|
|
|
The Department of Labor Revisits the Misclassification Issue: Independent Contractor versus Employee
On September 22, the Department of Labor announced a proposed rule addressing how to determine whether a workers is an employee under the Fair Labor Standards Act or an independent contractor. The issue of whether an individual is properly classified as an independent when the law determines the individual is an employee is commonly referred to as the misclassification issue.
Recently, employers have been subject to different rules and a moving target as it concerns how to properly classify a worker as either an employee or independent contractor. With its proposed rule, the Department of Labor intends to clarify the definition of an employee under the FLSA as it relates to independent contractors. The proposed rule can be found here.
In its proposed rule, the Department of Labor suggests the following:
- Adopt an "economic reality" test to determine a worker's status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for themselves (independent contractor) or is economically dependent on a putative employer for work (employee);
- Identify and explain two "core factors," specifically: the nature and degree of the worker's control over the work; and the worker's opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else's business or is in business for themselves;
- Identify three other factors that may serve as additional guideposts in the analysis including: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer; and whether the work is part of an integrated unit of production; and
- Advise that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.
The Department of Labor is seeking comments on its proposed rule. Comments may be submitted through October 26 by clicking here. In the meantime, if you have concerns whether you are properly classifying your workers as independent contractors, please contact either Philip Siegel or Ben Lowenthal, who can assist with performing a relationship audit.
|
|
Revised Certification Requirements for Women-Owned Small Businesses
The Small Business Administration ("SBA") has issued regulations effective October 15, 2020 which change the manner in which women-owned small businesses can be certified in order to qualify for set-asides available pursuant to SBA guidelines. The regulations put into effect a change originally enacted in 2015.
Prior to the new regulations, a woman-owned small business was permitted to self-certify in order to qualify for set asides available under the law for federal contracting opportunities. Although the lack of any central certification authority allowed many businesses the opportunity to become involved in these programs, a good deal of confusion has existed, especially in light of the specific certification procedures in place for other SBA set aside programs. The new regulations are intended to clarify the process and make certification available to any business which qualifies.
Under the new regulations, a woman-owned business seeking certification can access this website
. The process is free and requires completion of an application after creation of a new account. SBA has additional resources available, including checklists, FAQ's and a certification options table. These and other resources are available here.
Business owners also still have the option of using third party companies for certification. Four are currently approved: El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women's Chamber of Commerce, and Women's Business Enterprise National Council. The programs offered by these companies may have costs and fees associated with them. Once certification is obtained through a third party company, proof of the certification needs to be provided through beta.certify.sba.gov.
Further Questions? If you have further questions about the new certification process or the existing requirements for certification as a woman-owned small business, please contact Scott Calhoun. You can e-mail Scott directly by clicking here.
|
|
OSHA Announces $913,133.00 in COVID-19 Violations
As of October 1, 2020, OSHA has cited 62 employers for COVID-19 related violations totaling $913,133.00 in penalties.
Specifically, many of the citations and penalties came as a result of employers failing to:
- implement a written respiratory protection program;
- provide and train employees on proper personal protection equipment (PPE);
- properly report and record an employee illness and;
- comply with the General Duty Clause of the Occupational Safety and Health Act of 1970 (failure to keep "a place of employment . . . free from recognized hazards that are causing or are likely to cause death or serious physical harm").
Although the majority of the citations were to healthcare facilities, nursing care facilities, and food processing facilities, construction employers must remain diligent in adhering to OSHA COVID-19 guidance for construction work, which is available on the OSHA website here. Specifically, all construction employers should assess the hazards to which workers may be exposed to COVID-19, evaluate the risk of exposure, and select and implement and ensure workers use controls to prevent exposure to COVID-19. Special care must be taken for indoor construction activities where any employee, contractor, owner, or other occupant has a known COVID-19 exposure or is exhibiting COVID-19 symptoms. In those instances, the employer's failure to take action and implement engineering controls (such as erecting physical barriers separating workers) and administrative controls (such as asking COVID-19 screening questions before worker entry) could very well result in OSHA citations and penalties.
For example, OSHA cited a food processing facility in Colorado and assessed a total of $15,615.00 in penalties for not developing and implementing timely and effective measures to mitigate exposure to COVID-19 hazards. In citing the food processing facility following a COVID-19 outbreak among its workers, OSHA listed the following recognized and feasible means of abatement of COVID-19 hazards:
- establish, implement, and enforce a social distancing program on the job site that allow for at least a six-foot distance between workers where feasible;
- implement protective measures such as barriers between workers, face coverings, and communicate the purpose and correct usage of such measures; and
- the use of symptom screening prior to allowing workers to enter the job site.
For construction employers, it will be important to recognize COVID-19 hazards, especially for indoor construction activities, and implement mitigation measures in order to prevent potential OSHA citations and fines. For any employer or job specific questions, please do not hesitate to call or email attorneys Philip Siegel and Ben Lowenthal by clicking here.
|
|
The Impact of COVID-19 on the Form I-9 Process
On September 23, United States Customs and Immigration Services (USCIS) announced that the issuance of certain Employment Authorization Documents (Form I-766, EADs) may be delayed due to the COVID-19 global pandemic. The press release from the USCIS explains to employers that certain Forms I-797, Notice of Action, issued by the Department of Homeland Security are acceptable List C documents, even though the notice states it is not evidence of employment authorization. The option of presenting a Notice of Action as a List C document during the Form I-9 process is available to new employees who are waiting for their EAD and current employees who require reverification.
For the Notice of Action to present as acceptable, the press release explains that it must include a Notice Date from December 1, 2019, through and including August 20, 2020. The Notice must also indicate that USCIS has approved the employee's Form I-765, Application for Employment Authorization. Both new and current employees may present this notice to complete Form I-9 until December 1. After December 1, employers are required to reverify employees who presented this Notice as a List C document. The press release explains that these employees must either present new evidence of employment authorization from either List A or List C. Of course, the new evidence may include the new EAD.
If you have any questions regarding completion for the Form I-9 process, or if you are considering conducting an internal I-9 audit, please contact Philip Siegel. You can e-mail Philip by clicking here, or you can call him directly at (404) 469-9197.
|
|
Unlicensed Contractors Beware
Travelling to various cities and states outside of a contractor's home base to perform work on construction projects is not only routine, it has more or less become the norm in the industry. Accordingly, paying close attention to and satisfying the licensing requirements for each location where you are performing work is vital to protecting a contracting business's rights and interests. Indeed, in certain states, the failure to obtain and maintain a valid and current contractor's license for the performance of construction work will result in the contractor having no right to enforce its contracts for the work performed. By failing to obtain or maintain a contractor's license, a contractor may forfeit its right to be paid for the work it performed. This harsh consequence was recently reinforced by two decision issued by the Georgia Court of Appeals.[1]
First, in LFR Investments, LLC v. Van Sant, the sole member of LFR Investments, LLC was properly licensed as a residential basic qualifying agent, but he was not licensed as the agent for LFR Investments. The Court of Appeals decided that the licensing statute required that the qualifying agent specifically hold the contractor's license on the contracting business's behalf. Thus, despite the individual who actually ran the business being properly licensed, the Court determined that the business itself was not licensed, and ruled that LFR Investments could not enforce its contract with Van Sant and was barred from recover any monies it claimed were owed for the performance of work.
Second, in Saks Management and Associates v. Sung General Contracting, Inc., Sung General Contracting, admitted that it was never a licensed contractor, but argued that its work was only repair work, that Saks knew it was unlicensed, and that Saks had waived its right to enforce the licensing statutes by acquiescing in and accepting the work performed, among other arguments. The Court of Appeals was not swayed by Sung General Contracting arguments, and, notably, found that an Owner could not waive the requirements of the licensing statutes by acceptance of work. Accordingly, Sung General Contracting, like LFR Investments, was barred from enforcing its contract and could not recovery any monies it claimed it was due and owed for the work it performed.
These results are consistent with the decisions of state courts across the country where unlicensed contractors attempt to collect compensation for work performed.[2] It is critical to recognize that these harsh consequences are not limited to those who purposely and knowingly perform work without a license. A contractor may suffer the same result even if there is only a temporary lapse of licensing due to an unwitting or accidental failure of the contractor to timely renew its licensing. Accordingly, contractors must remain vigilant and ensure that they are compliant with the licensing rules and regulations in each location where they perform work to ensure they maintain the rights bargained for under their contracts.
If you have further questions about contractor licensing or need assistance with licensing matters, please contact J.T. Gallagher, you can email J.T. by clicking here.
[1] See Saks Mgmt. & Assocs., LLC v. Sung Gen. Contracting, Inc., No. A20A1085, 2020 WL 4914660 (Ga. Ct. App. Aug. 21, 2020); See LFR Investments, LLC v. Van Sant, 355 Ga. App. 101, 842 S.E.2d 574 (2020).
[2] See 44 A.L.R.4th 271, Failure of building and construction artisan or contractor to procure business or occupational license as affecting enforceability of contract or right of recovery for work done - modern cases.
|
|
Firm News
Philip Siegel was a recent guest on The Roofers Show podcast by Dave Sullivan. Philip spoke on what he considers the killer contract clauses roofing contractors are often asked to agree to when executing a construction contract. You can access the podcast episode by clicking here.
|
|
