2d Circuit Court Issues Blueprint for Avoiding Misclassification; Business Owners Classifying Workers as Independent Contractors

The United States Court of Appeals for the 2d Circuit recently issued a decision that could potentially save certain business owners both money and stress. The 2d Circuit, which encompasses the states of New York, Connecticut, and Vermont, in a recently decided case (Saleem v. Corporate Transportation Group, Ltd.) provided guidelines for employers as to whether their workers are employees or independent contracts. The issue of classification of workers as an employee or independent contractor is significant. For example, an independent contractor is exempt from minimum wage and overtime requirements. Further, such a classification can have significant tax consequences for a business. The above-referenced case clarifies longstanding issues regarding classification workers as employees or independent contractors. The hope is that the by issuing said guidelines, the Court will help employers avoid troublesome allegations of misclassification.

The case involved a driver service and its workers. Corporate Transportation Group and its affiliate companies (CTG) run a black-car service in the New York City area. The Company requires its drivers to sign a contract that acknowledged they were “not an employee or agent” of the company “but merely a subscriber to the services offered” by CTG. The drivers filed a class action lawsuit against CTG seeking unpaid overtime pay pursuant to the federal Fair Labor Standards Act (FLSA) and New York state wage and hour law.

In its decision, the Court established a three pronged analysis for determining whether a worker is an independent contractor or an employee. The Court initially noted that any independent contractor misclassification dispute arising under the FLSA must be examined under an “economic realities” test. The Court then listed the following three factors to be crucial to its decision:

  1. The Drivers Had Entrepreneurial Opportunities Not Available to Employees;
  2. The Drivers Made A Heavy Investment In Their Business and;
  3. The Drivers Maintained A High Level Of Flexibility.

The Court cautioned however, that its ruling was based on the fact-specific “totality of the circumstances” comprising the relationship between CTG and the drivers in this specific case. “In a different case, and with a different record, an entity that exercised similar control over clients, fees, and rules enforcement in ways analogous to CTG might well constitute an employer within the meaning of the FLSA.”

As a result it is clear that each case is to be determined on a case by case basis. Further, there is a lot of gray area as to how each of the above-referenced guidelines may be applied to difference business. Each case can turn on several variables. It is always best to consult an experienced employment attorney. If you have questions regarding employee or independent contractor classificication status, or are facing potential misclassification issues, call Gilbert Law Group today at 631.630.0100.

Spanish Speaking Employees Bring Lawsuit Over English-only Rule At Work

Can an employer require its employees to speak only English at work? That question will be answered in a lawsuit brought against Delta Airlines by a group of Spanish speaking airplane cabin cleaners. The employees claim that a shift manager barred workers from speaking Spanish after a company, Gate Gourmet, took over the contract to clean Delta’s planes at Los Angeles International Airport. Most of the 14 employees speak little to no English but had been performing their jobs for years.

According to the national counsel for the Mexican American Legal and Educational Fund which is representing the plaintiffs, “They’re essentially muted. They’ve got to walk around with their mouth shut. So it is humiliating and denigrating, and it makes it harder for them to do their job.” Gate Gourmet said that the comppany does not have an English-only rule. Under California law, employers can require employees to speak English only if there is a legitimate business reason.

The court complaint alleges that employees must rapidly clean airplane cabins and restock supplies before passengers board the planes. They communicate over radio regarding when and where they need to go. The employer did not warn employees what penalty would be imposed if they violated the language rule. The company may have difficulty in defending the case as it appears that the shift policy is only applied to workers on the evening shift. Morning and night crews continue to speak in Spanish, according to the complaint.

The employees assert that they complained to the human resources department but received no answer. The action seeks to require Gate Gourmet to withdraw the rule and pay damages and attorneys’ fees.

If you have any issues with a claim, potential claim, or questions regarding the issues raised by this lawsuit or other workplace policies, please calll the Gilbert Law Group at 631.630.0100.

 

 

New Kind of Employment Discrimination to be Banned

Ten states, the city of Chicago, and now, New York City will soon bar most New York City employers from using credit checks and credit history to deny hiring according to an amendment to the city’s human rights law. This new category of employment discrimination may usher in a wave of changes nationwide.

The rationale, according to its supporters, is that applicants’ consumer credit history bears no correlation to their future job performance, and can be used to discriminate. They argue that those most likely to have poor credit are people of color. City Councilman Brad Lander stated, “Credit checks for employment unfairly lock New Yorkers out of jobs for a whole set of unfair reasons: divorce, health care debt, student loans, identity theft, simple errors.” Although Mayor DiBlasio has not signed the law yet, his spokeswoman said, “Credit discrimination is oftentimes an unnecessary obstacle to New Yorkers getting jobs.” In opposition, Councilman Mark Weprin likened the restrictions to those of a “nanny state,” adding that it would be difficult to prove definitively that credit problems were the reason an applicant was rejected.

There are exemptions to the law. Positions excluded are chief financial officer-like jobs with authority over company or third-party funds, or assets worth over $10,000, police officers, elected officials, and others who must report their finances to the Conflicts of Interest Board, as well as those with access to intelligence, national security information, or trade secrets. Additional compromise language was included in an effort to protect the interests of businesses and consumers. New York City’s law is tougher on the financial industries than other similar laws nationwide.

Nonetheless, we can expect similar measures to increasingly pop up across the nation as states and other municipalities attempt to address this growing concern over employment decisions being based on credit history and/or credit problems.

If you have questions or encounter issues or problems with this or any employment-related matter, call the Gilbert Law Group at 631.630.0100.

 

 

Pregnancy Discrimination Act: Employment Retaliation Claims Are At an All-Time High

The Supreme Court will decide whether UPS violated the Pregnancy Discrimination Act (PDA) when it refused to provide a temporary light duty assignment to Peggy Young when she was pregnant 7 years ago before giving birth to her daughter, Triniti. The assignment would have allowed Young to work but avoid lifting heavy packages, as her physician had ordered. The issue is whether UPS violated the law by its policy of providing temporary light duty only to employees who had on-the-job injuries, were disabled under the Americans with Disabilities Act, or lost their federal driver certification. It is well-settled that drawing a distinction between pregnant and nonpregnant employees  is generally unlawful pregnancy discrimination, unless there is a legitimate business reason to justify the distinction.

In 1978, Congress passed the PDA in response to the Supreme Court ruling that workplace rules that excluded pregnant workers from disability benefits and insurance coverage was not sec discrimination under Title VII of the Civil Rights Act of 1964. In this case UPS argues that unless Young can show that it intentionally discriminated against her, she has no case. Young contends that UPS “told me basically to go home and come back when I was no longer pregnant.” Young is now 42 and it has taken 7 years to get before the Court.

The Obama administration and 120 Democrats in Congress have submitted a brief supporting Young’s position. Moreover, the EEOC has updated guidance to employers to clarify that they should accommodate workers like Young. Likewise, UPS has since changed its policy so that pregnant employees are eligible for the light duty assignment.

Nonetheless, the Court’s decision is expected to have far-reaching impact in workforces across the nation as 75% of women entering the workforce today will become pregnant at least once while employed, and many will be forced to work throughout their pregnancies, or face possible termination during their pregnancies or upon their return. Stay tuned for the decision.

 

New Law Regarding Franchise Joint Employer Liability

The Office of the General Counsel of the National Labor Relations Board (NLRB) recently issued 13 complaints against McDonald’s franchisees as well as their franchisor, McDonald’s USA, LLC alleging various labor law violations.  The complaints follow the NLRB General Counsel’s announcement in July 2014 that McDonald’s USA may be held to be liable as a “joint employer” for unfair labor practices committed by its individual franchisees. This represents a departure from a long-standing precedent regarding franchise joint employer liability.

The 13 complaints allege that the individual franchises violated their employees’ right to engage in protect concerted activity. In other words, they took actions against them for engaging in activities aimed at improving their wages and other terms and conditions of their employment. This includes participating in nationwide fast food worker protests during the past two years. If successful, this would mean that under certain circumstances, a franchisor can be held liable for any unfair labor practices perpetrated by any of its franchisees. Such a precedent would have have a significant impact on franchise joint employer liability.

The NLRB posted on its website a “McDonald’s Fact Sheet” in which it  claims McDonald’s USA “through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees” sufficient to share liability for its franchisees’ violations of the National Labor Relations Act.

The results of these complaints will not be determined for some time. Franchisors should take note, however, there are steps a franchisor can take to mitigate its risk of being declared a joint employer of its franchisees’ employees under the current law, as well as potentially under any new law.  These steps will also lessen the risk of a finding of common law vicarious liability for a franchisee’s employment practices in most states.

For more information regarding franchising and/or ways to avoid being declared a joint employer and therefore avoid liability for a franchisees’ employment issues call Gilbert Law Group today. 631-630-0100.

WAITING TO WORK OR WAITING TO LEAVE: PAID TIME? SUPREME COURT DECIDES

The U.S. Supreme Court has ruled that employees who wait on a security line before leaving the worksite to go home is not compensable or paid time under the Fair Labor Standards Act (FLSA). Please refer to our blog post on 10.21.14 for how this case came about. Basically, contracted employees before leaving an Amazon warehouse are required to go through security screenings. They sought overtime compensation for the time spent. The unanimous decision was in favor of the employer.

When Congress enacted the FLSA, it purposefully left vague a number of provisions. As a result, a floodgate of litigation ensued as employees wanted to be paid for walking to and from job sites. More than $6 billion in payouts in 1940s dollars were paid, almost bankrupting several industries. As a result, congress passed and emergency law, the Portal to Portal Act that exempted travel to or from work. It also exempted from overtime pay “activities which are preliminary [before work begins] to or postliminary [after work ends] to said principal activities.”

The key in deciding whether a particular activity is exempt is determining whether it is “integral and indispensable” to the main work performed.

Thus, battery-plant workers’ showers after work have been held to be integral to their work duties because the chemicals were toxic and changing clothes and showering were indispensable to the principal work done. Similarly, meat packers sharpening their knives was compensable time, as dull knives are dangerous and wastes product. The Department of Labor (DOL) has issued regulations exempting checking in and out from work and waiting in line to do so. The situation presented in this case fell into that category, and was therefore found not to be compensable time.

Justice  Sotomayor, with whom Justice Kagan joined, wrote a concurring opinion which summarized the Court’s findings:

“The Court reaches two critical conclusions. First, the Court confirms that compensable ” ‘principal’ ” activities ” ‘includ[e] . . . those closely related activities which are indispensable to [a principal activity's] performance,’ ” ante, at 6 (quoting 29 CFR §790.8(c)(2013)), and holds that the required security screenings here were not “integral and indispensable” to another principal activity the employees were employed to perform, ante, at 7. I agree. As both Department of Labor regulations and our precedent make clear, an activity is “indispensable” to another, principal activity only when an employee could not dispense with it without impairing his ability to perform the principal activity safely and effectively. Thus, although a battery plant worker might, for example, perform his principal activities without donning proper protective gear, he could not do so safely, see Steiner v. Mitchell350 U. S. 247, 250-253 (1956); likewise, a butcher might be able to cut meat without having sharpened his knives, but he could not do so effectively, see Mitchell v. King Packing Co.350 U. S. 260, 262-263 (1956); accord, 29 CFR §790.8(c). Here, by contrast, the security screenings were not “integral and indispensable” to the employees’ other principal activities in this sense. The screenings may, as the Ninth Circuit observed below, have been in some way related to the work that the employees performed in the warehouse, see 713 F. 3d 525, 531 (2013), but the employees could skip the screenings altogether without the safety or effectiveness of their principal activities being substantially impaired, see ante, at 7.

Second, the Court holds also that the screenings were not themselves ” ‘principal . . . activities’ ” the employees were ” ‘employed to perform.’ ” Ibid. (quoting 29 U. S. C. §254(a)(1)). On this point, I understand the Court’s analysis to turn on its conclusion that undergoing security screenings was not itself work of consequence that the employees performed for their employer. See ante, at 7. Again, I agree. As the statute’s use of the words “preliminary” and “postliminary” suggests, §254(a)(2), and as our precedents make clear, the Portal-to-Portal Act of 1947 is primarily concerned with defining the beginning and end of the workday. See IBP, Inc. v. Alvarez546 U. S. 21, 34-37 (2005). It distinguishes between activities that are essentially part of the ingress and egress process, on the one hand, and activities that constitute the actual “work of consequence performed for an employer,” on the other hand. 29 CFR §790.8(a); see also ibid. (clarifying that a principal activity need not predominate over other activities, and that an employee could be employed to perform multiple principal activities). The security screenings at issue here fall on the “preliminary . . . or postliminary” side of this line. 29 U. S. C. §254(a)(2). The searches were part of the process by which the employees egressed their place of work, akin to checking in and out and waiting in line to do so–activities that Congress clearly deemed to be preliminary or postlimininary. See S. Rep. No. 48, 80th Cong., 1st Sess., 47 (1947); 29 CFR §790.7(g). Indeed, as the Court observes, the Department of Labor reached the very same conclusion regarding similar security screenings shortly after the Portal-to-Portal Act was adopted, see ante, at 7-8, and we owe deference to that determination, see Christensen v. Harris County, 529 U. S. 576, 587 (2000).”

There remain many issues still undefined in the workplace regarding whether a particular activity is exempt or not. The courts and DOL will continue to refine the parameters of exempt and non-exempt time as specific situations occur. 

Should you have wage and hour questions or other workplace issues, please contact the Gilbert Law Group at 631. 630.0100.

Nurses Strike over Ebola

Approximately 18,000 nurses went on strike in Northern California to voice concerns about patient-care standards and Ebola. The nurses are in the middle of collective bargaining negotiations for a new contract. Nurses often strike while in the midst of contract negotiations. This time however, the circumstances surrounding the strike are unique. While picketing Kaiser Permanente facilities, they held up signs which stated “Kaiser Open for Premiums; Closed for Safe Patient Care” and “Strike for Health and Safety.” The two-day strike impacted more than 21 Kaiser-owned hospitals and 35 clinics.

The union claimed that the nurses were striking over the lowering of patient-care standards, and that the company has failed to adopt optimal safeguards for Ebola. The union also asserted that the nurses reported many stories about the lack of safety and concern for patients. “This isn’t about money. This is about something much deeper,” the union’s executive director said.

In response, Kaiser said that it was “particularly irresponsible” to strike just when the flu season was starting, and when the nation is concerned about the risk of Ebola. Kaiser disputed the union’s claims, asserting that the reasons the union leaders are giving for walking out are not supported by the facts, wither at the medical centers “or at the bargaining table.” Kaiser used replacement workers in order to remain open.

As the nation wrestles with infectious diseases like Ebola, how the health industry deals with patients and the workforce and their interactions with the public will remain a controversial and evolving drama.

Employers, Religious Discrimination, and Accommodation

The U.S. Supreme Court is about to clarify an employer’s obligation to provide accommodations for religious discrimination under Title VII.

In E.E.O.C. v. Abercrombie & Fitch Stores, Inc., the Court will determine whether a retail store in Woodland Hills Mall in Tulsa, Oklahoma discriminated by failing to accommodate a young woman who was refused hire as a “model” or sales associate because she wears a head scarf, or hijab, for religious reasons. The head covering violated Abercrombie’s “Look Policy,” which applies prohibits employees from wearing certain attire, such as black clothing and caps. Violation of the Look Policy subjects an employee to disciplinary action, up to and including termination.

Pursuant to Abercrombie’s policy, the assistant store manager who interviewed the applicant did not ask her questions regarding her religion. Moreover, the applicant never referenced her head scarf, and she did not ask any questions regarding the dress code, although it was discussed.

After the interview, the assistant store manager was advised that the applicant should not be hired because the head scarf was inconsistent with Abercrombie’s Look Policy.

The EEOC brought suit for religious discrimination insofar as it failed to hire her because she wore a head scarf and that it failed to accommodate the applicant’s religious beliefs.

The trial court found that the store did in fact discriminate based on religion. Of interest is the fact that the trial court reasoned that the decisive factor was not whether the applicant explicitly requested an accommodation, but whether the employer had enough information to be on notice that a religious accommodation was needed.

The truth is it would have been easy for Abercrombie to avoid this lawsuit. If they had been properly advised, they would be aware of simple steps that can be taken which would not give rise to a claim of religious discrimination and failure to accommodate. Employers facing discrimination issues should always consult a knowledgeable attorney.

If you or someone you know is facing issues relating to discrimination based on religion, race, gender, sex, ethnicity, or disability call Gilbert Law Group today at (631)630-0100.

N.Y. Mets Deny Pregnancy and Marital Status Discrimination

N.Y. Mets chief operating officer Jeff Wilpon has denied discriminating against and eventually firing a former female senior executive based on her pregnancy and marital status, specifically, for having a baby out of wedlock. In a lawsuit filed in Federal Court in Brooklyn, New York, Wilpon is quoted as saying during a discussion of e-cigarette ads, “I am as morally opposed to putting an e-cigarette sign in my ballpark as I am to Leigh [Castergine] having this baby without being married.” Wilpon is also alleged to have made fun of Castergine by pretending to look for an engagement ring on her finger at meetings, and trashed her to colleagues by saying that “people would respect her more if she was married.” The lawsuit seeks monetary damages for discrimination on the basis of sex, pregnancy and marital status. A Major League Baseball source said the league was aware of the suit and considered it a team matter.

The suit alleged Wilpon told Castergine, who earned a six figure salary, to tell her boyfriend “that when she gets a ring she will make more money and get a bigger bonus.” Castergine gave birth in March 2014 and returned to work in June 2014, but was allegedly urged by other executives to quit.

In August 2014, she claimed that the Mets raised issues about her job performance but offered a severance package if she would agree to not sue or say negative things about the team and Wilpon. Castergine also claims that she was fired August 26, 2014, three minutes after her lawyer sent an email to the team claiming that she was subjected to work-related discrimination. In court papers, however, the Mets asserted that she was fired before they received the email and that it “was based on legitimate business reasons” unrelated to Castergine’s “gender, marital status, pregnancy, or leave.” They pointed to “business issues and conflicts” between Castergine and her supervisor and other executives which began prior to learning that she was pregnant. They also asserted that Wilpon was a longstanding supporter of her.

It remains to be seen if the case goes to trial whether a jury will believe Castergine’s discrimination claims or the Mets’ and Wilpon’s defense that there were independent business reasons unrelated to the plaintiff’s gender, pregnancy and marital status, or leave, all of which comprise categories of discrimination protected by federal and state law.

For workplace issues concerning pregnancy, marital status, leaves, work performance, and gender discrimination or harassment contact the Gilbert Law Group at 631.630.0100.

Waiting to Work or Waiting to Leave: Paid Time?

The decades-long battle for pay during down time or time employees prepare to work, wait to work, or wait to leave work continues. Whether working to wait before leaving for the day or waiting to work before clocking in are instances of paid time is the issue. U.S. Supreme Court justices expressed doubts recently during arguments over whether federal law requires that workers be paid for the time they take to go through security checkpoints to prevent employee theft at Amazon. Previously, the Supreme Court held that employees must be paid for the time they take to put on protective gear, but not for the waiting time associated with taking it off. Also, the Court has ruled that butchers must be paid for the time it takes to sharpen their knives as it is an essential duty to working at a meatpacking plant.

This most recent dispute involves two former employees at a Nevada warehouse who claim that their employer, Integrity Staffing Solutions, Inc., required them to wait up to 25 minutes in security lines at the end of every shift. Integrity provides workers who fill customer orders for Amazon at warehouses. The intermediate appeals court had ruled that the work was payable as the anti-theft screenings were necessary to the workers’ primary work at the warehouse, and it was done for the employer’s benefit. However, certain Supreme Court justices disagreed with the workers’ attorney who argued that the work was compensable under the Fair Labor Standards Act (FLSA), as walking through security was a principal activity of the employees’ job duties.

Chief Justice Roberts responded, “But no one’s principal activity is going through security screenings.It may be part of that… but that doesn’t make it a principal activity.” Justice Scalia opined that the security check “is not indispensable to [the warehouse work].” In reply, the workers’ attorney argued that the screening was a “discrete act” that only occurred after the workers had clocked out and handed in their tools. He stated, “It’s work because you are told to do it.”

The Obama administration is siding with the employer. The Justice Department attorney argued that the security screenings were not “integral and indispensable to the workers’ jobs.”

It will be interesting to see how the Supreme Court decides this hot-button workplace wage issue. Stay tuned.

Should you have wage and hour questions or issues, please contact the Gilbert Law Group: 631.630.0100.