Tag Archives: Department of Labor

How to Determine Whether a Worker is an On-Call Employee

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Far too often, employers find themselves in the position of unknowingly violating the law as it relates to compensating their employees. Similarly, it is critical for employees to understand what their rights under federal and state law and how much they should be earning. Unfortunately, the complicated and often dynamic nature of federal and state law can render understanding labor law exceedingly challenging for both employers and employees. One such complex issue is determining whether a worker should be compensated as an on-call employee.

On-call time is where an employee is not technically working but is still compensated because he or she is considered to be “on-call.” Determining whether an one should be classified as an on-call employee can be challenging insofar as it is a query that is dependent on a number of very specific variables. Indeed, making this issue even more difficult is the fact that there is no bright line rule for determining whether an on-call employee must be paid for on-call time.

Both federal (FLSA) and state (NYCRR) law call for employees to be compensated while they are on-call at their place of employment or at a place required by the employer. What happens however, when an employee is not required to be in a certain place while on-call. The answer in part, is dependent on for whom the employees use of time benefits. In other words, who benefits more from the time the employee spends on-call, the employee or the employer. This is not a straight forward inquiry, however. Moreover, this is not the only inquiry that is necessary to determine whether an employee should be compensated for time spent on-call. This determination turns on several other significant variables.

If you have questions regarding on-call time, or other labor and/or employment law related questions, call Gilbert Law Group today at (631)630-0100, and speak to one of our qualified and knowledgeable attorneys.

DOL Abrogates Obama Administration’s Efforts to Decrease Misclassification of Independent Contractors and ‘Joint Employment’ Standards:

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Earlier this month, the U.S. DOL (Department Of Labor) announced that it was revoking the standards set for by the Obama Administration for when a company is considered to be a “joint employer” of contract and franchise workers. The prior administration’s regulations were designed to protect against employers’ misclassification of employees as independent contractors.

 The particular guidance letters that were removed included the 2015 “administrator’s interpretation” regarding the classification of independent contractors and 2016 “administrator’s interpretation” relating to joint employment. The 2015 “administrator’s interpretation” regarding the classification of independent contractors stated that “ most workers are employees” under the Fair Labor Standards Act (FLSA). The 2016 joint employment “administrators interpretation” presented guidance on joint employment under the FLSA and included a distinction between “horizontal” and “vertical” joint employment. The two letters, which were implemented by the Wage and Hour Division (WHD) administrator, were met with much controversy as the purpose of the letters was to decrease the number of instances in which a worker was misclassified and increase the number of situations in which a business may be considered a joint employer of a worker.

The 2015 “administrator’s interpretation,” titled “Administrator Interpretation 2015-1” construed the definition of an “independent contractor” in a more narrow context than previously used. This particular letter provided that the DOL would shift its focus from whether the business “controls” the operations of the individual’s work to the “economic realities” of the individual’s job situation and whether the individual is financially dependent on the employer. This shift in focus was a substantial change from the “controls test” which resulted in more workers falling under the “employee” classification than “independent contractor” classification. The significance of this result, i.e., of more workers being classified as employees, was that these workers became eligible for overtime compensation and other benefits that come with being considered an employee rather than an independent contractor.

 The 2016 “administrative interpretation,” titled “Administrative Interpretation 2016-1” issued guidelines on how the WHD would deal with the question of which employer has obligations owed to the specific worker. With the implementation of this particular letter, the WHD was to evaluate working relationships through a “vertical” analysis of the employment relationship. Vertical joint employment is when a worker has an employment relationship with one worker such as a subcontractor, labor provider, staffing agency or other employer and the “economic realities” show that the person is financially dependent on another employer who is involved in the work. This form of vertical joint employment analysis lead to a substantial increase in the chances of an employer being liable to workers that they secured through a third party. This analysis was designed to decrease employee misclassification as an independent contractor, particularly where there is joint employer relationship.

On June 7, 2017, the U.S. Secretary of Labor Alexander Acosta announced that these “administrator interpretation” letters regarding independent contractors and joint employment would be nullified. Acosta also stated in his announcement that “removal of administrative interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law.”

 The removal of these liability expanding guidance letters were met with high praise across the labor community including the National Association of Home Builders (NAHB). Chair of the NAHB and Texas-based builder Granger McDonald expressed his satisfaction with the removal stating “given that independent contractors and subtractors are critical to housing, we were very concerned about recent efforts attempting to limit their participation in the home building process. Withdrawing these documents will provide more certainty and clarity for home building firms and other small businesses who work closely with subcontractors and independent contractors.”

 The rollback of these guidance pieces should be encouraging to employers directly involved in work with independent contractors, leasing agencies, temp workers, and other potentially joint employment relationships. Additionally, the fact that Secretary Acosta wasted little time reversing these guidance pieces indicates that the reversal of other Obama-era enforcement strategies may be on the horizon. On the other hand, transient workers such as employees who gain employment by virtue of employment will see their protection from being misclassified as an independent contractor be vitiated by this change.

 Although the nonprofit worker advocacy group expressed its disappointment with the removal of these guidance letters, the removal has not done anything to alter the legal landscape regarding joint employment and independent contractor conflicts. In New York, the US Court of Appeals for the second circuit has ruled that joint employment should be evaluated on a case-by-case basis based on the totality of the circumstances. The Second Circuit has adopted two different tests for determining joint employer status, which depends on whether the court is looking at the employer’s formal or functional control over the employee.

 When determining the issue of whether the secondary employer exercises sufficient functional control over the relevant employees to be considered a joint employer, the Second Circuit applies a six part test which looks at: whether the employee at issue used the secondary employer’s premises and equipment, whether the primary employer had a business that may or did shift as a unit from one secondary employer to another, the extent to which the employees performed a job that was integral to the secondary employer’s production process, whether one subcontractor may pass responsibility under the contracts to another subcontractor without material changes, the degree to which the secondary employer or its agents supervised the employee’s work, and whether the employees worked exclusively or predominantly for the secondary employer. There are also other factors that may be considered when addressing this issue of functional control as long as those factors are pertinent to the court’s assessment of economic realities. The issue of joint employment is a mixed question of both law and fact that is properly decided by a jury.

 Another approach that may be used by courts in the Second Circuit is focusing the analysis on whether the secondary employer exercised sufficient formal control over the employees at issue. When using this type of analysis, courts in the Second Circuit apply a four-factor test that focuses on whether the secondary employer had the power to hire and fire the employees, supervise and control employee work schedules or conditions of employment, determine the rate and method of employment, and maintain employment records.

 Despite the removal of these particular guidance letters, these second circuit tests regarding joint employment issues that govern the Fair Labor Standards Act and New York Labor Law remain in tact and unaffected by the recent removal of these guidance letters.

Contributed by Richard (R.J.) Cherpak

If you have questions regarding misclassification and/or New York Labor Law, call Gilbert Law Group today at (631) 630-0100.

Department of Labor Issues New Worker Misclassification Guidelines: Whether a Worker is an Employee or Independent Contractor?

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The Department of Labor (DOL) has issued new guidelines, Administrator’s Interpretation 2015-1 detailing its interpretation of the “economic realities” test as it relates to the misclassification of workers. The guidance expands on the six factors in the test, emphasizing that the main issue is whether the worker is “economically dependent on the employer or truly in business for him or herself.” The vague definition of “employ” found in the Fair Labor Standards Act (FLSA) combined with the totality of the circumstances considered in the test means that most workers are considered employees, the DOL commented. The expansive reading of what constitutes an employee will likely generate an increase not only in DOL oversight but worker lawsuits as well. The DOL has been cracking down on worker misclassification by issuing severe penalties on employer’s who label a worker as an independent contractor rather than an employee for the consequential tax benefits. So how does one determine whether a worker is an employee or independent contractor?

“In sum, most workers are employees under the FLSA’s broad definitions,” the DOL said. “The very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor. The factors should not be analyzed mechanically or in a vacuum, and no single factor, including control, should be over-emphasized. Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus its employee). The factors should be used as guides to answer that ultimate question of economic dependence.”

The six factor test is complex, and many times whether a worker is an employee or an independent contractor can turn on several variables. For help navigating through issues related to worker misclassification and whether a worker is an employee or independent contractor, call Gilbert Law Group today at (631)630-0100.

SYSTEMATIC WAGE THEFT BY BRONX PAPA JOHN’S FRANCHISEE LEADS TO JAIL TIME, AG SCHNEIDERMAN’S FIRST CRIMINAL WAGE AND HOUR CASE

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Employees who earn hourly wages are entitled to minimum wage and time-and-a-half for overtime, among other guarantees. When employers skirt this rule by misclassifying workers as independent contractors (whether intentionally or negligently), most penalties are limited to the civil realm. In other words, the employers will have to pay the difference to all affected workers, a fine to the U.S. Department of Labor, and other expenses arising out of the episode. For the first time, the Office of the New York State Attorney General recently secured criminal charges in a wage theft case, over and beyond these civil penalties.

 Abdul Jamil Khokhar owns nine Pizza Papa John’s franchises in Bronx, NY, under his company BMY Foods, Inc. Mr. Khokhar had been under investigation since 2013 for failing to pay and report overtime premiums. While his workers appear to have been lawfully paid for regular hours, Khokhar’s criminal scheme involved making overtime payments in cash, under fictitious names corresponding to the workers on the payroll, and at the regular hourly rate. Furthermore, Khokhar’s filed tax returns did not include any references to the pseudonymous workers, meaning that Khokhar represented that his workers worked up to, but not past, the overtime threshold—which Attorney General Eric T. Schneiderman disproved.

 On July 15, 2015, Khokhar pled guilty to his scheme. He will be sentenced on September 21. As a result, Khokhar will spend sixty days in jail, pay $230,000 in back pay to his employees, pay the same amount in additional liquidated damages, pay another $50,000 in other civil penalties, and BMY Foods, Inc. will have to designate an internal compliance officer and submit to independent audits.

 Wage theft is a crime that can result in substantial liability to the employer. Meanwhile, hourly employees are entitled to minimum wage and overtime premiums. The requirements placed on employers by the Wage Theft Prevention Act go much further however, than merely ensuring an employee is paid minimum wage and time and a half for overtime. If you need help in pursuing or defending a wage theft claim, do not hesitate in calling the Gilbert Law Group, (631)630-0100.

Contributed by Michael B. Engle