New Test To Determine Independent Contractors!

January 28, 2019

We continually come across clients who are still confused about using independent contractors. It can be complex. I understand that. There is a vitally important distinction between employees and independent contractors because key employment laws, such as anti-discrimination laws, wage and hour laws and labor laws do not apply to independent contractors.

Previously the National Labor Relations Board significantly limited the coverage of which workers qualify as independent contractor under federal labor laws. At that time, the Board reversed decades of precedent by concluding that workers only qualify as independent contractors if they are “rendering services as part of an independent business.” This narrow test subjected myriad workers to coverage as employees, even if the employer exercised limited (or no) control over how they performed their jobs.

Recently, in SuperShuttle DFW, Inc., the Board reversed course and reinstated its pre-FedEx test. This test balances the following 10 factors to determine whether the “employer” exercised sufficient control over the workers’ employment.

  1. The extent of control which, by the agreement, the master may exercise over the details of the work.
  2. Whether or not the one employed is engaged in a distinct occupation or business.
  3. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.
  4. The skill required in the particular occupation.
  5. Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
  6. The length of time for which the person is employed.
  7. The method of payment, whether by the time or by the job.
  8. Whether or not the work is part of the regular business of the employer.
  9. Whether or not the parties believe they are creating the relation of master and servant.
  10. Whether the principal is or is not in business.

In balancing these factors, the Board concluded that the airport shuttle franchisees were not employees, but instead independent contractors. The Board relied heavily on the facts that the drivers leased or owned their work vans, that they were paid by the customer per fare (as opposed to by the hour or day), and that they maintained nearly unfettered control over their daily work schedules and working conditions. Thus, the franchisee-drivers had significant entrepreneurial opportunity for economic gain (or loss).

This decision is significant, in that it restores some common sense middle ground to the issue of who counts as an employee under the National Labor Relations Act. It bears watching if other agencies (such as the Department of Labor’s Wage and Hour Division) continue this trend.

This is an excellent decision by the Board and clarifies in simple language the requirements that can create an independent contractor. As usual, a word of caution! A written agreement, alone, is not sufficient to determine the status.  The business and independent contractor must interact following the guidelines noted above. Do not stray. If you are not sure have your counsel or an experienced consultant assist you.


Religious Accommodation: Use Common Sense!

January 21, 2019

A federal court jury found in favor of a dishwasher after concluding that her employer failed to honor her religious beliefs by repeatedly scheduling her on Sundays, and then firing her.

The employee claimed that she told her employer that she needed Sundays off for her missionary work. The hotel accommodate her for the first three years of her employment, but then began scheduling her on Sundays. After she advised that she would have to quit, the company again accommodated her scheduling request for another six years. Then, however, the hotel again changed her schedule to include Sundays. Pierre then provided a letter from her pastor explaining her religious need for the time off. The hotel, however, refused and ultimately fired her for unexcused absences.

The hotel argued that it had no idea that she was a missionary or had requested Sunday off. Her lawyer, however, disagreed. “There were letters in [her personnel] file and her pastor went down there.”

Title VII requires an employer to reasonably accommodate an employee who’s sincerely held religious belief, practice, or observance conflicts with a work requirement, unless doing so would pose an undue hardship. An accommodation would pose an undue hardship if it would cause more than a small cost on the operation of the employer’s business. Factors relevant to undue hardship may include the type of workplace, the nature of the employee’s duties, the identifiable cost of the accommodation in relation to the size and operating costs of the employer, and the number of employees who will in fact need a particular accommodation.

Scheduling changes, voluntary substitutions, and shift swaps are all common accommodations for employees who need time off from work for a religious practice. It is typically considered an undue hardship to impose these changes on other employees involuntarily. However, the reasonable accommodation requirement can often be satisfied without undue hardship where a volunteer with substantially similar qualifications is available to cover.

In other words, permitting the employee in this case to take every Sunday off may have imposed an undue hardship, depending on the nature of her work performed and her job duties. Other employees could have agreed to move shifts around to cover for her, but employers cannot force such scheduling changes. What is interesting in this case was that the hotel appears to have accommodated her for eight years and this action by the employer should have weighed heavily in favor of the reasonableness of the accommodation. The problem is they fired her. Arguably, they should have continued with the accommodation and certainly not fired her for excessive absenteeism when they had knowledge as to why she had been taking off. Quite frankly, under these facts, this case should have been settled. The argument they used “we did not know” was “lame” (excuse the language!).

Look, the times are changing and there might be a way around granting time off for an employee to observe a religious practice, but do you want to risk the inevitable (and expensive) lawsuit?

Legalities aside, this issue asks a larger question. What kind of employer do you want to be? Do you want to be a company that promotes tolerance or fosters exclusion? The former will help create the type of environment that not only mitigates against religious discrimination, but spills over into the type of behavior that helps prevent unlawful harassment and other liability issues. If you can grant the accommodation, why not do so? And if you have granted it, why take it away?

Developing Middle Managers: 5 Suggestions!

January 14, 2019

We’ve all heard and likely executed, the notion that the example and company culture starts at the top with senior leadership. While it is tremendously important for those in senior leadership positions to embrace, embody, and champion organizational changes and organizational culture, middle managers play a crucial part in implementing and executing organizational strategies and cultural changes.

Neglecting to strengthen the middle of an organization may lead to high turnover, a decrease in employee engagement, or poor succession down the line.

Strengthening the middle leads to better leaders, prepared for managing change, coaching emerging leaders, and executing the strategic vision of the organization. Employers need to train and develop mid-level managers.

Middle managers face a whole new set of leadership challenges as they begin to progress their careers. It’s no longer just about holding employees accountable for their work and their contributions. Here are five suggested skills your mid-level leaders need for success:

  1. Strategic Leadership

Leadership is much different from management. Middle management is the cornerstone of an organization’s strategic initiatives and the execution of those initiatives. Making the transition from manager to strategic leader requires much more critical thinking.

While managing demands planning, budgeting, organizing, performance managing, and staffing, it takes a true leader to understand the significance of setting direction, aligning people, empowering, motivating, and inspiring.

It’s when a manager finds his or her ability to go beyond the managing and embrace being a leader that success is reached.

  1. Retaining and Engaging Talent

Building a greater awareness of how talent development is a critical success factor in ensuring the future of the organization in a competitive marketplace. Middle managers should obtain the knowledge of what defines the top talent in an organization and what qualities or characteristics are associated with talented professionals.

  1. Developmental Coaching

Managers have a lot of responsibility. They have routine team management to look after and often have a plate full of work only they can complete. It’s crucial for middle managers to not only manage their day-to-day but to strategically think about how they can improve the way their team works.

One of the key aspects of their role is to help their team members grow, develop, and flourish. This can be achieved through coaching.

A great leader is someone who manages workload and performance but also someone who nurtures their individual team member’s abilities. Someone who is one their employee’s side, who encourages, and works with employees to set goals that challenge them.

Turning middle managers into developmental coaches can have an incredible impact on the success of an organization. Coaching employees turns into engagement increases, performance boosts, and job satisfaction.

  1. Finance for the Non-Financial Professional

Financial acumen is a skill that can be invaluable to a mid-level leader. Having an understanding of how a department, division, or team financially impacts people, expenses, revenue, margin, and indirect costs such as time, inconvenience, etc., puts middle managers in an advantageous spot for their group to strategically align with the organization.

The results of a mid-level manager understanding basic business finance include the ability to identify and quantify key drivers, develop, measure, and report key metrics, budget, present effective business cases, and interpret key financial statements, among many more.

  1. Emotional Intelligence

Understanding self-awareness and social awareness begins with discovering more within oneself and others. A mid-level manager should use their emotional intelligence to improve their own communication, conflict management, and the communication with their team.

In addition, losing their emotions and lashing out an employee can create a negative effect on everything the manager tried to accomplish. Not to mention such outburst can lead to liability. Managers have to stay in control of their emotions.

Senior management should keep in mind that good middle managers makes their job easier. Good luck!

2019 HR Compliance Checklist!

January 7, 2019

Today is the start of the first full week of 2019. Which means it’s a perfect time to take a step back and review your efforts at HR and employment-law compliance for the coming year.

This list is not meant to be complete or exhaustive, but should provide a high level look at the top 20 issues that you should be reviewing this year, and every year for your business.

☑️ How many employees do you have (15 / 20 / 50)?

☑️ When is the last time your handbook has been reviewed and updated?

☑️ When was your last harassment / respectful workplace training?

☑️ Do you require restrictive covenants for key employees?

☑️ Do you have employees that work in states in which marijuana is legal?

☑️ Do you have federal contracts?

☑️ Are you employment law posters up to date?

☑️ Has your state or local minimum wage increased?

☑️ How are you calculating and paying overtime to non-exempt employees?

☑️ When did you last analyze your exempt employees?

☑️ Do you have independent contractors?

☑️ Is all of your workplace OSHA compliant?

☑️ Are your OSHA 300 logs up to date and your 300A form posted?

☑️ Are your FMLA forms up to date?

☑️ Are you managers trained on the ADA interactive process?

☑️ Are you job applications and workplace accessible for the disabled?

☑️ Do you know what devices are accessing your network?

☑️ Have you tested your network and work environment for security?

☑️ Are employees trained on cyber security compliance?

☑️ Do you have necessary and appropriate insurance (EPLI / Cyber / D&O)?

It’s a new year with unknown issues confronting businesses. The list above is designed to hopefully cut down on the possibilities. I strongly suggest that you go through the list and address those issues that are applicable to you. If you need assistance in any of the above consult with your counsel or feel free to contact Potts & Associates.

Don’t forget, Jim Potts is streaming live on LA Talk Radio on Sundays at 3 pm PST.