Employment Law – 260AT
Professor Saucedo
Spring 2013
A. The Meaning of Employee
· There is no uniform doctrinal test to determine whether someone is an employee or independent contractor
· Issue must be examined in the context of the legislative purpose of the particular statutory rights at issue
· Decisions are fact-intensive and depend on the statutory rights at issue
Who is an employee?
o Most of the laws that govern the workplace only apply to employees
o None of the federal employment laws (ADA, ERISA, etc.) apply to independent contractors
o Independent contractors do not get benefits; must sue employers for employment injuries
o Employees have statutory remedies; ICs do not
o Employees injured in the workplace must use worker’s comp system; IC’s must file for tort remedies in court
o The label of the employee is irrelevant (“independent contractor” or “employee at will”)
§ The law will determine your employee status
o Courts confronting the issue of which entity is functioning as an employer look beyond labels and ostensible relationships to determine whether an employment relationship exists.
The Control Test (i.e., Agency Test, Common Law Test, etc.)
· Independent Contractor: Employer reserves only the right to control the ends to be achieved.
· Common Law: Agency Principles (control is the “essential ingredient” of the common law test)
· Relevant Statutes: ERISA, NLRA, FICA, FUTA
Types of Control:
Behavioral (is the behavior indicating the person is an employee)
These factors involve the ER’s ability to control the work, either by direction or instruction about (the more you show the easier it’s to prove you’re an employee):
When and where
· What tools or equipment to use
Where to purchase supplies and services
What work must be performed
What order to follow
Financial
Extent of unreimbursed expenses
Worker’s investment
Extent to which ee makes services available to others
How the ER pays the EE
Extend to which EE can make a profit or lost
Relationship
Is there a K that defines relationship?
Does ee get ee-like benefits (insurance, sick and vacation days, etc.)
Is relationship indefinite or permanent (as opposed to specific period)
The more permanent the more ongoing, the more you can makeout their an employee
Are ee’s services a key aspect of the ER’s regular activity
This one is HUGE, the closer the service is to the business , the more a person is made out to be an employee
The Economic Realities Test
· Relevant Statutes: FLSA, FMLA, OSH Act, EPPA, Title VII, ADEA, etc.
· Test: If worker is economically dependent on the business to which he renders service…or is, as a matter of economic reality, in business for himself.
· Focus on the purpose of the statute in analyzing the relationship between ee and er
o If worker was meant to be protected, label doesn’t matter
· Focus on whether ee is economically dependent on er
oi.e., an ee is one “who as a matter of economic reality follows the usual path of an ee and is dependent on the business which he serves.”
o If dependency existed, then the worker was an employee
· Courts typically apply a “totality of the circumstances” approach to evaluate the economic reality test.
Devolution of ER test into factors
· DOL Wage administrator, applying E.R. test to FLSA, came up with six factors for determining dependence on business
o Six Factors:
Limited amount of worker’s investment in facilities and equipment
Nature and degree of control by co.
Worker’s limited opportunities for profit and loss
Small degree of worker’s independent initiative, judgment, and foresight in open market competition with others required for success of operation
High degree of permanency of the work relationship
Broad extent to which the services are integral part of the company’s business
The Hybrid Test
· Relevant Statutes: Title VII, ADEA
· Test: Courts consider the economic reality of the working relation but generally accord particular weight to the putative employer’s right of control.
Estrada v. Fedex Ground Package System, Inc. – (CA App. 2007)
Facts: Fedex drivers bring class action against FedEx claiming there are employees, not independent contractors. They contract they signed identified them as independent contractors. FedEx set terms for job. Driver provides truck. Truck must have FedEx logo and abide by the terms and conditions set by FedEx. FedEx pretty much dictates what the “independent contractors” can do; thus, eliminating any sense of “independence.”
HELD: The drivers are employees because in theory, they are independent contractors, but in practice, the work performed by the drivers is wholly integrated into FedEx’s operations. The drivers look, act, and are paid like FedEx Employees, and receive many employee benefits. Moreover, although the contract said one thing, FedEx’s conduct was something different (e.g., ability to terminate at will, controlling every exquisite detail, etc.)
Notes:
-CA state case where FedEx drivers were seeking reimbursement of certain expenses
-FedEx tells its drivers how to do their jobs and where to go (more like employee) but doesn’t control the drivers’ profits (more like independent contractor)
-Deferential standard of review (because employee status is not a jurisdictional element)
-Court finds that the drivers are employees, not independent contractors
FedEx Home Delivery v. National Labor Relations Board (D.C. Circuit 2009) (suspect case)
Facts: Teamsters was organized and certified as collective bargaining rep for FedEx drivers in Washington. FedEx refuses to bargain because they argue drivers are not employees under NLRA. NLRB had ruled that FedEx violated Sec 8(a)(1) and 8(a)(5). FedEx appealed and here we are.
HELD: Control test (i.e., common law agency test) is used. To determine the legal distinction between employee and independent contractor, conclusions must be drawn from the factual setting of the particular dispute. The looks as whether the “putative independent contractors have significant entrepreneurial opportunity for gain or loss.” Here, the drivers are independent contractors because they both have extreme control (e.g., being able to hire own workers, option to go to work or not, etc.) AND have entrepreneurial opportunity for gain or loss (e.g., can sell, trade, give or even bequeath their routes, take more routes, negotiate for higher fees, etc.). The court finds it is the workers retention of the right to engage in entrepreneurial activity rather than his regular exercise of that right that is most relevant.
Exotic Dancers
· Dancers are an integral part of a business and are therefore employees.
· Dancers were considered as independent contractors (went to work every day, had schedules, inspections, rules, songs, etc.)
Piece-Work or Project Basis Workers (knitters, sewers, etc.)
· Courts in these cases focus on whether the work is vital to the putative employer’s business
· Most times, they are held to be employees and not independent contractors, even if the work is done from home.
o Courts reason that such workers are performing a “core function” vital to the production of a particular product.
· Exception: Computer programmers who performed technology services was an independent contractor(even one that worked for the same company for 10 years), because using the company’s equipment is inevitable for the type of work.
Who is an Owner
-The Clackamas test has been used to draw the line between ownership status and employee status
· (1) Whether the organization can hire or fire the individual or set the rules and regulations of the
te the business successfully
6. Employee protections guaranteeing “fairness” in discipline
a. Industrial Due Process
i. actual or constructive notice of expected standards of conduct and penalties for wrongful conduct
ii. decision based on facts, determined after an investigation that provides the employee an opportunity to state his case, with union assistance if he desires it
iii. imposition of discipline in gradually increasing degrees, except in cases involving the most extreme breaches of the fundamental understanding
1. employee’s past record shows unsatisfactory conduct will continue
2. most stringent form of discipline is needed to protect the system or of work rules
3. continued employment would inevitably interfere with the successful operation of the business
iv. proof by management that just cause exists
b. Industrial Equal Protection – treatment of like cases
c. Individualized Treatment – distinctive facts must be given appropriate weight
Public Employment
Board of Regents of State Colleges v. Roth – Creation of property Interest (U.S. 1972)
Facts – The respondent was hired in 1968 for his first teaching job as an assistant professor at a state university for a fixed term of one academic year. The notice of his faculty appointment so specified. He completed the academic year, but was informed that he would not be rehired for the next academic year. Under university rules, the respondent was given no reason for the decision not to rehire him, nor was he given any opportunity to challenge the decision at any sort of hearing, because (1) he had acquired no tenure rights to continued employment under state statutory law, such rights inuring to the benefit of state university teachers only after 4 years of year-to-year employment, and (2) absent tenure rights, he was entitled to nothing under state law beyond his one-year appointment.
Issue : Is there a legitimate entitlement to state benefit? NO!!
HELD: court says no liberty interest – no damage of reputation, integrity, etc. that would inhibit his ability to become reemployed. Property is a legitimate claim of entitlement – not a mere hope or idle expectation. Roth has to show legitimate entitlement to continued employment court looked to the employment contract; could also look to practice, trade, custom (implied contract); and state laws that create interests in jobs (principal source)
Notes:
1. court found no property interest here and no right to job beyond the one year contract term
2. due process can be invoked by public employees – doesn’t guarantee job security, but guarantees process protections
3. due process is a check on government power to protect individual rights – protects against arbitrary, capricious, and unreasonable government action
4. the right to due process comes from the fact that the state hinged on my right to property and liberty.
Perry v. Sindermann (SCt. 1972)
1. Court held Sindermann had an implied property interest in retaining his job
2. could point to traditions of tenure in the system in which he worked
· The value of process
1. due process valuable because it protects against arbitrary government action, insure fairness in government decision-making, and avoid mistaken decisions
