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Publications
Contingent Employment Law
Manual
January ,2008- 8th Edition
Contingent
Employment
Case Law Supplement
January 2008-
8th Edition
Contingent Workforce Forms Book
January, 2008-
4th Edition
Making News
WORKER
MISCLASSIFICATION -
Employee vs. Independent
Contractor
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,
January 2008
The IRS challenged the classification
of FedEx Ground workers, and imposed fines and penalties of $319
million (for 2002 alone). FedEx could face additional
penalties totaling over a billion dollars after the IRS
completes its investigation. The
IRS and various State taxing authorities are also
challenging its independent contractor business model.
CA Supreme Court
Upholds Ruling that Fed Ex Drivers are Employees not
Contractors and entitled to
$11 Million in Damages, November 28, 2007
The California Supreme Court refused to hear the final appeal
of FedEx Ground Package System, Inc. to overturn the CA
trial court’s decision finding the company’s drivers to be
employees and not independent contractors.
The
California Court of Appeals denied the appeal in the landmark
case of Estrada v..FedEx Ground Package System, Inc., determining that the FedEx Ground drivers were entitled
to total damages of about $11
million.
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 Class Action Worker Misclassification
Lawsuit in Federal Court, Boston, MA, May 5, 2005
Plaintiffs representing 17,000 Fed Ex drivers in the US and
Canada filed a worker misclassification class action lawsuit in
U.S. District Court in Boston, MA. The lawsuit charges Fed-Ex
with unlawfully misclassifying its drivers as independent
contractors rather than employees. Plaintiff signed contracts
stating they were independent contractors, but FedEx treated
them like employees, by requiring them to comply with FedEx
rules, and other reasons. (May 5, 2005)
10th Circuit Appeals Court Holds Security
Guards are Not Protected By the FLSA Based on Status as
Independent Contractors, Not Employees, thus
cannot bring overtime case. (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
plaintiffs security
guards. (See full text of case in the Contingent
Employment Case Law Supplement, see summary and
details in Contingent Employment
Law Manual).
5th Circuit Holds Contract
Employees Placed with Defendant Georgia Gulf Were Not
Common
Law Employees, thus Not Entitled to Benefits
under ERISA.
(Landry,
et. al. v. Georgia Gulf, 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.
Employer is Liable to IRS for
certain Unpaid
Employment Taxes; Court Holds IRS Properly Classified Worker as an Employee. (Nu-Look
Design, Inc. v. Commissioner of IRS, 3rd Circuit Court of Appeals,
January 26, 2004)
The 3rd Circuit Court of Appeals upheld 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.
Employment Discrimination Claim Against Hospital Based on
Plaintiff's Failure to Prove He Was an Employee is Rejected by
Appeals Court.
Court held plaintiff
did not establish that an employer-employee
relationship existed between himself and Deaconess
Hospital. (Shah v. Deaconess Hospital, No. 02-3033
(6th Cir. January 14, 2004)
California Supreme Court Upholds
Landmark California Appeals Court Case for misclassified workers
paid through third party
payroll agencies (Metropolitan Water District v.
Cargill, February
2004)
The
California Sup. 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 payrolling agency.
CO-EMPLOYMENT
and JOINT EMPLOYER LIABILITY
Wal-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).
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,
November 19, 2004). 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.
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, September 8, 2004)
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.
Dunkin' Donuts and Employee Leasing Company
Liable as Co-employers under NLRA. (Dunkin'
Donuts Mid-Atlantic Distribution Center Inc. v. NLRB, No. 02-1334, April 2, 2004)
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.
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, February 4, 2004).
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.
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,
December
30, 2003).
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 Agrees 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.
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, Jan 26, 2005)
(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 Coemployment
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
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