Liability

I’m Independent Until I’m Not

Josh runs a localDriver1 courier service. He decides which jobs to accept and negotiates delivery fees with customers. When a customer calls, Josh looks at the roster of drivers and goes down the list until he finds a driver to handle the job.

His couriers are part-timers and include college students, stay at home moms, and a few Uber drivers. He treats everyone as an independent contractor because they use their own vehicles and set their own hours. All Josh requires is a clean driving record and proof of insurance.

Driver3Yesterday, Ron, a college student driver, was involved in a fender bender while making a delivery.  Ron is desperate to avoid telling his parents about the car. His parents bought the car for him as a reward for dropping his beer and pizza plan for college studies and getting serious about graduating.

Ron asks Josh to help pay for the repairs but Josh declines. He points out that Ron is an independent contractor, not an employee. Josh adds that it’s not his fault Ron was talking on his cell phone while driving and not paying attention to the traffic signals.

So Ron calls his mom to give her a hint that the car insurance premium may, possibly, kind of, increase due to unforeseen circumstances.  Like any experienced mother, Ron’s mom gets the real story within minutes. After she finishes explaining that idiots who can’t multitask shouldn’t try to drive and talk at the same time, she asks for more details about Josh’s courier business.

Driver2Ron’s mom works in HR for a major corporation and she’s just read about the U.S. Department of Labor’s new “economic realities” test. She thinks that Ron is actually an employee and not an independent contractor.

What should Ron’s mom do next?

  1. She can use her HR experience to compare Ron’s description of how the courier business is run to the DOL test and assess whether he’s an employee.
  2. She can ask one of the corporate attorneys at her company to give her an off-the-record assessment of the DOL test.
  3. She can contact Josh directly to argue that he should pay for the auto repairs because she believes her son is actually an employee of Josh’s business.

DOL released guidance on their new “economic realities” test about a year ago. This new test looks at whether a worker is economically dependent on the “employer”.  If yes, then the worker is an employee under the Fair Labor Standards Act (FLSA). Expect to hear much more about this test.

If your company is struggling with HR issues, Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

Join the HR Compliance Jungle today. Click here!

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If It’s Not In Writing…

Another update from the Jungle…

Auto-1Alan owns an auto repair shop and he seems to have a revolving door for employees. He knows that not everyone wants to be a grease monkey and finding employees is not easy.  In fact, he’s hired people who otherwise would never have experienced the joys of employment.  With so much turn over Alan never created written policies for his employees.

When Alan started his business, he was on the edge of town surrounded by fields. Sam and Zeke, a couple of good old boys wandered in from the fields where they were looking for their hunting dog and signed on to work for Alan. Sam and Zeke are good auto mechanics when they pay attention to the job.

Auto-4Alan lets them use some of his tools and equipment to build cars that they race on dirt tracks during the summer.  If they don’t wreck their dirt track car, they celebrate by getting drunk on Jack Daniels (black label only; green label is for sissies). When work is slow, Sam and Zeke also like to do a little target practice at the makeshift shooting range they created on the back part of Alan’s property.

Now the surrounding fields are mostly gone, replaced by a shopping center and McMansions for the urban sorts who want to experience suburban life. Alan’s property still backs up to fields but he’s worried about stray bullets. So he tells Sam and Zeke to dismantle the shooting range and keep their guns at home.  Several weeks pass and Sam and Zeke are still using the shooting range despite repeated verbal warnings of dire consequences.

Now Alan has a policeman in his office politely explaining that the neighborhood was recently annexed and is now within town limits. Town ordinances prohibit firing guns within town limits and violators can be arrested. As the property owner, Alan could be arrested.

What should Alan do next?

  1. He can blame Sam and Zeke and tell the police officer to arrest them.
  2. He can fire Sam and Zeke for ignoring his verbal warnings. Of course, Sam and Zeke have conveniently forgotten the verbal warnings (and they have guns).
  3. He can acknowledge that he needs to take a more organized approach to employee matters by creating written policies and documenting disciplinary actions.

The old adage “if it’s not in writing, it didn’t happen” still holds true. Employers like Alan who fail to document employee actions, including verbal warnings, face a greater chance of being sued for wrongful termination if they fire an employee for disciplinary reasons.

 

If your company is struggling with HR issues, Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

Ebook Link: https://njshirk12.files.wordpress.com/2015/03/skh-employee-theft.pdf

Join the HR Compliance Jungle today. Click here!

Follow us on Facebook & Twitter!

Visit us: http://www.complianceriskadvisor.com/