Employment Law
Spitko, Spring 2011
Glynn, Arnow-Richman, Sullivan
THE BENEFITS AND BURDENS OF EMPLOYMENT
A. Distinguishing “Employee” From “Independent Contractor”
· The most litigated issue for three reasons:
o A host of legal consequences flow from the workers’ status
o Most workers are either employees or independent contractors
o Distinguishing between employees and independent contractors is often both difficult and highly fact intensive.
· Restatement (Second) of Agency:
o A “master” or employer is “a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in performance of the service.
o A servant or employee is “an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master.”
o Independent contractor is one “who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking.”
· Section 220 – Definition of a servant
o A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other’s control or right to control.
o Factors to determine whether one is a servant or independent contractor:
§ Extent of control which, by the agreement, the master may exercise over the details of the work.
§ Whether or not the one employed is engaged in a distinct occupation or business
§ The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist w/o supervision
§ The skill required in the particular occupation
§ Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work
§ The length of time for which the person is employed
§ The method of payment, whether by the time or by the job
§ Whether or not the work is a part of the regular business of the employer
§ Whether or not the parties believe they are creating the relations of master and servant
§ Whether the principal is or is not in business.
a. McCary v. Wade
i. After a sever automobile accident, passengers in a van being driven home by their employer sued Company of the truck driver that hit them.
ii. Issue is whether or not the driver of the truck was acting as an employee at the time of the accident, and if so, whether the company could be held vicariously liable for the driver’s actions.
iii. General Rule that employers of an independent contractor has no vicarious liability for the torts of the independent contractor or for the torts of the independent contractor’s employees in the performance of the contract.
1. Courts may look beyond terms of contract at the parties’ conduct
iv. Tests given:
1. Whether the principal master has the power to terminate the contract at will;
2. Whether he has the power to fix the price in payment for the work, or vitally controls the manner and the time of payment;
3. Whether he furnishes the means and appliances for the work;
4. Whether he has control of the premises;
5. Whether he furnishes the materials upon which the work is done and receives the output thereof, the contractor dealing with no other person in respect to the output;
6. Whether he has the right to prescribe and furnish the details of the kind and character of work to be done;
7. Whether he has the right to supervise and inspect the working during the course of the employment;
8. Whether he has the right to direct the details of the manner in which the work is to be done;
9. Whether he has the right to employ and discharge the sub employees and to fix their compensation; AND
10. Whether he is obliged to pay the wages of said employees.
v. Driver cut, hauled, then sold his timber to Company. He had his own truck and equipment and decided where, when, and how to work. Company purchased services of Driver to cut and haul timber to a 3rd party. He was independent contractor.
1. Public policy argument (that Driver was insolvent) did not avail Plaintiffs.
b. Fitzgerald v. Mobil Oil Corporation
i. P was injured when he fell from the tanker truck he used to deliver oil.
1. Mobil’s defense was that as Workers’ Comp was exclusive remedy and that P was employee of Mobil and TLI (provider of drivers) for WC
ii. P was hired by Rieger, owner and lessor of the tractor P used to haul loads. But before he could be hired, he had to pass a road test administered by Mobil.
1. Mobil told him where to deliver oil after he would call them at least once a day, but he submitted his paperwork to Rieger
iii. Economic realities test:
1. Control of a worker’s duties
2. The payment of wages
3. The right to hire and fire and the right to discipline, and
4. The performance of the duties as an integral part of the employer’s business towards the accomplishment of a goal
iv. Application:
1. Control – Mobil Oil significantly controlled his truck and assignments
2. Wages – Mobil Oil paid reimbursements to TLI who paid drivers directly, and even if indirect, satisfies Michigan caselaw
3. Right to hire/fire/discipline – Mobil had right to refuse P’s services, and though he might have been able to provide services to another company through TLI/Rieger, he was hired for work for Mobil
4. Performance of Duties – delivery of oil is critical part of Mobil’s business
v. P argues that Mobil set up their labor system to avoid certain liability for employees and independent contractors by using a labor broker.
c. Notes
i. Think about why different outcomes for these cases – different protections/obligations/liabilities assigned to different worker statuses.
ii. Different tests in these cases – first is about respondeat superior, which is common law – hence common law test, but second is about statutory interpretation, and as explained below, can lead court to different test.
iii. Respondeat Superior – an employer is vicariously liable for torts committed by its employees within the scope of their employment.
1. BUT, tortuous conduct of independent contractors generally does not give rise to vicarious liability for the principal.
iv. Legal Advantage of Common Law “Employee status for workers:
1. Congress rarely defines “employee” or “employer”, so for issues of statutory interpretation, courts have gone to the common law agency test in cases of:
a. Nat’l Labor Rel. Act, ERISA, FMLA, and civil rights legislation like ADEA, ADA, etc.
2. Some courts use Econ. Realities test because they think that the purpose of the statutes is to protect what are really employees and focus on worker dependence.
a. Has, in some cases, significantly extended the common law def.
d. Natkin v. Winfrey
i. Issue: Whether either P or D has established ownership of the copyrights to photos P took of D’s show.
1. “work made for hire” and “joint work” exception to normal rule that person who translates an idea into a fixed, tangible expression is entitled to copyright protection.”
2. Are photographers at Oprah’s show owners of the copyright or not?
ii. Court applies the Reid Factors (non-exhaustive list):
1. The hiring party’s right to control the manner and means by which the product is accomplished;
2. The skill required;
3. The source of the instrumentalities and tools;
4. The location of the work;
5. The duration of the relationship between the parties;
6. Whether the hiring party has the right to assign additional projects to the hired party;
7. The extent of the hired party’s discretion over when and how long to work;
8. The method of payments;
9. The hired party’s role in hiring and paying assistants;
10. Whether the work is part of the regular business of the hiring party;
11. Whether the hiring party is in business
12. The
oors
2. ADEA applies only to employers with >20 employees
3. FMLA only to those with 50+ and only to employees employed at a worksite where the employer employs at least 50 employees w/in a 75 mile radius.
4. Public/private distinction also matters – no private protection for constitutional rights or substantive civil service codes.
iv. “Covered Employees”
1. ADEA – “age” only includes those 40 or older
2. ADA – “qualified individual with a disability.”
3. FMLA excludes new and part-time workers
4. FLSA excludes professionals and others.
v. Under common law and most statutory schemes, the entity (i.e. corporation) is the employer. Managers, supervisors, and other employees are not generally liable, but could have personal responsibility for some types of claims.
c. Yates v. Hendon
i. Issue: does working owner of a business qualify as a participant in a pension plan covered by ERISA?
ii. Court rejects notion that a business owner may rank only as an “employer” and not also as an “employee” for purposes of ERISA-sheltered plan participation.
iii. Under ERISA, a working owner may have dual status, i.e. he can be an employee entitled to participate in a plan, and at that same time, the employer who established the plan.
1. Seem to determine this from statutory background on congressional intent, even though two sections make him both eligible and ineligible
d. Notes
i. Why is the analytic approach so different in these two cases?
C. Rise of “Contingent” Labor as a Challenge to Traditional Categories
· Public policy considerations of rise of “contingent labor”
o Firms may prefer contingent workers for a variety of reasons: workplace and workforce flexibility, promoting certain expectations and competition among workers, labor cost savings, tax advantages, and reduced risk of various forms of liability
o Workers may also prefer it: autonomy benefits it affords and the costs of regular employment it avoids, including office politics and inequities. Also some data showing that highly skilled contingent workers make more $$
o But, on average, contingent workers receive lower wages and fewer benefits and have less wage stability
o Question is whether and how employment law ought to protect them?
a. Ansoumana v. Gristede’s Operating Corp.
i. Duane Reade grocery contracted with Hudson/Chelsea to provide delivery workers for pharmacy deliveries. H/C hired workers at $20-$30/day and were paid $250-$300/wk by DR. H/C hired them as independent contractors.
1. Delivery workers sued under FLSA, and both DR and H/C were liable
ii. Court applied “economic realities” test to find that workers were joint employees of both DR and H/C:
1. The degree of control exercised by the employer over the workers
2. The workers’ opportunity for profit or loss and their investment in the business
3. The degree of skill and independent initiative required to perform the work
4. The permanence or duration of the working relationship; and
5. The extent to which the work is an integral part of the employer’s business.
iii. Carter v. Dutchess Community College – four factors to consider in “joint employment” status for multiple employers:
1. Who hired and fired the workers
