What's in a Name? Independent Contractor Liability

The task of properly classifying a worker as an employee or independent contractor has never been easy.  Understanding the implications of the latter is also important. Take two recent examples:

On September 10th the 2nd U.S. Circuit Court of Appeals (covering CT, NY and VT) addressed whether an employer may be liable for age discrimination under the federal Age Discrimination in Employment Act (ADEA), which generally covers employers with 20 or more employees, for the actions of an independent contractor.  In this case, a company used a recruiter whom both parties agreed was an independent contractor. A candidate sued the Company alleging age discrimination claiming the independent contractor who interviewed him said he was "too old" for the job. The question was whether the company could be held liable for the recruiter's actions. The court ruled that the company could be liable under the ADEA for the actions of the independent contractor noting, "If a company gives an individual authority to interview job applicants and make hiring decisions on the company's behalf, then the company may be held liable if that individual improperly discriminates against applicants on the basis of age."  Halpert v. Manhattan Apartments, Inc.

On November 19th the 9th U.S. Circuit Court of Appeals (covering AK, AZ, CA, HI, ID, MT, NV, OR, WA) decided a case of alleged employment discrimination filed under the federal Rehabilitation Act.  The Act provides that no "otherwise qualified individual with a disability...shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance."  In this case, the defendant, which was a medical center that received federal funds, informed an anesthesiologist with sickle cell anemia that they could not accommodate his work and on-call schedules. The anesthesiologist then sued for breach of contract as well as employment discrimination under Section 504 of the Rehabilitation Act.  Neither party contested that the anesthesiologist was, in fact, an independent contractor.  The question was whether Section 504 of the Rehabilitation Act was limited to the employee-employer relationship or whether it covered independent contractors as well.   The Court overruled the lower court's decision and ruled that Section 504 of the Rehabilitation Act does cover independent contractors. This decision follows a similar holding in the 10th Circuit but differs from the 6th and 8th Circuits, which have held that the Rehabilitation Act does not protect independent contracts (see why the answer is "it depends"?). Fleming v. Yuma Regional Medical Center

Lessons Learned: This issue of employee classification is getting more and more attention at the federal as well as state levels.  There are currently at least eight states that have laws prohibiting the misclassification of employees as independent contractors with legislation pending in other states.  Also note that many states' workers compensation and unemployment insurance codes define employee and/or independent contractor differently from the IRS guidance or other laws and regulations. Be sure that you have not only properly classified your workers as employees versus independent contractors but also be sure you understand the potential implications of using the latter classification.  

In 2007 Ms. Walters testified before the U.S. House of Representatives Subcommittee on Health, Employment, Labor & Pensions and the Subcommittee on Workforce Protections on the challenges employers face in properly classifying workers as independent contractors.  

 Hot Hits!! Education Corner

December's Public Seminars & Presentations

Presented by Christine V. Walters, MAS, JD, SPHR

Monday, December 7th, "Practice Your Passion: Advocacy as a Core Competency for HR Professionals," presented for the Maryland SHRM State Council's 6th Annual Conference, 7:30 - 5:15 p.m., Adelphi, MD.

   December's Client Training Programs

"Managing for Performance Improvement"  

"HR & the Law for Managers"

NEXT WEBCAST!

To be continued in 2010!

4th Wednesday of every month (except December)

New Improvements on the way!

Click here for more information coming in December.

In the interim?  Need HRCI credits?  Any of FiveL's webcasts archived in or after August 2009 are pre-approved for 1.0 GENERAL CREDIT HOUR.

Use of this seal is not an endorsement by HRCI of the quality of the program. It means that this program has met HRCI's criteria to be pre-approved for recertification credit.

2010: A Self-Paced Odyssey 

No, it's not the movie; it's new web-based training services that FiveL Company will be offering in 2010!!

In 2009 FiveL Company received multiple requests and inquiries from clients and others seeking customized, web-based training programs they could offer their employees. Web-based programs offer flexibility, permit employees to participate on an individualized basis at varying times and without incurring the time and costs for a consultant's or your own employees' travel and lodging expenses.

LOOK NO FURTHER!  In 2010, FiveL Company will be offering this service.  Stay tuned or contact FiveL today for more information!

Question of the Month

With the holidays in full swing and up-and-coming I thought this question might be of interest to you.

Q1: If an employee is out on FMLA leave during a paid holiday, do we count that holiday as an FMLA absence?

A: (Come on, you know what it is!)..."It depends."  The FMLA regulations provide, "For purposes of determining the amount of leave used by an employee, the fact that a holiday may occur within the week taken as FMLA leave has no effect; the week is counted as a week of FMLA leave. However, if an employee is using FMLA leave in increments of less than one week, the holiday will not count against the employee’s FMLA entitlement unless the employee was otherwise scheduled and expected to work during the holiday."

Q2: If the employee is out on FMLA leave during a paid holiday, do we have to pay the employee for the holiday?

A: In this case, the FMLA regulations provide that you may simply follow your company policy for non-FMLA covered absences. "An employee’s entitlement to benefits other than group health benefits during a period of FMLA leave (e.g., holiday pay) is to be determined by the employer’s established policy for providing such benefits when the employee is on other forms of leave (paid or unpaid, as appropriate)."  

  Spotlight!

Lisa Kaminski, Vice President of People Operations for eInstruction, Inc., recently rated FiveL Company's services related to review and update of their Team Member Handbook as "Excellent" adding that services were, "Very proactive and timely." Thanks Lisa! 

Are you preparing to "clean house" and start the New Year with refreshed, revised and updated employee handbooks, policies or procedures?  Contact FiveL Company today for an HR Audit checklist or estimate for Handbook review.