Archive
Employment Law Clip: Pitfalls of Using Independent Contractors
Many businesses use “independent contractors” to augment their regular workforce. They see advantages to using trained, non-employee workers with specialized skills who can provide needed services on a short-term or long-term basis.
However, the ability of businesses to classify workers as independent contractors is not unchecked. Businesses cannot avoid employer obligations simply by designating certain workers as independent contractors.
Please feel free to contact any member of MBBP’s Employment Law Group with questions on independent contractors.
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Minimum Wage Increases in 13 States
By: Robert Shea
Employers in 13 states begin 2014 with higher minimum wage requirements. Now, 21 states have minimum wage rates exceeding the federal minimum wage rate of $7.25 per hour. Here in New England, as of January 1, 2014, Connecticut’s minimum wage rate is $8.70 (and will go to $9.00 on January 1, 2015), Rhode Island’s rate is $8.00, and Vermont’s rate is $8.73. Minimum wage rates in Maine, Massachusetts and New Hampshire remain at $7.50, $8.00, and $7.25, respectively. Also, note New York’s minimum wage rate will go from $8.00 to $8.75 on December 31, 2014 and to $9.00 on December 31, 2015.
Minimum wage increases are also being discussed in several other states, including Massachusetts. Proposed legislation in Massachusetts would increase the minimum wage rate from $8.00 to $11.00 over three years. The minimum wage is also a hot topic on Capitol Hill where Democrats are seeking a significant increase in the federal minimum wage rate, which has been at its current rate of $7.25 per hour since 2009.
For more information on this topic, please contact MBBP’s Employment Law Group.
New Proposed Federal Legislation Targets Independent Contractor Misclassification
By: Bob Shea
Government efforts to combat the independent contractor misclassification continue as a new U.S. Senate bill was recently introduced by Sen. Bob Casey of Pennsylvania. The “Payroll Fraud Prevention Act” would amend the federal Fair Labor Standards Act to require employers to “accurately classify” workers as either employees or non-employees, and to provide each worker with a written notice informing the worker “of the classification of such individual … as an employee or a non-employee.” The Act also would require the notice to include a statement directing the worker to a U.S. Department of Labor website providing further information about employee rights.
Under the Act, if an employer failed to provide the required notice to a worker the individual would be presumed to be an employee, as opposed to an independent contractor. The Act also would contain anti-retaliation protections for workers and would amend the Social Security Act to provide for audits of employers who are believed to be misclassifying workers for purposes of avoiding unemployment taxes or benefits.
Please contact our Employment Law Group if you have questions regarding this topic.
Employee Recordkeeping Requirements Under Federal and Massachusetts Wage Laws: Which Records Should Employers Keep?
Employers have an obligation under the federal regulations interpreting the Fair Labor Standards Act (FLSA) and separately under Massachusetts law to keep and retain certain time and wage records.
Keeping complete and accurate time and wage records is not just a legal requirement– it is also a good business practice. In a lawsuit for unpaid wages or overtime, the burden of proving when and for how long an employee worked is placed on the employer. An employer who has kept thorough and accurate time and wage records will be better equipped to defend against a wage and hour lawsuit.
For each non-exempt employee, federal regulations require that employers retain at least the following records:
- Employee’s full name and social security number.
- Address, including zip code.
- Birth date, if younger than 19.
- Sex and occupation.
- Time and day of week when employee’s workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Basis on which employee’s wages are paid (e.g., “$9 per hour,” “$440 a week,” “piecework”).
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee’s wages.
- Total wages paid each pay period.
- Date of payment and the pay period covered by the payment.
For each exempt employee, federal regulations require that employers retain at least the records listed above, except those listed in numbers 6 through 10 and a description of the basis on which wages are paid, e.g. the dollar amount of earnings per month, per week, per month plus commissions, benefits, etc.
For more information on recordkeeping requirements or the prevention of wage and hour lawsuits, please contact a member of the Employment Law Group.
MBBP Employment Breakfast Seminar on Employee Terminations
On Tuesday, October 29th MBBP is hosting a seminar on Employee Terminations: Avoiding Claims & Liability. Discharging an employee is one of the most difficult parts of a manager’s (and HR professional’s) job. It is also the employment action most likely to expose a business to legal claims and liability. This Program is designed to help HR professionals, managers and in-house counsel develop a rational and strategic approach to employee terminations. We will review the major areas of risk and the common employer pitfalls and traps for the unwary. We will lead a very practical discussion with attendees focused on developing best practices that will avoid employee claims and liability.
Registration for the event begins at 7:30AM with the program to begin at 8:00AM. To learn more or to register for this event, please visit our event page.
Scott Connolly Presents on Defending Discrimination Claims
On September 26, 2013, MBBP employment attorney Scott Connolly spoke on a panel at Boston College Law School on the subject of defending discrimination and retaliation claims before the Massachusetts Commission Against Discrimination (MCAD). Scott, who has been defending employers against such claims for more than 12 years, presented to a panel of third-year law students on case evaluation, witness interviews, procedure, development of defenses, and preparation of employer Position Statements.
Employers with questions about responding to charges of discrimination or retaliation at the MCAD or the federal Equal Employment Opportunity Commission should feel free to contact Scott about this area of practice.
Governor Patrick Administration Supports “Outright Elimination” of Non-Compete Agreement Enforceability
By: Bob Shea
In testimony before the Joint Committee on Labor and Workforce Department on September 10, Gregory Bialecki, Governor Deval Patrick’s Secretary of Housing and Economic Development, stated that the Patrick Administration now supports the outright elimination of the enforceability of non-competition agreements in Massachusetts. Secretary Bialecki stated that a ban on non-competes should be combined with the adoption of the Uniform Trade Secrets Act (“UTSA”) to protect against the potential loss or disclosure of proprietary information by departing employees.
Secretary Bialecki testified that Massachusetts “should do everything it can to (1) retain talented entrepreneurs; (2) support individual career growth and flexibility; and (3) encourage new innovative businesses that are the engines of economic growth.” According to Bialecki, non-competes “stifle movement and inhibit competition” and, as a result, “we are not seeing the kind of spin-offs and start-ups at the same rate that previously made Massachusetts an enviable model.”
Secretary Bialecki testified that Massachusetts should adopt the USTA, as 47 other states have done. He said that the UTSA “and other tools protect an employer’s trade secrets and proprietary information,” and that, “[e]ven without non-compete agreements, companies still have a disproportionate ability to litigate against the individual.”
There are three pending non-compete bills before the Massachusetts legislature. Two bills would create a presumption that non-competes lasting more than 6 months are unenforceable. One bill would ban non-competes in Massachusetts altogether. At this point, however, any legislative effort to restrict the use of non-competes faces a tough battle. Still, the Patrick Administration’s decision to support a ban on non-competes may be a turning point in the debate.
You may contact a member of MBBP’s Employment Law Group for more information.
SJC Rules Employees Can Pursue Wage Claims under Both MA Wage Act and Common Law
On August 12, 2013, the Massachusetts Supreme Judicial Court (“SJC”) ruled that employees claiming they are owed wage or salary compensation are not limited to bringing their claims under the Massachusetts Wage Act, M.G.L. c. 149, § 148, and can also bring claims under common law, including breach of contract claims. The ruling is significant because, although the Wage Act provides very powerful remedies to claimants, including mandatory treble damages and attorney’s fees, the Wage Act has a three year statute of limitations. In contrast, a six year statute of limitations period applies to breach of contract claims in Massachusetts. This means that claimants can seek damages going back six years, though only the last three years of damages would be subject to trebling.
The SJC’s decision in Lipsitt v. Plaud can be accessed here.
You may contact a member of MBBP’s Employment Law Group for more information.
New Report Concludes that MA Independent Contractor Law “Suppresses” Over 43,000 Self-Employment Jobs Annually
By: Bob Shea
On June 11, 2013, New Jobs for Massachusetts, Inc., a non-profit public policy advocate for growth in private sector employment in Massachusetts, issued a report concerning the impact of the Massachusetts Independent Contractor Law (“MICL”) on self-employment growth in Massachusetts.
Using data from U.S. Bureau of Labor Statistics, the report analyzes 739 occupational classifications and identifies 400 service occupations adversely affected by MICL. The report concludes that the difficulty faced by businesses in meeting the strict requirements of MICL, along with the legal liability associated with MICL non-compliance, “suppresses” the creation of over 43,000 self-employment jobs annually. The report argues that bringing MICL more in line with the independent contractor law tests used under federal law and the laws of other states will lead to significant growth in self-employment in Massachusetts.
MBBP’s Employment Law Group has addressed the problems presented by MICL for businesses using independent contractors in past communications to clients.
Please feel free to contact MBBP’s Employment Law Group with any questions on this topic.
D.C. Circuit Court of Appeals Declares NLRB’s Posting Rule Invalid
By: Scott Connolly
On May 7, 2013, the U.S. Court of Appeals for the District of Columbia invalidated a rule issued in 2011 by the National Labor Relations Board (the “Board”) that would have required employers to post notices informing employees of their unionization rights. The case, National Association of Manufacturers v. National Labor Relations Board, was brought by trade associations and other employer representatives who claimed that the Board’s rule violated the National Labor Relations Act (“NLRA”) and the First Amendment to the Constitution.
Specifically, the Board’s rule would have required employers to post notices to employees in conspicuous places informing them of their rights under the NLRA to, for example, form, join or assist a union; bargain collectively; and strike and picket. The Board’s poster also recited more specific employee rights. For example, the poster states that it is “illegal” for an employer to prohibit employees “from wearing union hats, buttons, t-shirts, and pins in the workplace” or to “[s]py on or videotape peaceful union activities.” The rule made failure to post the notice an unfair labor practice, as well as evidence the Board could consider of the employer’s unlawful motive regarding other alleged unfair labor practices, such as plant-closing threats, firings or refusals to hire. The Board claimed the rule was “necessary” because employees were not aware of their union rights. Obviously, employer groups found the required notice pro-union.
The Court held that the Board’s rule violated Section 8(c) of the NLRA, which states:
The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this [Act], if such expression contains no threat or reprisal or force or promise of benefit.
Citing “firmly established principles of First Amendment free-speech law,” the Court determined that Section 8(c) protects the right of employers to both speak and “not to speak.” In other words, an employer’s decision to not disseminate information contained in the Board’s poster is protected to the same extent as an employer’s right to express views and disseminate information about unions. Employers, the court concluded, cannot be compelled by the Board to speak its message. The Board’s rule violated Section 8(c) and First Amendment principles by making an employer’s failure to post the Board’s notice an unfair labor practice, and by treating such a failure as evidence of anti-union animus in cases involving, for example, unlawfully motivated firings.
It remains to be seen whether the Board will appeal the Court’s ruling to the U.S. Supreme Court.
Please feel free to contact Scott with any questions on this topic.
How Does Massachusetts Medical Marijuana Law Impact Employers?
The medical marijuana law, titled Massachusetts’s Act for the Humanitarian Medical Use of Marijuana (the “Act”), went into effect on January 13, 2013. And while it does not directly implicate the employment relationship, there will undoubtedly be workplace issues which will
arise concerning the use of medical marijuana. We explore the potential issue for employers in our latest issue of the Employment Law Advisor. You can download the newsletter and sign up for our monthly updates here.
Massachusetts Employment Law Blog 