Part 1 The Benefits and Burdens of Employment. Chapter 1 The Stakes of “Employment”

Part 1Part 1

The Benefits and Burdens of The Benefits and Burdens of EmploymentEmployment

Chapter 1Chapter 1

The Stakes of “Employment”The Stakes of “Employment”

Problem 1.1Problem 1.1

Problem 1.1 Problem 1.1 (cont.)(cont.)

GardenersGardeners

Floral designersFloral designers

Software engineer/IT expertSoftware engineer/IT expert

SalespersonSalesperson

Workers for transport, manual laborWorkers for transport, manual labor

McCary v. WadeMcCary v. Wade

ΔΔ Wade & WLM Wade & WLM Georgia PacificGeorgia Pacific

MyrickMyrick

π McCary & Fulwiley

K

…contracted with……to provide logs

to…


Issue: Whether Myrick was “employee” of Wade at Issue: Whether Myrick was “employee” of Wade at the time of the accident.the time of the accident.Myrick liable but bankruptMyrick liable but bankrupt∆∆: Myrick independent hauler: Myrick independent hauler∆∆: Wade not liable to : Wade not liable to ππ via via respondeat superiorrespondeat superior..Summary judgment grantedSummary judgment granted– No public policy overrideNo public policy override– Private ordering reignsPrivate ordering reigns


Multi-factor balancing test to determine Multi-factor balancing test to determine whether Myrick is employee of Wadewhether Myrick is employee of Wade

Deciding factors:Deciding factors:– Myrick owned his own equipmentMyrick owned his own equipment– Wade exercised little controlWade exercised little control

Ergo: Wade Ergo: Wade notnot Myrick’s employer. Myrick’s employer.

Did Wade choose this structure to insulate Did Wade choose this structure to insulate itself from liability to third parties?itself from liability to third parties?

Downsides of Wade being an independent Downsides of Wade being an independent contractor?contractor?

Fitzgerald v. Mobil Oil Corp.Fitzgerald v. Mobil Oil Corp.

TLI MTLTLI MTL

ππ Fitzgerald Fitzgerald ΔΔ Mobil Mobil

Jerry ReigerJerry Reiger

…was hired by…

…lea

sed

tracto

r to…

…received paychecks from……provided drivers to…

leas

ed tr

aile

r fr

om…

…had to pass road test given by…

…delivered oil to various customers from...


““Exclusive Remedy” -- Exclusive Remedy” -- Workers’ Comp is Workers’ Comp is employee’s only remedy employee’s only remedy against employer.against employer.Mobil Oil argues that it Mobil Oil argues that it was Fitzgerald’s employerwas Fitzgerald’s employer““Employer” status benefits Employer” status benefits Mobil in this caseMobil in this caseCourt agrees that Mobil = Court agrees that Mobil = employer.employer.


““Economic Realities Test”Economic Realities Test”– (1) control of worker’s duties(1) control of worker’s duties– (2) payment of wages(2) payment of wages– (3) right to hire/fire/discipline, and(3) right to hire/fire/discipline, and– (4) performance of duties = integral part of business.(4) performance of duties = integral part of business.

Less exacting than Less exacting than McCaryMcCary test as to degree of test as to degree of control required?control required?Mobil Oil has conflicting incentives:Mobil Oil has conflicting incentives:– “ “Leases” TLI employees; TLI pays themLeases” TLI employees; TLI pays them– yet successfully argues Fitzgerald its employee.yet successfully argues Fitzgerald its employee.

Natkin v. WinfreyNatkin v. Winfrey

ππ Natkin & Green Natkin & Green……were retained as “staff were retained as “staff

photographers” by…photographers” by…

ΔΔ Winfrey Winfrey……who published photos who published photos taken by Natkin & Green taken by Natkin & Green

without permissionwithout permission

Natkin v. WinfreyNatkin v. Winfrey

∆ ∆ claims photos “works for hire” by employeesclaims photos “works for hire” by employees

Court: Court: ππs s independent contractors, not employees. independent contractors, not employees.

Court uses nonexhaustive, 13 factor Court uses nonexhaustive, 13 factor ReidReid test. test.

Critical factors:Critical factors:– (1) highly skilled professionals;(1) highly skilled professionals;– (2) who owned & insured equipment;(2) who owned & insured equipment;– (3) who exercised considerable discretion;(3) who exercised considerable discretion;– (4) not treated by Oprah as employees for (4) not treated by Oprah as employees for

compensation/taxes.compensation/taxes.

NotesNotes

If If private ordering always trumpedprivate ordering always trumpedThenThen employers would often define employers would often define workers as independent contractorsworkers as independent contractorsWhy “employ” at all?Why “employ” at all?– Worker’s Comp exclusivityWorker’s Comp exclusivity– nonlegal reasonsnonlegal reasons

control over work productcontrol over work productMoraleMoraleCompetitivenessCompetitiveness

Balancing?Balancing?– By employers in private ordering?By employers in private ordering?– By courts in implementing public policy?By courts in implementing public policy?

TheThe Reid Reid 1313

1.1. Right to controlRight to control

2.2. Skill requiredSkill required

3.3. Source of toolsSource of tools

4.4. Location of workLocation of work

5.5. Duration of relationDuration of relation

6.6. Right to give more workRight to give more work

7.7. Hired party’s discretion Hired party’s discretion over when to workover when to work

8.8. Method of paymentMethod of payment

9.9. Hired party’s role re Hired party’s role re assistantsassistants

10.10. Is work regular Is work regular business of hirer?business of hirer?

11.11. Is hirer in business?Is hirer in business?

12.12. Employee benefitsEmployee benefits

13.13. Tax TreatmentTax Treatment

Problem 1.2 Problem 1.2

GardnersGardners





Clackamas Gastroenterology Clackamas Gastroenterology Associates v. WellsAssociates v. Wells

ππ sues under ADA sues under ADA

ππ = employee = employee

ΔΔ = statutory employer? = statutory employer?

15-employee threshold15-employee threshold

Are 4 physician-shareholders Are 4 physician-shareholders “employees” under statute?“employees” under statute?

Court adopts 6 factor EEOC testCourt adopts 6 factor EEOC test

Remands for decisionRemands for decision

What should happen below?What should happen below?

TheThe Clackamas Clackamas 66

1.1. Can firm hire/fire/set rules for the individual?Can firm hire/fire/set rules for the individual?

2.2. Does the organization supervise her work?Does the organization supervise her work?

3.3. Does the individual report to a higher-up?Does the individual report to a higher-up?

4.4. Is the individual able to influence the firm?Is the individual able to influence the firm?

5.5. Intention of parties as expressed in contract?Intention of parties as expressed in contract?

6.6. Does individual share firms profits/losses?Does individual share firms profits/losses?

ClackamasClackamas Notes Notes

Not all employers are “statutory employers”Not all employers are “statutory employers”– Title VII/ADA = 15Title VII/ADA = 15– ADEA = 20ADEA = 20– FMLA = 50 & 50/75 milesFMLA = 50 & 50/75 miles– FLSA = broad rule, riddled with exceptionsFLSA = broad rule, riddled with exceptions

Not all employees are covered by all lawsNot all employees are covered by all laws– ADEA bars discrimination against over 40ADEA bars discrimination against over 40– ADA protects “qualified individuals with a disability”ADA protects “qualified individuals with a disability”

Some statutes impose personal liability on managers Some statutes impose personal liability on managers (e.g., FLSA); some don’t (e.g., Title VII)(e.g., FLSA); some don’t (e.g., Title VII)

Yates v. HendonYates v. Hendon

Yates = corporation’s Yates = corporation’s president/sole shareholderpresident/sole shareholderProfit Sharing Plan bars Profit Sharing Plan bars alienation of plan benefits alienation of plan benefits Benefits outside BankruptcyBenefits outside BankruptcyYates’s creditors ask Bankruptcy Yates’s creditors ask Bankruptcy Court to avoid $50K payments Court to avoid $50K payments he made to the Plan to put them he made to the Plan to put them back in Yates’s estateback in Yates’s estate

$50,000

Yates

Yates Profit-Sharing Plan

Benefits

Yates’ Creditors

Yates v. HendonYates v. Hendon

Congress intended working Congress intended working owners to qualify as participants owners to qualify as participants in ERISA employee benefit plan.in ERISA employee benefit plan.

For most purposes, Yates is For most purposes, Yates is sole proprietor of small businesssole proprietor of small business

For ERISA, he is an employee.For ERISA, he is an employee.

Clackamas owners can have Clackamas owners can have their cake and eat it tootheir cake and eat it too

Ansoumana v. Gristede’sAnsoumana v. Gristede’s

ππss delivered for DR delivered for DR HC paid HC paid ππs s $25-$30/day $25-$30/dayHC paid #250-300 by DRHC paid #250-300 by DR ππs cs claim FLSA minimum laim FLSA minimum

wage/overtimewage/overtime ππs s New York law claimNew York law claim

ΔDuane Reade

Δ Hudson/Chelsea

π

Ansoumana v. Gristede’sAnsoumana v. Gristede’s

ISSUESISSUES(1)(1) Whether Whether ππs were employees or s were employees or

independent contractors of ∆s independent contractors of ∆s H/C? H/C?

(2)(2) Whether DR was also liable as Whether DR was also liable as

“joint” employer?“joint” employer?

HOLDINGSHOLDINGS(1)(1) ππs were employees; s were employees;

H/C liable to themH/C liable to them

(2)(2) DR a joint employer, DR a joint employer, jointly/severally liablejointly/severally liable

Note:The Immigration DilemmaNote:The Immigration Dilemma Immigrants often take lower-paying jobs

IRCA bars discrimination against documented workers and mandates it against undocumented ones

UAs unlikely to seek wage/hours protection

Should FLSA protect UAs?

In terms of federal wage/hours policy?

exploitation objectionable

In terms of federal immigration policy?

low wages incentivize employers to hire UAs

higher wages incentive illegal immigration

Vizcaino v. Microsoft Corp.Vizcaino v. Microsoft Corp.

ππs classified as non-s classified as non-employees by Microsoft.employees by Microsoft.

ππs sue for benefits available s sue for benefits available to employees underto employees under(1) SPP (ERISA)(1) SPP (ERISA)(2) ESPP (Washington law)(2) ESPP (Washington law)


HOLDINGSHOLDINGS

(1)(1) ππ workers covered workers covered under ESPP plan.under ESPP plan.

(2)(2) SPP issue remanded to SPP issue remanded to Plan AdministratorPlan Administrator


Plurality’s OpinionPlurality’s Opinion: focuses on plan : focuses on plan documents, which show an intent to include documents, which show an intent to include all employees in plan.all employees in plan.

O’ScannlainO’Scannlain: focuses on particulars of what : focuses on particulars of what parties negotiated; no contract for benefits parties negotiated; no contract for benefits ever formed.ever formed.

Microsoft NotesMicrosoft Notes

The semantics of the opinionsThe semantics of the opinions

Professionals different?Professionals different?– Cf. “free lancers” in Cf. “free lancers” in AnsoumanaAnsoumana– Did Microsoft workers benefit from higher pay?Did Microsoft workers benefit from higher pay?

The Plan Administrator denied the claimsThe Plan Administrator denied the claims– ERISA not very employee-friendly?ERISA not very employee-friendly?

Microsoft planning for the futureMicrosoft planning for the future

Problem 1.3Problem 1.3

GardnersGardners





Part 1 The Benefits and Burdens of Employment. Chapter 1 The Stakes of “Employment”

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Transcript of Part 1 The Benefits and Burdens of Employment. Chapter 1 The Stakes of “Employment”