When is a worker considered an Independent Contractor?

Using independent contractors can be a good way for companies to meet their business goals. However, doing so may put you at risk as the U.S. Department of Labor investigates many instances of contractors as employees.

Addressing this misclassification has become a key government priority. DOL spokeswoman Mary Beth Maxwell recently called “the misclassification of workers as a serious problem for affected employees and employers and to the company.” Additionally, the DOL’s Wage and Hour Division continues to focus with great urgency on misclassification by launching many related investigations and lawsuits.

If your company relies on independent contractors, be proactive in auditing how you use them. Once you have determined the classifications, be sure to update independent contractor agreements. Although these agreements do not conclusively establish independent contractor status, these agreements are an important factor in determining who can be classified as an independent contractor.

The agreements should establish some of the following for the worker and you should enter into a new agreement for each project:

  • Uses own equipment and tools
  • May perform services for other businesses
  • Can assign tasks to others
  • Provides his/her own liability insurance and benefits
  • Not eligible for employee benefits
  • Has his/her own business and tax ID number
  • Has the opportunity to receive bonuses or chargebacks

Do not provide independent contractors with job descriptions, business cards, computers, office space or training.

No single factor will determine the outcome of a misclassification inquiry and every work relationship may be assessed differently. But most federal judges apply the following test to determine if a worker is an employee or an independent contractor.

  • Does the worker or company control the details of the work?
  • Does the worker or company supply the equipment needed to do the work?
  • Does the worker have an opportunity to make a profit or suffer a loss in performing the work at issue?
  • Is the relationship between the company and worker permanent or temporary, and is the work of an “on again/off again” nature?
  • Does the job require worker skill and initiative?

An additional way to help create a good-faith defense and show that the business practices comply with the FLSA is to perform an FLSA classification audit.
Source: SHRM.org

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Debbie Strahle, Partnership Manager

Be cautious when hiring or firing employees due to ADA protections

A new and increasingly utilized protection under the Americans With Disabilities Act (ADA) has been defined as “Associational Discrimination.” The Equal Employment Opportunity Commission explains it this way:

“The association provision of the ADA prohibits employment discrimination against a person, whether or not he or she has a disability, because of his or her known relationship or association with a person with a known disability. 

“This means that an employer is prohibited from making adverse employment decisions based on unfounded concerns about the known disability of a family member, or anyone else with whom the applicant or employee has a relationship or association.”

Ensure hiring or firing is not associated with disability

Employers need to be cautious when deciding not to hire an applicant or terminating employees. They must ensure that the decision is not associated with knowledge of an employee’s family, friend or partner with a disability that they perceive would require the employee to miss work, for example.

An employee who is eligible for the Family and Medical Leave Act (FMLA) is granted legal rights to take leave to care for a family member with medical certification. However that requirement only applies to employees who have been with the company for at least one year (cumulatively) and have worked 1,250 hours in the previous 12 months.

Under the ADA, any employee, no matter the length of service, is eligible for ADA protections. Even an applicant for an open position has these protections.

Under the ADA, an employer who makes an adverse employment action could be charged with “associational discrimination.” This could include failing to hire an applicant or terminating a current employee due to an assumption that the employee will miss time from work to care for a family member that has a disability.

An employee must be able to perform essential functions of a job. However, recent court cases have also held that  an employee that does not fall under certain attendance or tardiness policies (an exempt employee, for example) cannot be held responsible if that  employee regularly starts the work day late due to caring for a family member with a disability.

Disciplining or terminating an employee who is not subject to attendance or tardiness policies could result in an associational discrimination charge.

Structure policies and handbook to limit exposure

Structure your company handbook and policies to limit exposure to associational discrimination claims and to train hiring managers to avoid decisions that leave the company vulnerable.

Additionally, it is imperative to review all factors when terminating employees. Consider the following points:

  • Was the employee qualified for the job at the time of the adverse employment action?
  • Was (s)he subjected to an adverse employment action?
  • Did the employer know at the time that (s)he had a relative or associate with a disability?
  • Did the adverse employment action occur under circumstances raising a reasonable inference that the relative’s or associate’s disability was a determining factor in the employer’s decision?

As always, contact your BCN Services Partnership Manager to arrange manager training, handbook or policy development and/or guidance in questionable employment situations.

 

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Jeff Walsh, Partnership Manager

Pregnant employee may entitled to protections under the ADA

In 2008 the Americans with Disabilities Act (ADA) was amended. The Americans with Disabilities Act Amendments Act (ADAAA) significantly expanded protections under the ADA. The definition of disability was expanded to include temporary impairments.

If an active impairment substantially limits a major life activity, the employee is protected by the ADAAA. The ADAAA has also expanded the definition of “Major Life Activity” to include things like digestive function or circulatory function. Other things like lifting, standing or bending can be considered major life activities.

Many common conditions related to pregnancy may qualify and require an employer to engage the employee to seek reasonable accommodations to allow the pregnant employee to continue to work or to allow her unpaid leave of absence rather than losing her job. This applies to employees that are not eligible for Family and Medical Leave Act or those that have already exhausted their FMLA eligibility.

Take these two examples:

  • A pregnant employee has severe nausea (morning sickness) and can’t get to work for her morning shift. As a digestive function issue that is severe enough to impact a major life activity (in this case working), the employee may be entitled to an altered schedule, reduced hours, telecommuting, or unpaid leave of absence while the condition exists.
  • A pregnant employee is told by her doctor that she can’t lift more than five pounds. Lifting is a major life activity so the employee may be entitled to accommodation such as light duty work, a temporary transfer to a job that does not require lifting or an unpaid leave of absence.

There are many other possibilities of conditions affecting a pregnant employee that can be considered severe, even if short term. If you are not sure whether a condition may be protected under the ADAAA, contact BCN services for guidance.

3 key things employers need to remember

First, if an employee indicates that they cannot perform their job due to some impairment, they do not have to use the term “ADA” or even request an accommodation. If their statement leads you to believe they may have an impairment, you need to determine if this is a potential ADA situation.

If so, it is imperative to engage the employee in a dialogue to discuss the situation and determine if there are any possible accommodations that are not an undue burden to the employer. Remember that pregnancy is a limited duration so, if nothing else, an unpaid leave of absence will not likely be considered an undue burden to the employer.

Secondly, the employer is entitled to determine whether an accommodation is a medical necessity.  But be aware that the ADA limits who may contact an employee’s physician.

For example, the employee’s supervisor is prohibited from contacting the physician. Don’t risk a violation of the ADA by contacting the employee’s physician. Your BCN Services Partnership Manager or Human Resources Administrators will be able to assist you in these situations. The HR department at BCN Services has the knowledge and experience to make those communications for you to avoid any claims of interference in the employee’s ADA case.

Third, there may be more than one accommodation that could allow the employee to continue working. During the interactive dialogue, you are not required to accept the employee’s suggestion. Multiple options providing for the same outcome allow the employer to determine which accommodation should be provided.

ADAAA provisions are being revised by court decisions on a regular basis. This new legislation will continue to be interpreted by courts and will impact employers. BCN Services continues to monitor legislative changes and court rulings to provide our clients with best practice guidance.

If you have questions about whether a pregnant employee can perform essential job functions or needs accommodations, BCN Services is always available to provide advice and guidance.

 

 

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Jeff Walsh, Partnership Manager

Pay attention to regulations for employee breaks and travel

Federal law doesn’t require employers to provide breaks for rest or meals.  However it does regulate how breaks are provided and compensated.  State law also often provides additional employee protections regarding break time requirements.

Most federal regulations derive from the Fair Labor Standards Act (FLSA), which applies to all employers in defined areas, regardless of how many employees the employer has. This is different than many federal laws that cover workplace standards.  The FLSA does not protect many salaried employees.

Breaks & meal periods:  When employers offer short breaks between 5 and 20 minutes, federal law considers these compensable work hours included in the sum of hours worked and considered when determining overtime. Unauthorized extensions of authorized work breaks need not be counted as hours worked when the employer has expressly and unambiguously communicated to the employee that:

  • the authorized break may only last for a specific length of time,
  • any extension of the break is contrary to the employer’s rules, and
  • any extension of the break will be punished.

Bona fide meal periods (typically lasting at least 30 minutes), serve a different purpose than coffee or snack breaks and are not compensable as work time.

Sleeping time and certain other activities:  An employee on duty for less than 24 hours is working even though he/she is permitted to sleep or engage in other personal activities when not busy. An employee on duty for 24 hours or more may agree to exclude bona fide, regularly scheduled sleeping periods of not more than 8 hours from hours worked. This is provided that adequate sleeping facilities are furnished by the employer and the employee can usually enjoy an uninterrupted night’s sleep. No reduction is permitted unless the employee sleeps a minimum of 5 hours.

Lectures, meetings and training programs:  Attendance at lectures, meetings, training programs and similar activities need not be counted as working time, but only if four criteria are met: it is outside normal hours, it is voluntary, not job related, and no other work is concurrently performed.

Home-to-Work Travel: An employee who travels from home before the regular workday and returns to his/her home at the end of the workday is engaged in ordinary home-to-work travel, which is not considered work time.

Home-to-work on a special one-day assignment in another city: An employee who regularly works at a fixed location is given a special one-day assignment in another city and returns home the same day. The time spent in traveling to, and returning from, the other city is considered work time. However, the the employer may deduct, or not count the time that the employee would normally spend commuting to the regular work site.

Travel that is all in a day’s work: Time spent by employees traveling as part of their principal activity, such as driving from job site to job site during the workday, is work time and must be counted as hours worked.

Problems arise when employers fail to recognize and count certain hours worked as compensable hours. For example, an employee who eats lunch at his/her desk and regularly answers the telephone and refers callers is working. This time must be counted and paid as compensable hours worked because the employee has not been completely relieved from duty.

These are some general guidelines.  If you have additional questions or need help for your individual business situation, please contact your BCN Services Partnership Manager.

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Debbie Strahle, Partnership Manager

More states, cities, and counties enact ‘ban-the-box’ laws

There are now 13 states and 66 cities restricting employers from inquiring about an applicant’s previous criminal background on job applications.

Most recently, the District of Columbia, Illinois, and New Jersey have passed “ban-the-box” laws.  Ban the box references the check box found on employment applications that asks an applicant if he or she has ever been convicted of a crime.

A common misconception is that if an employer removes the check box, they are abiding by the law.  The law more specifically restricts employers from asking applicants about their background until an interview or conditional job offer has been made to the applicant.

No two laws are exactly the same. Each state, county and city that has enacted the law has different restrictions and criteria. For some states, the law is for only for public sector employers.  It is important to check the law in each city or state that impacts your company.

The 13 states with statewide ban-the-box laws as of September 2014 include: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New Mexico, Rhode Island and also Washington D.C.  States that have not enacted such a law may have restrictions on how and when background checks can be conducted or may have cities or counties with laws affecting businesses in their jurisdictions.

If you have additional questions about ban-the-box policies in various state, city and/or county or other HR matters, please contact your BCN Services Partnership Manager. Email us at hr@www.bcnservices.com call 734-994-4100 or contact us here.

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Kateyln Walzbecker, Partnership Manager

Most interns must be paid, but federal law allows certain exceptions

Note: This article was updated with new laws and rules in 2019. Read the post here

The summer internship season is upon us and if you’re considering bringing an intern onboard you may be asking yourself whether or not you must pay him or her.

Generally speaking, internships in the for-profit business sector are most often viewed by the U.S. Department of Labor and the Internal Revenue Service as employment, and therefore, the intern must receive at least minimum wage and overtime for hours worked over 40 in a workweek.

There are some exceptions to this general rule.  The Department of Labor has set forth a test with six criteria that should be considered when determining whether or not an intern should be paid:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under the close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern and, on occasion, its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. (Source: DOL Fact Sheet #71)

If all of the above rules are met, under the Fair Labor Standards Act there would be no employment relationship and minimum wage and overtime regulations would not apply.

Because this exclusion does not apply in all circumstances, we encourage you to contact BCN Services at 1-800-891-9911 for help in determining whether or not your summer intern should receive regular wages.

 

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Alicia Jester, Manager Benefits and Payroll

Though employees generally don’t understand labor law, many assume that they do

Frequently we hear employees claim that the “Labor Board” requires the employer to pay for lunches, provide paid vacations, sick days or other benefits. They also may claim that you cannot require them to work overtime hours.

Federal requirements for employers are regulated by the Fair Labor Standards Act (FLSA). These federal requirements are actually quite limited. As an employer, the FLSA requires employers to pay their employees minimum wage and overtime at the rate of time and a half the employee’s regular rate of pay.

Under federal law employers are NOT required to provide:

  • Vacations
  • Holidays
  • Sick Pay
  • Premium pay for weekend, holiday or shift work (beyond the required time and one-half for hours worked over 40 in one week)
  • Pay raises (unless to comply with minimum wage requirements under the law)
  • Other fringe benefits, except as required under the Affordable Care Act
  • Discharge notices, reason for discharge or immediate payment of wages upon termination.
  • Lunches (paid or unpaid)
  • Breaks  (however, if you provide breaks of 20 minutes or less that time is compensable)

Additionally the FLSA does not limit the number of hours you can schedule or require an employee to work (either daily or weekly, including overtime) as long as you pay time and one-half for time worked in excess of 40 hours. Note: this only applies to employees 16 years of age or older.

Some cities and states are more restrictive

That said, many states, and some cities have passed or are considering legislation that will add requirements for employers. For example, many states and cities have higher minimum wage rates than the federal government.

Most states have youth labor laws that limit the number of hours that minors may work. Some states require payment of final wages immediately upon termination. A few states require paid breaks and/or lunches and some states require overtime (time and one-half) for hours worked in excess of 8 hours per day rather than 40 hours per week.

Several cities and a few states have passed paid sick leave requirements.

Additionally, for those working under federal contracts, an Executive Order from the President has raised minimum wage for employees covered under those contracts. In cases where there is a difference between federal and state laws, the law that benefits the employee will always take precedence.

There continue to be changes that may impact employers on national and state and local levels. BCN Services monitors the ever-changing scope of legal requirements for our clients and will keep you apprised of anything that impacts your business.

If you have specific questions regarding employer’s requirements under federal, state or local government regulations, please contact your Partnership Manager. If you are an employer that does not currently work with us, please contact us for assistance or more information.

 

 

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Jeff Walsh, Partnership Manager

Be prepared for new overtime rule affecting Direct Care Workers

On September 17, 2013, the U.S. Department of Labor issued its final rule regarding direct care workers. The change effectivy extends overtime protections to this group.

These workers, who provide essential in-home care for people who are elderly, injured, disabled, or suffering from illness, are currently exempt from the overtime rule of time-and-one-half of regular hourly wages for any hours worked over 40 in a standard, 7 day work week.  The new ruling will take effect Jan. 1, 2015.

Ruling expected to affect 1.9 million workers

This ruling is widespread, affecting an estimated 1.9 million U.S. workers who provide custodial care to those people dependent on their services.  “Direct care workers play a critical role in ensuring access to high-quality home care that many people need in order to remain healthy and independent in their communities, and they should be compensated fairly for this important work.” said U.S. Secretary of Health and Human Services Kathleen Sebelius in a news release announcing the change.  “We will continue to engage with consumers, states, advocates and home care providers in the implementation of this rule to help people with disabilities, older adults and their families receive quality, person-centered services,”

The DOL set the effective date for this ruling well in advance to allow third-party home care agencies enough time to adjust their staffing levels where needed and implement new policies regarding overtime scheduling.  Not only will home care agencies and their employees be affected by the ruling, consideration must also be given to those people who make use of this very important service which, in many cases, allows them to lead independent lives.

In order for agencies to remain profitable (or for non-profit agencies, be able to continue with the services they provide), they may need to limit total hours worked per week for many employees who are currently providing custodial care to one or more persons more than 40 hours per week.

Change affects continuity of care

Agencies may have to employ multiple staff members to serve each consumer to be able to provide continuity of care.  Many agencies rely on public funding to supplement payment for services.  No ruling has been given on public funding being increased to account for the increased hourly rate for overtime hours.  At this time, the same rate of payment that applies to regular hours will apply to any overtime hours worked, thus creating a shortage of funds for in home care agencies.

It is important to clarify that this ruling is directed towards those employees who work for home care agencies and other third-party employers to provide custodial care to consumers.  The ruling does not apply to in-home care workers who are employed directly by either the person requiring services, or that person’s family.  Overtime pay exemption will still apply to these workers after the Jan. 1, 2015 ruling takes effect.

The Department of Labor has created a new web portal with interactive web tools, fact sheets and other materials to help families, employers and workers understand the new requirements. These, along with information about upcoming webinars on the rule, are available at www.dol.gov/whd/homecare.

BCN Services partners with multiple in-home care agencies to provide their PEO services.  We are prepared to guide our clients, or other who would benefit from our direction, through these changes that will strongly impact a business’s operation and profit.  If your company needs help with this or other initiatives affecting your operation, contact us for assistance.  We’re here to help.

 

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Frank Lewandowski, Partnership Manager

Employers must know the rules for different kinds of work breaks

The Fair Labor Standards Act (FLSA) does not require employees (other than minors) receive any breaks, either paid or unpaid.  FLSA regulations outline only when breaks must be paid if they are offered at the employer’s discretion.

There is one exception with the implementation of the new federal Patient Protection & Affordable Care Act.  Under the FLSA, employers must now must provide nonexempt mothers with the time and space to express breast milk for one year after the birth of a child.  Few employers limit this right to nonexempt employees only, and many states have laws that that are stricter than the federal law.

The regulations divide breaks into two categories:  rest breaks and meal breaks.  In terms of payment, different rules apply depending on the type of break.

Rest breaks:  Regulations stipulate that an employer must pay workers if the period is 20 minutes or less. Breaks lasting five to 20 minutes are common and promote efficiency.

Meal breaks:  Regulations stipulate that ordinarily an employer must pay workers if the break is less than 30 minutes.  The regulations leave open the possibility that shorter meal periods may be noncompensable in special circumstances.  However, the burden is on the employer to prove that special circumstances apply for justifying the shorter break.

Keep in mind the regulations do not always fit today’s work place.  Sometimes it is hard to tell whether a break is to rest or to consume a meal.

For this reason it is not surprising that some U.S. Department of Labor (DOL) investigators, as a matter of enforcement, have taken the position that an employer must pay workers for all breaks that are less than 30 minutes.  By doing this, they don’t have to engage in a break-by-break analysis.

In such cases, the DOL’s position is inconsistent with its own regulations and case law.  But a 30-minute rule does avoid litigation over that issue.

Even if a meal break is 30 minutes it does not mean it automatically occurs without pay.  The employer must consider the length of the break and whether the employee is free from work.  If the employer requires the employee to stay in his or her work area, they may have to pay the employee, even if the break is 30 minutes or more.  Similarly, if the employer asks an employee to do any work during the break, the employee may have to be compensated for the entire break.

Source:   SHRM.org

 

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Debbie Strahle, Partnership Manager

Case study: Fair Labor Standards Act violation proves costly for business owner

It is important to train supervisors and managers so they know the minimum wage and overtime requirements under the Fair Labor Standards Act (FLSA) and when to report employee concerns and complaints.  This is the key to avoiding costly fines for the company AND its executives.

Nearly all employers are subject to the requirements of the FLSA, and the potential penalties for violations can be costly.

Case study against NY supermarket chain

Case in point is a wage-and-hour lawsuit against Gristede’s Foods, Inc. in which the company’s owner has been held personally liable for payments to employees in the case.

The New York supermarket conglomerate employed approximately 1,700 employees.  In 2004, a group of Gristede’s employees filed a class/collective action lawsuit alleging that the company failed to pay overtime under the FLSA.  The employees prevailed, and the parties entered into a multi-million-dollar settlement.

When Gristede defaulted on its payment obligations under the settlement agreement, the employees asked the U.S. District Court for the Southern District of New York to hold John Catsimatidis, the long-time owner, chairman and CEO of the company, personally liable for the payments.  The district court granted the employees’ request.

Catsimatidis appealed to the 2nd U.S. Circuit Court of Appeals, but the appellate court upheld the lower court’s decision, ruling that Catsimatidis was an employer under the FLSA and could be held personally liable for violations of the Act.

Owning company was active in running day-to-day

The 2nd Circuit Court made this decision regardless of the fact that Catsimatidis managed employees at a very high level.  For example, he wasn’t typically involved in the day-to-day operations of individual supermarkets.  He didn’t hire or fire most employees or set specific wages or schedules, and he had only limited interaction with the managers who handled those types of decisions.  It also didn’t matter that Catsmatidis wasn’t accused of making decisions that violated the FLSA.

Rather, the court concluded that Catsimatidis was an employer and he was active in running the company.  This included having contact with individual stores, employees, vendors, and customers and supervision of certain managerial personnel such as the chief financial officer and the chief operating officer.  The ruling concluded that this gave him ultimate responsibility for employees’ wages and signed paychecks.

In early December 2013, Catsimatidis petitioned the U.S. Supreme Court to hear the case and overturn this ruling of personal liability.  At this time, it is not known if the high court will hear the case.

With court decisions like these, corporate officers should be more motivated than ever to ensure that their companies and agencies are in compliance with the FLSA’s requirements.  Now is a good time to review and update your policies to ensure that employees understand their obligation to accurately report all time worked.  Contact BCN Services if you need to consult on any FLSA matters.

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Sue Kester, HR Manager