The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee?

The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? Cosponsored by the Labor & Employment Section Wednesday, July 18, 2018 Noon–1:15 p.m. 1.25 General CLE credits THE PITFALLS OF EMPLOYEE CLASSIFICATION: IS THAT INDEPENDENT CONTRACTOR REALLY AN EMPLOYEE? OREGON STATE BAR LABOR & EMPLOYMENT SECTION EXECUTIVE COMMITTEE Aruna A. Masih, Chair Clarence M. Belnavis, Chair-Elect Lisa A. Amato, Past Chair Stephen L. Brischetto, Treasurer Kyle T. Abraham, Secretary J. Ashlee Albies Janine C. Blatt Amanda T. Gamblin Shirin Amir Khosravi Jose A. Klein Sally Ann LaJoie Haley Rosenthal Shelley D. Russell Elizabeth A. Semler Jennifer Sung Dennis E. Westlind Scott N. Hunt,Advisory Member The materials and forms in this manual are published by the Oregon State Bar exclusively for the use of attorneys. Neither the Oregon State Bar nor the contributors make either express or implied warranties in regard to the use of the materials and/or forms. Each attorney must depend on his or her own knowledge of the law and expertise in the use or modification of these materials. Copyright © 2018 OREGON STATE BAR 16037 SW Upper Boones Ferry Road P.O. Box 231935 Tigard, OR 97281-1935 The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? ii TABLE OF CONTENTS Schedule . v Faculty . v Presentation Slides. 1 Advisory Opinion of the Commissioner of the Bureau of Labor and Industries Regarding the Employment Status of Uber Drivers . 7 In the Matter of C.S.R.T., LLC, and Robert P. Sabo, 33 BOLI 263 (2014) . 11 In the Matter of Susan C. Steves, 32 BOLI 43 (2012) . .23 In the Matter of Mark A. Frizzell, 31 BOLI 178 (2011) . .37 In the Matter of Horizon Technologies, LLC, 31 BOLI 229 (2011) . .69 The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? iii The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? iv SCHEDULE 11:30 Registration Noon The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? F A Bureau of Labor and Industries administrative law judge and two attorneys share the employee and employer perspectives F Review recent and notable cases and agency opinions that explain the multi-factored “economic realities” test F Considerations for building or defending a misclassification case or how to set up a legal working relationship from the start Kari Furnanz, Bureau of Labor & Industries, Portland Damien Munsinger, Klein Munsinger LLC, Portland Corinna Spencer-Scheurich, Northwest Workers’ Justice Project, Portland 1:15 Adjourn FACULTY Kari Furnanz, Bureau of Labor & Industries, Portland. Ms. Furnanz is an administrative law judge for BOLI’s Administrative Prosecution Unit. Damien Munsinger, Klein Munsinger LLC, Portland. Mr. Munsinger has represented and advised individuals, universities, small and large companies, and public entities on a wide range of issues including employment discrimination, wrongful termination, disability, and Title IX compliance, adjudication, and litigation. He is a member of the Northwest Association of Title IX Administrators; the Oregon Women Lawyers Queen’s Bench Special Events Subcommittee; the Oregon Asian Pacific American Bar Association; the Oregon State Bar Legal Heritage Committee, Labor and Employment Section, Litigation Section, and Sustainable Futures Section; the Federal Bar Association, and the American Bar Association. He regularly speaks on a wide range of employment-related topics and has taught at the Lewis & Clark Graduate School of Education and Counseling and at Willamette University College of Law. Corinna Spencer-Scheurich, Northwest Workers’ Justice Project, Portland. Ms. Spencer-Scheurich is the Deputy Director of the Northwest Workers’ Justice Project (NWJP). For the last six years, she has litigated in both state and federal court exclusively on behalf of low-wage workers in Oregon. Before joining NWJP, Ms. Spencer-Scheurich was the South Texas Regional Director of the Texas Civil Rights Project, where she practiced employment, disability, and civil rights law on behalf of low-income families living on the Texas-Mexico border. The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? v The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? vi THE PITFALLS OF EMPLOYEE CLASSIFICATION: IS THAT INDEPENDENT CONTRACTOR REALLY AN EMPLOYEE? OREGON STATE BAR LABOR AND EMPLOYMENT SECTION JULY 18, 2018 PRESENTED BY: KARI FURNANZ OREGON BUREAU OF LABOR & INDUSTRIES CORINNA SPENCER-SCHEURICH, NW WORKERS JUSTICE PROJECT DAMIEN MUNSINGER KLEIN MUNSINGER LLC The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? 1 INDEPENDENT CONTRACTORS Economic realities test • Oregon wage and hour. Right to control test • Oregon civil rights, employment. ORS 670.600 • Department of Revenue, Employment Department, Construction Contractors Board, and Landscape Construction Board. ECONOMIC REALITIES TEST WAGE & HOUR 1. The extent to which the work performed by the worker is an integral part of the alleged employer’s business. 2. The degree of control exercised by the alleged employer. 3. The permanency of the relationship. The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? 2 ECONOMIC REALITIES TEST WAGE & HOUR 4. The skill and initiative required to perform the work. 5. The degree to which the worker's opportunity for profit and loss is determined by the alleged employer. 6. The extent of the relative investments of the worker and alleged employer. ECONOMIC REALITIES TEST REMEMBER… • No single factor is determinative. • Labels don’t mean anything. • Totality of the circumstances. The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? 3 RIGHT TO CONTROL TEST CIVIL RIGHTS 1. Direct evidence of the right to control, or the exercise of control. 2. Method of payment. 3. Furnishing of equipment. 4. Right to fire. ORS 670.600 CERTAIN STATE AGENCIES • Department of Revenue, Employment Department, Construction Contractors Board, and Landscape Construction Board. • All statutory elements must be satisfied. The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? 4 THE PITFALLS OF EMPLOYEE CLASSIFICATION: IS THAT INDEPENDENT CONTRACTOR REALLY AN EMPLOYEE? THANK YOU! QUESTIONS? The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? 5 The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? 6 BRAD AVAKIAN CHRISTIE HAMMOND COMMISSIONER DEPUTY COMMISSIONER BUREAU OF LABOR AND INDUSTRIES ADVISORY OPINION OF THE COMMISSIONER OF THE BUREAU OF LABOR AND INDUSTRIES OF THE STATE OF OREGON Regarding: October 14, 2015 THE EMPLOYMENT STATUS OF UBER DRIVERS ADVISORY OPINION Introduction In recent months, BOLI has received requests for guidance on the employment status of Uber drivers. To date, no case relevant to this question has been filed with BOLI. Any such case would be decided on the specific facts and legal arguments presented. Although the analysis would not be binding in that proceeding, we intend this Advisory Opinion to be instructive to all interested parties—most notably Uber, its drivers and other transportation network companies—on what conclusions can be drawn from current, available information. Under existing labor laws, the rights of workers are dependent upon their proper classification as employees. Employees are afforded workplace protections such as receiving at least minimum wage for all hours worked (unless exempt), timely payment of wages, safe working conditions, remedies for discriminatory practices and, unemployment and workers' compensation benefits. Independent contractors, although they may have greater independence and flexibility than employees, are entitled only to compensation and other advantages as provided by agreement. In Oregon and many other states, workers are increasingly performing work in circumstances that appear to be outside of traditional employment arrangements. This trend has raised concerns that employees are being improperly classified as independent contractors, volunteers or interns. When an employer misclassifies a worker, it is not only the worker who is adversely affected. The employer also skirts its responsibility to pay employer taxes, creating an uneven playing field for employers who do follow the rules. Recent administrative and court cases in California address the employment status of Uber drivers. In addition, a recent opinion from the United States Department of Labor (Administrative Interpretation No. 2015-1, July 15, 2015) analyzes the misclassification of workers generally. These are instructive to this Advisory Opinion. 800 NE OREGON ST., SUITE 1045 PORTLAND OR 97232-2180 TELEPHONE (971) 673-0781 FAX (971) 673-0762 OREGON RELAY TTY (800) 735-2900 The Pitfalls of Employee Classification: Is That Independent Contractor Really an Employee? 7 Analysis Like federal law, Oregon's wage and hour regulations broadly define "employ" as "to suffer or permit to work," ORS 653.010(2). A business "suffers or permits" a person to work if, as a matter of economic reality, the person is dependent on the business. When determining whether a person has performed work as an employee, BOLI applies the "economic realities" test used by courts to determine employee status under the federal Fair Labor Standards Act. See, Cejas Commercial

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