Under federal law, a worker must be classified as either an employee or an independent contractor. This determination is important as employees are entitled to a number of protections that are not available to independent contractors. By way of example, independent contractors are not covered by the National Labor Relations Act, the Fair Labor Standards Act, or laws protecting workers against unlawful discrimination and retaliation. Courts and agencies apply different tests to determine proper worker classification. The most predominant tests are the Right to Control and Economic Realities Tests.
Right to Control
The Internal Revenue Service applies common law rules, often referred to as the “Right to Control” test, to determine if a worker is an employee or an independent contractor. Each factor is designed to evaluate who controls how work is performed. Generally speaking, the test looks to:
Behavioral Control. How much control does the company exercise over the employee? (more “yes” answers to the below questions means the worker is more likely an employee):
Does the company dictate how, when and where the worker does the work?
Does the company provide training to do the work?
Does the company supervise performance?
Financial Control. Does the company have the right to control the financial and business aspects of the job? (more “yes” answers to the below questions means the worker is more likely a contractor):
Does the worker pay for his or her own business expenses?
Does the worker own or lease equipment or facilities? (computer, car, office or shop).
Does the worker have other customers or clients?
Is the worker paid by the project instead of paid salary or hourly wage?
Does the worker have the potential for profit or loss?
Relationship of the Parties. (more “yes” answers to the below questions means the worker is more likely an employee)
Is the worker eligible for benefits including a pension plan, insurance, paid time off or other benefits indicating an employee relationship? Read More
Earlier this year in a case of first impression, the Superior Court of Pennsylvania found corporate “no-hire” policies void against public policy.
Pittsburgh Logistics Sys., Inc. v. BeeMac Trucking, LLC, 2019 PA Super 13 (Jan. 11, 2019) involved a service contract entered between Pittsburgh Logistics Systems, Inc. (“PLS”) and BeeMac Trucking LLC. (“BeeMac”). PLS, a third-party logistics provider, assists clients in shipping materials through proper avenues at the best price. PLS contracted with BeeMac to coordinate a materials shipment from BeeMac. The contract included a provision prohibiting BeeMac from directly or indirectly hiring any employee of PLS during the life of the contract and for two years afterwards. While the agreement was still in force, four PLS employees left PLS to join BeeMac. PLS sought a preliminary injunction based on the no-hire provision.
In an en banc opinion, the Superior Court voided the “no-hire” provision as against public policy. The PLS employees did not know about the provision and were not provided any additional consideration in exchange for this restraint. The Superior Court reasoned that the “no-hire” provision was, in effect, a backdoor restrictive covenant prohibiting the free movement of PLS employees. Two judges dissented, arguing that conflating BeeMac’s corporate agreement to not hire employees with individual non-compete agreements was incorrect as a matter of law and that the “no-hire” provision was not against public policy.
There are two immediate takeaways. First, the decision demonstrates that a court will restrict freedom of contract between sophisticated commercial employers if it finds that the contract derogates the interests of employees. Second, this holding dampens one potential method for a company to shield confidential business information. Accordingly, businesses should place greater emphasis on strong confidentiality agreements with key employees.
The analysis of Pittsburgh Logistics Sys., Inc. v. BeeMac Trucking, LLC may not be complete. Read More
Roughly three out of four large U.S. employers utilize exit interviews, which are considered a low-risk, low-cost way to acquire valuable information. However, companies who approach exit interviews with an “auto-pilot” mentality may expose themselves to increased employment liability if they do not think strategically about how and why they conduct such interviews. Conversely, a robust exit interview program may reduce a company’s exposure to certain types of prospective liability, such as whistleblower claims. Likewise, exit interviews can combat against disclosure of a company’s trade secrets. Depending upon a company’s industry, culture and processes, conducting exit interviews may or may not be advisable. This article discusses some considerations to guide that decision-making process.
General Employment Liability Risks
Departing employees can, and do, raise allegations during exit interviews that create increased employment liability exposure. This often happens when a departing employee is interviewed by a human resources representative. Even though HR employees are most likely to conduct an exit interview, they often lack insight into the employee’s history at the company and may not be prepared to meaningfully respond to an allegation that is grounded in the departing employee’s daily experience.
For example, a departing employee may reveal that they had to pursue another job with better telework arrangements because their boss would not let them work from home, despite a medical condition that made teleworking desirable. Could that employee have a constructive discharge claim under the Americans with Disabilities Act due to a failure to accommodate? Perhaps. Will an HR representative be prepared to answer questions from the departing employee about why another employee in the same department was permitted to periodically work from home? Probably not. Given these potential risks, companies should assess whether their HR representatives have the time to investigate such issues (and whether they are actually likely to do so once an employee has left) before automatically embarking on an exit interview program. Read More
Gaetan J. Alfano was mentioned in an article titled, “Court Rejects ‘Close Nexus’ Arbitration Argument in Dispute Between School, Condo Owner.” Published March 14, 2019 in The Legal Intelligencer.
Related Information:
Click here to read the article in The Legal Intelligencer Read More
The National Labor Relations Board (“NLRB”) recently issued two decisions that give companies greater flexibility to discipline employees and classify workers as independent contractors. Alstate Maintenance, LLC, 367 NLRB 68 (2019); SuperShuttle DFW, Inc., 367 NLRB 75 (2019).
In Alstate, the Board rejected a standard that protected broad statements to management in front of colleagues, making it more difficult for employees to successfully claim comments are protected by the National Labor Relations Act (“NLRA”). Now, an employee’s statement is not protected unless the employee brings a truly group complaint or attempts to start group action for mutual aid or protection. The Board rejected the argument that the comment, “we did a similar job a year prior and we didn’t receive a tip for it” was a group complaint simply because it was made in front of coworkers and used the plural pronoun “we.” Rather, because the employer did not control tips, the comment could not be considered as made to management for the workers’ mutual aid or protection.
In SuperShuttle, the NLRB returned to its long-standing broad definition of an independent contractor. The Board reaffirmed a traditional common-law agency test, which focuses on a company’s ability to control a worker’s daily tasks. Going forward, the Board will also examine the entrepreneurial opportunity a position affords a worker as one aspect of determining his or her employment status. The ruling may make it more difficult for workers to unionize because only employees are covered by the NLRA.
Both decisions indicate that the NLRB may continue to relax restrictions on American businesses, including a company’s ability to discipline its employees and classify its workers as it chooses. Employers should be mindful to distinguish between individual complaints, even if made in a group setting, which are not protected, and group actions concerning terms and conditions of employment, which cannot be restricted. Read More
Laura C. Bunting will be presenting, “Social Media: Legal Issues When Employees Log-On (Inside and Outside of the Workplace),” at the Pittsburgh Human Resources Association’s 70th Annual Conference & Exhibition in Mars, PA on October 9, 2018. Read More
One of the defining moments for many adolescents is their first summer job. A first job often represented a sense of freedom and increased independence. No matter what your first job was, you certainly learned lessons about how to be a valuable member of a workplace. During summers in Ithaca, New York, I worked at a bakery, a clothing store at the mall, an antiques store, and later, I was a counselor at a sleep-away camp in the Poconos. Each of these jobs taught me new skills, pushed me outside my comfort zone, and developed my career values. As this summer ends, revisit the lessons you learned during your first jobs and use them to sustain and reinvigorate your legal career. The following are some of the key lessons I learned during my summer jobs.
Persistence
Finding your first job may have been a challenge and likely taught you how important follow-up and follow through are in the workplace. My first summer home from college, it seemed like I was running out of places to apply to for a job and not having any luck. Many of the restaurants were not interested unless you had worked in a restaurant before and I had only worked retail during high school. I eventually made a list of each place I had applied and then followed up with phone calls to each business asking the manager the status of my application. Eventually I was hired by one of the first places I had applied. The same thing may have been true when searching for your first job out of law school or your next position. Try not to be frustrated with the hard work that often accompanies finding or changing jobs. A positive attitude while job hunting will be noticed. Additionally, whether you want to develop your career at your firm or organization or make a career transition, be persistent in working toward your goals. Read More
The commencement speaker when you graduated from law school inevitably highlighted members of the audience who supported the graduates during school, and would provide continued support while the graduates studied for the bar exam and began their careers. Your career can be enhanced through relationships with others in your network of fellow attorneys, along with support from friends and family. These relationships can provide you with new opportunities and challenge you to go outside of your comfort zone. Each person has specific strengths. Therefore, it may be helpful to seek out connections with different skills to help you work toward your career goals. With that in mind, you may want to develop connections in the following categories:
The Scholar
The best source of referrals, future job prospects, and long-term success in the legal field is substantive knowledge of the law. As a young lawyer, one of the highest compliments you can be paid is if another attorney refers a case to you. The best way to build these referrals is to become the “go-to” attorney in your area of the law, so that you are the first person who comes to mind when an attorney has a case to refer. The scholar is a well-respected and well-versed practitioner or in-house counsel in your chosen field of law. Ask the scholar to coffee or a meeting in his office to express an interest in his or her career. The scholar may be able to provide insight on resources and organizations you should consider joining to deepen your understanding of the law. For example, if you practice labor and employment law, a Human Resources organization may provide insight on issues employers are facing. Become curious about available resources as well. The U.S. District Court ECF (electronic case files) systems allow you to receive notifications of filings related to attorney, party or type of case directly to your email. Read More
Gaetan J. Alfano will be a panelist speaker at the Business Insurance U.S. Women to Watch Annual Conference in New York City, on December 15, 2017.
Mr. Alfano’s panel will focus on the gender pay gap issue. He will discuss recent case law on the employer ban on inquiries into salary history, the Philadelphia ordinance, and how all of these developments impact the overall landscape for employees.
For More Information Click HERE Read More
August 15, 2024
Pietragallo Gordon Alfano Bosick & Raspanti, LLP is pleased to announce that 27 lawyers have been named as 2025 The Best Lawyers in America® and Ones to Watch.Read More
May 17, 2024
Pietragallo is pleased to announce that 24 lawyers have been named to the 2024 Pennsylvania Super Lawyers and Rising Stars list. Read More
