Say Say Say: How Not to Bungle an Independent Contractor Relationship

Remember the 1983 song, Say Say Say, by Paul McCartney and Michael Jackson? “Say, say, say what you want. But don’t play games with my affection.”

The songs asks for some straight talk. Be direct. Say what you mean. Or as Michael says, “What can I do girl, to get through to you. Cause I love you, baby (baby).”

1983 was a memorable year for me for music. I had a cassette called CHART ACTION 1983 that was one of my favorites. It included songs from Dexy’s Midnight Runners, Adam Ant, the Stray Cats, Bonnie Tyler, and Golden Earring.

But it didn’t have Say, Say, Say, and that was fine by me because I don’t really like the song. If it was on CHART ACTION 1983, I’d have skipped it, but the old fashioned way: forward, forward more, a little more, oops too far, rewind, rewind, forward, got it. Hungry Like the Wolf.

“Say say say what you want” would have been good advice for a Pennsylvania agency that offered interpreter and transcription services. The agency tried to run its business with an independent contractor model, but failed to say say say the right things in its agreements.

A Pennsylvania court ruled that the agency had misclassified its interpreters as independent contractors. Under PA unemployment law, the interpreters were actually employees. (“You know I’m crying oo oo oo oo oo.”)

Let’s look at where the agency went wrong.

Bad facts, tending to support employee status: The interpreters had a set of policies and procedures they had to follow, including wearing name badges. The agency did the scheduling.

Good facts, tending to support contractor status: The interpreters are not supervised, reimbursed for their expenses, or provided benefits, training, equipment, or name badges. An interpreter could refuse work at any time.

Totally unnecessary bad fact: The interpreters had to sign a non-compete agreement. That’s evidence of employment because it restricts the interpreter’s ability to work for others as an entrepreneur would do. But it turns out that, in reality, the agency didn’t care if the interpreters worked for others, and many of the interpreters did work for others.

Even worse, the non-compete included language referencing an “existing contract of employment.” Oops. Poor choice of words when you’re trying to prove there was no employment relationship. I would bet that the agency just pulled this non-compete language off the internet, without having considered the legal implications. The court focused a lot of attention on the non-compete when ruling that the interpreters were really employees.

The non-compete was a self-inflicted wound. That misstep is a good example of why you can’t just pick template agreements off the internet and expect that they’ll be sufficient.

More bad facts were on the website: Another problem for the agency was its website, which described the extensive training provided to interpreters, referred to them as “new hires,” and indicated they were all required to undergo a final performance evaluation. These facts all suggest an employment relationship.

Pennsylvania unemployment law applies a two-part test for determining whether someone is an employee or an independent contractor. To be an independent contractor, the service had to prove that it did not exercise control (a Right to Control Test) and that the interpreters were “customarily engaged in an independently established trade, occupation, profession or business.”

This could have been done correctly. Because of the independent nature of an interpreter’s work, the agency probably could have set up legitimate independent contractor relationships. This case is a classic example of how a proactive legal review could have saved the day.

If the agency had asked a lawyer for help in setting up the business the right way, this case could have gone the other way. The agency could have eliminated the non-compete agreement (which it didn’t enforce anyway), modified the website to eliminate “new hire” language and to de-emphasize training, cut back on the specific training provided, and changed the name tag requirement to a more generic requirement to provide identification.

So to the song I say say say: You may have hit #1 in the U.S. that October, but I’m not the one who really loves you.

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

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