Webinar Unintended Employees
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© 2009 PULLMAN & COMLEY, LLC Unintended Employees – Avoiding Unintended Employment Relationships with Contractors and Franchisees Presented by: Joshua A. Hawks-Ladds, Esquire November 19, 2009 www.pullcom.com
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Transcript of Webinar Unintended Employees
© 2009 PULLMAN & COMLEY, LLC
Unintended Employees – Avoiding Unintended Employment
Relationships with Contractors and Franchisees
Presented by:Joshua A. Hawks-Ladds, EsquireNovember 19, 2009
www.pullcom.com
© 2009 PULLMAN & COMLEY, LLC
Who is an Employee?
• A Worker Can Only Receive Employment Protections if an Employment Relationship is Established
• Unintended Employees Include: Temporary or Contract Workers, Independent Contractors; Franchisees (Single Person Operator), Franchisee’s Employees
© 2009 PULLMAN & COMLEY, LLC
Who is an Employer?
• Unintended Employers Include: Any Company that Hires Independent Workers/Contractors; Temporary Placement Agencies, Professional Employment Organizations and Franchisors
© 2009 PULLMAN & COMLEY, LLC
Statutory Definitions
Employer Defined. . . • FLSA - “Enterprise
Engaged in Commerce or Production of Goods for Commerce”
• Title VII - “A Person Engaged in an Industry Affecting Commerce. . .”
Translation. . .• FLSA – Almost All
Workers are Presumed to be Employees
• Title VII – Continual Increase in Workers who are Deemed Employees
© 2009 PULLMAN & COMLEY, LLC
Is Your Worker An Employee?The Common Law Test (Agency)
• Reid Factors - Community for Creative Non-Violence v. Reid
• Control Factor – Degree of Control Exercised by the Employer Over a Worker
• Independent Contractor Relationship Scrutinized – Burden on Employer - Baker v. Flint Engineering and Construction Co.
Right to Control the Manner and Means by Which the Product is Accomplished
© 2009 PULLMAN & COMLEY, LLC
Is Your Worker An Employee?The Economic Realities Test for FLSA Purposes
The Extent to Which Typical Employer Prerogatives Govern the Relationship Between the Putative
Employer & Employee
Dependence
Supervise & Control Employee Work Schedule
Rate & Method of Payment
Degree of Skill & Independent Initiative Required
Power to Hire & Fire
Extent Work is Integral to Employer’s Business
Maintain Employment Records
Duration of Working Relationship
Worker’s Opportunity for Profit or Loss
Degree of Control Exercised Over Workers
© 2009 PULLMAN & COMLEY, LLC
IRS Factors
Behavioral Control
Type of Relationship Between the Parties
Financial Control
The Relationship of Employer and Employee The Relationship of Employer and Employee Exists When the Person for Whom Services are Exists When the Person for Whom Services are
Performed has the Right to Control and Direct the Performed has the Right to Control and Direct the Individual who Performs the Services, not Only as Individual who Performs the Services, not Only as to the Result to be Accomplished by the Work but to the Result to be Accomplished by the Work but Also as to the Details and Means by Which That Also as to the Details and Means by Which That
Result is Accomplished Result is Accomplished
© 2009 PULLMAN & COMLEY, LLC
“ABC” Test
A. Free From Control or Direction of the Employing Enterprise
B. Outside the Usual Course of the Business or Outside of all the Places of Business, of the Enterprise and
C. Part of an Independently Established Trade, Occupation, Profession, or Business of the Worker
Employer Must Show that the Services at Issue Are Performed …
© 2009 PULLMAN & COMLEY, LLC
Who is the Employer?
• Defacto Employer• Business’s Relationship to Another Entity
– Single Employer v. Joint Employer
• Claims - ERISA, NLRB, Title VII
© 2009 PULLMAN & COMLEY, LLC
Single Employer Analysis
Single Employer Analysis
Interrelated Operations
Common Management
Centralized Control of
Labor Relations
CommonOwnership
A Single Employer Relationship Exists When Two Nominally Separate Entities are Actually Part of a Single Integrated Enterprise so That, for all Purposes, There is in Fact Only a Single Employer
The Single Employer Standard is Applicable if the Separate Corporations are not What They Appear to be, That They are but Divisions or Departments of a Single Enterprise.
© 2009 PULLMAN & COMLEY, LLC
Single Employer Analysis – 4 Factors
(1) Interrelation of Operations
• Share Governing Board Members & Bylaws, as well as control of Day-to-Day Operations
(4) Common Ownership• Finding of Absolute
Authority Over Financial Matters
(3) Centralized Control of Labor Relations
• Entities Share Policies Concerning Hiring, Firing, and Training of Employees, and in Developing and Implementing Personnel Policies and Procedures
Common Ownership
Common Management
Interrelation of Operations
Control(2) Common Management
• Overlap of Officers or Members who Sit on the Board of Directors
© 2009 PULLMAN & COMLEY, LLC
Joint Employer Analysis Hallmark of Joint Employer Status:
Immediate Control over Employees
Hiring & Firing
Participatedin CollectiveBargaining
Process
Maintain Records; Handle Pay
Roll; Provide Insurance
Directly SupervisedEmployees
Directly Administered
Discipline
Employee’s Burden
to ShowBoth
Companies
Two Separate Business Entities Can Be Held Liable for Workplace Discrimination If Both Simultaneously Exercise Control Over the Same Workforce or Employee.
© 2009 PULLMAN & COMLEY, LLC
Joint Enterprise Analysis (a.k.a. Joint Venture)
A Joint Venture Exists Where Two or More Parties Combine Their Property, Money,
Effort, Skill or Knowledge in Some Common Undertaking
• Intent • Single Transaction
© 2009 PULLMAN & COMLEY, LLC
Can a Franchisor be a Franchisee’s Employer?
Situations Where a Franchisor can be Sued…
1. An Employee of the Franchisee Suing Both the Franchisee and the Franchisor as Its Employer
2. The Franchisee Itself Suing Franchisor as Its Employer
3. Governmental Agency Alleging Franchisor is Franchisee’s Employee’s Employer
© 2009 PULLMAN & COMLEY, LLC
Single Employer (a.k.a. Integrated Enterprise)
• (2) Common Management & (4) Common Ownership Typically Not Applicable
• (1) Interrelation of Operations – Franchisors Will Not be Held Liable for Exercising Control Over Conformity to Standard Operational Details
• (3) Centralized Control – Actions Speak Louder Than Words – Franchishor’s Actions Trump Franchise Agreement
• Circuit Split on Amount of Control Necessary
Title VII
© 2009 PULLMAN & COMLEY, LLC
ABC Test
Boston Bicycle Couriers, Inc. v. Deputy Director of the Division
of Employment and Training2002
Athol Daily News v. Board of Review of the
Division of Unemployment Assistance2003
Coverall North America, Inc. v. Commissioner of the
Division of UnemploymentAssistance
2006 Massachus
etts
Trilogy
Unemployment
Compensation
© 2009 PULLMAN & COMLEY, LLC
Common Law Agency
• Did the Franchisor Exercise Control Over the Results Produced or the Means to Achieve the Results
• Although the Franchise Agreement Attempts to Claim Worker as an Independent Contractor, the Contract Terms are not Dispositive on the Issue
Title VII &
Unemployment
Compensation
© 2009 PULLMAN & COMLEY, LLC
Economic Realities Test
• [See Earlier Definition]– Franchisors Will not be Held Liable for
Exercising Control Over Conformity to Standard Operational Details
– Franchisors Performing Ministerial Financial Functions for Franchisee Will not be Held Liable
FLSA
© 2009 PULLMAN & COMLEY, LLC
Hybrid Test …Combination of Common Law Agency & Economic Realities Test
A Court Examines the Economic Realities Relationship, but Also Considers the Extent of the Employer’s Right to Control the Means and Manner of the Worker’s Performance as the Most Important Factor• Spirides 11 Factors
Title VII
© 2009 PULLMAN & COMLEY, LLC
Pendulum Swinging in 2009
EEOC v. Papin Enterprises• Title VII• Employee Succeeds with
Joint Employer Analysis• Franchise Agreement
Unpersuasive • Franchisee Could not
Unilaterally Waive Policy• Franchisor Involved in
Specific Dispute Regarding Employment
Roberts v. Administrator Unemployment Compensation
•Unemployment Compensation
•Employee Succeeds with ABC Test
•Conduct Trumps Franchise Agreement
•Franchisor Failed All 3 Parts
•Appeal Pending
© 2009 PULLMAN & COMLEY, LLC
Joshua A. Hawks-LaddsPullman & Comley, LLC90 State House Square
Hartford CT 06103(860) 541-3306
BridgeportHartfordStamfordWhite Plains
www.pullcom.com
