Tag Archives: Federal Employment Law

The Myth of Contract Labor

Compensation,

My clients sometimes fall for the myth of “contract labor”, which is about as real as Bigfoot and the Loch Ness monster. The Texas Workforce Commission’s mythbusters explain it this way:

“Contract labor” may be the most widely used misnomer in business today. The issue is really whether a given worker is an employee or an independent contractor. In basic terms, an employee is someone over whose work an employer exercises direction or control and for whom there is extensive wage reporting and tax responsibility. An independent contractor is self-employed, bears responsibility for his or her own taxes and expenses, and is not subject to an employer’s direction and control. The distinction depends upon much more than what the parties call themselves. . . . It is important to note that it does not matter that one or both parties may call their arrangement “contract labor”.

I can’t tell you how many employers I know who still try to claim that an employee is “contract labor”, a “subcontractor” or an “independent contractor”. The IRS and the TWC will very likely see your situation differently . . . even if the employee has signed a contract labor agreement . . . even if your employee agrees to this arrangement . . . even if you’ve always done it this way . . . even if your employee doesn’t work full-time . . . etc.

While there is no easy test, let’s just put it this way: The person performing work for you is your employee. Unless the worker advertises his services in the phone book, works by the job and has lots of other clients besides you, the government is probably going make a finding that he is your employee.

If you really, strongly, firmly believe that your situation is unique and you really do use independent contractors instead of employees, talk to your employment lawyer before deciding that you can get away with not following the tax and employment laws as to any particular worker. Otherwise, get ready for a TWC payroll tax audit, a Department of Labor overtime investigation or an IRS audit. Or maybe all three.

Policy Manual Promises can be Exploited

Personnel Policies

Does your company have an employee policy manual that you borrowed from another company, found on the internet, or wrote yourself? A recent federal appeals court opinion is a cautionary tale for those companies that have not had an employment law expert draft or review their employee manual.

The 7th U.S. Circuit Court of Appeals held recently that an employee who wasn’t covered by the Family and Medical Leave Act (“FMLA”) could assert a claim to enforce the promises that his company employee handbook made, regardless of whether the FMLA actually applied to him. The company published an inadequately worded FMLA policy to all of its employees. That mistake cost the company. The court said that the company has to live up to whatever was written in its employee manual, even though the company was not actually required by law to provide FMLA to this particular employee. Peters. v. Gilead Sciences, Inc. (7th Cir. July 14, 2008).

What should you take away from this case? The direct answer is that if you are a small employer (less than 50 employees), don’t promise family and medical leave to your employees in your handbook, because your business is excluded by law from having to provide FMLA.

Similarly, if you employ less than 15 workers, don’t promise equal employment opportunity in your workplace. You can still practice equal employment, but don’t promise it in your written policies because you are small enough to fly under the regulatory radar and avoid expensive discrimination litigation.

The larger lesson is that what you say in your employee policies can protect you if you are careful about drafting and enforcing your policies. But carelessly worded policies can be used against you by a disgruntled employee and his/her attorney, so make sure a professional who knows the law of your state and knows something about your company has reviewed any employee policy you adopt.

Layoffs Can Lead to Lawsuits

Discrimination, Termination

The Department of Labor released new unemployment figures today. Nationwide, the unemployment rate is 5.7%. That is the highest it has been in 4 years. The DOL found that the manufacturing, construction and retail industries were seeing lots of layoffs, while education and health care are still growth industries.

In the Panhandle of Texas, the unemployment rate is not nearly as high. The last figures I found are for June 2008, and show that the unemployment rate is only 3.7% here. But that doesn’t mean that every industry is solid in our area. Several of my clients have recently laid off a few employees because of increasing expenses, mainly for transportation.

If you have to lay off employees, it is important to know how to do so without discriminating against any of the employees who lose their jobs. Just because you have an economic reason for your actions doesn’t mean that your business is immune from facing a lawsuit by one or more of the employees you laid off. In fact, in hard times, an employee who has been laid off may have difficulty getting reemployed and then decide he/she has little to lose by suing you. So here are some tips to protect your business during a layoff: Continue reading Layoffs Can Lead to Lawsuits →

Employers Can Face Criminal Penalities

Ethics, Management, Termination

Ionia Management is a Greek company that manages a fleet of tanker vessels. The company was convicted of a crime and sentenced for its role in falsifying records to conceal the overboard dumping of waste oil from one of its vessels into international waters. The case is now on appeal to the federal Second Circuit Court of Appeals.

Ionia Management says it was convicted based on the acts of rogue employees, who had been trained and repeatedly reminded of the company policy prohibiting the dumping but did it anyway. That leads us to the question of whether the company or its owners should face criminal fines and possibly jail for the acts of its subordinate employees. Or is civil liability in court more appropriate?

However you feel about criminal liability for corporate actions, in these post-Enron days, it is a fact of business. And as a employment lawyer, I feel compelled to point out a couple of the ways in which your employee relations can land you in criminal court. Continue reading Employers Can Face Criminal Penalities →

Required Employee Posters

Discrimination, Employee Rights, Forms and Policies,

For this week’s Friday Form, I thought I would provide you with the links for many of the employee rights notices that you as an employer should have posted in your workplace.

Most of the necessary posters are available free from the agencies that require them, so don’t bother paying money to a commercial vendor for them. The posters change too often to make that a good deal.

Here is where you can find explanations and instructions for downloading almost all the posters required by federal law.

Here is where you can find almost all the posters required of Texas employers in addition to the federal posters.

Failure to post the required notices for your employees to see can cost you as much as $100 per poster per worksite if anyone spots or reports your violation. It is so easy to post these things that there is really no reason not to do so.

Discrimination Complaints to EEOC Increase

Discrimination

Here’s a scary little tidbit for employers. The Equal Employment Opportunity Commission (EEOC), which assists employees in bringing claims for discrimination against their employers, have announced that filings with the EEOC for discrimination jumped 9% in fiscal year 2007. In the first quarter of fiscal year 2008, they jumped another 21% from the previous year’s numbers for the same quarter.

Are employers suddenly discriminating that much more? Are employees more aware of their rights? Is the terrible economy driving more unemployed workers to sue their former companies? Continue reading Discrimination Complaints to EEOC Increase →

Genetic Information Now Protected By Law

Discrimination, Medical

In June 2008, the Genetic Information Nondiscrimination Act (GINA) was passed by Congress and signed into law by President Bush. The law prohibits discrimination based on genetic information about employees and applicants, their dependants, and any relatives out to the fourth-degree, such as great-grandparents. GINA stops employers from requesting, requiring or purchasing genetic information about an employee or his family members. The law goes into effect for employers beginning in November 2009.

Although many people have questioned why we needed a law when no one recognized that genetic discrimination was a problem, the federal government seemed to think that the law was necessary to allow genetic testing to begin to be used to its full potential in fighting disease. In fact, the law passed with only one “no” vote in the House and unanimously in the Senate.

How do you as an employer need to respond to GINA? Continue reading Genetic Information Now Protected By Law →

Minimum Wage Increase Reminder

Compensation

Remember that the minimum wage increases by $.70 per hour again on July 24, 2008.

If you are paying less than $6.55 to almost any worker (except waitstaff that receives part of their income from tips), you will need to raise his/her hourly rate to $6.55 per hour for every hour beginning with those worked after 12:01 a.m. on Thursday, July 24.

If you want to find out more about whether you are responsible as an employer for paying your workers the minimum wage, check out the Department of Labor’s explanatory information at https://www.dol.gov/dol/topic/wages/minimumwage.htm.

The minimum wage will go up again on July 24, 2009, to $7.25 per hour. There are no increases scheduled after that date.

Small Employers May Have it Easier

Personnel Policies

            I’ve been dispensing legal advice to employers for 21 years now. In all that time, I can thankfully say I’ve never been sued by an employee. I’ve never faced a gender discrimination claim, a disability problem or a termination under the Family and Medical Leave Act directed at me. No employee has ever accused me of racial harassment or complained to the EEOC about my employment practices.

            Is that because I diligently follow my own advice? Do I have the world’s greatest employee manual, does every employee get an annual written evaluation and do I use progressive discipline to give every employee an opportunity to cure a problem before it becomes a termination?

            Actually, I don’t. Why? I keep my business small. I only have one employee right now. Sometimes I bulk up to as many as three employees, but never have I needed more than that.

Continue reading Small Employers May Have it Easier →

Hiring Teen Workers

Employee Rights, Hiring

Summer is coming and you may be thinking about hiring some teen workers under the age of 18. Here’s some lawyerly advice: Proceed with Caution.

 

There are lots of legal restrictions on hiring teens, which are still considered “child labor” by the Department of Labor. You need to review the basic rules on the Department of Labor website, www.dol.gov, such the limitations on the hours that 14- and 15-year-olds can work:

  • Non-school hours;
  • 3 hours in a school day;
  • 18 hours in a school week;
  • 8 hours on a non-school day;
  • 40 hours on a non-school week; and
  • hours between 7 a.m. and 7 p.m. (except from June 1 through Labor Day, when the evening hours are extended to 9 p.m.)

If you are hiring a 16- or 17- year old, there are no limits on the hours that he can work. However, there are limits on the duties anyone under 18 can perform. He generally cannot work in any occupation considered hazardous, including construction jobs, warehousing jobs, public messenger jobs or jobs that require the use of power-driven machines, such as meat slicers, bakery equipment, power saws, etc.

Continue reading Hiring Teen Workers →