Part 1Part 1
The Benefits and Burdens of The Benefits and Burdens of EmploymentEmployment
Chapter 1Chapter 1
The Stakes of “Employment”The Stakes of “Employment”
Problem 1.1Problem 1.1
Problem 1.1 Problem 1.1 (cont.)(cont.)
GardenersGardeners
Floral designersFloral designers
Software engineer/IT expertSoftware engineer/IT expert
SalespersonSalesperson
Workers for transport, manual laborWorkers for transport, manual labor
McCary v. WadeMcCary v. Wade
ΔΔ Wade & WLM Wade & WLM Georgia PacificGeorgia Pacific
MyrickMyrick
π McCary & Fulwiley
K
…contracted with……to provide logs
to…
McCary v. WadeMcCary v. Wade
Issue: Whether Myrick was “employee” of Wade at Issue: Whether Myrick was “employee” of Wade at the time of the accident.the time of the accident.Myrick liable but bankruptMyrick liable but bankrupt∆∆: Myrick independent hauler: Myrick independent hauler∆∆: Wade not liable to : Wade not liable to ππ via via respondeat superiorrespondeat superior..Summary judgment grantedSummary judgment granted– No public policy overrideNo public policy override– Private ordering reignsPrivate ordering reigns
McCary v. WadeMcCary v. Wade
Multi-factor balancing test to determine Multi-factor balancing test to determine whether Myrick is employee of Wadewhether Myrick is employee of Wade
Deciding factors:Deciding factors:– Myrick owned his own equipmentMyrick owned his own equipment– Wade exercised little controlWade exercised little control
Ergo: Wade Ergo: Wade notnot Myrick’s employer. Myrick’s employer.
Did Wade choose this structure to insulate Did Wade choose this structure to insulate itself from liability to third parties?itself from liability to third parties?
Downsides of Wade being an independent Downsides of Wade being an independent contractor?contractor?
Fitzgerald v. Mobil Oil Corp.Fitzgerald v. Mobil Oil Corp.
TLI MTLTLI MTL
ππ Fitzgerald Fitzgerald ΔΔ Mobil Mobil
Jerry ReigerJerry Reiger
…was hired by…
…lea
sed
tracto
r to…
…received paychecks from……provided drivers to…
leas
ed tr
aile
r fr
om…
…had to pass road test given by…
…delivered oil to various customers from...
Fitzgerald v. Mobil Oil Corp.Fitzgerald v. Mobil Oil Corp.
““Exclusive Remedy” -- Exclusive Remedy” -- Workers’ Comp is Workers’ Comp is employee’s only remedy employee’s only remedy against employer.against employer.Mobil Oil argues that it Mobil Oil argues that it was Fitzgerald’s employerwas Fitzgerald’s employer““Employer” status benefits Employer” status benefits Mobil in this caseMobil in this caseCourt agrees that Mobil = Court agrees that Mobil = employer.employer.
Fitzgerald v. Mobil Oil Corp.Fitzgerald v. Mobil Oil Corp.
““Economic Realities Test”Economic Realities Test”– (1) control of worker’s duties(1) control of worker’s duties– (2) payment of wages(2) payment of wages– (3) right to hire/fire/discipline, and(3) right to hire/fire/discipline, and– (4) performance of duties = integral part of business.(4) performance of duties = integral part of business.
Less exacting than Less exacting than McCaryMcCary test as to degree of test as to degree of control required?control required?Mobil Oil has conflicting incentives:Mobil Oil has conflicting incentives:– “ “Leases” TLI employees; TLI pays themLeases” TLI employees; TLI pays them– yet successfully argues Fitzgerald its employee.yet successfully argues Fitzgerald its employee.
Natkin v. WinfreyNatkin v. Winfrey
ππ Natkin & Green Natkin & Green……were retained as “staff were retained as “staff
photographers” by…photographers” by…
ΔΔ Winfrey Winfrey……who published photos who published photos taken by Natkin & Green taken by Natkin & Green
without permissionwithout permission
Natkin v. WinfreyNatkin v. Winfrey
∆ ∆ claims photos “works for hire” by employeesclaims photos “works for hire” by employees
Court: Court: ππs s independent contractors, not employees. independent contractors, not employees.
Court uses nonexhaustive, 13 factor Court uses nonexhaustive, 13 factor ReidReid test. test.
Critical factors:Critical factors:– (1) highly skilled professionals;(1) highly skilled professionals;– (2) who owned & insured equipment;(2) who owned & insured equipment;– (3) who exercised considerable discretion;(3) who exercised considerable discretion;– (4) not treated by Oprah as employees for (4) not treated by Oprah as employees for
compensation/taxes.compensation/taxes.
NotesNotes
If If private ordering always trumpedprivate ordering always trumpedThenThen employers would often define employers would often define workers as independent contractorsworkers as independent contractorsWhy “employ” at all?Why “employ” at all?– Worker’s Comp exclusivityWorker’s Comp exclusivity– nonlegal reasonsnonlegal reasons
control over work productcontrol over work productMoraleMoraleCompetitivenessCompetitiveness
Balancing?Balancing?– By employers in private ordering?By employers in private ordering?– By courts in implementing public policy?By courts in implementing public policy?
TheThe Reid Reid 1313
1.1. Right to controlRight to control
2.2. Skill requiredSkill required
3.3. Source of toolsSource of tools
4.4. Location of workLocation of work
5.5. Duration of relationDuration of relation
6.6. Right to give more workRight to give more work
7.7. Hired party’s discretion Hired party’s discretion over when to workover when to work
8.8. Method of paymentMethod of payment
9.9. Hired party’s role re Hired party’s role re assistantsassistants
10.10. Is work regular Is work regular business of hirer?business of hirer?
11.11. Is hirer in business?Is hirer in business?
12.12. Employee benefitsEmployee benefits
13.13. Tax TreatmentTax Treatment
Problem 1.2 Problem 1.2
GardnersGardners
Floral designersFloral designers
Software engineer/IT expertSoftware engineer/IT expert
SalespersonSalesperson
Workers for transport, manual laborWorkers for transport, manual labor
Clackamas Gastroenterology Clackamas Gastroenterology Associates v. WellsAssociates v. Wells
ππ sues under ADA sues under ADA
ππ = employee = employee
ΔΔ = statutory employer? = statutory employer?
15-employee threshold15-employee threshold
Are 4 physician-shareholders Are 4 physician-shareholders “employees” under statute?“employees” under statute?
Court adopts 6 factor EEOC testCourt adopts 6 factor EEOC test
Remands for decisionRemands for decision
What should happen below?What should happen below?
TheThe Clackamas Clackamas 66
1.1. Can firm hire/fire/set rules for the individual?Can firm hire/fire/set rules for the individual?
2.2. Does the organization supervise her work?Does the organization supervise her work?
3.3. Does the individual report to a higher-up?Does the individual report to a higher-up?
4.4. Is the individual able to influence the firm?Is the individual able to influence the firm?
5.5. Intention of parties as expressed in contract?Intention of parties as expressed in contract?
6.6. Does individual share firms profits/losses?Does individual share firms profits/losses?
ClackamasClackamas Notes Notes
Not all employers are “statutory employers”Not all employers are “statutory employers”– Title VII/ADA = 15Title VII/ADA = 15– ADEA = 20ADEA = 20– FMLA = 50 & 50/75 milesFMLA = 50 & 50/75 miles– FLSA = broad rule, riddled with exceptionsFLSA = broad rule, riddled with exceptions
Not all employees are covered by all lawsNot all employees are covered by all laws– ADEA bars discrimination against over 40ADEA bars discrimination against over 40– ADA protects “qualified individuals with a disability”ADA protects “qualified individuals with a disability”
Some statutes impose personal liability on managers Some statutes impose personal liability on managers (e.g., FLSA); some don’t (e.g., Title VII)(e.g., FLSA); some don’t (e.g., Title VII)
Yates v. HendonYates v. Hendon
Yates = corporation’s Yates = corporation’s president/sole shareholderpresident/sole shareholderProfit Sharing Plan bars Profit Sharing Plan bars alienation of plan benefits alienation of plan benefits Benefits outside BankruptcyBenefits outside BankruptcyYates’s creditors ask Bankruptcy Yates’s creditors ask Bankruptcy Court to avoid $50K payments Court to avoid $50K payments he made to the Plan to put them he made to the Plan to put them back in Yates’s estateback in Yates’s estate
$50,000
Yates
Yates Profit-Sharing Plan
Benefits
Yates’ Creditors
Yates v. HendonYates v. Hendon
Congress intended working Congress intended working owners to qualify as participants owners to qualify as participants in ERISA employee benefit plan.in ERISA employee benefit plan.
For most purposes, Yates is For most purposes, Yates is sole proprietor of small businesssole proprietor of small business
For ERISA, he is an employee.For ERISA, he is an employee.
Clackamas owners can have Clackamas owners can have their cake and eat it tootheir cake and eat it too
Ansoumana v. Gristede’sAnsoumana v. Gristede’s
ππss delivered for DR delivered for DR HC paid HC paid ππs s $25-$30/day $25-$30/dayHC paid #250-300 by DRHC paid #250-300 by DR ππs cs claim FLSA minimum laim FLSA minimum
wage/overtimewage/overtime ππs s New York law claimNew York law claim
ΔDuane Reade
Δ Hudson/Chelsea
π
Ansoumana v. Gristede’sAnsoumana v. Gristede’s
ISSUESISSUES(1)(1) Whether Whether ππs were employees or s were employees or
independent contractors of ∆s independent contractors of ∆s H/C? H/C?
(2)(2) Whether DR was also liable as Whether DR was also liable as
“joint” employer?“joint” employer?
HOLDINGSHOLDINGS(1)(1) ππs were employees; s were employees;
H/C liable to themH/C liable to them
(2)(2) DR a joint employer, DR a joint employer, jointly/severally liablejointly/severally liable
Note:The Immigration DilemmaNote:The Immigration Dilemma Immigrants often take lower-paying jobs
IRCA bars discrimination against documented workers and mandates it against undocumented ones
UAs unlikely to seek wage/hours protection
Should FLSA protect UAs?
In terms of federal wage/hours policy?
exploitation objectionable
In terms of federal immigration policy?
low wages incentivize employers to hire UAs
higher wages incentive illegal immigration
Vizcaino v. Microsoft Corp.Vizcaino v. Microsoft Corp.
ππs classified as non-s classified as non-employees by Microsoft.employees by Microsoft.
ππs sue for benefits available s sue for benefits available to employees underto employees under(1) SPP (ERISA)(1) SPP (ERISA)(2) ESPP (Washington law)(2) ESPP (Washington law)
Vizcaino v. Microsoft Corp.Vizcaino v. Microsoft Corp.
HOLDINGSHOLDINGS
(1)(1) ππ workers covered workers covered under ESPP plan.under ESPP plan.
(2)(2) SPP issue remanded to SPP issue remanded to Plan AdministratorPlan Administrator
Vizcaino v. Microsoft Corp.Vizcaino v. Microsoft Corp.
Plurality’s OpinionPlurality’s Opinion: focuses on plan : focuses on plan documents, which show an intent to include documents, which show an intent to include all employees in plan.all employees in plan.
O’ScannlainO’Scannlain: focuses on particulars of what : focuses on particulars of what parties negotiated; no contract for benefits parties negotiated; no contract for benefits ever formed.ever formed.
Microsoft NotesMicrosoft Notes
The semantics of the opinionsThe semantics of the opinions
Professionals different?Professionals different?– Cf. “free lancers” in Cf. “free lancers” in AnsoumanaAnsoumana– Did Microsoft workers benefit from higher pay?Did Microsoft workers benefit from higher pay?
The Plan Administrator denied the claimsThe Plan Administrator denied the claims– ERISA not very employee-friendly?ERISA not very employee-friendly?
Microsoft planning for the futureMicrosoft planning for the future
Problem 1.3Problem 1.3
GardnersGardners
Floral designersFloral designers
Software engineer/IT expertSoftware engineer/IT expert
SalespersonSalesperson
Workers for transport, manual laborWorkers for transport, manual labor