That Contractor May Be Your Employee

Transcription

1 SHRM Rutherford County Chapter Complimentary Legal Seminar by Gullett, Sanford, Robinson & Martin, PLLC MARK WESTLAKE & KATHY POHLID PRESENT: That Contractor May Be Your Employee Pinnacle Bank Learning Center 150 Third Avenue South, Nashville

2 Red Flags Is the work performed at the heart of the company s business? Does the company control the worker and how the work is performed? Is the worker set up as an independent business and able to work for others?

3 Independent Contractor or Employee? Cars for Auction Can you spot the contractor? Your employee hit my client with a spatula Independent Contractor Delivery Cabbie gets hurt in accident Exotic Dancers

4 Cars for Auction Cars for Auction

5 Exhibit A

6 You be the Judge Employee OR Independent Contractor

7 Holding: Employee 1. Defendant controlled the Plaintiff's work; 2. Plaintiff did not have any opportunity for profits or losses; 3. Plaintiff lacked any investment in equipment of materials or any authority to hire other workers; 4. Plaintiff's work as a driver did not require any special skills as Plaintiff only drove passenger vehicles; 5. Plaintiff's work as a driver was for an indefinite period of time; and 6. Plaintiff's driving services were integral to Defendant's business of transporting vehicles from place to place. Boyd v. Nashville Limo Bus, LLC, No. 3:11 cv 0841, 2012 U.S. Dist. LEXIS (M.D. Tenn. Oct. 4, 2012)

8 Independent Contractor or Employee? Cars for Auction Can you spot the contractor? Your employee hit my client with a spatula Independent Contractor Delivery Cabbie gets hurt in accident Exotic Dancers

9 Microsoft & the IRS Mark Counsel for the Government Kathy Counsel for the Company

10 Exhibit A

11 Can you spot the contractor?

12 A few more questions. Did you verify eligibility for U.S. employment or collect I 9s? Did you issue W2s or withhold taxes? Did you pay the employer share of FICA or FUTA? Did you allow participation in qualified benefit plans? Do you cover their workers compensation benefits? Do you accept employer liability for EPA, ADA, ADEA, COBRA, FMLA, WARN?

13 You be the Judge OR

14 IRS Ruling: Employee IRS uses 20 Factor test to determine that the freelancers are employees. Microsoft is required to pay FICA and FUTA

15 Microsoft Office Mark Counsel for the Employees Kathy Counsel for the Employer

16 Fair Labor Standards Act Collective Action An employee may bring a collective action on behalf of himself and "other employees similarly situated" to recover unpaid overtime compensation. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought." 29 U.S.C. 216(b).

17 Holding: Settled Microsoft pays $96,885,000 to employee freelancers Workers hired as employees, to be paid an additional $101 million Microsoft paid $27,127,800 in attorney fees Vizcaino v. Microsoft, 290 F.3d 1043 (9th Cir. 2002)

18 Independent Contractor or Employee? Cars for Auction Can you spot the contractor? Your employee hit my client with a spatula Independent Contractor Delivery Cabbie gets hurt in accident Exotic Dancers

19 Your employee hit my client with a spatula! Mark Counsel for the Company Kathy Counsel for the Injured Plaintiff

20 Exhibit A

21 Exhibit B

22 Exhibit C AFFIDAVIT 1. My name is Mark and I am counsel for McDonalds. 2. McDonalds does not own the Holly Springs store. 3. McDonald s does not pay utilities for the store or sell any products as the store. 4. McDonald s does not supply any products to the store. 5. McDonald s does not have the right to control the day to day activities at the store. 6. The franchise owned and operated the store pursuant to the franchise agreement.

23 You be the Judge Was McDonald s the employer / master of Ms. Jones?

24 Holding: Not McDonald s Employee McDonald's did not act as the master or employer of the franchise. McDonald's did not control the day to day operation of the franchise, it did not have the authority to hire or fire employees, and it did not own or operate the franchise at issue. Parmenter v. J&B Enterprises, Inc., and McDonald's Corporation, Inc., 99 So. 3d 207 (Miss. App. 2012)

25 Independent Contractor or Employee? Cars for Auction Can you spot the contractor? Your employee hit my client with a spatula Independent Contractor Delivery Cabbie gets hurt in accident Exotic Dancers

26 Independent Contractor Delivery Mark Counsel for the Employees Kathy Counsel for the Company

27 Exhibit A

28 You be the Judge Employee OR Independent Contractor

29 Holding: Employee Class Action Certification Overtime Minimum Wage Meal Breaks FMLA Class Action Certification: In re FedEx Ground Package Sys., 273 F.R.D. 424 (N.D. Ind. 2008)

30 Independent Contractor or Employee? Cars for Auction Can you spot the contractor? Your employee hit my client with a spatula Independent Contractor Delivery Cabbie gets hurt in accident Exotic Dancers

31 Cabbie gets hurt

32 You be the Judge Employee OR Independent Contractor

33 Holding: Independent Contractor The statutory factors support independent contractor status: the right to control the conduct of the work, the right of termination, the method of payment, the furnishing of tools and equipment, and the self scheduling of working hours. The factors relating to the freedom to select and hire helpers and the freedom to offer services to other entities favors neither party's position. Mohamed v. Taxi USA of Tennessee, LLC, No. M WC R3 WC, 2012 Tenn. LEXIS 62 (Tenn. Feb. 10, 2012)

34 Independent Contractor or Employee? Cars for Auction Can you spot the contractor? Your employee hit my client with a spatula Independent Contractor Delivery Cabbie gets hurt in accident Exotic Dancers

35 Exotic Dancers

36 Dancer s Packet Dancer s Packet Club Rules and Conduct for Contractors & employees Conduct in VIP rooms Dancer Information Sheet Random Drug Test Consent Form Independent Contractor Agreement Wage Acknowledgement on Tip Credit Rules Recognition Consent

37 You be the Judge Employee OR Independent Contractor

38 Holding: Employee The Club's degree of control over the work of entertainers, the entertainers' opportunity for profit and loss, the entertainers' relative investment, the lack of specialized skill required to be an entertainer, and the integral nature of nude entertainment to the Club's business support a finding that an employer employee relationship existed. Clincy v. Galardi South Enterprises, Inc., 808 F. Supp. 2d 1326 (N.D. Ga. 2011)

39 Independent Contractor or Employee? Cars for Auction Can you spot the contractor? Your employee hit my client with a spatula Independent Contractor Delivery Cabbie gets hurt in accident Exotic Dancers

40 Q&A

41 Contact Information Mark Westlake Phone Fax Kathleen Pohlid Phone Fax Thank you!