Not Your Ordinary Haircut: Does Your Sexual Harassment Policy Prohibit Harassment by Contractors?

Harassment policy independent contractor

From the Library of Congress digital collection.

This photo came with the description: “One of a series of images of a man harassing a woman as he cuts her hair.” Tip: don’t try this at home.

There are (unfortunately) many ways to harass a woman, most without scissors. Harassment can be by supervisors or fellow employees, but sometimes it comes from independent contractors.

Your company has a sexual harassment policy. Does it prohibit harassment of employees by contractors and other non-employees?

It should. Federal law creates a claim for sexual harassment if the harassment is by another employee, especially a supervisor. But the path toward a sexual harassment claim against a company for conduct by its independent contractors is less obvious. A hostile work environment claim can be asserted if a company knows of — and permits — a work environment that includes harassment by contractors, but a company’s control over contractors and their actions is going to be more limited than its control over its employees.

Your policy should fill the gap.

By creating a policy that takes a stance against harassment by independent contractors and other third parties, your company enhances its position in the event of a claim. Plus, it’s the right thing to do. If you hear of such a claim, investigate it. You may need to do something about it. That may include terminating the relationship with the contractor.

The policy should also say that conduct may be in violation of company policy even if the conduct is not prohibited by law. In other words, you are not conceding that you can control what your contractors do, and you are not conceding that there’s a viable legal claim. But you are taking a position against harassing behavior as a matter of policy.

The caption at the bottom of the photo above is small, but it says, “Getting his hair banged.”  I haven’t the slightest idea what that means, but it sounds bad. I would prohibit that too.

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

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“Who Was That Masked Man?” It Could be Your Independent Contractor.

who was that masked manFrom 1949 to 1957, The Lone Ranger ruled the airwaves. As recounted in the all-knowing wikipedia: “At the end of each episode, mission completed, one of the characters would always ask the sheriff or other authority, ‘Who was that masked man?’ When it was explained, ‘Oh, he’s the Lone Ranger!,’ the Ranger and Tonto would be seen galloping off with the cry, ‘Hi-Yo, Silver! Away!’ catching the attention of one of the townspeople crossing the street.”

Today, the answer to “Who was that masked man?” is likely to be, “Oh, he’s the lone maintenance guy on third shift” or “Oh, that’s Wilbur, our accountant.”

With many states now requiring employees and customers to wear face coverings, should the same be required of your company’s independent contractors? If you require contractors to wear face coverings, is that the type of control that could weigh in favor of employee status?

The practical answer is that, as the nation tries to emerge from the coronavirus pandemic, it’s a good practice to require everyone who works onsite — employees, customers, and independent contractors — to wear face coverings. The use of face coverings can be made mandatory as a condition of entering your facility. That is a site safety measure, not evidence of control that would convert your contractor to an employee.

But what about when the contractor works remotely, perhaps interacting with customers or working independently offsite? In that case, follow common sense and any applicable state and local law. For independent contractors who work on their own or in their homes, it’s probably not necessary to impose any specific face covering requirement. But that doesn’t mean they should freely expose their titillating chins and lips to the adoring masses. In your contracts with independent contractors, it is always wise to require that they comply with all applicable laws when performing any part of the services. That catch-all requirement is going to capture whatever face covering rule applies in that state at that time. The contractor should be required to do whatever the state or local law requires. Different states have different requirements.

What about staffing agency workers who work onsite? Can you safely impose the same face covering requirements on them as with your W-2 employees? Yes, and you should. Anyone working in your facility needs to comply with the applicable state and local work rules. That includes staffing agency workers at your location.

When the popular show’s run ended, Clayton Moore, who played the Lone Ranger, used to make public appearances in his distinctive mask. But in 1979, the Wrather Corp., which owned the rights to the character, sued Moore to make him stop wearing the mask in public. Moore reverted to wearing green-tinted sunglasses with his cowboy outfit, hardly an acceptable substitute for our heroic roughrider.

In 1985, the Wrather Corp. relented and allowed Moore to again don the mask. As he told the Los Angeles Times in 1985, “Playing the Lone Ranger made me more considerate of my fellow man.”

In today’s COVID-19 climate, you can follow the Lone Ranger’s ethos and require face coverings. It’s a small gesture that will make you more considerate of your fellow man.

Hi-yo!

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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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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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In Contract Labor Agreements, This Simple Clause Can Be Your Pillow

Joint employment contract clauseFor humans, some things are essential. Like a good pillow. For non-humans, the anti pillow sometimes works too. Not sure how. But the non-human in this picture generally sleeps like this.

For businesses contracting for labor, some things are essential too. One clause you are likely to have in contract with a supplier of labor is the right to remove a bad apple from the project.

The bad apple clause typically reads something like this: “We have the right to remove any individual supplied by contractor from the project for any reason at any time.”

That’s useful, but does it create an argument that your business is taking control over the individual’s employment in a way that could make your business an employer (or joint employer) of an individual you remove?

Here’s a simple fix to improve your contracts and limit the viability of that argument:

“We have the right to remove any individual supplied by contractor from the project for any reason at any time. We do not, however, have any right to control the individual’s employment status with contractor. Contractor retains the sole right to make all decisions regarding the hiring, termination, and other conditions of employment for all individuals assigned to the project or removed from the project.”

Consider the addition of that extra sentence or two to be a fluffy pillow.  It will help you sleep better if faced with a misclassification or joint employment claim.

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

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Need Direction After California’s New Independent Contractor Law? Download the Playbook!

Siri punked me. Independent contractor misclassification AB 5Sometime I forget where I park, so when I went to the airport recently, I told Siri where I left the car.

Siri then punked me with this. I think it was intentional. Stupid AI.

California businesses may be in need of some direction too. On September 18, Gov. Gavin Newsom signed Assembly Bill 5 into law.  The law redefines the Independent Contractor vs. Employee test in California, applying an ABC Test to a broad range of state laws.

When the law takes effect January 1, 2020, it will instantly turn thousands of independent contractors into employees. Some aspects of the law may even apply retroactively.

What are your options?

I can think of ten. Click here to download The Playbook: Now That California Has Passed AB 5, What Are the Options for Businesses Using Independent Contractors?

 

Page 1 from The-Playbook-California-AB-5_p03

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

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The Monster with Three Eyes Can Help You Avoid Claims of Joint Employment

Some monsters are scary. There’s Godzilla, who terrorized Tokyo and whose name in Japanese translates roughly to gorilla-whale. (Thanks, wikipedia!) There’s Frankenstein’s monster, Dracula (also Count Chocula), and the Creature from the Black Lagoon, which was filmed in terrorizingly implausible black and white 3-D.

But on the other hand, some monsters are friendly and educational, like Cookie Monster, E.T., or, dare I say, Elmo. (“Kids look at these crayons… Kids look at these crayons.”)

This post is about a friendly and educational monster: The Monster with Three Eyes.

If you want to help your business avoid claims of joint employment, remember the Monster with Three Eyes when drafting contracts with staffing agencies or other vendors that supply labor.

Confession: The “three eyes” really should be the letter I three times, but when I try to write that out, it looks like “three is,” which is neither memorable nor a suitable name for a monster, even a friendly and educational one. So we go with three eyes. When I say it aloud — making sure first that no one is listening because why would a person say something like that aloud for seemingly no reason? — it sounds the same.

Here are the three main ingredients you’ll want to include in each contract with a vendor that supplies labor:

1. Identify the sole responsibilities of the vendor with respect to its employees. List these responsibilities. List the various obligations of an employer — things like properly recording all hours worked, paying overtime, paying a minimum wage, handling payroll, reimbursing expenses, providing meal and rest breaks, stuff like that. List these responsibilities specifically in the contract. Don’t just say the agency agrees it is the sole employer. Remember, joint employment is a legal doctrine that holds your business responsible if the vendor failed to do something it’s supposed to do. If your found to be legally liable, you want to be able to point to a specific contractual obligation the vendor failed to satisfy.

2. Indemnify. The indemnification provision needs specificity. It should require the vendor to indemnify your business for any claims of joint employment and for any claims arising out of the vendor failing to comply with any of its contractual obligations. That’s why you’re listing the specific contractual obligations of the vendor. When seeking indemnification, you want to be able to point to a specific contractual obligation the vendor failed to meet, which triggers the indemnification requirement.

3. Insure. Insurance requirements are just as important as indemnity. The indemnity clause is of no value if the vendor goes out of business or is liable for more than it can pay. Vendors who supply labor should be able to demonstrate that they have sufficient insurance so that if there is a joint employment claim and your business seeks indemnity, someone (the insurer) has the ability to pay.

Because joint employment is a legal doctrine that can hold your business fully liable for the misdeeds of a vendor, the key to limiting your business’s exposure is a carefully drafted contract. Even if your business is jointly liable under the law, you want to have a contractual claim against the vendor that failed to do what it was supposed to do, along with indemnity and insurance so that your business can be made whole.

So remember the Monster with Three Eyes when drafting or reviewing your next contract with a vendor that is providing laborers. If the vendor fails to meet its legal obligations, a contract drafted with these lessons in mind will be the gorilla-whale you need to get out of paying for the vendor’s mistakes.

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

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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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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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Meatloaf Lyrics Inspire Supreme Court; Arbitration Agreements Can Be Implied to Include Class Action Waivers

Meatloaf Lamps Plus Arbitration agreements independent contractorhttps://youtu.be/_wO8toxinoc

Meatloaf’s “You Took the Words Right Out of My Mouth” opens with a dialogue by Jim Steinman, who wrote the song, and actress Marcia McClain, who played Dee Stewart in the soap opera As the World Turns. He asks, “On a hot summer night, would you offer your throat to the wolf with the red roses?”

For a quick trip back to 1978-79, listen to the album version, not the shortened single, which cut out the dialogue, presumably because it distracted the roller skaters. The song is about teenage lovers and passion, and the lyrics are rich with intense imagery.

Offering a new twist on this old classic, the Supreme Court last week issued a ruling on arbitration agreements that can be paraphrased as “You took the words right out of the air because they weren’t in my arbitration agreement.” This decision will inflame passions in the pro-worker camp, but it’s a good decision for businesses. The case is called Lamps Plus v. Varela.

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Mixed Messages, Misclassification, and My Visit to Ohio E-Check: Just Another Day on My Way to the Office

Independent contractor misclassification e-check mixed messages

Yesterday I was at Ohio E-check. When they use their fancy vehicle emissions testing equipment, they ask you to get out of your car and wait in a small glass-walled waiting area. Inside there are two signs. The first says: “Ohio E-Check. No cell phones!”  The second says: “Ohio E-Check. How are we doing? To comment, use this QR code.”

Regrettably, I complied with the first sign, so I do not have a picture for you of the two signs. (While waiting, I tried like hell to memorize that QR code!)

When waiting for E-Check, mixed messages are funny. When retaining independent contractors, however, mixed messages are no joke. If enough signs suggest that a contractor is really an employee, the risk of a misclassification finding is heightened, and the consequences of misclassification can be severe.

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