1. The Law Firm of Ekaterina Mouratova, PLLC
154 Grand Street
New York, NY 10013
Tel.: (212) 203-2406
Fax: (212) 279-9743
Email: info@mouratovalawfirm.com
www.mouratovalawfirm.com
Business Immigration
Intellectual Property Real Estate

2. Employment Law for Business
Owners
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

3. “Teamwork is the ability to work together
toward a common vision. The ability to direct
individual accomplishments toward
organizational objectives. It is the fuel that
allows common people to attain uncommon
results.”
- Andrew Carnegie

4. Employment “At-Will”
• In New York, employment is generally resumed to be “at-will”
• An employer has the right to discharge an employee at any time
for any reason, or no reason at all
• An employees is equally free to resign at any time without being
required to explain his/her decision
• Exception to “at-will” doctrine – when parties entered into a
written employment agreement, proving for a specific term of
employment and/or that termination can be only for cause
• Other writings that can change “at-will” status include codes of
conduct and employee handbook provisions
• When examining whether an employment was “at-will” or not,
courts examine the entire course of conduct between the parties. So
employers must be careful what they promise to employees in pre-
hiring negotiations
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

5. Claims for Unlawful Termination
• “At-will” employment does not protect employers against claims for
unlawful termination
• Discrimination – an employer cannot terminate or harass an employee
based on race, creed, nationality, age, disability, gender, sexual orientation,
or marital status
• Retaliation - an employer cannot terminate or harass an employee based
on employee’s opposition to a discriminatory practice, or participation in a
discriminatory investigation
• Wrongful termination in violation of other public policies - an employer
cannot terminate or harass an employee in violation of a public policy if
such public policy is embodied in a statute or constitutional provision
(e.g., cannot terminate if an employee reports wrongful conduct to
authorities, if an employee is absent due to jury service, takes medical
leave, etc.)
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

6. Other Major Employment Laws
• Equal Pay Act – requires that men and women receive “equal pay for
equal work”. However, an employer may establish a pay system based on
seniority, merit, quantity and quality of production, or any factor other than
sex
• The Family and Medical Leave Act – provides of up to 12 weeks of
unpaid leave during any 12-month period for certain medical and family
situations of an eligible employee. “Eligible employee” is the one who have
worked for an employer for a total of 12 month and have worked not less
than 1,250 hours during the previous 12 months. This act applies to
employers with 50 or more employees
• The Fair Labor Standards Act – prescribes standards for minimum
wage and overtime pay
• Taxation - employers must withhold income tax and pay unemployment
insurance, worker’s compensation insurance, Medicare, Social Security and
payroll taxes for every employee they have
• Work Place Safety Requirements – an employer must maintain a work
place safe for its employees to be present there and perform their functions
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

7. Independent Contractors vs.
Employees
• Properly classified independent contractors are not employees and therefore, are not
covered by the various federal and state employment laws
• Independent contractors are paid what they bargained for. They are not entitled to
minimum wages and overtime pay as employees are
• Independent contractors are not entitled to take medical or family leave with the
presumption that an employer will continue professional relationship with them once their
circumstances have changed as a case may be with employees
• An employer is not required to withhold income tax or pay unemployment insurance,
worker’s compensation insurance, Medicare, Social Security and payroll taxes for
independent contractors
• Relationships between an employer and independent contractor are temporary in nature and
are terminated once job is completed. There are much less chances that an employer may face
claims from independent contractor for unlawful termination based on discrimination,
retaliation, or in violation of other public policies
• Employers are vicariously liable for the actions of their employees committed within the
scope of the employment. In case of independent contractors, employers do not control the
manner of the job performance, accordingly they are not liable for the independent
contractor’s misconduct unless the independent contractor was engaged in an “ultra hazardous
activity” (that is most likely to cause damages to third-parties if proper precautions were not
taken)
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

8. Independent Contractors
• Sometimes it is more beneficial for employers to utilize independent contractors rather than
employees to cut labor costs without sacrificing productivity
• But improper classification of workers is risky and can lead to administrative audits,
assessments, fines, penalties and civil litigation
• An employer can be liable for back wages, overtime pay and the taxes it should have paid
• Courts and IRS have certain guidelines in determining whether a worker is an employee or an
independent contractor regardless how an employer presents him/her
• Due to employers’ misclassifications of their workers as independent contractors the Federal
government and state agencies lost billions of dollars in tax revenue in the past years. Now they
have renewed interest in collecting payroll taxes and enforcing employment laws against
companies that improperly classify their workers.
• The Federal and state agencies set much bigger budgets than before to increase audits of the
companies
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

9. Classifying Workers
• There is no bright line test to determine if an independent contractor
relationship exists. The combination of all aspects should be evaluated
• Generally, an individual is an employee if the employer controls his/her with
respect to the results of the work and the manner and means used to achieve
the results
• An independent contractor relationship typically exists where an employer
may only control or direct the result of the work and not the manner and
means by which the work is performed
• For example, an employee works from the employer’s space using
employer’s technology; an independent contractor organizes his/her working
conditions himself/herself and delivers the final product to the employer. The
employer does not control the time, place, and methods of independent
contractor’s performance
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

10. Signs of Employer-Employee
Relationship
• Employer’s control over individual’s activities (e.g. full-time service,
work schedule, meeting attendance, training, permission for absences)
• Employer’s control over the time, place, and method of performance
• The use of employer’s facilities, equipment and tools
• Employer’s payment of an hourly or other regular fee, rather than
commissions or per-job fee
• Employer-provided fringe benefits
• Reimbursement of expenses
• Employer’s determination of the rate
• Employer’s control over solicitation and billing of customers
• The individual’s failure to maintain indicia of an independent business,
such as business cards
• Employer’s restriction of the individual’s performance of services to
others
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

11. Independent Contractor Relationship
• Independent contractors (ICs) should be allowed entrepreneurial control over
the manner and means by which services are performed
• ICs should make important business decisions, including whether to hire
additional help, what equipment to use, where performs the services, when to
service other clients (can have multiple customers)
• ICs should be allowed flexible work time on specific projects of limited
duration (i.e. a client can set a deadline, but cannot direct the hours, during
which an IC must work)
• ICs should have the resources to operate as an independent business (e.g.
have own office or shop, business cards, websites, their own support personnel
and consultants)
• ICs should bear the risk of profit and loss
• ICs should be compensated for work completed rather than for hours worked
• ICs can perform the same services for multiple clients during the same
period of time they are working for a particular organization
© 2012 The Law Firm of Ekaterina Mouratova, PLLC

12. The Importance of Written Agreements
• Two main written documents are Employment / Independent Contractor Agreement
and Handbooks
• These documents are the first place attorneys turn to when contemplating a claim
against an employer
• These documents are the first place an employer’s counsel turns to when preparing a
defense
• An Employment / Independent Contractor Agreement should unambiguously state the
terms and conditions of the employment, including the reasons and procedures for its
termination
• An Employment Agreement should clearly define the scope of the employment
(remember, employees as well as independent contractors can bind a company to certain
liabilities when they act as company’s agents)
• Handbooks should address important policies of the company, including at-will
employment, anti-harassment, use of technology, vacation, timekeeping, confidentiality
matters, reasons and procedures for disciplinary actions, and many others
• Handbooks should be the primary source, to which employees turn with day-to-day
questions
• These documents should be prepared by a business attorney to ensure that all aspects of
the employment relationships are covered and various outcomes are foreseen
© 2012 The Law Firm of Ekaterina Mouratova, PLLC