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Ron Wainrib, Esq., Editor
Temp
Law On
Line
142 Longhill Rd.
Franklin, MA
02038
Ph: (508) 528-5445
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Featured Publications
Contingent Employment Law Manual
January ,2008- 8th Edition
Contingent Employment Case Law Supplement
January 2008- 8th Edition
Contingent Workforce Forms Book
January, 2008- 5th Edition
Making
News
NEW IRS Form
IRS provides new Form
8919: Uncollected Social Security and Medicare Tax
on Wages,
for
Employees Misclassified as Independent Contractors (See Contingent
Workforce Forms Book)
Form 8919 may be used by any employee
whose employer did not withhold their share of these taxes, and the
employee meets IRS criteria. The IRS
will then credit these taxes to the employee's social security records. Employees using Form 8919 must meet
one of several criteria proving employee status.
EMPLOYEE
MISCLASSIFICATION - Employee or Independent
Contractor?
June 24, 2008
- Class action notices were
sent to more than 27,000 current and former Fed Ex Ground Home Delivery
drivers in the class action lawsuit challenging Fed Ex's independent
contractor business model under
ERISA. The
Notice allows the drivers to stay in the lawsuit by taking no action or
"opt-out" of the case and retain their individual
right to sue separately.
It also protected from retaliation
for participating in the case. FedEx is specifically prohibited by law from asking
or telling the drivers to exclude themselves from the action, or
expressing an opinion as to whether it is or is not in their best interest to remain a class member or
exclude him/herself from this action. If FedEx tried to
influence the drivers it would violate the Court’s warning
Class
action certification is pending in other states. In nine states Courts
have denied
class certification.
Also pending;
Anfinson v. FedEx Ground: the first case to go to trial since the landmark Estrada case
California,
which found Fed-ex drivers to be employees, not independent
contractors.
January 2008 - FedEx
Faces $319 Million Federal Tax Liability for 2002, could
reach over $1 Billion, plus possible state tax liabilities; IRS and various State tax authorities also
Investigate FedEx contractor model
The IRS
challenged the classification of FedEx Ground workers, and imposed
fines and penalties of $319 million (for 2002 alone). FedEx could
face over One Billion dollars after the IRS completes its
investigation. The IRS and various State taxing agencies
are also challenging Fed Ex's independent contractor
business model.
Estrada v. FedEx Ground Package System, the California Supreme Court upheld finding
that Fed Ex Drivers are employees, not Independent Contractors, and
thus entitled to receive $11 Million in Damages. November 28, 2007 -
In this landmark
case, the California Supreme Court refused to hear Fed Ex's final
appeal to overturn the trial court’s finding that Fed Ex’s drivers are employees,
not independent contractors. This
was the first court ruling involving
Fed-Ex drivers that held the drivers were employees.
A federal judge in Indiana ruled
in a similar case that multiple lawsuits by FedEx Ground
drivers seeking to be classified as employees rather than
independent contractors can be combined in a class-action suit.
·
Fed Ex
Drivers File Worker Misclassification Class
Action Lawsuit in Federal Court in Boston, MA, U.S. D. Ct., D. Mass May 5, 2005 -.
Plaintiffs representing 17,000 Fed Ex drivers
nationwide and in Canada
filed a worker misclassification class action lawsuit in Federal Court
in Boston,
charging Fed Ex with unlawfully misclassifying its drivers as
independent contractors rather than employees.
Plaintiffs had
signed contracts stating that they were independent contractors, but
Fed Ex treated them like employees by requiring them to comply with Fed
Ex's rules and policies, under its business model.
June
7, 2004 - In landmark case, the
10th Circuit Appeals Court held that security guards could
not bring their overtime suit against defendant because they were
independent
contractors, not employees, thus not protected by the Fair Labor
Standard Act (FLSA). (Johnson, et. al. v. Unified Government of Wyandotte
County/Kansas City, Kansas and Housing
Authority of Kansas
City, June 7, 2004) (See Full case
opinion in Case Law Supplement)
The Court
based its ruling
on five factors
in determining employee vs. independent contractor status.
It found that the defendant Housing Authority had only a minimal
degree of control over plaintiff security guards. (See full
text of case in the Contingent Employment
Case Law Supplement. See summary in the Contingent Employment Law Manual).
5th Circuit Held that Contract Employees Placed
with Defendant Georgia Gulf were not Common Law Employees, thus not
Entitled to Employee Benefits
under ERISA (March
8, 2004)
Defendant hired
contract workers from various third parties. Plaintiffs
claimed they were eligible for employee benefits from
Georgia Gulf.
They sued defendant claiming they were
common law employees and thus eligible for employee benefits under
ERISA. The 5th Circuit affirmed the district court's holding that
plaintiffs were not common law employees of defendant based on the
traditional common law factors test. Details
and analysis in the Contingent
Employment Law Manual.
January 26, 2004- 3rd Circuit Finds
Employer Liable to IRS for certain Unpaid Employment Taxes; Court holds
that IRS Properly Classified Worker as an Employee. (Nu-Look
Design, Inc. v. Commissioner of IRS, 3rd Circuit Court of Appeals.
The 3rd Circuit
upheld the IRS's classification of a worker as an employee for Social
Security (FICA) and Federal Unemployment Taxes withholding based on its
finding that Nu-Look Design (employer)
lacked a reasonable basis for not treating the worker as an
employee. (Details and analysis are in the
Contingent Employment Law Manual. The
full case is in the Case Law Supplement.
January 14, 2004 - Appeals Court Rejects Employment
Discrimination Claim Against Hospital Based on Plaintiff's Failure to
Prove He Was an Employee. (Shah
v. Deaconess
Hospital, No.
02-3033 (6th Cir. ) Court held plaintiff
did not establish that an employer-employee relationship existed
between himself and Deaconess
Hospital.
February 2004 -California Supreme Court
Upholds Landmark California
Appeals Court
Case for Misclassified Workers Paid Through Third Party Payroll
Agencies (Metropolitan Water District v. Cargill)
The California
Supreme Court affirmed a landmark 2001 Appeals Court case holding
Metropolitan Water District of Southern California (MWD) illegally
excluded common law employees from participating in the California
Public Employees Retirement System (CALPERS). In MWD v. Cargill,
the Court held that California state law is clear that common law
employees must be enrolled in CALPERS regardless of whether they
are paid through
a third party payroll agency.
CO-EMPLOYMENT and JOINT EMPLOYER LIABILITY
Wa-Mart Agrees to $11
Million Settlement in Illegal Foreign Janitors' Class Action
Lawsuit Holding Wal-Mart Liable for Its Contract Janitorial Firms' Violations of Federal Immigration and Labor
Laws. (Zavala et.al. v. Walmart Stores, Inc. ,
U.S. D.Ct. D. N.J.) settled March 18, 2005).
The
illegal immigrant janitors were employed by Wal-Mart's contract
janitorial services companies. Wal-Mart was liable as a joint employer
with 12 contract janitorial services firms. The janitorial firms were
charged with criminal violations and were fined $4 million.
$22 Million Settlement
for 2,000 Illegal Immigrant Contract Janitors in Federal Class Action
Lawsuit Charging National Supermarkets and their
Subcontractor Cleaning Companies with FLSA Violations. (Florex v. Albertson's. et. al. , U.S. D.Ct.,
C.D., Cal.
Jan 26, 2005) (see also immigration law and employment liability news below).
November 19, 2004 - The NLRB Overturns its Sturgis Decision,
Holding that Bargaining Units of Jointly Employed Employees Require
Parties' Consent. H.S.
Care LLC, d/b/a/ Oakwood
Care Center, 343 N.L.R.B. No. 76.
In a landmark
decision, the NLRB reversed its prior landmark ruling in M.B.
Sturgis (2000) and held that the NLRA does not authorize the
Board to direct elections in units encompassing the employees of more
than one employer (joint employers), returning to its pre-Sturgis case
law. Details and analysis are in the Contingent Employment Law Manual. The full
Case Opinion is in the updated Case Law Supplement.
September 8, 2004 - Employer Held Not
Liable to Pilot as "Joint" Employer or “Integrated Employer”
under the FMLA - Appeals
Court Establishes 3-Factor Test to
Determine "Co-employer" Status. (Morrison v. Magic
Carpet Aviation, RDV Sports, Inc., Harry Mitchel,
Alticor, Inc., f.n.a. Amway Corporation,
No. 03-15340, 11th Cir)
In this landmark case the
11th Circuit established a 3-factor test for determining whether
an entity is an individual's "co-employer".
The Court found there was no shared control
of plaintiff for joint employer purposes and therefore no joint employment
liability when an employer contracts for the services by another party.
Read details and analysis
in the Contingent Employment Law
Manual. The
full Opinion is in the Case Law Supplement.
April 2, 2004 - Dunkin' Donuts and
Employee Leasing Company Liable as Co-employers under NLRA. (Dunkin'
Donuts Mid-Atlantic Distribution Center Inc. v. NLRB, No. 02-1334)
The DC Court of
Appeals affirmed an NLRB holding that Dunkin' Donuts
and Aldworth Co. were joint employers
of plaintiff. Aldworth leased employees
to Dunkin' Donuts, which violated
the NLRA. As co-employers, both Dunkin' Donuts and Aldworth were ordered to: 1) offer reinstatement to
employees who were unlawfully discharged; 2) compensate employees for
losses; 3) purge their files of employees who suffered illegal
discharges or discipline; 4) post remedial notices, and 5) engage in
collective bargaining with the union. Read
details and analysis in the Contingent
Employment Law Manual. The full Case Opinion is in the Case Law Supplement.
February 4, 2004 - Appeals Court Finds Air France
Was Not a Joint Employer under FMLA and California
Family Rights Act (CFRA); Plaintiffs/Employees Who Provide Contracted Services to Air France Did Not Have Rights Under FLMA or
CFRA (Moreau
v. Air France, 9th Cir.
Ct of Appeals.)
The 9th Circuit
held Air France was
not a "joint employer" of other firms' employees who provide
contracted services to Air France, thus not covered by
either FMLA or CFRA because
it did not meet FMLA minimum employee requirement of 50 or more
employees within 75 miles of where the plaintiff worked. Read details and analysis in the Contingent Employment Law Manual. The full
Case Opinion is in the Case Law Supplement.
December
30, 2003 - 2nd Circuit Makes Major
Changes in Joint Employer Status Test in Affirming Employer Liability
as Joint Employer in FLSA cases. (Zheng v. Liberty Apparel Co. Inc., No. 02-7826,
In a landmark decision the 2nd Circuit significantly
changed its test for determining joint employer status (thus
co-employment liability) under the FLSA and NY State labor law, holding
that both defendant garment manufacturers and outsourced contract
manufacturers were both liable as joint employers under the FLSA and NY
labor law. Read details and analysis in our Contingent Employment Law Manual. Read the
full case opinion in our Manual Case Law Supplement.
EMPLOYMENT
LIABILITY
WalMart Agreed to $11 Million Settlement in Illegal Foreign Janitors'
Class Action Lawsuit Charging Walmart with
Violations of FLSA and RICO (Zavala
et.al. v. Walmart
Stores, Inc. , U.S. D.Ct. D. N.J.) settled
March 18, 2005) The $11 million settlement cleared Wal-Mart of
federal charges for hiring the illegal immigrants
Labor Dept Orders Computech to Pay $5.7
Million in Fines and Back Wages for FLSA Violations to more than
200 H-1B Computer Professionals. (March, 2005)
The
Labor Dept ordered Computech Inc., a national
placement firm for computer professionals to pay $4.5 million in back
wages to 232 non-immigrant computer professionals and $1.2 million in
fines for willful violations of the H-1B visa program's wage
requirements and providing inaccurate information on its H-1B
application materials in violation of immigration laws. Computech brought non-immigrant H-1B workers into
the country, but did not pay them the required wage rate in the areas
where they were employed, and often paid them nothing when there were
no work assignments available. Read
details and analysis in the updated Contingent
Employment Law Manual.
Jan 26, 2005 -Federal Court Holds National Supermarkets
Responsible for Overtime and other FLSA Violations by their
Subcontractor Cleaning Firm, Resulting in a $22.4 Million
Settlement for 2,000 Immigrant Janitors in Class Action Suit. (U.S.
D.Ct.,
Cal, ) (see also immigration law and co-employment liability)
In a
landmark case, a Federal Court in California approved a $22.4 million
settlement in this class action lawsuit by 2,000 immigrant janitors who
were hired by subcontractor cleaning firms and worked as janitors
in the California stores of several national grocery stores - Safeway,
Vons, Albertsons, and Ralph’s. The plaintiffs/janitors charged the
defendants violated FLSA overtime and minimum wage laws, holding the
stores responsible for their cleaning companies’ failure to pay
overtime and minimum wages under the FLSA. (U.S. D.CT. S.D., CA,
Los Angeles, Jan
26, 2005).
Federal Court Approves Class
Action Status in Janitors' Co-employment Class Action Lawsuit against Walmart charging Violations of FLSA and RICO (Zavala et.al. v. Walmart Stores,
Inc , U.S. D.Ct. D. N.J.) Dec 29. 2004 (see also Immigration Law and Co-employment Liability)
The Federal Court in
Newark, New Jersey
has approved a "collective action" in the class action lawsuit
filed contract employee janitors who had sued Walmart
in November 2003 charging that Walmart
violated the FLSA and RICO as a co-employer with the contract employee
staffing agencies. The Court ruled only on the FLSA claim, that all
contract janitors who worked for Walmart
since 2000 anywhere in the U.S. should be notified of
their potential eligibility to join as members of this class action.
Security Guards Not Entitled to Overtime under FLSA
Based on Court Finding Guards were Independent Contractors, not
Employees. (Johnson,
et.al. v. Unified Government of
Wyandotte County/Kansas City, Kansas and Housing Authority of Kansas
City, June 7, 2004)
In this landmark
case, the 10th Circuit held that security guards at defendant's Housing
Authority were not entitled to overtime pay because they were
contractors and not employees. The Court based its ruling on five factors in determining employee vs. independent contractor status, holding
that the defendant Housing Authority had only a minimal degree of
control over its security
guards.
Sega of America
and Spherion Corp Settle Employment Discrimination and Retaliation
Lawsuit by EEOC for $600,000 (March, 2004)
The EEOC charged that Sega directed Spherion to terminate temporary
employees placed at Sega's testing department by firing 13 Filipino
game testers due to their national origin and firing five other testers in retaliation for their friendship
with an employee who threatened to file
a complaint alleging preferential treatment of Filipino employees.
Supreme
Court Sets Standard for Corporations to include Shareholder- Directors
as "Employees" in order to meet "Employee
Headcount" Threshold for ADA
Coverage. (Clackamas
Gastroenterology Associates v. Wells, U.S. Supreme Court, April 22, 2003). Read
analysis of this landmark case affecting small business owners in the Contingent
Employment Law Manual.
Musicians are Independent Contractors and Not
Employees of Community Orchestra, and Therefore Don't Have Rights to Sue the Defendant Orchestra under the
ADA or Title VII of the Civil Rights Act. (Lehrol v. Friends of
Minnesota,
U.S. Ct
of Appeals, 8th Circuit, May 6, 2003). Details in the
Contingent Employment Law Manual.
Appeals
Court Rejects Age Discrimination Claim By Corporate Shareholder Who
Shared Control of a Closely Held Professional Corporation (Schmidt v. Ottawa Medical Center, P.C.), US Court of Appeals,
7th Circuit, March 5, 2003) Read
details and analysis in our Contingent
Employment Law Manual
EMPLOYEE BENEFITS and ERISA
5th Circuit
Holds Contract Employees Placed with Defendant Georgia Gulf Were Not
Common Law Employees of Georgia Gulf, thus Not Entitled to Benefits
under ERISA. (Landry,
et. al. v. Georgia
Gulf, March
8, 2004).
Defendant Georgia
Gulf hired contract workers from
various third parties. Plaintiffs claimed they were
eligible for employee benefits from
Georgia Gulf.
They sued defendant claiming they were
common law employees and thus eligible for employee benefits under
ERISA. Georgia
Gulf concluded
that plaintiffs were not common law employees, and therefore not
eligible for employee benefits. The District court held that plaintiffs
were not common law employees of
Georgia Gulf.
The 5th Circuit affirmed the district court on appeal, holding that
plaintiffs were not common law employees of defendant based on the
traditional common law factors test of Nationwide
Mut. Ins. Co. v. Darden. It found that a plurality
of the Darden factors, including skill
required, right to assign additional projects, method of payment, role
in hiring and paying assistants, employee benefits, and tax treatment,
supported the finding that plaintiffs were not defendant's
common law employees.
Plaintiffs also
argued that Georgia
Gulf's benefit
plans would lose their tax exempt status because defendant undercounted
its contract employees. The Court rejected this argument as well, holding
that no precedent conflates tax exempt status with common law
employment under the Darden factors.
Supreme Court
Holds Working Owner of a Business Who is Sole Shareholder and President
Qualifies as an Employee "Participant" in an ERISA-Covered Pension
Plan. (Yates
v. Hendon, U.S. Supreme Court, March 2, 2004, remanded by Hendon
v. Yates (In re Yates, 6th Cir. April 8, 2004.)
If an
employee benefit plan covers one or more employees other than the
business owner and his or her spouse, the working owner may participate
on equal terms with other plan participants.
Employer
May Limit Employee Benefits Plan Participation to Salaried Employees
Only Under ERISA (Bauer v. Summit
Bancorp., US Ct of Appeals, 3rd Circuit, March
25, 2003). The
full text of this case can be found in our Case Law
Supplement. The case is analyzed with details in our Contingent Employment Law Manual
Walmart Enforcement
Action Highlights Legal Risks in Hiring Immigrants - BCIS Enforcement
Includes Civil and Criminal Penalties for Immigration Law Violations. Walmart responded to the arrest of 245 foreign
non-immigrant workers by promising to review its 1.1 million workforce
and to discharge workers hired in violation of Immigration Law
requirements of proper documentation to work in the U.S.(including
properly completed I-9 Forms (see our Contingent
Workforce Forms Book).
HIPAA PRIVACY REQUIREMENTS
Temporary
Staffing Agencies are Treated as Business Associates under New HIPAA
Privacy Rules -- Agencies should review all contracts and add Business Associate Agreements for HIPAA
compliance as needed. (HHS Regulations, April 14, 2003)
See
article below.
Privacy Rules
Create Two New Worker Classifications Replacing
Traditional "Employee vs. Contractor" Distinctions. Workers are
either "workforce members" or "business associates"
Contractor agreements need revision for HIPAA compliance
as "business associate agreements". (HHS Regulations,
April 14, 2003). See article below.
HIPAA
Requirements for Small Business Business
Became Effective April 14, 2004
New
HIPAA Privacy Rule Requirements protecting personal health information
(PHI), mandate compliance for small
providers. Details, analysis, fact sheets and FAQ's are included in our
Contingent Employment Law Manual. Forms
for HIPAA compliance are included in our Contingent
Workforce Forms Book.
Worker Status Tests Under
Federal Laws
IRS Worker Status Determination
Criteria: - new 3-prong test
ERISA/Employee Benefits 12-Factor Test
Immigration Law: 7- Factor
Test
EEOC Common Law Test
Commentary
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