Wednesday, September 23, 2015

Top Five Issues Facing Employers Today

We’re doing a round up of the top five issues currently facing employers. Here’s the first three:

Classification Issue

The Department of Labor continues to come down hard on employers who misclassify an employee as an independent contractor. Earlier this year, it issued a new Guidance on the subject which announced a change in the way that the agency will view these relationships going forward. The DOL espoused an economic realties test to determine employment status which includes the following factors:

1) The extent to which the work performed is an integral part of the employer’s business. 

2) Whether the worker’s managerial skills affect his or her opportunity for profit and loss. 

3) The relative investments in facilities and equipment by the worker and the employer. 

4) The worker’s skill and initiative

5) The permanency of the worker’s relationship with the employer

6) The nature and degree of control by the employer 

Previously, greater weight was generally given to the last factor, the degree of control by the employer. The recent guidance shifts that focus. It says “[i]n order to make the determination whether a worker is an employee or an independent contractor under the FLSA, courts use the multi-factorial “economic realities” test, which focuses on whether the worker is economically dependent on the employer or in business for him or herself.  In practical terms this means that if an employer has an individual who they treat as an independent contractor for pay purposes but that individual is pretty much only working for the employer, then a real danger exists that the individual will be considered an employee by the DOL.

An unfavorable finding that an independent contractor is really an employee can cost employers not only the employment tax and social security and/or pension contributions, but penalties and interest on all of that.

Employers should confront this issue sooner rather than later. The new economic realities test advocated by the DOL should be applied to all independent contractor relationships. Those relationships that don’t fit the factors should be proactively changed.

Off Duty Overtime

Smartphones, tablets and other mobile devices make it easier than ever for employees to access work from anywhere at anytime. We recently reported on the pending lawsuit by a number of Chicago police officers who claim overtime is due to them for the times that they received and responded to emails and messages off duty on their department issued Blackberrys. The City has already spent nearly $500,000 on legal fees alone in defending the case.

Employers need strong and up to date policies on the expectation of employee use of employer issued devices off duty and when employees are authorized to work during unscheduled hours. As we have often suggested, employees should sign off on their hours worked each pay period so that an accurate record exists of all the hours worked by each employee.

Transgender Rights in the Workplace

There couldn’t be a hotter topic currently. If social issues drive workplace issues as well as the law (and we believe so), then employers need to address this topic immediately. OSHA’s new guidance on restroom accommodations and the EEOC’s position, which is rapidly gaining acceptance, that transgender individuals are protected by gender non-discrimination laws, signal that employers must incorporate rights of transgender employees into their workplace policies and training programs for all staff.

Tomorrow we will round out our list.