Author: jamesperry

Employers Beware: Misclassification Cases are Costly and Common

Many employers erroneously classify workers who should be employees as independent contractors, due to the significant tax savings. However, misclassification cases present major risks. The independent contractor status for a worker is not favored by the IRS, the Department of Labor (DOL), the states, and many agencies within the states including those enforcing workers’ compensation benefits and unemployment. As such, treating a worker who should be an employee as an independent contractor can result in costly litigation and even personal liability. The biggest problem in classifying workers is that there is no uniform definition of “employee” or “independent contractor” under all the Federal and State labor and tax laws. The Fair Labor Standards Act, passed in 1935, has the broadest definition of “employee” and that has served as the model for most State wage hour laws. Additionally, there have been and continue to be many cases concerning this issue being litigated under Federal and State wage/hour statutes. The Common Law Definition of Employee The extent of control which is exerted by the employer over the details of the individual’s work. Whether the individual is engaged in a distinct occupation or business, so that the individual has an opportunity for profit or loss. Whether the work is done under the direction of the employer, or by the individual without supervision. The skill, experience, and specialized training required by the individual’s...

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The Most Common Failing of Supervision is Failing to Document

A common failing of supervision and management in dealing with a problem employee is failing to document counsellings and verbal warnings issued concerning annoying or counterproductive, yet correctable, employee behavior. For example, tardiness, excessive breaks, excessive time away from working areas, etc. These behaviors, in and of themselves, are not serious enough to warrant discharge on their first or second occurrence, but they can have a negative impact on productivity and morale. The good news is that these types of behaviors are correctable, but they are correctable only if managers are diligent in documenting the incidents of occurrence and communications with the employee regarding the issue and the need to correct it. Not only does documentation help curb these minor annoyances that have the potential to become larger issues, but, in the event they do cause a larger issue, proper documentation is a very helpful tool in defending a wrongful termination case resulting from a serious incident or multiple “minor” transgressions. Below are a few steps to help any business start a system of proper employee performance management: Train. The key to anything is ensuring that everyone is on the same page. This means training management employees to recognize improper conduct and understand the disciplinary tools at their disposal. Timing. In the same vein, managers should be trained to document incidents, witnesses to each incident, and all relevant content...

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The HR Blog is published by Dickinson Wright PLLC to inform the public of important developments within the firm and practice areas. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered in this blog.

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