train too. Earlier this month, the Board announced its intent to adopt a new rule on joint employment. The new rule would displace the Trump-era regulation, which currently requires direct and substantial control over essential terms and conditions of employment before joint employment can be found.
The NLRB’s Notice of Proposed Rulemaking follows the trail blazed by the Wage and Hour Division (WHD) of the DOL, which in July rescinded the joint employment regulations passed during the Trump Administration. The WHD didn’t make a new rule; it just left a giant crater in the landscape, and now for Fair Labor Standards Act claims, there is no regulation at all.
The NLRB seems intent on adopting its own rule, not just rescinding the current regulation. There’s little doubt as to what the new rule will look like. Expect it to track the Browning-Ferris standard imposed by the Board in 2015. Under Browning-Ferris, when one company has the right to control aspects of the work, joint employment exists — regardless of whether control is actually exerted, and regardless of whether the control is over wages, hours, scheduling or anything else that fits within the meaning of essential terms and conditions.
Expect a substantial expansion in the scope of who a joint employer under the NLRA after the new rule is released. The impacts of joint employment under the NLRA can include being forced into bargaining with workers directly employed by a different company (a subcontractor, for example), being accused of a broader range of unfair labor practices, and being subjected to picketing that would be illegal secondary picketing if there were no joint employment relationship.
Back when Bob Dole was seeking the White House, actual control was required to be a joint employer under the NLRA. Since 2015, the standard has ping-ponged back and forth as the political winds have shifted. We’re about to see another major change sometime in mid-2022. If after the change you find yourself missing the good ol’ days, at least you can still cozy up with your Apple 2E and check out the Dole-Kemp campaign website.
Suppose Kermit works 30 hours a week at The Muppet Show. He holds a non-exempt position as a research assistant, trying to determine why are there so many songs about rainbows.
Frog food is expensive these days, so he holds a second job too. Kermit works nights at Sesame Street, where he spends 20 hours a week investigating multi-colored arc-shaped atmospheric phenomena and what’s on the other side.
With 30 hours at one job and 20 hours at another, neither role pays Kermit overtime.
But is he being cheated out of time-and-a-half? Let’s hop in and take a deeper look.
Horizontal joint employment is when a person holds two jobs, but the businesses are under common control. They may have the same owners or officers, they may coordinate schedules among workers, or they may share a common pool of employees. When horizontal joint employment exists, the hours from both jobs are aggregated, and 30 hours at one job plus 20 hours at the other equals 50 total hours, 10 of which require overtime pay.
So what about our short-bodied, tailless amphibian friend? Does Kermie get overtime?
Kermit may seem like a free spirit, but whether he’s on The Muppet Show (30 hours) or Sesame Street (20 hours), his every move is controlled by Jim Henson. Literally.
Common control signals horizontal joint employment, which means Kermit’s been shortchanged 10 hours of overtime. It’s not easy being green.
You’ve probably read about recent changes to the joint employment tests, but those changes are for vertical joint employment, not horizontal joint employment. Vertical joint employment is when the employees of a primary employer perform services for the benefit of a secondary employer, like in a staffing agency relationship. When staffing agency employees work side-by-side with a company’s regular employees, the staffing agency and the other business may be joint employers.
The rules on horizontal joint employment are unchanged. So if sharing employees with a business under common control, be aware of the rules and look before you leap.
Florence Ford was terrified of storms and, seeing as how she was born in 1861, none of the weather apps on her phone were working yet. Her mother Ellen provided comfort when the rains came. So naturally, when Florence died at age 10, Ellen felt she still needed to comfort her daughter when it rained.
In Natchez, Mississippi, you can visit one of the oddest graves in the world. Ellen fitted her daughter’s coffin with a small window and built stairs down to the casket. When it poured in Natchez, Ellen would head down to the casket and provide much-needed comfort to Florence’s bones.
Ellen couldn’t quite accept the reality of Florence’s death and tried to create an exception. In her version of death, reading or singing to the corpse still brought comfort to her daughter — or maybe just to herself.
A less creepy version of dueling realities continues to play out in California, as the legislature keeps reviving exceptions from the harshness of the ABC Test it adopted in AB 5.
The state continues to make tweaks. Two recent bills (AB 1506 and AB 1561) adopt these changes:
Extends the temporary exemption for newspaper publishers and distributors who meet certain criteria;
Imposes reporting requirements on publishers and distributors to ensure they are complying with the Borello Test, if they’re exempt from the ABC Test;
Extends the manicurists exemption for three more years (Kudos to the manicurists’ lobby! They nailed it!);
Extends the construction industry subcontractor exemption for another three years;
Amends the data aggregator exemption; and
Modifies the insurance exemption.
This grab bag of edits comes soon after the adoption of AB 2257, last fall, which rewrote AB 5 to change the long list of exemptions.
What’s going on here? The problem is that the ABC Test doesn’t make a lot of sense when you try to apply it across all types of working relationships. That’s why California’s ABC Test statute keeps getting a makeover. After the state legislature codified the ABC Test in September 2019 by passing AB 5, the state has adopted dozens and dozens of exceptions, and as you can see here, the list keeps growing.
Here’s what businesses in California need to remember:
The ABC Tests is still the default test for determining whether an independent contractor is misclassified and should really be an employee.
There are loads of exemptions, many of which are difficult to follow and require compliance with a long list of criteria before they will apply. Check the list of exemptions to see if they apply.
If an exemption applies, it does not mean that independent contractor status is proper. It just means you make the independent contractor vs. employee determination using the Borello balancing test instead of the ABC Test.
The rules keep changing.
If this monsoon of details makes you uncomfortable, it should. Fortunately, today you learned one more way that a person can find comfort in a storm. Thank you Ellen of Natchez.
With Halloween around the corner, it’s scary movie season. Every year, various publications post what they claim is the definitive list of All-Time Scariest Movies. Go ahead, google it.
But in 2021, the Science of Scare Project took a more scientific approach. The Project measured heart rate elevation in 250 volunteers while watching 40 scary movies, and the scariest – measured by increased beats per minute – was a low budget 56-minute thriller you might not expect. The full rankings, with beats per minute spike chart, can be found here.
The movie industry got a different scare last month. Usually, we’re looking for ways to preserve independent contractor status. But in this case, a script writer’s independent contractor status may allow him to take back the copyright to the script, since 35 years have passed since its publication.
In a case called Horror Inc. v. Miller (yes, really), the Second Circuit Court of Appeals ruled that Victor Miller, who wrote the script for Friday the 13th, could legally reclaim copyright on the original screen play. After 40 years, he can take it back!
This surprising outcome is no surprise to those who know the intricacies of the U.S. Copyright Act. The Act says that authors who executed a license or granted a copyright transfer after January 1, 1978, can terminate the license or grant 35 years after the original transaction. The author has five years to provide notice of termination, and Miller provided that notice in 2016, 36 years after the 1980 film was released.
Horror, Inc., which owns the rights to Friday the 13th, argued that the script was a “work made for hire” and that Miller was acting as an employee under federal labor law when he wrote the script. Miller was a member of the Writer’s Guild of America, and the film’s rights holder had registered the screenplay as a work made for hire.
But the Second Circuit Court of Appeals ruled that the test for “employee” under federal labor law is different than the test under U.S. Copyright law. Federal labor law tries define employment broadly, in a way to protect workers and their right to organize. In contrast, U.S. Copyright law applies a narrower interpretation, designed to protect authors. Even if Miller was an employee under labor law, that didn’t make him an employee under copyright law.
The Court looked at five factors for determining whether the screenplay was a “work made for hire,” and the Court ruled that the test was not met. Miller was not an employee under the U.S. Copyright Act, even if he was an employee under federal labor law.
It is here that I strongly disagree with the Court’s analysis. The test for employment status under federal labor law is fundamentally the same as the test under the Copyright Act. Both tests seek to apply the common law of agency, and both are Right to Control Tests. The Court’s attempt to distinguish between the tests falls flat, in my mind, and it appears to me as if the Court made up its mind first and then tried to fit the desired result into a legal framework that would justify the outcome. If Miller was an employee using the common law agency (Right to Control) test that applies to federal labor law, he should have been an employee under the common law agency test that applies to copyright law. (Fun fact: Miller signed a document called “Employment Agreement,” but the Court was not swayed.)
Since Miller wrote the screenplay as an independent contractor under the Copyright Act, the Act grants him the right to cancel the transfer after 35 years, and he properly served notice of his intent to do so. Horror, Inc. is going to lose the copyright to the film.
Copyright termination cases are starting to pop up more frequently, posing a real threat to rights holders in the film and comic book industries.
When engaging a writer, businesses need to weigh the benefits of retaining an independent contractor with the risks. For commercials or social media posts with short-term value, retention as an independent contractor is likely the best path.
But with movies or other assets that are likely to have value for 35 years or more, retention as an independent contractor leaves open the risk that the writer can reclaim the copyright after 35 years. Buyer beware.
The scariest horror movies have plot twists and unexpected scares. For many rights holders, the idea that a script writer could reclaim copyright after 35 years is the kind of scare they could do without. Heart rates among movie rights holders are increasing with this decision.
Content creators need to know what they’re getting into and need to understand the long-term risks.
In 2017, the Fyre Festival failed spectacularly after all sorts of social media influencers touted it as the must-attend party of the year. Documentaries on Hulu and Netflix tell the story in all its gory detail, and you can see the videos that hyped the event that wasn’t.
Despite that epic fail, the use of social medial influencers continues to be a powerful form of marketing. But when contracting with a social media influencer, beware. There are legal traps for the unwary.
For those of you who missed the social media influencer webcast on September 28, here are five tips to help prevent your social media influencer from being misclassified as your employee.
1. Whenever possible, contract with the influencers’ loan out company instead of the influencer as an individual. This is especially important if the influencer is a member of SAG-AFTRA and union pension and health contributions may be in play.
2. Limit control over things you don’t need to control. Yes, you can put parameters around the influencer’s messaging to protect the brand, and it’s ok to require the influencer to follow the FTC Guides, to avoid use of nudity or profanity, to avoid discriminatory or harassing language, and similar reasonable guardrails. But don’t get sloppy and start requiring the influencer to use your equipment or work from your facility. Be careful about open-ended contracts that are terminable at will. Don’t overreach in exerting control over when and where the. work is performed. Consider all of the Right to Control Test factors.
3. Remember that the law decides whether it’s employment, regardless of what the parties agree. And the Right to Control Test is not the only game in town. The Economic Realities Test will apply for determining worker status under federal wage and hour law and some state laws. More troubling, ABC Tests in California, Massachusetts, and other locations raise the bar significantly and make it much harder to maintain an independent contractor relationship. If the law says that it’s employment, then it’s employment. The labels you put in your contract don’t matter.
4. Avoid terminology that sounds like employment. “Retain” the influencer, not “hire.” “Terminate the contract,” instead of “fire.” Pay a “fee,” not a “wage.”
5. Pay by the project, not by the hour, whenever possible. Method of pay is a factor in many of the classification tests, and payment by the hour is one factor that’s suggestive of an employment relationship.
For more tips about how to properly engage a social media influencer, including how to make sure you follow advertising laws and avoid misclassification risks, tune in to the webcast.
There’s a fight brewing over cockfighting, and it may be headed to the Supreme Court. The dispute is over who can regulate the bloodsport and how. The Commonwealth of Puerto Rico has joined a cadre of cockfighting enthusiasts to ask the Supreme Court to rule that it’s unconstitutional for the federal government to ban the contests.
In 1933, Puerto Rico changed its laws to allow the sport, in which gamecocks are often fitted with spurs and battle until death or dismemberment. The federal government later stepped in to ban the fights. People bet on this stuff, really. On chickens. Wearing spurs.
Closer to home, another fight is brewing, and it’s on a subject familiar to readers of this blog – Prop 22 in California. Passed in late 2020 through a ballot initiative, Prop 22 exempts app-based drivers from the ABC Test and allows them to maintain independent contractor status, so long as the app companies provide certain types of benefits to drivers.
But on Friday, an Alameda County Superior Court judge ruled that Prop 22 is unconstitutional. Wait, what?
Even though Prop 22 passed with 58% support, the SEIU and a vocal group of drivers weren’t too happy and sued. The matter initially went to the California Supreme Court, but the Court dismissed the petition and said it would not hear the case. The SEIU tried again, this time starting in Superior Court, which is where cases are supposed to start. The union found a sympathetic ear in Judge Frank Roesch, who issued this 12-page opinion, which is confusing, hard to follow, and seems to me to be just plain wrong.
What was the basis for the ruling? Two things.
First, Judge Roesch concluded that Prop 22 was unconstitutional because it limits the legislature’s ability to regulate workers’ compensation. Prop 22 defines app-based drivers as contractors, and contractors don’t get workers comp coverage. The law limits the ability of the legislature to undo Prop 22, which was smart since the legislature hated the bill.
The judge found that these limitations made Prop 22 unconstitutional because the California constitution grants the legislature “plenary” power to oversee workers’ compensation. Prop 22 allows the legislature to make limited amendments to Prop 22 but not to undo the whole thing or reclassify the drivers as employees. In making his ruling, the judge essentially concluded that if the legislature couldn’t undo the law, then the law unduly restricted the legislature. But wait! Just a few pages earlier, the judge conceded that “The term ‘legislature’ in [the California constitution] includes the people acting through the initiative power.” Yes, that’s quite the internal contradiction. If the term “legislature” includes initiatives by the people, then initiatives by the people are the equivalent of legislative action. They are acting as the legislature. An appeals court will likely take care of that confusing mess.
Second, the judge concluded that Prop 22 violated the state constitution’s rule that legislation can only be about one subject. Judge Roesch pointed to the part of Prop 22 that gave app-based drivers the right to collectively bargain in a quasi-union environment. He concluded that the bargaining piece of the law is “utterly unrelated” to the law’s purpose. Huh? That utterly makes no sense. The whole point of Prop 22 was to grant app-based drivers various concessions in exchange for clarity on their status as contractors. These concessions include a minimum rate of pay, contributions to healthcare funds, automobile insurance, and the right to collectively bargain in a specified manner. How could the right to collectively bargain be unrelated to these other rights, all of which were part of the quid pro quo in exchange for preserving independent contractor status? The ruling makes no sense, and this too is likely to be cleaned up on appeal.
So what’s the status of Prop 22? Is it dead? Dismembered? The judge may have tied spurs to his feet and kicked the law around a bit, but I am cautiously optimistic that this law will live to see another day.
The case is now headed to the Court of Appeal, and it may end up back with the California Supreme Court.
Meanwhile, for those of you wagering on whether cockfighting will return to legal status, I’d say the odds are against. I don’t think the Supreme Court will take the case and, if it does, I don’t think the Court will say the federal government lacks the power to regulate chicken gladiator shows. I’d put my money on Prop 22 to survive on appeal. I think Judge Roesch’s analysis is incorrect and will be overturned on appeal. But I can’t say I have the same sense of optimism for our cockfighting aficionado friends.
I just finished reading The Longest Day, the 1959 book by Cornelius Ryan that tells the story of the D-Day landing from Allied, French, and German perspectives. The book covers June 6, 1944 and the days leading up to it, but it doesn’t get into what happened next. To facilitate supply lines into Europe right after D-Day, the British built two artificial harbors off the Normandy coast. Mulberry Harbours A and B allowed for the transport of up to 7,000 tons of vehicles and supplies to the mainland each day.
A harbor is a place where ships can seek shelter from the open ocean. Switching our focus to peacetime and the law, a “safe harbor” is the legal term for a provision that protects against liability if you meet certain conditions. No ships are required. Know the required conditions, and you can find shelter from a legal storm.
Two states recently passed laws that create safe harbors against claims of independent contractor misclassification.
Businesses using independent contractors in West Virginia and Louisiana should update their contracts immediately to take advantage of these new statutes.
Each state’s law provides a list of conditions that, if met, will make someone an independent contractor, providing a safe harbor against claims that these workers are misclassified and should be employees. The LA law creates a presumption of contractor status; the WV law is conclusive.
One of the conditions in WV, for example, is that the written contract “states…that the person understands” a list of five specific facts. The contract needs to “state” these five things. The WV law has other requirements too.
The LA law requires that 6 of a possible 11 conditions are met to fall within the safe harbor.
Other states are considering similar laws. Missouri and North Carolina are considering similar bills. Oklahoma was headed down the same road during the last legislative section but has not yet passed a bill.
Businesses using independent contractors in these states should amend their agreements to take advantage of these safe harbor opportunities.
At a time when the federal government is pledging to crack down further on independent contractor misclassification, it’s important to have contracts that are built to withstand classification challenges by any governmental body. Even under federal law, which doesn’t have these safe harbors, these recitations can be helpful when trying to meet the Right to Control and Economic Realities Tests used in federal law and in most states.
Your agreements with independent contractors provide an opportunity to build your defense against claims of misclassification. They should not be treated as a mere formality.
You want to be able to point to your agreements as Exhibit 1 in your defense against a misclassification claim. Play offense, not defense. Adding the WV and LA clauses — and even the proposed NC and MO clauses — can go a long way toward protecting your independent contractor relationships.
You might not be into reading books about World War II and that’s ok. But please read your contracts carefully. Now is a great time to amend and improve independent contractor agreements.
No visit to Turkmenistan would be complete without a visit to the Darvaza Crater, more commonly known as the Door to Hell. This massive crater formed decades ago after a Soviet drilling rig collapsed. Roughly 40 years ago, the Soviets lit the crater on fire to burn off the methane. But Turkmenistan has some of the largest gas reserves in the world, which meant you couldn’t just make the gas go away.
The fire still burns today, and the massive fiery hole is an impressive sight.
A massive hole can also describe what the Wage and Hour Division (“WHD”) just created.
On July 29, the WHD formally announced the rescission of all of the regulations that define when joint employment exists under the Fair Labor Standards Act (“FLSA”).
The regulations, which can be found in Part 791 of 29 C.F.R., have existed in some form since 1958, which is right around the tenth anniversary of a magnitude 7.3 earthquake that killed up to 10% of the entire population of Turkmenistan.
In 2020, the Trump Administration revised the regulations to provide more clarity about who is a joint employer and when. The 2020 regulations listed specific factors that should be applied. The new rule sought to create consistency in place of the patchwork of different factors used by different courts in different circuits. The 2020 regulations also included 11 helpful illustrations of how the new rules would be applied in various situations.
Pro-business groups liked the new rule because it provided clarity and made it harder to be a joint employer. Pro-employee groups hated the rule because it provided clarity and made it harder to be a joint employer.
In March 2021, the Biden Administration announced an intent to rescind the 2020 regulations. On July 29, the rescission was formally announced. The rescission takes effect September 28, 2021.
In the formal rescission notice, the WHD notes that few courts had followed the new test and that a federal district court in New York had ruled that the 2020 regulations were invalid. (That case is now on appeal to the Second Circuit.)
What does the rescission mean?
Welcome to Turkmenistan! The rescission doesn’t reinstitute the 1958 regulations. It doesn’t provide new regulations. Instead, it strikes all of Part 791 and leaves an empty hole.
The new guidance is that there is no guidance.
No kidding. Here’s what the notice says:
Effect of Rescission
Because this final rule adopts and finalizes the rescission of the Joint Employer Rule, part 791 is removed in its entirety and reserved. As stated in the NPRM, the Department will continue to consider legal and policy issues relating to FLSA joint employment before determining whether alternative regulatory or subregulatory guidance is appropriate.
The WHD notice reminds us that courts have set forth their own tests, and those tests can be followed.
So where does that leave us? What’s the rule? Well, it depends where you live. Really! Different courts apply different tests. But for the most part, they are similar.
In general, there are two types of joint employment – vertical and horizontal.
Vertical joint employment is when one employer, such as a staffing agency, provides workers for the benefit of a second entity. Joint employment under the FLSA means that both entities are legally responsible for ensuring that the workers are properly paid a minimum wage and overtime. Both are also jointly liable for any FLSA violations, even though the staffing agency likely has full control over payroll.
Based on court decisions, vertical joint employment will follow an Economic Realities Test, and joint employment will exist when “the economic realities show that the employee is economically dependent on, and thus employed by the other employer.” Multiple factors go into this analysis. These typically include:
Right to direct, control and supervise work;
Right to control employment conditions;
Permanency and duration of relationship;
Repetitive or rote nature of the work;
Whether the work is integral to the business;
Whether the work is performed on premises; and
Which entity performs the administrative functions characteristic of an employer (payroll, workers compensation, etc.)
Different courts articulate the test in different ways, but that’s a reasonable summary of the factors most commonly applied.
Any new interpretive guidance from the Biden WHD is almost certainly going to be that joint employment should be widespread and easy to establish.
Horizontal joint employment is when two businesses under common control employ the same individual. This issue arises when a worker spends 30 hours at Business 1 and 30 hours at Business 2. If the businesses are joint employers, then the worker is entitled to 20 hours of overtime for the combined 60 hours of work.
The 2020 regulations did not materially change the test for horizontal joint employment. The 1958 version of the regulations looked at whether the two entities were “completely disassociated” from each other. Courts typically look at common control and common management as evidence of horizontal joint employment. That is not likely to change, but that regulation’s gone too.
Will There Be New Regulations?
Maybe. It seems more likely to me that we’ll see a re-issuance of the 2016 Administrator’s Interpretation on Joint Employment. The 2016 AI adopted an expansive view of joint employment, finding that it’s fairly easy to establish. The 2016 AI was issued by David Weil, who ran the WHD under Obama. President Biden has nominated Weil to head the WHD in the current administration, so it would not be a surprise to see the 2016 AI or something similar re-issued.
Businesses should expect an expansive definition of joint employment, with little guidance or help from the WHD. With all regulations gone, and with different courts applying different tests, the landscape on joint employment resembles a massive crater filled with burning methane. It’s not a hospitable climate.
What Should Businesses Do?
Businesses should review their arrangements with vendors who provide labor and revisit those contracts and relationships. Steps can be taken to provide contractual protection against joint employment, even where the law will find a joint employment relationship.
This article in The Fox Magazine lists five things you can buy that are portable, even though you wouldn’t think they could be. The list includes toilets, massage chairs, saunas, neck fans, and bedrooms. The description of a portable bedroom goes like this:
Another brilliant innovation from the country that brought us the toilet in a suitcase, you can now buy a portable bedroom which comes folded up in a series of cabinets that look just like regular closets and dressers. Simply open the cabinet and fold out your bed for a super comfortable night’s sleep.
Um, no thanks.
If this article is revised next year, one surprising addition to the list could be Health Benefits for Massachusetts Independent Contractors. A new bill, inspired by California’s Prop 22, has been introduced in the Massachusetts legislature. To my surprise, the three co-sponsors are Democrats.
The bill, H. 1234, would create a exception to the strict ABC Test in Massachusetts, but only in the rideshare and delivery industries.
If the bill passes, rideshare and delivery platform companies would be required to offer occupational accident insurance and pay into a portable benefit account for drivers.
In exchange for doing so, these companies would gain assurance that drivers on their platforms are independent contractors under Massachusetts state law. The normal ABC Test would not apply. Platform companies would also be required to follow a few other basic guidelines in their interactions with drivers, including that:
Drivers can decide when to work and not work;
Drivers’ access to the platform cannot be terminated for declining a specific rideshare or delivery request;
Drivers can provide services on multiple platforms; and
Drivers can also work in another lawful occupation or business.
The bill is supported by the Massachusetts Coalition for Independent Work (and, of course, by the gig companies), and it is opposed by the Boston Independent Drivers Guild.
If passed, this would mark a significant exception to the strict ABC Test in Massachusetts, which currently presumes all working relationships to be employment, unless:
(A) the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and
(B) the service is performed outside the usual course of the business of the employer; and,
(C) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
Unlike California’s AB 5 (later rewritten as AB 2257), the Massachusetts law does not currently have exceptions for certain industries. Rideshare and delivery services would be the first industries carved out of the Massachusetts ABC Test.
The bill is in the early stages of being considered. It has been referred to the Joint Committee on Financial Services for further consideration. We’ll keep an eye on this one. It’s much more intriguing to me than a portable bedroom or sauna.
This is one of my favorite optical illusions. The spheres here are all beige. They are not red, green, or purple. Look closely and you’ll see. David Novick, a professor of engineering at UTEP, explains the illusion here.
It’s fun to be fooled with optical illusions. But it’s not fun to be fooled with federal immigration law.
Companies retaining independent contractors should remember these key points for I-9s and immigration law compliance:
1. Properly classified independent contractors do not need to complete I-9 forms.
2. Misclassified independent contractor — that is, those who are really employees under federal law — are employees and should have a completed I-9. A multi-factor test is used to make this determination. According to federal regulations, these factors should be considered:
Who supplies tools or materials;
Whether the worker makes services available to the general public;
Whether the worker works for a number of clients at the same time;
Worker’s opportunity for profit or loss as a result of labor or services provided;
Worker’s investment in facilities for work;
Who directs the order or sequence in which the work is to be done; and
Who determines the hours during which the work is to be done.
3. Federal law prohibits individuals or businesses from contracting with an independent contractor to provide services in the U.S., knowing that the contractor is not authorized to work in the U.S. [8 U.S.C. 1324a(a)(4)]
4. Staffing agency temps employed by the staffing agency must complete I-9s as employees of the staffing agency. Contracts with staffing agencies should make clear the staffing agency accepts this obligation. If an agency sends a bunch of undocumented temps to your worksite, you might get an unscheduled visit from ICE, which is not a good look.
For those keeping a list at home (wait, that’s just me?), you can add immigration law noncompliance to the list of Things That Can Go Badly When Independent Contractors are Misclassified.