Misclassification of employees as independent contractors under FSLA

A headline in the Christian Science Monitor caught my eye the other day: "Are you an independent contractor? Probably not, Labor Department says."

The article goes on to discuss a new Department of Labor ruling concerning the misclassification of employees as independent contractors.

The new ruling, Administrator's Interpretation No. 2015-1, dated July 15, 2015, states in its introduction that:

Misclassification of employees as independent contractors is found in an increasing number of workplaces in the United States, in part reflecting larger restructuring of business organizations.  When employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation.  Misclassification also results in lower tax revenues for government and an uneven playing field for employers who properly classify their workers.  Although independent contracting relationships can be advantageous for workers and businesses, some employees may be intentionally misclassified as a means to cut costs and avoid compliance with labor laws.

This rings true, as I have seen a number of workers compensation cases in which regular employees certainly seem misclassified as 1099 independent contractors.  Usually this involves construction subcontractors who hire mostly undocumented workers.  This particular administrative interpretation, however, deals directly with the definition of who is an employee under the Fair Labor Standards Act, not with workers' compensation law.  The courts have developed a multi-factor test to determine whether a worker is an employee or an independent contractor under the FSLA.

The factors typically include: (A) the extent to which the work
performed is an integral part of the employer’s business; (B) the worker’s opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer.

In a footnote, the Department of Labor references its "Misclassification Initiative and related memoranda of understanding", which essentially involves sharing of information between federal and state agencies. Details are available here. 





The 30 day period for judicial review of a MD WCC award is not extended by three days for mailing

In Chance v. WMATA, No. 240 (In the Court of Special Appeals of Maryland, April 4, 2007), the Court held that the 30 day period to file a petition for judicial review under LE Section 9-737 starts running from the date of the mailing of the Commission's order, and that the 30 day period is NOT extended by Md. Rule 1-203(c)(which provides for a three-day extension to a presribed period within which a party has a right to act when the period commences after service upon the party).

Further, the opinion states that the 30 day period is in the nature of a statute of limitations and thus subject to waiver by failure of a party to raise it in the proper manner. Id., at n. 6.

In short, in a Md WCC matter, the losing party gets 30 days to file the petition for judicial review, and no extra 3 days for mailing. And if the other side makes that mistake and you don't raise it properly, the defense is waived.

Cross examination of illegal aliens

Illegal aliens or undocumented workers have become a constant presence in civil litigation.  They may be plaintiffs, defendants, your witnesses, or the opponent's witnesses.  In workers compensation matters, they may be claimants, co-workers and sometimes employers.  Where an illegal alien is concerned, there may be violations of immigration or other laws that offer opportunities for cross examination or even legal defenses.   To develop the evidence to raise such issues, it may not be enough to take discovery from the witness or party; it may be necessary to also take discovery from his or her employer.  That requires prior planning and a determination to contest objections.  It is almost a certainty that there will be resistance to disclosure of facts about a witness's immigration status.  That may result in discovery disputes and rulings from the court or agency that could be the basis of meritorious appellate issues.  The assertion of 5th Amendment privileges may also be a basis for proper adverse inferences to be drawn in a civil matter.

Any lawyer who is involved in litigation has to be prepared to deal with immigration-related issues from either side.   It is not an issue "owned" by the defense bar or the plaintiff's bar.

As a threshold issue, the advocate has to consider the venue and the likelihood of how such a cross examination will be received.   Illegal immigration isn't a new phenomenon and there will  be a local body of law to be consulted.  See this recent Fairfax, Va. court ruling, for example.  Further, an attempt to cross examine on such issues could backfire.  There is some moral ambivalence about illegal immigration.  On the other hand, as Robert Samuelson's column in the Washington Post points out, the magnitude of the problem of illegal immigration, in terms of sheer numbers, now militates against the impulse of a nation of immigrants to simply overlook the issue.

There is a pervasive criminal element that sells fake documentation to illegal immigrants so that they can obtain work.  Evidence of the use of such fake documentation would be useful information to uncover for purposes of cross examination.  Every year the Social Security Administration sends out "no match" letters to employers concerning millions of workers who are using invalid social security numbers.   Discovery should focus not only on the worker, but on the worker's employer, who might have copies of the false documentation used to obtain the job and a copy of any "no match" letter received from the SSA with regard to this particular employee.

More on this later.

Virginia Legislature Acts to Clarify Lien Rights of Employer in Third Party Actions

This is courtesy of my partner, John H. Carstens, who is also our firm's managing partner:

In 2003, the Supreme Court of Virginia held that the employer did not timely protect its subrogation rights in a third party action, where its petition was filed after a settlement was reached but prior to the entry of the final order. See Yellow Freight Systems v. Courtaulds Performance Films, Inc, 266 Va. 57, 580 S.E.2d 812 (2003). While the Supreme Court acknowledged that the petition had been filed prior to verdict as required by the statute, as it then existed, the Court found that the subrogation rights had been extinguished by virtue of the settlement. As a result, the employer had no enforceable right at the time it filed its petition and the trial court could not consider it.

Effective July 1, 2004, the Virginia legislature amended the subrogation provisions of the Virginia Workers’ Compensation Act to address the anomaly created by the Courtaulds decision. The statute now provides that the employer shall have a lien against any verdict or settlement. Va. Code § 65.2-309(A). See also, Va. Code §§ 65.2-309.1, 310 and 311. The statute expressly gives the employer, whose lien has not been satisfied, a right to recover against the person receiving the proceeds of the settlement or verdict either through a civil action, or as a credit against future compensation. Va. Code § 65.2-309(D). These rights are extended to the workers’ compensation carrier by Va. Code § 65.2-812.

Plesae contact John Carstens at our Virginia office for further information.

Virginia Supreme Court Finds That Trial Court Erred In Overruling Pleas In Bar Based On Exclusivity Provisions of Virginia Worker's Compensation Act, Reversing a $900,000 Plaintiff's Judgment

In Clean Sweep Professional Parking Lot Maintenance v. Talley, No. 030058 (Va. Jan. 16, 2004), the Virginia Supreme Court held that the trial court erred in overruling pleas in bar based upon the exclusivity provisions of the Virginia Workers' Compensation Act.

The plaintiff was an employee of a subcontractor and brought a negligence action for personal injuries against another subcontractor. Both subcontractors had been hired by the general contractor engaged in the repaving of certain portions of I-95 under a contract with the Virginia Department of Transportation.

The plaintiff's employer, Coleman Trucking, had been hired to transport asphalt from the general contractor's plant to the jobsite, load asphalt into the paving machines, and haul the millings from the jobsite back to the plant.

The defendant subcontractor had been hired to help clear the roadway of asphalt after it was loosened by the milling machines.

The issue on appeal was whether the plaintiff's employer, Coleman Trucking, was engaged in the trade, business, or occupation of the general contractor. The trial court had held that Coleman Trucking was only engaged in a function which was as a supplier or deliverer of goods and to haul off goods, and was not engaged in the trade, business or occupation of the general contractor.

The Virginia Supreme Court disagreed. It reasoned that:

Coleman Trucking was not merely delivering its own independently manufactured parts. Rather, it was hauling asphalt millings to Virginia Paving’s plant and delivering the recycled asphalt from the plant back to the road project to be used in new paving. Clearly, similar to the defendant in Peck, Coleman “was engaged in an essential part of the work that [Virginia Paving] was required to perform under its contract with [VDOT.]” See 262 Va. at 528, 551 S.E.2d at 330. Coleman Trucking was not a stranger to the work of Virginia Paving, and its employee, Talley, was a statutory employee of Virginia Paving. . . .

D.C. Court of Appeals Remands Compensation Award To Pro Hockey Player For Agency Consideration of Who Is A Treating Physician

In Lincoln Hockey, LLC v. D.C. DOES, the Court has remanded a compensation award for the agency to consider, among other things, who is a "treating physician." The claimant here was a professional hockey player who alleged that his career was cut short by trauma-induced headaches that began after he was struck in the head and neck during a game with the Montreal Canadiens. The claimant had seen many physicians, but at the hearing his major medical expert was a physician with whom he had only met with twice and who was not aware of his full medical history. The employer (the Washington Capitals) argued that that physician's opinions were improperly given deference as treating physician opinions. The Court discussed at length the precedent for giving deference to the opinions of treating physicians, but noted that there has never been a definition of who is a treating physician.

On remand, the Court invited the agency to "explain its views of the criteria to be employed in determining who is a treating physician and the factors to be considered in assessing preferentially such a physician’s testimony as reflected in this case."

Anyone else find it bizarre that a highly paid professional athlete in a violent contact sport like hockey can receive a worker's compensation award in D.C.?