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Publications
Contingent Employment Law
Manual
January ,2008- 8th Edition
Contingent
Employment
Case Law Supplement
January 2008-
8th Edition
Contingent Workforce Forms Book
January, 2008-
4th Edition
Making News
WORKER
MISCLASSIFICATION -
Employee or Independent
Contractor?
June 24, 2008 - Class action
notices were sent to more than 27,000 current and former Fed Ex
Ground Home Delivery drivers nationwide
in the class action lawsuit challenging Fed Ex's independent
contractor business model
under ERISA,
The Notice, approved by the
U.S. District
Court for the Northern District of
Indiana,
informs the drivers that they can stay in the lawsuit by taking
no action or they can "opt-out" of the case and retain
their individual right to sue separately. Any driver who "opts
out" would not participate if
the case results in an award or settlement for the plaintiffs.
It also explains that
drivers are protected from retaliation for participating
in the case. It says that FedEx is specifically
prohibited by law from asking
or telling the drivers to exclude themselves from the
action, or expressing
an opinion as to whether it is or is not in their best
interest to remain a class member or exclude him/herself from
this action. If FedEx tries to influence the drivers it will
violate the Court’s warning
Class action certification is still pending in
other states. In nine states Courts have
denied class certification.
Also pending;
Anfinson v. FedEx
Ground: the Washington State Court in Seattle has
scheduled an October trial date for the first case to go to
trial since the landmark Estrada case
California, where Fed-ex drivers were found to be employees,
not independent contractors. Class notice
was sent to nearly 350 drivers in Washington.
January 2008
- FedEx Faces
$319
Million Federal Tax Liability for 2002, could reach
over $1 Billion, plus possible state tax liabilities;
IRS and various State tax authorities also Investigate FedEx
contractor model
The IRS challenged the classification
of FedEx Ground workers, and imposed fines and penalties of $319
million (for 2002 alone). FedEx could face over One Billion dollars after the IRS
completes its investigation. The
IRS and various State taxing agencies are also
challenging Fed Ex's
independent contractor business model.
November
28, 2007 -
The California
Supreme Court upheld
the Trial Court's finding that Fed Ex Drivers are Employees, not Independent Contractors, and
thus entitled to receive
$11 Million in Damages.
Estrada v. FedEx Ground Package System
In this landmark case, the California Supreme Court refused to hear
Fed Ex's final appeal
to overturn the trial court’s finding that Fed Ex’s drivers
are
employees, not independent contractors.
This was the first
court ruling involving Fed-Ex drivers that held the drivers
were employees.
A federal judge
in Indiana
ruled in a
similar case that multiple lawsuits by FedEx Ground
drivers seeking to be classified as employees rather than
independent contractors can be combined in a class-action suit.
May 5, 2005 -
Fed Ex Drivers File Worker Misclassification
Class Action
Lawsuit in Federal Court in Boston, MA,
U.S. D. Ct., D. Mass.
Plaintiffs representing 17,000 Fed Ex drivers nationwide and in
Canada filed a worker misclassification class action lawsuit in
Federal Court in Boston,
charging Fed Ex with unlawfully misclassifying its drivers as
independent contractors rather than employees.
Plaintiffs had signed contracts stating that they were
independent contractors, but Fed Ex treated them like employees
by requiring them to comply with Fed Ex's rules and policies,
under its business model..
June 7, 2004
- In landmark case, the 10th Circuit Appeals Court
held that security
guards
could not bring
their overtime suit against defendant because they were
independent contractors,
not employees,
thus not protected by the Fair Labor Standard Act (FLSA).
(Johnson,
et. al. v. Unified Government of Wyandotte County/Kansas City,
Kansas and Housing Authority of
Kansas City,
June 7,
2004) (See Full case opinion in Case
Law Supplement)
The Court
based its
ruling
on five factors in
determining employee vs. independent contractor status. It found
that the defendant Housing
Authority had only a minimal degree of control over
plaintiff security
guards. (See full text of case in the Contingent
Employment Case Law Supplement. See summary in
the Contingent Employment
Law Manual).
March 8, 2004 - 5th Circuit Held that Contract
Employees Placed with Defendant Georgia Gulf were not Common
Law Employees, thus not Entitled to Employee Benefits
under ERISA.
(Landry,
et. al. v. Georgia Gulf.)
Defendant hired contract workers from various third
parties.
Plaintiffs
claimed they were eligible for employee benefits from Georgia
Gulf. They sued defendant claiming they were common law
employees and thus eligible for employee benefits under ERISA. The 5th Circuit affirmed the district
court's holding that plaintiffs were not common law
employees of defendant based on the traditional common law
factors test.
Details and analysis in the Contingent
Employment Law Manual.
January 26, 2004- 3rd Circuit Finds Employer Liable to IRS for
certain Unpaid
Employment Taxes; Court holds that IRS Properly Classified Worker as an Employee. (Nu-Look
Design, Inc. v. Commissioner of IRS, 3rd Circuit Court of
Appeals.
The 3rd Circuit upheld
the IRS's
classification of a worker as an employee for Social Security (FICA) and
Federal Unemployment Taxes withholding based on its finding that Nu-Look Design (employer)
lacked a
reasonable basis for not treating the worker as an employee.
(Details and analysis are in
the Contingent Employment Law Manual. The full
case is in the Case Law Supplement.
January 14, 2004 -
Appeals Court Rejects
Employment Discrimination Claim Against Hospital Based on
Plaintiff's Failure to Prove He Was an Employee.
(Shah v. Deaconess Hospital, No. 02-3033
(6th Cir. )
Court held plaintiff
did not establish that an employer-employee
relationship existed between himself and Deaconess
Hospital.
February
2004 -California Supreme Court Upholds
Landmark California Appeals Court Case for Misclassified Workers
Paid Through Third Party
Payroll Agencies (Metropolitan Water District v.
Cargill)
The
California Supreme Court affirmed a landmark 2001 Appeals Court
case holding Metropolitan Water District of Southern California (MWD) illegally excluded
common law employees from participating in the California Public Employees Retirement
System (CALPERS). In MWD v. Cargill, the Court held that California state law is
clear that common law employees must be enrolled in CALPERS regardless of whether they are paid through a third party
payroll agency.
Federal Taxes and Tax
Forms
IRS Provides New Form 8919,
Uncollected Social
Security
and Medicare Tax on Wages,
for Employees
Misclassified as Independent Contractors
Form 8919 may be
used by an employee whose employer did not withhold their share of these taxes, and
the employee meets IRS criteria. The IRS will then credit
these taxes to the employee's social security records.
Employees using Form 8919 must
meet one of several criteria proving employee status.
See
details in the Contingent
Employment Law Manual and/or the IRS web site,
www.irs.gov..
CO-EMPLOYMENT
and JOINT EMPLOYER LIABILITY
Wal-Mart
Agrees to $11 Million Settlement in Illegal Foreign
Janitors' Class Action Lawsuit Holding Wal-Mart Liable for Its
Contract Janitorial Firms' Violations of Federal
Immigration and Labor Laws.
(Zavala
et.al. v. Walmart Stores, Inc. , U.S. D.Ct. D. N.J.)
settled March 18, 2005).
The illegal immigrant janitors
were employed by Wal-Mart's contract janitorial services
companies. Wal-Mart was liable as a joint employer with 12
contract
janitorial services firms. The janitorial firms
were charged with criminal
violations and
were
fined $4 million.
$22 Million Settlement for
2,000 Illegal Immigrant Contract Janitors in Federal Class Action Lawsuit
Charging
National Supermarkets and
their Subcontractor Cleaning Companies with FLSA Violations. (Florex v. Albertson's. et. al.
, U.S. D.Ct.,
C.D., Cal. Jan 26, 2005)
(see also immigration
law and employment liability
news below).
November 19, 2004
-
The NLRB Overturns its
Sturgis Decision, Holding that Bargaining Units of Jointly
Employed Employees Require Parties' Consent.
H.S. Care
LLC, d/b/a/ Oakwood Care Center, 343 N.L.R.B. No. 76.
In a landmark decision, the NLRB reversed
its prior landmark ruling in M.B. Sturgis (2000) and held
that the NLRA does not authorize the Board to direct elections in
units encompassing the employees of more than one employer
(joint employers), returning to its pre-Sturgis case law.
Details and analysis are in the Contingent
Employment Law Manual. The full Case Opinion is in the
updated
Case Law Supplement.
September 8, 2004 -
Employer Held Not Liable
to Pilot as "Joint" Employer or “Integrated Employer” under the FMLA -
Appeals Court Establishes 3-Factor Test to Determine "Co-employer" Status.
(Morrison
v. Magic Carpet Aviation, RDV Sports, Inc., Harry Mitchel,
Alticor, Inc., f.n.a. Amway Corporation,
No. 03-15340, 11th
Cir)
In this
landmark case
the 11th Circuit
established a
3-factor test for determining whether an entity is an
individual's "co-employer".
The Court found there was no
shared control of plaintiff for joint employer purposes and therefore
no joint employment liability when an employer contracts for
the services by another party.
Read
details and analysis in the Contingent
Employment Law Manual. The full Opinion is in the
Case Law Supplement.
April 2, 2004 -
Dunkin' Donuts and Employee Leasing Company
Liable as Co-employers under NLRA. (Dunkin'
Donuts Mid-Atlantic Distribution Center Inc. v. NLRB, No.
02-1334)
The DC Court of Appeals affirmed
an NLRB holding that
Dunkin' Donuts and Aldworth Co. were joint employers
of plaintiff. Aldworth
leased employees to Dunkin' Donuts,
which violated
the NLRA. As co-employers, both
Dunkin' Donuts and Aldworth were
ordered to: 1)
offer reinstatement to employees who were unlawfully discharged;
2) compensate employees
for losses; 3) purge their files of employees who suffered illegal discharges or discipline;
4)
post remedial notices, and 5) engage in collective bargaining with the union.
Read
details and analysis in the Contingent
Employment Law Manual. The full Case Opinion is in the
Case Law Supplement.
February 4, 2004 -
Appeals Court Finds
Air France Was
Not a Joint Employer under FMLA and California
Family Rights Act (CFRA); Plaintiffs/Employees Who Provide Contracted Services to Air France
Did Not Have Rights Under FLMA or CFRA (Moreau v. Air
France,
9th Cir. Ct of Appeals.)
The 9th Circuit held
Air France was not a "joint employer" of other firms'
employees who provide contracted services to Air France, thus
not covered by either FMLA or CFRA because it
did not meet FMLA minimum employee requirement of 50 or more employees within 75 miles of where the plaintiff worked.
Read
details and analysis in the Contingent
Employment Law Manual. The full Case Opinion is in the
Case Law Supplement.
December 30, 2003 -
2nd
Circuit Makes Major Changes in Joint Employer Status Test in Affirming Employer
Liability as Joint Employer in FLSA cases. (Zheng v. Liberty Apparel
Co. Inc., No. 02-7826,
In a landmark
decision the 2nd Circuit significantly changed its test for determining joint employer
status (thus co-employment liability) under the FLSA and NY
State labor law, holding that both defendant garment
manufacturers and
outsourced contract manufacturers were both liable as joint
employers under the FLSA and NY labor law. Read
details and analysis in our Contingent Employment Law Manual.
Read
the full case opinion in our Manual Case Law Supplement.
EMPLOYMENT
LIABILITY
WalMart Agreed to $11 Million Settlement in Illegal Foreign
Janitors' Class Action Lawsuit Charging
Walmart with Violations of FLSA and RICO
(Zavala
et.al. v. Walmart Stores, Inc. , U.S. D.Ct. D. N.J.)
settled March 18, 2005)
The $11 million settlement cleared
Wal-Mart of federal charges for hiring the illegal immigrants
Labor Dept
Orders
Computech
to Pay $5.7
Million in Fines and Back Wages for FLSA Violations
to more than 200
H-1B Computer Professionals. (March, 2005)
The Labor Dept ordered Computech
Inc., a national placement firm for computer professionals to
pay $4.5 million in back wages to 232 non-immigrant computer
professionals and $1.2 million in fines for willful violations
of the H-1B visa program's wage requirements and providing
inaccurate information on its H-1B application materials in
violation of immigration laws. Computech brought non-immigrant
H-1B workers into the country, but did not pay them the required
wage rate in the areas where they were employed, and often paid
them nothing when there were no work assignments available.
Read
details and analysis in the updated Contingent
Employment Law Manual.
Jan 26, 2005 -Federal Court Holds National
Supermarkets Responsible for Overtime and other FLSA Violations
by their
Subcontractor Cleaning Firm,
Resulting in a
$22.4 Million Settlement
for 2,000 Immigrant Janitors in Class Action Suit.
(U.S. D.Ct., Cal, )
(see also immigration
law and co-employment
liability)
In a landmark case, a Federal
Court in California approved a $22.4 million settlement in
this class action lawsuit by 2,000 immigrant janitors who were
hired by subcontractor cleaning firms and worked as janitors
in the California stores of several national grocery stores -
Safeway, Vons,
Albertsons, and Ralph’s.
The plaintiffs/janitors charged the defendants violated FLSA overtime and minimum wage laws,
holding the stores
responsible for
their cleaning companies’ failure to pay overtime and minimum
wages under the FLSA.
(U.S. D.CT. S.D., CA, Los Angeles, Jan 26, 2005).
Federal Court Approves Class Action Status in Janitors'
Co-employment Class Action Lawsuit against Walmart charging
Violations of FLSA and RICO
(Zavala
et.al. v. Walmart Stores, Inc , U.S. D.Ct. D. N.J.)
Dec 29. 2004 (see also Immigration
Law and Co-employment
Liability)
The Federal
Court in Newark, New Jersey has approved a "collective action"
in the class action lawsuit filed contract employee janitors who
had sued Walmart in November 2003 charging that Walmart violated
the FLSA and RICO as a co-employer with the contract employee
staffing agencies. The Court ruled only on the FLSA claim, that
all contract janitors who worked for Walmart since 2000 anywhere
in the U.S. should be notified of their potential eligibility to
join as members of this class action.
Security
Guards Not Entitled to Overtime under
FLSA Based on
Court Finding Guards were
Independent Contractors,
not Employees. (Johnson,
et.al. v. Unified Government of Wyandotte
County/Kansas City, Kansas and Housing Authority of
Kansas City,
June 7,
2004)
In this landmark case, the 10th
Circuit held that security guards at defendant's Housing
Authority were not
entitled to overtime pay because they were contractors and not
employees. The Court based
its ruling on five factors in determining employee vs.
independent contractor status,
holding that the defendant Housing
Authority had only a minimal degree of control over
its security
guards.
Sega of America and Spherion Corp Settle Employment
Discrimination and Retaliation Lawsuit by EEOC for
$600,000
(March, 2004)
The EEOC charged that Sega directed Spherion to terminate
temporary employees placed at Sega's testing department by
firing 13 Filipino game testers due to their national origin and
firing
five
other testers in
retaliation for their friendship with an employee who
threatened to file a complaint alleging preferential treatment
of Filipino employees.
Supreme
Court Sets Standard for Corporations to include Shareholder- Directors as
"Employees" in order to meet "Employee Headcount" Threshold for ADA Coverage. (Clackamas
Gastroenterology Associates v. Wells, U.S. Supreme Court, April 22, 2003).
Read analysis of this landmark case affecting small business
owners in the Contingent Employment Law Manual.
Musicians are
Independent Contractors and Not Employees of Community
Orchestra, and Therefore Don't Have Rights to Sue the Defendant Orchestra under the ADA or Title VII of the Civil Rights Act.
(Lehrol v. Friends of
Minnesota, U.S. Ct of Appeals,
8th Circuit, May 6, 2003). Details in the Contingent Employment Law Manual.
Appeals Court Rejects Age Discrimination Claim By
Corporate Shareholder Who Shared Control of a Closely Held Professional Corporation
(Schmidt v. Ottawa Medical Center, P.C.), US Court of Appeals, 7th Circuit, March
5, 2003) Read details and
analysis in our Contingent Employment Law Manual
EMPLOYEE BENEFITS
and ERISA
5th Circuit Holds Contract
Employees Placed with Defendant Georgia Gulf Were Not
Common
Law Employees of Georgia Gulf, thus Not Entitled to Benefits
under ERISA.
(Landry,
et. al. v. Georgia Gulf, March 8, 2004).
Defendant Georgia Gulf hired contract workers from various third
parties.
Plaintiffs
claimed they were eligible for employee benefits from Georgia
Gulf. They sued defendant claiming they were common law
employees and thus eligible for employee benefits under ERISA.
Georgia Gulf concluded that plaintiffs were not common law
employees, and therefore not eligible for employee benefits. The
District court held that plaintiffs were not common law
employees of Georgia Gulf. The 5th Circuit affirmed the district
court on appeal, holding that plaintiffs were not common law
employees of defendant based on the traditional common law
factors test of
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