California Employee Rights Advocate : California Labor Attorney & Lawyer : Southern CA Employment Law : Los Angeles, Orange County : United Employees Law Group

Answer: Department of Labor, the Internal Revenue Service, and Congress

Our budget deficit has all three of these entities working towards a common goal: tax revenue. They are putting pressure on employers, big and small, to make sure they are properly classifying their workers. As an independent contractor you would be responsible for paying your own taxes and you wouldn’t be covered under the company’s worker compensation insurance or unemployment insurance; making it near impossible to get worker compensation if you are hurt or unemployment benefits if you are fired. Essentially all of the financial responsibility is on the independent contractor. The employer is relieved of a substantial amount of taxes and insurance costs by hiring independent contractors. The issue is that companies can’t just decide that you will be an independent contractor. There are specific laws dictating who can and cannot be classified as such. An independent contractor should be independent enough from the company to have control over the following:

• Scheduling; the freedom to create and maintain their own schedule so long as major deadlines are met.
• Equipment; should be able to chose what type of their own equipment they will use to complete the work including vehicles.
• Uniforms; should not be forced to wear the hiring company’s logo/ uniforms as if they are an employee.
• How the task is completed; should not be told in detail how to perform the work. End goals are really all the hiring company should be imposing.

"We Can Help" - The Department of Labor:

Independent contractors are not protected under the Fair Labor Standards Act protections for issues like minimum wage and overtime or other benefits, so often wrongly classified independent contractors do not receive legal protections they are entitled to. The "We Can Help" campaign encourages employees to seek aid from the DOL if they believe they are not being paid correctly or are misclassified. The DOL intends to further focus on fixing worker-classification issues in 2011 by adding 90 new enforcement personnel and an additional $12 million to the Wage and Hour Division's budget.

Even More "Help"- The Internal Revenue Service:

Employee-classification is a front runner with the IRS because employers are not required to pay social security, Medicaid, unemployment, or other payroll taxes on independent contractors. In an attempt to rectify these improper misclassifications the IRS will be adding 100 new enforcement agents and allocating $25 million to investigating misclassification of employees as independent contractors. IRS audits may also impose penalties and require payment of back pay and taxes for workers previously misclassified. The Treasury Department estimates an increase of by $7 billion over the next ten years.

Congress: Proposed Legislation Affects Even Small Employers

Congress offered up new legislation regarding worker classification; The Fair Playing Field Act of 2010. This bill is intended to amend Section 530 of the Revenue Act of 1978, which currently provides a safe harbor for Companies to treat employees as independent contractors for tax purposes if the company has a logical basis for treating them as independent contractors and has consistently reported their income on Form 1099s. If passed this bill would eliminate that safe harbor and employers would be open to larger penalties for worker misclassification, even good faith mistakes.

Employee Misclassification Prevention Act, is another bill that has recently been proposed. It focuses on classification for purposes of compliance with the Fair Labor Standards Act. That Act was introduced in April 2010 and would create a new FLSA violation: misclassification of an employee as an independent contractor. The Act would also:

• Impose notice and record-keeping requirements on businesses with independent contractors,
• Impose fines on businesses for each employee misclassification,
• Expand FLSA's anti-retaliation provisions to cover independent contractors, and
• Award triple damages for violations of minimum wage or overtime laws for employees wrongfully    classified.

The Fair Playing Field Act and the Employee Misclassification Prevention Act are both intended to correct perceived abuse of the independent contractor label, the acts contain different tests for determining who is an independent contractor and who is an employee, which may lead to even more confusion surrounding the issue.

To be safe you should contact a California labor Law attorney to examine your job duties and work conditions to determine your worker classification status. If you have been improperly classified as an independent contractor a California employment attorney could help you recover back pay for minimum wage, overtime, and benefits.

If you have any questions about this article or our blog, feel free to call us at:
          Long Beach – (562) 256-1047
          Los Angeles – (213) 261-0229
          San Francisco – (415) 200-0012 or (415) 230-2755
          San Diego – (619) 342-1242 or (619) 272-2193 

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If you are a working family member of a military service member or a member of an airline flight crew, proposed regulations to the Family and Medical Leave Act (FMLA) may provide you with several additional employment benefits. The FMLA was originally designed to help employees take leave from work for family and medical reasons without risk of losing their job or health benefits. The Act applies to public agencies, public and private elementary schools, and companies with 50 or more employees. An employee that has worked for any of the aforementioned employers for at least 12 months or at least 1,250 hours over the course of 12 months is entitled to up to to 12 weeks of unpaid leave per year.  In 2009, President Barack Obama signed into law the National Defense Authorization Act for Fiscal Year 2010 and the Airline Flight Crew Technical Corrections Act. These acts extended FMLA benefits to both military service members and airline flight crews who had previously been disqualified. Now it is expected that the Department of Labor (DOL) will propose amendments to these Acts to further expand their coverage. 

The National Defense Authorization Act provides that certain family members of soldiers on active duty may be allowed to take extended leave from their jobs for reasons including, but not limited to, preparing for deployment, making child care and financial arrangements, attending pre-employment and post-employment activities, and caring for an injured active duty service member or previously injured veteran. On May 28, 2010, the House of Representatives approved a bill that would amend the Act to allow the spouse, children and parents of a deployed service member to take at least two weeks of unpaid leave, even if they are not covered under the FMLA. 

The Airline Flight Crew Technical Corrections Act extends FMLA benefits to pilots, flight attendants, and other flight crew workers. Normally, most flight crew members would not qualify for FMLA benefits because they are paid for only “in-flight” time and not for the hours they are on duty between flights or on layovers. The Act provides that flight employees quality for FLMA if they are paid 60 percent of the airline’s monthly work schedule or for at least 504 hours. 

New regulations to both of the aforementioned Acts are expected to take place before November. There may also be revisions to other aspects of the Act previously enacted by the Bush administration. Although the exact changes have not been specified, the DOL has indicated that it will conduct a study next year to evaluate how families are using the FMLA. 

When applying for FMLA, be sure that you use the most current DOL-issued forms. If you take the proper steps and believe your employer has improperly denied you leave, do not hesitate to contact a knowledgable California labor law attorney for a thorough evaluation of your case.

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IMPORTANT – Do not sign any agreement in which you may be settling any rights you may have without first checking with an attorney that experienced in Labor Law.

On termination you may be offered a severance package in exchange for giving up your rights to back overtime pay. These rights could actually be worth well over $100,000 and you may lose them.

Many Labor Law attorneys will take a look at your situation without charge and give you piece of mind that you interests are protected.

One word can be used to best describe the California information technology (IT) industry this past year: layoffs. Although the technology industry grew overall, layoffs dominated as major companies continued to trim their workforce. The companies with the some of the most drastic cuts included IBM, Novell, Microsoft, Cisco, and Sun Microsystems.  As a result many technology workers are starting off the New Year without a job or, perhaps even more disheartening, training their foreign replacements. An increasing number of tech companies are using L-1 and H1-B workers to reap the benefits of highly skilled professionals for a much lower cost than their American counterparts. This leaves California workers to train these new employees for little compensation, usually the promise of a few weeks of additional pay or a severance package.  However, employees on their way out the door have rights and should not hesitate to milk the benefits due to them from their employers. Federal and state laws mandate that employers make a final payment of wages, overtime pay, and accrued vacation time at the time of a layoff or face stiff penalties.

Of particular concern for IT professionals is employers’ frequent denial of overtime pay. Despite popular belief, all employees in California are entitled to overtime pay unless they fall within a particular exemption or wage order. IT jobs encompass a wide range of duties and usually require long hours, working from home, and the ability to be “on call.” Unfortunately, many workers never see a check for their earned overtime, because their employers misclassify them as exempt from overtime pay. The determination of whether an IT employee is exempt requires a careful analysis of the employee’s duties and how they relate to the company’s overall operation.

The Department of Labor has opined that IT specialists whose primary duty “consists of installing, configuring, testing, and troubleshooting computer applications, networks, and hardware” do not qualify for the administrative or computer employee exemptions under the Fair Labor Standards Act.  Many IT employees are also not likely to qualify for the executive exemption. Unless they spend over one half (51%) of their weekly work time engaged in managerial responsibilities, they will likely be non-exempt and therefore entitled to overtime pay. Examples of managerial responsibilities include negotiating on behalf of the employer, influencing company policy, and supervising others. It is important for employees to remember that it is the actual job duties and not the job title that determines whether an exemption applies. Employers often manipulate job titles, pay structures, or management levels to classify employees as exempt so as to avoid paying overtime costs; yet, they do this at the risk of huge penalties.IT workers who have been wrongfully denied overtime pay under federal law are entitled to liquidate damages. This means employees can collect double the amount of their normal overtime rate. 

If you are an IT worker facing a layoff or otherwise suspect that you have been misclassified by your employer, now is the time to take steps to protect yourself against loss of overtime and other valuable benefits.

Strategy:

1. Request a full copy of your payroll records from your employer as soon as possible. Certain documents in your employee file, must be made available to you within 21 days of your request.
2. Gather all documentation establishing your wages and benefits immediately prior to the layoff, including itemized wage statements (pay stubs), W2 forms, a calculation of your overtime pay, proof of your total accrued vacation time, and a copy of your employer’s benefit plan.
3. Compile a list of your job duties and obtain the names of witnesses who can testify regarding your day to day work duties and hours worked, including supervisors, co-workers, industry contacts, etc.
4. Visit the human resources department and request a copy of your personnel file. This file will contain performance reviews, awards, contractual agreements and other items that will be beneficial to you. Remember you have a legal right to any documents that you have signed. It is also wise to copy all company policies, employee manuals, and other data that is non-proprietary and that you would have access to as an employee.
5. Remove all personal items from your place of work, including your computer. If you have created any personal files or installed software, copy and delete them. Be careful not to take anything that may be considered proprietary, such as customer lists, proposals, financial reports, etc.
6. Consult a qualified California labor law attorney to obtain an unbiased analysis of your situation. The above documentation will help to assess you case and obtain money to which you are rightfully entitled.
 

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