Thanks to the ABA Journal for recognizing WhoIsMyEmployee.com as its Featured Blog of the Week for the week of May 18, 2017. I appreciate the recognition!
To my readers: I hope you have been enjoying the blog, and I encourage you to email me with ideas for posts, along with any questions or comments.
Thanks!
Todd Lebowitz
Have you ever heard someone say, “The definition of insanity is doing the same thing over and over and expecting a different result“? That’s just wrong. No, it’s insanely wrong. (Irony! Actual definition, click here).
My consistent advice to companies that use independent contractors is to be proactive. Review your policies, practices, and documents now — before you get sued or audited. Many take this advice. Those who do not generally give two reasons:
Folks, that kind of thinking is: n. extreme foolishness; folly; senselessness; foolhardiness.
Here are a few quick facts:
Among James Bond films, Rotten Tomatoes ranks Never Say Never Again 18th out of 26, with a mediocre 63% rating. (Bond movie quiz at the end of this post, for patient readers.)
It’s a cliche saying, I know, but my first reaction when asked this question was, “I’d never say never, but it’s hard to imagine a scenario where that would work.” (That was also my second reaction and my third. Let’s just say that’s my reaction.)
Let’s run this through the gauntlet. Remember, it’s not your choice whether an intern is an independent contractor or an employee. The law decides that for you, based on the nature of the relationship.
Test #1: Economic Realities Test. Under federal wage and hour laws, an independent Continue reading
The great scholar Mick Jagger reminds his followers that you can’t always get what you want, but if you try sometimes well you might find you get what you need. This is good advice, not just for Mr. Jimmy (who did look pretty ill), but also for companies who use independent contractors.
In a true independent contractor relationship, the hiring entity knows what it needs. It needs results, but the details about how, when, and where to work toward those results are left to the contractor’s discretion. There is no oversight or supervision.
The more direction a company provides a contractor on how to perform the work, the more likely the contractor is misclassified and the relationship will be deemed employment. You might want to control these things, but if they are not necessary to get what you need, then you should try sometimes and you might find you can get what you need without exerting extra control over the contractor. Continue reading
In December 1965, the Beatles released Rubber Soul, which led with Drive My Car. (“Asked a girl what she wanted to be/She said Baby, can’t you see?/I want to be famous, a star on the screen/But you can do something in between.”) You can thank me later for getting that song stuck in your head all day.
Under a new Florida law, online ride hailing service are singing “Baby you can drive my car, and maybe I’ll love you.” If certain easy-to-meet conditions are satisfied, drivers for online ride hailing services are declared independent contractors by law, not employees. This new law protects Uber, Lyft, and similar services from misclassification class actions brought under state law.
The requirements for being granted independent contractor status under the new law are simple. Continue reading
It’s summer intern hiring season. Can your interns be unpaid? If you pay them something, can you pay a small stipend that amounts to less than minimum wage?
Wage and hour laws dictate when a summer intern must be paid like a regular employee, with a required minimum wage and eligibility for overtime. Seasonal amusement and recreational establishments (such as summer camps or some amusement parks) may qualify for a special exemption, but this post is focused on more conventional year-round businesses.
Here are six tips for maintaining unpaid internship status: Continue reading
Sort of. The Fair Labor Standards Act (FLSA) covers only employees, not independent contractors. The FLSA’s requirements on minimum wage and overtime, therefore, do not apply to independent contractors.
But wait, dear reader, don’t click away quite yet! There’s more! The real question is whether your independent contractor is really an independent contractor.
The question of Independent Contractor vs. Employee is determined under the FLSA by applying an Economic Realities Test to the facts of the relationship, not by deferring to how the parties have characterized they relationship.
The Economic Realities Test evaluates whether the worker is economically reliant on the company for which services are being provided, as opposed to in business for himself/herself.
I have written about the Economic Realities Test here, walking the reader through the various factors that courts and the DOL use to determine Who Is My Employee? under the FLSA.
The bottom line: A true independent contractor is not covered by the FLSA, but an Economic Realities analysis must be applied to determine whether a worker is truly an independent contractor.
© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.
Photo of Singer Dave Mason (We Just Disagree), by Alan Hurtock
Let’s start with this: Everyone is happy being an independent contractor until they’re not.
What do I mean by that? Right now, the relationship works. The contractor performs, and you pay for the work.
But what happens when things go south? As soon as you decide you no longer need those services, the contractor might stop being your BFF.
A disgruntled former contractor has some options, all of which involve some variation of this story: “Once upon a time, I was misclassified and should have been an employee.” None of the former contractor’s possible next steps are good for you: Continue reading
The IRS offers a settlement option for companies that suspect they have been misclassifying their independent contractors and wish to reclassify them as employees.
The Voluntary Classification Settlement Program (VCSP) requires companies to meet certain eligibility criteria to participate but, in exchange, the IRS rewards participating companies with a steep discount off potential back taxes and penalties.
To participate in VCSP, a company:
Benefits for participating companies include:
The settlement process requires companies to sign a closing agreement with the IRS.
Is this a good deal? It can be, but it depends on the overall circumstances. Some factors to consider before applying include: Continue reading
As we know, there are a variety of tests used to determine Independent Contractor vs. Employee, and the proper test varies depending of the law being applied.
Most of these tests are balancing tests. A variety of factors are considered, and no single factor is determinative.
ABC tests, however, are different. ABC tests start with a presumption that a contractor is an employee, then requires a company to prove each of three factors to protect a contractor’s status as a contractor.
ABC tests tend to apply only to state unemployment coverage laws and, less commonly, to
state workers’ compensation laws. Continue reading
Who Is My Employee? 