SlideShare ist ein Scribd-Unternehmen logo
1 von 27
Downloaden Sie, um offline zu lesen
FULL SLIDES 2016: The Current & Future State of Independent Contractor Compliance & Usage
DENIS S. KENNY
ATTORNEY, SCHERER SMITH & KENNY LLP
2016: THE CURRENT & FUTURE
STATE OF INDEPENDENT
CONTRACTOR COMPLIANCE
& USAGE
AGENDA
• Effects and implications of U.S. Department of
Labor Administrator’s Interpretation No. 2015-1
• Misconceptions that lead to misclassifications: “on
demand companies” in the “sharing” or “gig”
economy
• Consequences and ways to reduce risks of
misclassification
• Prognostication for 2016 and beyond. . .
EVOLVING & DIVERSE LEGAL STANDARDS
No Single Federal or California Test
Federal Tests
Federal Common Law Test NLRA
IRS Test FICA/FUTA, IRCA
Economic Realities Test FLSA/ADEA/Title VII/ADA
Hybrid Test Title VII
EEOC Test Title VII, ADA, ADEA
California Tests
California Borello Test
CA FEHA, CA Family Rights Act, CA Labor Code, CA Workers Comp Act,
Agricultural Labor Relations Act
California Common Law Test California UI, SDI, FTDI, Payroll Tax
Employment Development Department (EDD) Test California UI, SDI, FTDI, Payroll Tax
Tests in Other States
IRS Test 24 states and District of Columbia
ABC Rule 19 states
NEW WAGE & HOUR ADMINISTRATOR’S
INTERPRETATION
• On July 15, 2015, United States Department of
Labor, Wage and Hour Administrator issued
Administrator’s Interpretation No. 2015-1
(“Interpretation”).
• Interpretation’s message is clear: most workers are
employees under FLSA, not independent
contractors.
INTERPRETATION (cont’d)
• Test for Employee/Independent Contractor still
the same:
o (a) FLSA defines “employ” broadly to include “to suffer or
permit to work”*
o (b) Multi-factor “economic realities” test
*Note: “to suffer or permit” encompasses workers that might be beyond common
law control of employer
INTERPRETATION (cont’d)
• Six-Factor economics realities test: This test looks to whether
worker is economically dependent on or independent of the hiring
company (the “Company”). Factors:
o Extent to which work performed is an integral part of the Company’s
business;
o Worker’s opportunity for profit or loss depending on worker’s
managerial skill;
o Extent of the relative investments of the Company and worker;
o Whether the work performed requires special skills and initiative;
o Permanency of the relationship; and
o Degree of control exercised or retained by the Company.
• Courts looks to economic reality rather than technical concepts.
EXAMPLE – INTERNET & CABLE INSTALLERS
Scantland v. Jeffry Knight, Inc., 721 F.3d 1308 (11th Cir. 2013)
• Claim: FLSA overtime claim by current and former internet and cable
installers alleging they were misclassified as ICs.
• Trial and Appellate courts applied the same economic reality test with
differing results.
o Trial court found installers were ICs, finding that the relationship is a
typical outsourcing arrangement. (Scantland v. Jeffry Knight, Inc.
(M.D. Fla. March 29, 2012) 2012 WL 1080361.)
o Appellate Court held 4 factors weighed strongly in favor of
employee status and 2 factors weighed only very slightly in favor of
IC status; thus, finding IC misclassification.
SCANTLAND (cont’d)
APPELATE COURT ANALYSIS
“[P]oints strongly toward employee status” Facts
Control Installers were required to report arrival and departure from assigned jobs, received
constant site checks, could not decline jobs without threat of termination, and were
subject to uncontestable fines.
Opportunity for Profit or Loss Company determined rates the installers were paid.
Permanency and Duration One-year terms, automatically renewed, and terminable with 30-day notice.
Integral Part of Company’s Business Company was in the installation and repair service business, and the installers provided
that service.
“Weakly” Favors IC Status Facts
Investment in Equipment or Materials Installers required to have vehicles, auto insurance, tools and safety equipment, and
commercial general liability insurance, but most installers already had own vehicles and
purchased specialty tools directly from the Company via “payroll” deductions.
Special Skills Installers were skilled workers, but Company provided those skills via unpaid trainings
and unpaid ride-alongs.
MISCONCEPTIONS
• “The worker wants to be an independent contractor.”
• “The worker created a LLC or S-Corp to do business
with us.”
• “We have a written contract.”
• “The worker only performs occasional services for us.”
Reality: Classification is a legal determination that parties
cannot displace by a written contract. “Form over
substance” will not be allowed.
WHY IS THIS TOPIC IMPORTANT RIGHT NOW?
Shifting Focus
• Historically misclassification has not been a huge area of focus
• Recession resulting in more businesses using ICs
• Tax deficit at state and federal level
• Estimated tax loss due to underreporting of employment taxes is $54B with an estimated over
$2.7B due to misclassification (Treasury Inspector General 2013 Report).
RESULT: Focus on misclassification and enforcement
• Increased legislation at federal and state level
• In California in 2011, SB 459 “deputized” state EDD, WCAB, UIAB, etc. (Labor Code §§
226.8, 2753 regarding sliding scale of penalties for “willful” misclassifications).
• Inter-agency (state and federal) cooperation is growing.
• Upsurge of audits
• Each budget since 2011 submitted to Congress has included $10M for DOL to distribute to
state agencies and almost $4M for DOL enforcement.
• For FY 2016, one of DOL’s Wage and Hour Division’s “Key Enforcement Initiatives” will be
“Addressing the Fissured Workplace,” i.e., IC relationships and other business models.
LESSONS FROM THE UBER & LYFT CLASS ACTIONS
Nature of Claims
• Class of thousands of drivers from both ridesharing
start-ups claim they should have been classified as
W-2 employees rather than 1099 independent
contractors (“ICs”) and, in turn, claim they are owed
overtime, vacation/sick leave, healthcare insurance
and other employee-related rights and benefits
(including workers’ compensation insurance).
THE UBER & LYFT CLASS ACTIONS:
THE FACTS & ANALYSIS
“On Demand” companies in the “Sharing Economy”
• Both Uber and Lyft allow drivers to make themselves available for work whenever they want and allow
them to accept or reject rides once they have been selected – both factors that favor IC status.
• On the other hand, both companies expressly reserve the right to terminate the drivers’ relationship or to
terminate their use of the company app if a driver’s customer ratings are deemed unacceptably low or
for any reason at all. Both courts noted that this factor is a key one favoring employee status.
• U.S. District Judge Edward Chen, who heard the Uber suit, voiced skepticism about the firm’s claims that it
wasn’t an employer, but rather a technology company that licenses its app to drivers given that Uber sets
fares and screens and fires drivers.
• U.S. District Judge Vince Chhabria, who heard the Lyft case, said that the current employment test for
classifying workers is “woefully outdated” when applied to app-enabled firms such as Lyft;
consequently, misclassification “will often be for juries to decide.”
LYFT LITIGATION
• On January 26, 2016, Lyft and its drivers reached a preliminary settlement,
subject to Court approval: $12.25M settlement for estimated reimbursement claims,
among nonmonetary components, but the preliminary settlement did not address
the classification issue.
• On April 7, 2016, Judge Chhabria rejected the preliminary settlement because the
monetary settlement short-changed the drivers.
• “[N]othing in this agreement would prevent the California Legislature (or Congress)
from offering a legislative solution to the problem of how to classify workers in the
‘gig economy.’”
UBER LITIGATION
• Settlement imminent in California litigation!
• As of April 21, 2016, subject to Judge Chen’s approval, the settlement provides
that Uber will pay $84M to the plaintiffs PLUS $16M if Uber goes public and
valuation increases 1.5x of Dec. 2015 valuation within 1st year of IPO, and drivers
remain ICs, not employees, among other provisions.
• Repeat: Drivers remain independent contractors.
• Comment: This proposed settlement is not binding on pending lawsuits in states
like Arizona, Florida, and Pennsylvania, but could signal a win for the “gig
economy.”
CONSEQUENCES OF MISCLASSIFICATION
Everyone is a potential adversary if you misclassify a worker as an independent contractor.
• Government agencies
• Plaintiff lawyers
• Customers
• Unions
• Workers’ compensation carrier
• Contractors themselves
• New! National Labor Relations Board (“NLRB”)
• On April 18, 2016, Los Angeles office issued an unfair labor practice complaint
against Intermodal Bridge Transport, alleging NLRA violations for misclassification.
CONSEQUENCES OF MISCLASSIFICATION
What Triggers an Audit
Unemployment, Worker’s Comp, Discrimination/Harassment/Retaliation claims
• A W-2 and 1099 issued for the same worker by the same company in the same
year
• Unmatched 1099 to individual income tax reporting
• “Disgruntled Worker” can anonymously request a misclassification review (IRS
Form SS-8)
• Class action lawsuits
• IRS “Whistleblower” Awards Program: Tax Relief and Health Care Act of 2006,
26 USC Section 7623(b)
POSSIBLE PENALTIES & COLLATERAL DAMAGES
Overview of Possible Penalties and Collateral Damages
• Total of Unpaid Taxes
• Penalties
• Fines
• Punitive Damages
• Compensatory Damages
• Liquidated Damages
• Equitable Relief
• Back-Pay
• Reinstatement
• Expenses including attorneys’ fees and costs (even a “win” will be costly!)
SAMPLE LITIGATION BUDGET:
SINGLE WORKER MISCLASSIFICATION CASEPRETRIAL TASKS: Hours Rate Total
I. PLEADINGS
A. Answer to Complaint 1.5 $355.00 $532.50
II. PRE-TRIAL DISCOVERY
A. Draft and Respond to Written Discovery 45.0 $295.00 $13,275.00
10.0 $415.00 $4,150.00
B. Depositions
> Plaintiff 15.0 $355.00 $5,325.00
> Plaintiff Co-Worker(s) 15.0 $355.00 $5,325.00
> Defend Owner 15.0 $355.00 $5,325.00
> Defend "Supervisor" 15.0 $355.00 $5,325.00
C. Other Analysis of Discovery and Summary 15.0 $355.00 $5,325.00
III. DISPOSITIVE MOTIONS
A. Possible Motion for Summary Judgment / Summary Adjudication 50.0 $295.00 $14,750.00
10.0 $415.00 $4,150.00
IV. EXPERT FEES TBD
V. MEDIATION
A. Including Brief, Preparation, and Mediation 30.0 $355.00 $10,650.00
VI. MISCELLANEOUS
A. Attend Status Conferences; Status Calls and Letters; Telephone Calls; Review and Analysis of Case-related
Documents/Correspondence.
40.0 $355.00 $14,200.00
PRE-TRIAL BUDGET $88,332.50
SAMPLE LITIGATION BUDGET:
SINGLE WORKER MISCLASSIFICATION CASE
VII. TRIAL AND PREPARATIONS
A. Preparing Witnesses 20.0 $355.00 $7,100.00
B. Summarizing Depositions 40.0 $295.00 $11,800.00
C. Preparing Evidence Including Exhibits 20.0 $295.00 $5,900.00
D. Research of Discreet Legal Issues 20.0 $295.00 $5,900.00
E. Preparing Jury Instructions / Special Verdict Form / Jury Questionnaire 15.0 $295.00 $4,425.00
F. Trial (Two Lawyers for 7 Days at 10.0 Hours Per Day) 140.0 $355.00 $49,700.00
TRIAL BUDGET $84,825.00
TOTAL LITIGATION BUDGET $173,157.50
Hourly Rates:
DSK: $415.00
Associate: $295.00
Blended Rate $355.00
MITIGATING YOUR RISKS
Basic Steps for Engaging Independent Contractors
• Review your IC agreements
• Refine your benefit plans
• Use specific “exclusion” clauses
• Educate your company as to methods of correct
classification
THE PRICE TO PAY FOR “VICTORY”
Suing the U.S. Dep’t of Labor – Gate Guard Services, L.P. v. Perez, 792 F.3d 554 (5th Cir. 2015).
• Facts: Company contracts with oil companies to provide gate attendants for remote drilling sites
and classified these gate attendants as ICs. DOL was obstructionist and unprofessional in how it
investigated this matter and litigated this case.
• Lawsuit: Company sued DOL seeking declaration that it is complying with FLSA in classifying its
gate guards as ICs. DOL filed a counter-action for misclassification-related back wages and
injunctive relief.
• District Court concluded that government’s position that gate attendants are employees (not ICs)
was “not substantially justified,” finding for employer and awarding over $565K in attorney’s
fees.
• Appellate Court awarded heightened fees because DOL’s conduct and ignorance of controlling
precedent demonstrated DOL “acted in bad faith, vexatiously, wantonly, or for oppressive
reasons”; DOL settled for $1.5M.
MITIGATING YOUR RISKS
How to Evaluate: Proving conduct is not “willful”
• Create a consistent, centralized process for evaluating IC status
o Evaluate everyone
o Use consistent standards
o Develop questionnaires for both managers and workers to complete
o Document your analysis of why the work and the worker are
suitable for IC classification
• Consult with experienced labor and employment counsel
PROGNOSTICATION:
WHAT MIGHT THE FUTURE HOLD
The California 1099 Self-Organizing Act (AB 1727)
• California State Assemblywoman Lorena Gonzalez (D-San Diego) has authored AB
1727, which allows ICs who provide services through hosting platform(s) to have certain
rights enjoyed by employees.
• Examples: right to organize, negotiate with hosting platforms, or engage in activities for
group negotiations or other mutual aid or protections.
• Status: On April 20, 2016, AB 1727 has been referred to the Assembly Judiciary
Committee.
PROGNOSTICATION:
WHAT MIGHT THE FUTURE HOLD
H.R. 2483: Independent Contractor Tax Fairness and Simplification Act of 2015
• Amends the Internal Revenue Code of 1986 to provide standards for determining employment
status. Further, H.R. 2483 would prohibit retroactive assessment of employment tax and prohibit
issuance of Treasury Regulations with respect to employment status for employment tax purposes.
• Establish “safe harbor” for Company if worker meets 4 factors: (1) incur significant financial
responsibility for providing/maintain equipment/facilities, (2) incur unreimbursed expenses/income
since compensation related to sales or output, (3) is compensated on factors relating to work, and
(4) substantially controls means and manner of work unless contractually specified.
• Limited impact: Bill focuses on industries where services provided on scheduled rates, not hours, for
example truckers and messenger couriers.
• Status: On May 20, 2015, H.R. 2483 was assigned to a congressional committee, but, as one
commentator noted, federal legislation is not likely before 2016 election.
QUESTIONS?
Please feel free to email or call me with
any follow-up questions or comments
about this presentation.
Thank you,
Denis Sullivan Kenny
(415) 433-1099
140 Geary Street, 7th Flr., San Francisco, CA 94108
denis@sfcounsel.com

Weitere ähnliche Inhalte

Was ist angesagt?

Form I-9 and E-Verify: Current Requirements, Anticipated Changes and Solutions
Form I-9 and E-Verify: Current Requirements, Anticipated Changes and SolutionsForm I-9 and E-Verify: Current Requirements, Anticipated Changes and Solutions
Form I-9 and E-Verify: Current Requirements, Anticipated Changes and SolutionsVerifications
 
A Modern Look at Contractors v. Employees
A Modern Look at Contractors v. EmployeesA Modern Look at Contractors v. Employees
A Modern Look at Contractors v. EmployeesDiana Maier
 
Uop eth 321 final exam guide new
Uop eth 321 final exam guide newUop eth 321 final exam guide new
Uop eth 321 final exam guide newlroselyn
 
Transforming Legal Profession To Legal Services (Legal Industry Analysis)
Transforming Legal Profession To Legal Services (Legal Industry Analysis)Transforming Legal Profession To Legal Services (Legal Industry Analysis)
Transforming Legal Profession To Legal Services (Legal Industry Analysis)Timothy LaBadie
 
Independent Contractors: Overcoming the Legal Perils and Challenges
Independent Contractors: Overcoming the Legal Perils and ChallengesIndependent Contractors: Overcoming the Legal Perils and Challenges
Independent Contractors: Overcoming the Legal Perils and ChallengesCarol Buckmann
 
Irrigation Association State Affairs Indiana Presentation(02 15-2011)
Irrigation Association State Affairs Indiana Presentation(02 15-2011)Irrigation Association State Affairs Indiana Presentation(02 15-2011)
Irrigation Association State Affairs Indiana Presentation(02 15-2011)Tom Barrett
 
Fair Lending Law, HMDA, Disparate Impact Doctrine & Beyond
Fair Lending Law, HMDA, Disparate Impact Doctrine & BeyondFair Lending Law, HMDA, Disparate Impact Doctrine & Beyond
Fair Lending Law, HMDA, Disparate Impact Doctrine & BeyondLexisNexis
 
Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...
Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...
Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...Diana Maier
 
JVs and Teams Teaming and JVs Chicago 2015
JVs and Teams Teaming and JVs Chicago 2015JVs and Teams Teaming and JVs Chicago 2015
JVs and Teams Teaming and JVs Chicago 2015David Rose
 
ACC Docket Article July/August 2010, Immigration Consequences of Corporate R...
ACC Docket Article  July/August 2010, Immigration Consequences of Corporate R...ACC Docket Article  July/August 2010, Immigration Consequences of Corporate R...
ACC Docket Article July/August 2010, Immigration Consequences of Corporate R...martinvisalaw
 
Advancing After Merger Between Industry Leaders
Advancing After Merger Between Industry LeadersAdvancing After Merger Between Industry Leaders
Advancing After Merger Between Industry LeadersXiaodong Hu
 
Are Your Prepaid Calling Cards Legal Final
Are Your Prepaid Calling Cards Legal FinalAre Your Prepaid Calling Cards Legal Final
Are Your Prepaid Calling Cards Legal FinalEdwardAMaldonado
 
Terms of Use and Privacy Policy Best Practices
Terms of Use and Privacy Policy Best PracticesTerms of Use and Privacy Policy Best Practices
Terms of Use and Privacy Policy Best PracticesRoger Royse
 
Fundamental Issues Of Corporate Responsibility And Ethics
Fundamental  Issues Of  Corporate  Responsibility And  EthicsFundamental  Issues Of  Corporate  Responsibility And  Ethics
Fundamental Issues Of Corporate Responsibility And Ethicsjoelnshisso
 
High-Tech Employees "No Poach" Antitrust Litigation
High-Tech Employees "No Poach" Antitrust LitigationHigh-Tech Employees "No Poach" Antitrust Litigation
High-Tech Employees "No Poach" Antitrust LitigationLuis Taveras EMBA, MS
 

Was ist angesagt? (16)

Form I-9 and E-Verify: Current Requirements, Anticipated Changes and Solutions
Form I-9 and E-Verify: Current Requirements, Anticipated Changes and SolutionsForm I-9 and E-Verify: Current Requirements, Anticipated Changes and Solutions
Form I-9 and E-Verify: Current Requirements, Anticipated Changes and Solutions
 
A Modern Look at Contractors v. Employees
A Modern Look at Contractors v. EmployeesA Modern Look at Contractors v. Employees
A Modern Look at Contractors v. Employees
 
Uop eth 321 final exam guide new
Uop eth 321 final exam guide newUop eth 321 final exam guide new
Uop eth 321 final exam guide new
 
Transforming Legal Profession To Legal Services (Legal Industry Analysis)
Transforming Legal Profession To Legal Services (Legal Industry Analysis)Transforming Legal Profession To Legal Services (Legal Industry Analysis)
Transforming Legal Profession To Legal Services (Legal Industry Analysis)
 
Independent Contractors: Overcoming the Legal Perils and Challenges
Independent Contractors: Overcoming the Legal Perils and ChallengesIndependent Contractors: Overcoming the Legal Perils and Challenges
Independent Contractors: Overcoming the Legal Perils and Challenges
 
Irrigation Association State Affairs Indiana Presentation(02 15-2011)
Irrigation Association State Affairs Indiana Presentation(02 15-2011)Irrigation Association State Affairs Indiana Presentation(02 15-2011)
Irrigation Association State Affairs Indiana Presentation(02 15-2011)
 
Fair Lending Law, HMDA, Disparate Impact Doctrine & Beyond
Fair Lending Law, HMDA, Disparate Impact Doctrine & BeyondFair Lending Law, HMDA, Disparate Impact Doctrine & Beyond
Fair Lending Law, HMDA, Disparate Impact Doctrine & Beyond
 
Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...
Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...
Privacy Best Practices for Lawyers: What Every Law Practice Needs to Know Abo...
 
JVs and Teams Teaming and JVs Chicago 2015
JVs and Teams Teaming and JVs Chicago 2015JVs and Teams Teaming and JVs Chicago 2015
JVs and Teams Teaming and JVs Chicago 2015
 
ACC Docket Article July/August 2010, Immigration Consequences of Corporate R...
ACC Docket Article  July/August 2010, Immigration Consequences of Corporate R...ACC Docket Article  July/August 2010, Immigration Consequences of Corporate R...
ACC Docket Article July/August 2010, Immigration Consequences of Corporate R...
 
Advancing After Merger Between Industry Leaders
Advancing After Merger Between Industry LeadersAdvancing After Merger Between Industry Leaders
Advancing After Merger Between Industry Leaders
 
CEO Roundtable on Local and State Tax Laws
CEO Roundtable on Local and State Tax LawsCEO Roundtable on Local and State Tax Laws
CEO Roundtable on Local and State Tax Laws
 
Are Your Prepaid Calling Cards Legal Final
Are Your Prepaid Calling Cards Legal FinalAre Your Prepaid Calling Cards Legal Final
Are Your Prepaid Calling Cards Legal Final
 
Terms of Use and Privacy Policy Best Practices
Terms of Use and Privacy Policy Best PracticesTerms of Use and Privacy Policy Best Practices
Terms of Use and Privacy Policy Best Practices
 
Fundamental Issues Of Corporate Responsibility And Ethics
Fundamental  Issues Of  Corporate  Responsibility And  EthicsFundamental  Issues Of  Corporate  Responsibility And  Ethics
Fundamental Issues Of Corporate Responsibility And Ethics
 
High-Tech Employees "No Poach" Antitrust Litigation
High-Tech Employees "No Poach" Antitrust LitigationHigh-Tech Employees "No Poach" Antitrust Litigation
High-Tech Employees "No Poach" Antitrust Litigation
 

Ähnlich wie FULL SLIDES 2016: The Current & Future State of Independent Contractor Compliance & Usage

Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...
Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...
Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...Palmer Kazanjian Wohl Hodson LLP
 
Independent Contractors In Massachusetts
Independent Contractors In MassachusettsIndependent Contractors In Massachusetts
Independent Contractors In MassachusettsMichael Gove
 
Employment Law Issues for the Gig Economy
Employment Law Issues for the Gig EconomyEmployment Law Issues for the Gig Economy
Employment Law Issues for the Gig EconomyRoger Royse
 
Emploment law issues for the gig economy
Emploment law issues for the gig economyEmploment law issues for the gig economy
Emploment law issues for the gig economyRoger Royse
 
Tax Issues in App Development
Tax Issues in App DevelopmentTax Issues in App Development
Tax Issues in App DevelopmentRoger Royse
 
The On-Demand Economy
The On-Demand EconomyThe On-Demand Economy
The On-Demand EconomyDrexelELC
 
A Sea Change in Wage and Hour Law
A Sea Change in Wage and Hour LawA Sea Change in Wage and Hour Law
A Sea Change in Wage and Hour LawQuarles & Brady
 
2016: The Current & Future State of Independent Contractor Compliance & Usage
2016: The Current & Future State of Independent Contractor Compliance & Usage2016: The Current & Future State of Independent Contractor Compliance & Usage
2016: The Current & Future State of Independent Contractor Compliance & UsagePopulus Group
 
Which Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your Exposure
Which Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your ExposureWhich Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your Exposure
Which Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your ExposureJim Radogna
 
HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019
HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019
HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019Ascentis
 
EEOC FCRA When Working With Temp or Contract Employees
EEOC FCRA When Working With Temp or Contract EmployeesEEOC FCRA When Working With Temp or Contract Employees
EEOC FCRA When Working With Temp or Contract Employeesssallay
 
Minimizing Risk within Your Organization by Auditing Your Employment Policies
Minimizing Risk within Your Organization by Auditing Your Employment PoliciesMinimizing Risk within Your Organization by Auditing Your Employment Policies
Minimizing Risk within Your Organization by Auditing Your Employment PoliciesQuarles & Brady
 
ABC, Empire State 2016 Legislative agenda
ABC, Empire State 2016 Legislative agendaABC, Empire State 2016 Legislative agenda
ABC, Empire State 2016 Legislative agendaBN5BS7JR9
 
Not-for-Profit Compensation Controversies Continue to Add Fuel to the Fire
Not-for-Profit Compensation Controversies Continue to Add Fuel to the FireNot-for-Profit Compensation Controversies Continue to Add Fuel to the Fire
Not-for-Profit Compensation Controversies Continue to Add Fuel to the FireCBIZ, Inc.
 
Architecture, Engineering & Construction Seminar - 2014
Architecture, Engineering & Construction Seminar - 2014Architecture, Engineering & Construction Seminar - 2014
Architecture, Engineering & Construction Seminar - 2014CBIZ, Inc.
 
Connecticut Automotive Retailers Association 2016 Dealer Symposium
Connecticut Automotive Retailers Association 2016 Dealer SymposiumConnecticut Automotive Retailers Association 2016 Dealer Symposium
Connecticut Automotive Retailers Association 2016 Dealer SymposiumJim Radogna
 
The Defense Contractors
The Defense ContractorsThe Defense Contractors
The Defense ContractorsLeslie Lee
 
New York Times-Cracking Down On Contractors
New York Times-Cracking Down On ContractorsNew York Times-Cracking Down On Contractors
New York Times-Cracking Down On Contractorsacahn
 

Ähnlich wie FULL SLIDES 2016: The Current & Future State of Independent Contractor Compliance & Usage (20)

Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...
Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...
Avoiding Liability: Legal Dilemmas Presented by Engaging Independent Contract...
 
Independent Contractors In Massachusetts
Independent Contractors In MassachusettsIndependent Contractors In Massachusetts
Independent Contractors In Massachusetts
 
Employment Law Issues for the Gig Economy
Employment Law Issues for the Gig EconomyEmployment Law Issues for the Gig Economy
Employment Law Issues for the Gig Economy
 
Emploment law issues for the gig economy
Emploment law issues for the gig economyEmploment law issues for the gig economy
Emploment law issues for the gig economy
 
Tax Issues in App Development
Tax Issues in App DevelopmentTax Issues in App Development
Tax Issues in App Development
 
The On-Demand Economy
The On-Demand EconomyThe On-Demand Economy
The On-Demand Economy
 
Independent Contractors or Employees
Independent Contractors or EmployeesIndependent Contractors or Employees
Independent Contractors or Employees
 
A Sea Change in Wage and Hour Law
A Sea Change in Wage and Hour LawA Sea Change in Wage and Hour Law
A Sea Change in Wage and Hour Law
 
Misclassification: 1099 Contractor or Employee
Misclassification: 1099 Contractor or Employee Misclassification: 1099 Contractor or Employee
Misclassification: 1099 Contractor or Employee
 
2016: The Current & Future State of Independent Contractor Compliance & Usage
2016: The Current & Future State of Independent Contractor Compliance & Usage2016: The Current & Future State of Independent Contractor Compliance & Usage
2016: The Current & Future State of Independent Contractor Compliance & Usage
 
Which Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your Exposure
Which Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your ExposureWhich Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your Exposure
Which Gov't Agencies are Targeting Auto Dealers… and How to Reduce Your Exposure
 
HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019
HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019
HR Webinar: Immigration Changes and the Impact to Employers: 2018-2019
 
EEOC FCRA When Working With Temp or Contract Employees
EEOC FCRA When Working With Temp or Contract EmployeesEEOC FCRA When Working With Temp or Contract Employees
EEOC FCRA When Working With Temp or Contract Employees
 
Minimizing Risk within Your Organization by Auditing Your Employment Policies
Minimizing Risk within Your Organization by Auditing Your Employment PoliciesMinimizing Risk within Your Organization by Auditing Your Employment Policies
Minimizing Risk within Your Organization by Auditing Your Employment Policies
 
ABC, Empire State 2016 Legislative agenda
ABC, Empire State 2016 Legislative agendaABC, Empire State 2016 Legislative agenda
ABC, Empire State 2016 Legislative agenda
 
Not-for-Profit Compensation Controversies Continue to Add Fuel to the Fire
Not-for-Profit Compensation Controversies Continue to Add Fuel to the FireNot-for-Profit Compensation Controversies Continue to Add Fuel to the Fire
Not-for-Profit Compensation Controversies Continue to Add Fuel to the Fire
 
Architecture, Engineering & Construction Seminar - 2014
Architecture, Engineering & Construction Seminar - 2014Architecture, Engineering & Construction Seminar - 2014
Architecture, Engineering & Construction Seminar - 2014
 
Connecticut Automotive Retailers Association 2016 Dealer Symposium
Connecticut Automotive Retailers Association 2016 Dealer SymposiumConnecticut Automotive Retailers Association 2016 Dealer Symposium
Connecticut Automotive Retailers Association 2016 Dealer Symposium
 
The Defense Contractors
The Defense ContractorsThe Defense Contractors
The Defense Contractors
 
New York Times-Cracking Down On Contractors
New York Times-Cracking Down On ContractorsNew York Times-Cracking Down On Contractors
New York Times-Cracking Down On Contractors
 

Mehr von Populus Group

Five Rules for Transforming Business Relationships
Five Rules for Transforming Business RelationshipsFive Rules for Transforming Business Relationships
Five Rules for Transforming Business RelationshipsPopulus Group
 
Insurance 101: What Insurance to Require, Why and How Much?
Insurance 101: What Insurance to Require, Why and How Much?Insurance 101: What Insurance to Require, Why and How Much?
Insurance 101: What Insurance to Require, Why and How Much?Populus Group
 
Access to Niche Foreign National Talent Under a Trump Presidency
Access to Niche Foreign National Talent Under a Trump PresidencyAccess to Niche Foreign National Talent Under a Trump Presidency
Access to Niche Foreign National Talent Under a Trump PresidencyPopulus Group
 
IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...
IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...
IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...Populus Group
 
Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...
Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...
Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...Populus Group
 
Legal, Compliance and Co-Employment - Keeping Up with Industry Regulations
Legal, Compliance and Co-Employment - Keeping Up with Industry RegulationsLegal, Compliance and Co-Employment - Keeping Up with Industry Regulations
Legal, Compliance and Co-Employment - Keeping Up with Industry RegulationsPopulus Group
 
Background Screening and the Impact in the Workplace
Background Screening and the Impact in the WorkplaceBackground Screening and the Impact in the Workplace
Background Screening and the Impact in the WorkplacePopulus Group
 
Best Practices for Establishing and Running an Effective Veteran Hiring Progr...
Best Practices for Establishing and Running an Effective Veteran Hiring Progr...Best Practices for Establishing and Running an Effective Veteran Hiring Progr...
Best Practices for Establishing and Running an Effective Veteran Hiring Progr...Populus Group
 
Welcome to Nashville - PG Customer Summit 2016
Welcome to Nashville - PG Customer Summit 2016Welcome to Nashville - PG Customer Summit 2016
Welcome to Nashville - PG Customer Summit 2016Populus Group
 
Managing Your Global Contingent Workforce
Managing Your Global Contingent WorkforceManaging Your Global Contingent Workforce
Managing Your Global Contingent WorkforcePopulus Group
 
Current & Future Trends in the Human Capital Management Industry
Current & Future Trends in the Human Capital Management IndustryCurrent & Future Trends in the Human Capital Management Industry
Current & Future Trends in the Human Capital Management IndustryPopulus Group
 

Mehr von Populus Group (11)

Five Rules for Transforming Business Relationships
Five Rules for Transforming Business RelationshipsFive Rules for Transforming Business Relationships
Five Rules for Transforming Business Relationships
 
Insurance 101: What Insurance to Require, Why and How Much?
Insurance 101: What Insurance to Require, Why and How Much?Insurance 101: What Insurance to Require, Why and How Much?
Insurance 101: What Insurance to Require, Why and How Much?
 
Access to Niche Foreign National Talent Under a Trump Presidency
Access to Niche Foreign National Talent Under a Trump PresidencyAccess to Niche Foreign National Talent Under a Trump Presidency
Access to Niche Foreign National Talent Under a Trump Presidency
 
IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...
IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...
IC Compliance, One Year Later: New Legislation, New Case Law and a New Admini...
 
Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...
Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...
Global Engagement in the Gig Economy: Freelancers, Independent Contractors an...
 
Legal, Compliance and Co-Employment - Keeping Up with Industry Regulations
Legal, Compliance and Co-Employment - Keeping Up with Industry RegulationsLegal, Compliance and Co-Employment - Keeping Up with Industry Regulations
Legal, Compliance and Co-Employment - Keeping Up with Industry Regulations
 
Background Screening and the Impact in the Workplace
Background Screening and the Impact in the WorkplaceBackground Screening and the Impact in the Workplace
Background Screening and the Impact in the Workplace
 
Best Practices for Establishing and Running an Effective Veteran Hiring Progr...
Best Practices for Establishing and Running an Effective Veteran Hiring Progr...Best Practices for Establishing and Running an Effective Veteran Hiring Progr...
Best Practices for Establishing and Running an Effective Veteran Hiring Progr...
 
Welcome to Nashville - PG Customer Summit 2016
Welcome to Nashville - PG Customer Summit 2016Welcome to Nashville - PG Customer Summit 2016
Welcome to Nashville - PG Customer Summit 2016
 
Managing Your Global Contingent Workforce
Managing Your Global Contingent WorkforceManaging Your Global Contingent Workforce
Managing Your Global Contingent Workforce
 
Current & Future Trends in the Human Capital Management Industry
Current & Future Trends in the Human Capital Management IndustryCurrent & Future Trends in the Human Capital Management Industry
Current & Future Trends in the Human Capital Management Industry
 

FULL SLIDES 2016: The Current & Future State of Independent Contractor Compliance & Usage

  • 2. DENIS S. KENNY ATTORNEY, SCHERER SMITH & KENNY LLP 2016: THE CURRENT & FUTURE STATE OF INDEPENDENT CONTRACTOR COMPLIANCE & USAGE
  • 3. AGENDA • Effects and implications of U.S. Department of Labor Administrator’s Interpretation No. 2015-1 • Misconceptions that lead to misclassifications: “on demand companies” in the “sharing” or “gig” economy • Consequences and ways to reduce risks of misclassification • Prognostication for 2016 and beyond. . .
  • 4. EVOLVING & DIVERSE LEGAL STANDARDS No Single Federal or California Test Federal Tests Federal Common Law Test NLRA IRS Test FICA/FUTA, IRCA Economic Realities Test FLSA/ADEA/Title VII/ADA Hybrid Test Title VII EEOC Test Title VII, ADA, ADEA California Tests California Borello Test CA FEHA, CA Family Rights Act, CA Labor Code, CA Workers Comp Act, Agricultural Labor Relations Act California Common Law Test California UI, SDI, FTDI, Payroll Tax Employment Development Department (EDD) Test California UI, SDI, FTDI, Payroll Tax Tests in Other States IRS Test 24 states and District of Columbia ABC Rule 19 states
  • 5. NEW WAGE & HOUR ADMINISTRATOR’S INTERPRETATION • On July 15, 2015, United States Department of Labor, Wage and Hour Administrator issued Administrator’s Interpretation No. 2015-1 (“Interpretation”). • Interpretation’s message is clear: most workers are employees under FLSA, not independent contractors.
  • 6. INTERPRETATION (cont’d) • Test for Employee/Independent Contractor still the same: o (a) FLSA defines “employ” broadly to include “to suffer or permit to work”* o (b) Multi-factor “economic realities” test *Note: “to suffer or permit” encompasses workers that might be beyond common law control of employer
  • 7. INTERPRETATION (cont’d) • Six-Factor economics realities test: This test looks to whether worker is economically dependent on or independent of the hiring company (the “Company”). Factors: o Extent to which work performed is an integral part of the Company’s business; o Worker’s opportunity for profit or loss depending on worker’s managerial skill; o Extent of the relative investments of the Company and worker; o Whether the work performed requires special skills and initiative; o Permanency of the relationship; and o Degree of control exercised or retained by the Company. • Courts looks to economic reality rather than technical concepts.
  • 8. EXAMPLE – INTERNET & CABLE INSTALLERS Scantland v. Jeffry Knight, Inc., 721 F.3d 1308 (11th Cir. 2013) • Claim: FLSA overtime claim by current and former internet and cable installers alleging they were misclassified as ICs. • Trial and Appellate courts applied the same economic reality test with differing results. o Trial court found installers were ICs, finding that the relationship is a typical outsourcing arrangement. (Scantland v. Jeffry Knight, Inc. (M.D. Fla. March 29, 2012) 2012 WL 1080361.) o Appellate Court held 4 factors weighed strongly in favor of employee status and 2 factors weighed only very slightly in favor of IC status; thus, finding IC misclassification.
  • 9. SCANTLAND (cont’d) APPELATE COURT ANALYSIS “[P]oints strongly toward employee status” Facts Control Installers were required to report arrival and departure from assigned jobs, received constant site checks, could not decline jobs without threat of termination, and were subject to uncontestable fines. Opportunity for Profit or Loss Company determined rates the installers were paid. Permanency and Duration One-year terms, automatically renewed, and terminable with 30-day notice. Integral Part of Company’s Business Company was in the installation and repair service business, and the installers provided that service. “Weakly” Favors IC Status Facts Investment in Equipment or Materials Installers required to have vehicles, auto insurance, tools and safety equipment, and commercial general liability insurance, but most installers already had own vehicles and purchased specialty tools directly from the Company via “payroll” deductions. Special Skills Installers were skilled workers, but Company provided those skills via unpaid trainings and unpaid ride-alongs.
  • 10. MISCONCEPTIONS • “The worker wants to be an independent contractor.” • “The worker created a LLC or S-Corp to do business with us.” • “We have a written contract.” • “The worker only performs occasional services for us.” Reality: Classification is a legal determination that parties cannot displace by a written contract. “Form over substance” will not be allowed.
  • 11. WHY IS THIS TOPIC IMPORTANT RIGHT NOW? Shifting Focus • Historically misclassification has not been a huge area of focus • Recession resulting in more businesses using ICs • Tax deficit at state and federal level • Estimated tax loss due to underreporting of employment taxes is $54B with an estimated over $2.7B due to misclassification (Treasury Inspector General 2013 Report). RESULT: Focus on misclassification and enforcement • Increased legislation at federal and state level • In California in 2011, SB 459 “deputized” state EDD, WCAB, UIAB, etc. (Labor Code §§ 226.8, 2753 regarding sliding scale of penalties for “willful” misclassifications). • Inter-agency (state and federal) cooperation is growing. • Upsurge of audits • Each budget since 2011 submitted to Congress has included $10M for DOL to distribute to state agencies and almost $4M for DOL enforcement. • For FY 2016, one of DOL’s Wage and Hour Division’s “Key Enforcement Initiatives” will be “Addressing the Fissured Workplace,” i.e., IC relationships and other business models.
  • 12. LESSONS FROM THE UBER & LYFT CLASS ACTIONS Nature of Claims • Class of thousands of drivers from both ridesharing start-ups claim they should have been classified as W-2 employees rather than 1099 independent contractors (“ICs”) and, in turn, claim they are owed overtime, vacation/sick leave, healthcare insurance and other employee-related rights and benefits (including workers’ compensation insurance).
  • 13. THE UBER & LYFT CLASS ACTIONS: THE FACTS & ANALYSIS “On Demand” companies in the “Sharing Economy” • Both Uber and Lyft allow drivers to make themselves available for work whenever they want and allow them to accept or reject rides once they have been selected – both factors that favor IC status. • On the other hand, both companies expressly reserve the right to terminate the drivers’ relationship or to terminate their use of the company app if a driver’s customer ratings are deemed unacceptably low or for any reason at all. Both courts noted that this factor is a key one favoring employee status. • U.S. District Judge Edward Chen, who heard the Uber suit, voiced skepticism about the firm’s claims that it wasn’t an employer, but rather a technology company that licenses its app to drivers given that Uber sets fares and screens and fires drivers. • U.S. District Judge Vince Chhabria, who heard the Lyft case, said that the current employment test for classifying workers is “woefully outdated” when applied to app-enabled firms such as Lyft; consequently, misclassification “will often be for juries to decide.”
  • 14. LYFT LITIGATION • On January 26, 2016, Lyft and its drivers reached a preliminary settlement, subject to Court approval: $12.25M settlement for estimated reimbursement claims, among nonmonetary components, but the preliminary settlement did not address the classification issue. • On April 7, 2016, Judge Chhabria rejected the preliminary settlement because the monetary settlement short-changed the drivers. • “[N]othing in this agreement would prevent the California Legislature (or Congress) from offering a legislative solution to the problem of how to classify workers in the ‘gig economy.’”
  • 15. UBER LITIGATION • Settlement imminent in California litigation! • As of April 21, 2016, subject to Judge Chen’s approval, the settlement provides that Uber will pay $84M to the plaintiffs PLUS $16M if Uber goes public and valuation increases 1.5x of Dec. 2015 valuation within 1st year of IPO, and drivers remain ICs, not employees, among other provisions. • Repeat: Drivers remain independent contractors. • Comment: This proposed settlement is not binding on pending lawsuits in states like Arizona, Florida, and Pennsylvania, but could signal a win for the “gig economy.”
  • 16. CONSEQUENCES OF MISCLASSIFICATION Everyone is a potential adversary if you misclassify a worker as an independent contractor. • Government agencies • Plaintiff lawyers • Customers • Unions • Workers’ compensation carrier • Contractors themselves • New! National Labor Relations Board (“NLRB”) • On April 18, 2016, Los Angeles office issued an unfair labor practice complaint against Intermodal Bridge Transport, alleging NLRA violations for misclassification.
  • 17. CONSEQUENCES OF MISCLASSIFICATION What Triggers an Audit Unemployment, Worker’s Comp, Discrimination/Harassment/Retaliation claims • A W-2 and 1099 issued for the same worker by the same company in the same year • Unmatched 1099 to individual income tax reporting • “Disgruntled Worker” can anonymously request a misclassification review (IRS Form SS-8) • Class action lawsuits • IRS “Whistleblower” Awards Program: Tax Relief and Health Care Act of 2006, 26 USC Section 7623(b)
  • 18. POSSIBLE PENALTIES & COLLATERAL DAMAGES Overview of Possible Penalties and Collateral Damages • Total of Unpaid Taxes • Penalties • Fines • Punitive Damages • Compensatory Damages • Liquidated Damages • Equitable Relief • Back-Pay • Reinstatement • Expenses including attorneys’ fees and costs (even a “win” will be costly!)
  • 19. SAMPLE LITIGATION BUDGET: SINGLE WORKER MISCLASSIFICATION CASEPRETRIAL TASKS: Hours Rate Total I. PLEADINGS A. Answer to Complaint 1.5 $355.00 $532.50 II. PRE-TRIAL DISCOVERY A. Draft and Respond to Written Discovery 45.0 $295.00 $13,275.00 10.0 $415.00 $4,150.00 B. Depositions > Plaintiff 15.0 $355.00 $5,325.00 > Plaintiff Co-Worker(s) 15.0 $355.00 $5,325.00 > Defend Owner 15.0 $355.00 $5,325.00 > Defend "Supervisor" 15.0 $355.00 $5,325.00 C. Other Analysis of Discovery and Summary 15.0 $355.00 $5,325.00 III. DISPOSITIVE MOTIONS A. Possible Motion for Summary Judgment / Summary Adjudication 50.0 $295.00 $14,750.00 10.0 $415.00 $4,150.00 IV. EXPERT FEES TBD V. MEDIATION A. Including Brief, Preparation, and Mediation 30.0 $355.00 $10,650.00 VI. MISCELLANEOUS A. Attend Status Conferences; Status Calls and Letters; Telephone Calls; Review and Analysis of Case-related Documents/Correspondence. 40.0 $355.00 $14,200.00 PRE-TRIAL BUDGET $88,332.50
  • 20. SAMPLE LITIGATION BUDGET: SINGLE WORKER MISCLASSIFICATION CASE VII. TRIAL AND PREPARATIONS A. Preparing Witnesses 20.0 $355.00 $7,100.00 B. Summarizing Depositions 40.0 $295.00 $11,800.00 C. Preparing Evidence Including Exhibits 20.0 $295.00 $5,900.00 D. Research of Discreet Legal Issues 20.0 $295.00 $5,900.00 E. Preparing Jury Instructions / Special Verdict Form / Jury Questionnaire 15.0 $295.00 $4,425.00 F. Trial (Two Lawyers for 7 Days at 10.0 Hours Per Day) 140.0 $355.00 $49,700.00 TRIAL BUDGET $84,825.00 TOTAL LITIGATION BUDGET $173,157.50 Hourly Rates: DSK: $415.00 Associate: $295.00 Blended Rate $355.00
  • 21. MITIGATING YOUR RISKS Basic Steps for Engaging Independent Contractors • Review your IC agreements • Refine your benefit plans • Use specific “exclusion” clauses • Educate your company as to methods of correct classification
  • 22. THE PRICE TO PAY FOR “VICTORY” Suing the U.S. Dep’t of Labor – Gate Guard Services, L.P. v. Perez, 792 F.3d 554 (5th Cir. 2015). • Facts: Company contracts with oil companies to provide gate attendants for remote drilling sites and classified these gate attendants as ICs. DOL was obstructionist and unprofessional in how it investigated this matter and litigated this case. • Lawsuit: Company sued DOL seeking declaration that it is complying with FLSA in classifying its gate guards as ICs. DOL filed a counter-action for misclassification-related back wages and injunctive relief. • District Court concluded that government’s position that gate attendants are employees (not ICs) was “not substantially justified,” finding for employer and awarding over $565K in attorney’s fees. • Appellate Court awarded heightened fees because DOL’s conduct and ignorance of controlling precedent demonstrated DOL “acted in bad faith, vexatiously, wantonly, or for oppressive reasons”; DOL settled for $1.5M.
  • 23. MITIGATING YOUR RISKS How to Evaluate: Proving conduct is not “willful” • Create a consistent, centralized process for evaluating IC status o Evaluate everyone o Use consistent standards o Develop questionnaires for both managers and workers to complete o Document your analysis of why the work and the worker are suitable for IC classification • Consult with experienced labor and employment counsel
  • 24. PROGNOSTICATION: WHAT MIGHT THE FUTURE HOLD The California 1099 Self-Organizing Act (AB 1727) • California State Assemblywoman Lorena Gonzalez (D-San Diego) has authored AB 1727, which allows ICs who provide services through hosting platform(s) to have certain rights enjoyed by employees. • Examples: right to organize, negotiate with hosting platforms, or engage in activities for group negotiations or other mutual aid or protections. • Status: On April 20, 2016, AB 1727 has been referred to the Assembly Judiciary Committee.
  • 25. PROGNOSTICATION: WHAT MIGHT THE FUTURE HOLD H.R. 2483: Independent Contractor Tax Fairness and Simplification Act of 2015 • Amends the Internal Revenue Code of 1986 to provide standards for determining employment status. Further, H.R. 2483 would prohibit retroactive assessment of employment tax and prohibit issuance of Treasury Regulations with respect to employment status for employment tax purposes. • Establish “safe harbor” for Company if worker meets 4 factors: (1) incur significant financial responsibility for providing/maintain equipment/facilities, (2) incur unreimbursed expenses/income since compensation related to sales or output, (3) is compensated on factors relating to work, and (4) substantially controls means and manner of work unless contractually specified. • Limited impact: Bill focuses on industries where services provided on scheduled rates, not hours, for example truckers and messenger couriers. • Status: On May 20, 2015, H.R. 2483 was assigned to a congressional committee, but, as one commentator noted, federal legislation is not likely before 2016 election.
  • 27. Please feel free to email or call me with any follow-up questions or comments about this presentation. Thank you, Denis Sullivan Kenny (415) 433-1099 140 Geary Street, 7th Flr., San Francisco, CA 94108 denis@sfcounsel.com