Wednesday, July 29, 2015

Ohio Employer's Law Blog

The unintended and unfortunate consequence of wage-and-hour reforms - Wage-and-hour reforms are all the rage. Yet, with reform comes a potential unforeseen price—businesses that simply cannot afford to stay in business. Cleaning services company Homejoy is shutting down on July 31 after struggling to raise a big enough round of funding. The company had already been facing growth and revenue challenges, but CEO Adora Cheung said the “deciding factor” was the four lawsuits it was fighting over whether its workers should be classified as employees or contractors. None of them were class actions yet, but they made fundraising that much harder. Re-classifying workers as employees instead of independent contractors, raising thesalary threshold so that fewer employees qualify as exempt from overtime, and increasing the minimum wage are all popular causes for employee groups to rally behind. Yet, if these reforms leave employees without jobs, was the cause worth fighting? I bet if you ask Homejoy’s soon-to-be-ex-cleaners, each would tell you they’d prefer to be paid as a independent contractor than not paid at all.
Who is an employee? DOL has answers in guidance on independent-contractor status -I’ve written a lot in the past year about the distinction between employees and independent contractors under federal wage-and-hour laws (here, here, here, and here). To me, here is what it all boils down to (cribbed from my post, The “duck”test for independent contractors: The best test to determine whether a worker is an employee or an independent contractor is the “duck” test—if it looks like an employee, acts like an employee, and is treated like an employee, then it’s an employee…. I think you know an employee when you see one. I’ve also cautioned that it is very difficult for an employer to justify the classification of a worker as an independent contractor, and that if you exercise any control over how workers perform services for you, it is likely that they should be classified as employees, not independent contractors. Make no mistake, this issue is of vital importance, because the mis-classification of an employee as a contractor carries with it serious implication under the FLSA, the employment discrimination laws, ERISA, tax laws, and any other laws that regulate the relationship between employer and employee….Read More….
Everything you want to know about the new overtime rules in 3:44 - You have to hand it to the Department of Labor. It has gotten creative to spread its message to American workers about the pending changes to the overtime rules. Last week, the DOL published to its blog a short YouTube video entitled, White Board Explainer: What is overtime? It’s wage-and-hour Schoolhouse Rock, minus the catchy tunes. Employers are fighting an uphill battle on this issue. A populist messsge that promises more pay for more people + a slick informational campaign = an issue that employers cannot win. But, do employers want to win this issue? As I pointed out two weeks ago, as a practical matter employers can control whether these new overtime rules actually result in increased pay. Yet, fighting this issue will play into the hands of labor unions that they are needed to increase worker pay and to generally fight for their workplace rights. Employers need to be very wary of the unintended consequence of empowering unions, and act accordingly.
2nd Circuit becomes 2nd court to toss DOL internship test - Four years ago, the 6th Circuit, in Solis v. Laurelbook Sanitarium and School, rejected the Department of Labor’s six-factored test for determining whether an “intern” is an employee entitled to wages. In its place, the court adopted a “primary benefit” test. At the time, the case did not garner that much attention. In the years since, however, the issue of unpaid interns has rocketed to the forefront of wage-and-hour issues on which employers need to focus. Last week, in Glatt v. Fox Searchlight Pictures [pdf], the 2nd Circuit become the 2nd federal appellate court to reject the Department of Labor’s formulaic six-factored analysis for the more flexible and nuanced primary-benefit test. In reaching its decision, the 2nd Circuit framed the import of the issue:….Read More….



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