Tag Archives: Independent Contractor Misclassification

03.13.17
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Independent Contractor vs. Employee, Hit List by Industry, 2016-2017

img_1044Are you on the hit list?

The highest concentration of independent contractor misclassification lawsuits during the past 12 months seem to be in these areas:

  • Agricultural workers
  • Beauty consultants (sales)
  • Cable installers
  • Car services (passengers, ride-hailing services)
  • Computer programmers
  • Construction workers
  • Consultants (various industries)
  • Couriers
  • Delivery drivers (food, goods, freight)
  • Exotic dancers (strippers)
  • Freelance writer/reporters/other journalism
  • Information technology workers
  • Installers (cabinets, appliances, windows, furniture)
  • Insurance sales representatives
  • Janitorial franchise owners (individuals)
  • Maintainance workers
  • Newspaper carriers
  • Performers (actors, cheerleaders, wrestlers)
  • Physicians
  • Property inspection services
  • Repair technicians
  • Sales representatives
  • Travel agents
  • Truck drivers
  • Yoga instructors

This list should not in any way suggest that the categories of workers in this list should be employees. That determination will depend on the facts in any given situation. All of these types of workers, however, have been plaintiffs in recent lawsuits alleging that they were misclassified as independent contractors and should have been deemed employees.

Companies who retain these types of workers as independent contractors should take proactive steps to evaluate the facts in these relationships, particularly under the variety of federal and state law tests that may apply. Companies should also remember that because different tests apply to different laws, workers may be properly classified as independent contractors under some laws and some tests, but may be deemed employees under other laws and other tests.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

03.06.17
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D.C. Court Doesn’t Fall for NLRB’s Lollipop Trick, Deems FedEx Drivers Independent Contractors

img_1042Act I, Scene 1

Location: Anywhere, USA

Boy: Can I have a red lollipop?

Mom: No, we’re eating dinner in half an hour.

Boy: (eats blue lollipop)

Mom: What are you doing? I said no!

Boy: I only asked about the red lollipop.

Too cute by half, right? Mom is no fool and easily sees through the simple trick. The boy is grounded.

Act I, Scene 2

Location:  D.C. Court of Appeals

NLRB: These FedEx drivers in Massachusetts are employees, not independent contractors.

D.C. Circuit (2009): No, they’re independent contractors.

NLRB: Ok, Connecticut then. The FedEx drivers in Connecticut are employees, not independent contractors.

D.C. Circuit (2017): Are you kidding me? We already ruled they are independent contractors.

NLRB: Last time I only asked about the drivers in Massachusetts.

Continue reading →

02.28.17
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Tip of the Day: Beware of the Million Dollar Unemployment Claim

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If your former contractor files for unemployment, pay attention!

When a former employee files for unemployment, it hardly matters to the business whether the individual gets unemployment coverage. Unless the individual had voluntarily quit, benefits are usually allowed. No big deal.

When an independent contractor files for unemployment, however, beware. Unemployment insurance coverage is available only to employees, not to independent contractors. For a contractor to obtain coverage, the state must first determine that the contractor was an employee.

This determination can have far-reaching economic consequences to the business, extending well beyond the individual contractor.

First, if your contractor was misclassified and is deemed an employee, you were not paying into the state unemployment insurance pool for that contractor — or for all contractors who are similarly situated. The state wants your money and may issue back assessments (and penalties and interest) for having failed to pay into the system — not just for that individual but for all other individual contractors who performed the same type of work.

Back assessments can stretch back years and can add up quickly, particularly for businesses that retain a large number of individual contractors.

Second, the impact of a misclassification finding can quickly snowball beyond the land of unemployment insurance.

Continue reading →

02.23.17
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Sticks & Stones: What Not to Call Your Independent Contractors

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“Sticks and stones can break my bones, but names will never hurt me.” Au contraire. That old adage may have rang true on the playground — or more likely, it probably got you beat up if you actually said it on the playground — but it does not ring true when speaking  about your independent contractors. Words matter. A lot.

Remember, any court or agency evaluating whether your independent contractor relationship is properly classified (and is not employment) will look to the facts. The facts include whether the parties refer to the relationship in ways that resemble employment. Avoid using terms that sound like employment.

Here are 14 things not to say about your independent contractors: Continue reading →

02.20.17
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Boom? Is the California Supreme Court About to Blow Up the Test for Independent Contractor Relationships?

california-independent-contractor-dynamex-boomThe California Supreme Court may be about to rewrite the test for Who Is My Employee? under California wage and hour law.  [Note 4/30/18: It just happened. Read more here.]

Independent contractor relationships that have stood the test of time may be in jeopardy.  And I don’t mean the (mildly?) entertaining Alex Trebek kind of Jeopardy. We’re talking real economic upheaval and uncertainty — worse than Schwarzenegger taking over Celebrity Apprentice.

Here’s the issue: Continue reading →

02.09.17
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Tip: Avoid Rebranding Former Employees as Independent Contractors

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It has become fairly common to take an outgoing employee and rebrand the employee as a consultant / independent contractor — either as part of a severance plan or to phase the employee into a retirement status. Continue reading →

02.06.17
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Lessons from Bob Seger’s “Against the Wind”: 5 Clues Your Independent Contractor May Be Misclassified

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The all-time best song lyric is Bob Seger’s “I wish I didn’t know now what I didn’t know then,” from Against the Wind. This is based on a comprehensive survey of 1 registered voter, but good enough.

Too many companies assume they don’t have an independent contractor misclassification problem because they have not yet been sued, audited, or investigated.

Remember how you could cover the eyes of small children and convince them you’ve disappeared? independent-contractor-misclassification-laughing-babyYou didn’t disappear, though, did you? (Or, did you?!!) This is a fun little game but bad risk management strategy.

The better strategy is Continue reading →

02.02.17
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Strippers Have No Class, Judge Rules

We’ve seen lots of exotic dancer cases lately (clarification for my wife: seen lots of cases, not dancers) where the dancers — apparently this is the preferred legal term for strippers — claim they have been misclassified as independent contractors.

employment-class-action-blogMany of these claims have succeeded, but here’s an unusual way to lose class action status. This judge refused to certify the proposed class because of lack of experience of counsel. Thanks to my colleague, Greg Mersol (experienced counsel), for this post. Class dismissed!

Unlikely Lessons in Legal History, Edition 1.
Why lawyers use the term “exotic dancer” instead of stripper:

Lawyer’s Wife:  Were you out cavorting with strippers again?

Lawyer:  No.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

01.10.17
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What is the Economic Realities Test?

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The Economic Realities Test seeks to determine whether, as a matter of economic reality, the worker is reliant on the hiring party, or is in business for him/herself.

[UPDATED 10/9/2021, 3/15/22:  See Notes in red, below.]

The Fair Labor Standards Act (FLSA) uses an Economic Realities Test to determine whether a worker is a contractor or an employee.  If the worker is an employee under this test, then the federal minimum wage and overtime rules apply, subject to any exemptions.  This test is also used to determine who is an employee under the Family and Medical Leave Act (FMLA). Continue reading →

01.03.17
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How Does the IRS Determine Who is an Employee?

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The IRS uses a Right to Control Test to determine whether a worker is an employee for tax purposes.

If the employer has the right to control the worker, that individual is deemed an employee and the company is subject to employment tax obligations. If the company does not exercise control over the worker but instead gives that worker significant independence, then the worker is generally viewed as an independent contractor. The more control and supervision by the employer, the more likely the worker will be deemed an employee.

Continue reading →