Embed Size (px)
Citation preview
Employment Law 101: Employment Law 101: Classifying Workers Classifying Workers
Dan HartMay 19, 2010
Firm/ Corp Logo
2
Mission of Mission of Pro Bono Partnership of Atlanta:Pro Bono Partnership of Atlanta:
To provide free legal assistance to community-based nonprofits that serve low-income or disadvantaged individuals. We match eligible organizations with
volunteer lawyers from the leading corporations and law firms in Atlanta who can assist nonprofits with their
business law matters.
3
Pro Bono Partnership of AtlantaPro Bono Partnership of AtlantaEligibility & Other InformationEligibility & Other Information
In order to be a client of Pro Bono Partnership of Atlanta, an organization must: Be a 501(c)(3) nonprofit organization. Be located in or serve the greater Atlanta area. Serve low-income or disadvantaged individuals. Be unable to afford legal services.
Visit us on the web at www.pbpatl.org Host free monthly webinars on legal topics for nonprofits
To view upcoming webinars or workshops, visit the Workshops Page on our website
4
Introduction Introduction
A substantial body of law governs wage and hour issues Employers must carefully analyze both federal and state
law – the rule that provides more expansive benefits to employees controls
Federal wage and hour law primarily is contained in the Fair Labor Standards Act and its implementing regulations.
The Department of Labor (“DOL”) is responsible for enforcing the FLSA
5
Threshold IssuesThreshold Issues
When determining employee classifications under the FLSA and other applicable laws, non-profit employers should consider two threshold questions:
1. Are my independent contractors really employees?
2. Are my volunteers really employees?
If the answer to either question is “yes,” the employer must then determine how the employees must be paid.
6
Case StudiesCase Studies
Case Study 1: Tim is a licensed clinical psychologist who has presented hundreds of seminars for a non-profit organization over the course of several years. The non-profit pays Tim a stipend for the seminars that he provides, but it does not withhold taxes from the stipend, it does not pay Tim overtime, and it does not provide Tim with benefits. After the non-profit severs its relationship with Tim, Tim sues for benefits and overtime compensation. The non-profit argues that Tim is an independent contractor and not entitled to benefits or overtime wages. Is Tim an independent contractor?
7
Case StudiesCase Studies
Case Study 2: Marci volunteers to assist a non-profit in grant-writing. A few months later, the non-profit obtains a state grant to provide parenting classes. The non-profit hires Marci to teach the parenting classes with the expectation that it will pay Marci with the funds that it receives through the grant. After the non-profit terminates Marci’s employment, Marci sues, alleging that she should have been paid for both the parenting classes and the grant writing. The non-profit argues that, although Marci is an employee with respect to the teaching, she is a volunteer with respect to the grant-writing. Is Marci a volunteer?
8
Case StudiesCase Studies
Case Study 3: Julie is an administrative assistant for a non-profit organization that provides after-school programs for children. Julie’s husband Mike is a counselor who supervises the children during after-school activities. The non-profit sponsors a Saturday field-trip to a professional baseball game. Julie and Mike volunteer to chaperone the children to the baseball game, even though Saturday is their day off. May the non-profit permit Julie and Mike to volunteer their time on Saturday, or must the non-profit pay them for their time?
9
Independent ContractorsIndependent Contractorsvs. Employeesvs. Employees
Determining whether a worker is an employee or an independent contractor is an important – and, if made incorrectly, costly – decision for an organization to make.
Misclassifying an employee as an independent contractor may result in significant exposure.
Key issue is whether the organization retains the right to control the means and manner by which the work is performed.
10
Independent ContractorsIndependent Contractorsvs. Employeesvs. Employees
Employees Protected by FLSA minimum
wage / overtime rules Generally receive benefits Protected by Title VII and other
anti-discrimination laws Potentially eligible for
unemployment benefits Wages subject to withholding,
reported on W-2
Independent Contractors Not protected by FLSA
minimum wage / overtime rules Do not receive benefits Not protected by Title VII and
other anti-discrimination laws Not eligible for unemployment
benefits Earnings not subject to
withholding, reported on 1099
11
Independent ContractorsIndependent ContractorsCommon Law Test FactorsCommon Law Test Factors
The skill required; The source of the instrumentalities and tools; The location of the work; The duration of the relationship between the parties; Whether the hiring party has the right to assign
additional projects to the hired party; The extent of the hired party’s discretion over when and
how long to work;
12
Independent ContractorsIndependent ContractorsCommon Law Test Factors (continued)Common Law Test Factors (continued)
The method of payment; The hired party’s role in hiring and paying assistants; Whether the work is part of the regular business of the
hiring party; Whether the hiring party is in business; The provision of employee benefits; The tax treatment of the hired party.
13
Independent ContractorsIndependent ContractorsGeorgia Employment Security LawGeorgia Employment Security Law
A worker is presumed to be an employee unless: Such individual has been and will continue to be free from
control or direction over the performance of such services, both under the individual’s contract or service and in fact; and
Such individual is customarily engaged in an independently established trade, occupation, profession, or business; or
Such individual and the services performed for wages are the subject of an SS-8 determination by the Internal Revenue Services, which decided against employee status.
14
Independent ContractorsIndependent ContractorsConsequences of MisclassificationConsequences of Misclassification
FLSA liability for unpaid minimum wages / overtime and potential DOL audit;
Liability for back taxes and penalties under state and federal tax laws;
Loss of protection of workers compensation statutes; Potential liability under ERISA for failure to provide same
benefits to misclassified “independent contractors” as those provided to employees
15
Independent ContractorsIndependent Contractors
Case Study 1: Is Tim an independent contractor? Maybe: Muller v. American Mgmt. Ass’n Int’l, 368 F.
Supp. 2d 1166 (D. Kan. 2004) (workers who provided seminars for non-profits were independent contractors under ERISA and possibly under FLSA even though they were employees under state workers’ compensation law)
16
Independent ContractorsIndependent ContractorsPractice PointersPractice Pointers
Have written independent contractor agreements. “Watch your language.”
Parties Independent contractor relationshipAuthority of contractorMode of paymentResponsibility for taxesTermination of contract
17
Independent ContractorsIndependent ContractorsPractice PointersPractice Pointers
Do not “Seize the Day” – “Let it Be”Hours of workLocation of workEquipmentEmployeesExpensesBenefitsExclusivity
18
VolunteersVolunteers
No broad statutory exception to FLSA coverage for volunteers in private sector.
Supreme Court’s recognized exception: “An individual who, ‘without promise or expectation of compensation, but solely for his personal purpose or pleasure, worked in activities carried on by other persons either for their pleasure or profit,’ is outside the sweep of the [FLSA].” Tony & Susan Alamo Found. v. Secretary of Labor, 471 U.S. 290 (1985) (citing Walling v. Portland Terminal Co., 330 U.S. 148 (1947)).
19
VolunteersVolunteers
Factors considered by DOL in determining volunteer status:The receipt of any benefits from those for whom the
services are performed,Whether the activity is a less than full-time
occupation, andWhether the services are of the kind typically
associated with volunteer work.
20
VolunteersVolunteers
Case Study 2: Is Marci a volunteer with respect to the grant-writing work?
Maybe not: Livingston v. Gaviolo, 2006 WL 37029 (W.D. La. 2006) (summary judgment to non-profit denied on worker’s claim for wages even though worker admitted that she had no expectation that she would receive compensation for grant-writing)
21
Can Employees Be Volunteers?Can Employees Be Volunteers?
Under DOL standard, paid employees of non-profits may volunteer their services only if:The services that they volunteer are not the same
type of service the employees are employed to perform and
The services take place outside of the employee’s normal working hours.
WH Admin. Op. FLSA2006-18 (June 1, 2006); 29 C.F.R. § 785.44.
22
Can Employees Be Volunteers?Can Employees Be Volunteers?
Case Study 3: Can Mike and Julie volunteer to work without pay on their day off?
Julie probably can but Mike probably can’t: WH Admin. Op. FLSA2006-18 (June 1, 2006) (“If the employee’s regular duties involve work similar to chaperoning . . . then the employee may not volunteer. For example, a secretary may volunteer to chaperone a trip, but a counselor whose regular duties involve supervising the children may not volunteer to chaperone a trip.”)
23
Volunteers: Practice PointersVolunteers: Practice Pointers
Requirement acknowledgment of volunteer status
Provide “thanks you” gifts of only minimal value Be mindful of employees volunteering their time
for activities sponsored by the organization
24
For More Information:For More Information:
If you would like more information about the services of Pro Bono Partnership of Atlanta, contact us at:
Phone: 404-407-5088Fax: 404-853-8806
