If recent history teaches anything, it is that no industry is immune from attacks on employers who allegedly misclassify workers as independent contractors.  In an offbeat case, this has occurred to a company that utilized medical interpreters.  The case is entitled In Re: Ingrid L. Vega, d/b/a Professional Interpreters of Erie v. Commonwealth of Pennsylvania, Department of Labor and Industry, Office of Unemployment Compensation Tax Services, and was filed in the Commonwealth Court of Pennsylvania

The three-judge panel affirmed an administrative finding by the Department of Labor and Industry that these Interpreters were misclassified.  The Court stated that “the department issued an extensive set of findings of fact that highlight the many policies, procedures, and agreements petitioner utilized in its relationships with the interpreters, which demonstrate that petitioner retained control over the interpreters.”  The Company did not put forth sufficient evidence to alter the conclusion reached below.

The Court focused on the control element and found that the Company exercised sufficient control to label the people as “employees.”  The Company set the pay rates of the people, provided name badges and gave the workers training.  The Company also controlled their work assignments and, significantly, compelled them to sign non-compete agreements.  The Company also evaluated and monitored the work performance of the workers.  The Court succinctly noted that “overall, based upon the supported findings of the department, petitioner maintained significant control over the interpreters, and petitioner did not provide sufficient evidence to rebut the presumption of employment regarding control or direction in the interpreters’ performances.”

The Company argued that the people were independent contractors because they had the right to work for other agencies, allegedly did not receive training and used their own supplies and equipment.  The Pennsylvania DOL, however, found that training was provided and looked at the non-competes as a strong factor in favor of employee status.

The Takeaway

This case is offbeat because usually the putative employer’s defense fails because it cannot show the independent contractor is in their own “independent business.”  Usually, the employer is able to show a lack of control.  Here, that was different—giving training, name badges, setting pay rates, evaluating performance, are all clear indicia of control.  The existence of the non-compete agreements, however, was the death knell to the employer’s defense.

Forget the non-compete…


In an off-beat case that revolved around the IRS twenty-factor test for independent contractor, an appellate court in Missouri has affirmed the state Labor Commission ruling that caretakers working for a pet sitting company were statutory employees, rather than independent contractors. The case is entitled 417 Pet Sitting LLC v. Division of Employment Security, and issued from the Missouri Court of Appeals, Western District.

The Court affirmed the Missouri Labor and Industrial Relations Commission when it analyzed the twenty factors, found that nineteen (19) had some bearing on the determination and found that thirteen (13) of those nineteen factors militated a finding of employee status.  Five factors favored independent contractor status and one was neutral.  The Court opined that “in light of the numerous factors indicative of an employer-employee relationship, Pet Sitting has failed to sustain its burden to prove that its sitters were independent contractors under the common law right to control test.”

The Court observed that there was control and direction exercised by the Company as it could counsel these workers when they received complaints from Company clients.  The sitters also were denied the right to assign their jobs to third parties.  The Court found that those circumstances were “particularly demonstrative of an employer-employee relationship.”  The Company could also dismiss the sitters for noncompliance and the Company was also very “dependent” on these sitters providing their services.   The Court differed from the Commission in finding that the payment of sitter business/travel expenses actually favored independent contractor status.

The Court also found that the setting of established hours did not favor an employment relationship but rather was neutral.  The Court did not find a need to analyze every one of the twenty IRS factors.  Interestingly, the vote in the Labor Commission was 2-1 for employee status.

The Takeaway

The IRS test usually provides employers with a better opportunity for success simply because there are more factors where the employer might find a positive reception.  What happened here is that the control factors seemed to be the place where the case was lost, although I wonder if these pet sitters had other “clients” of theirs, on their own.  Interestingly, employers fare well, as a rule, on the control (or lack thereof) factors and founder on the “independent business” side of the ledger. Another factor was that the work of these people was clearly “integral” to the business of the putative employer.

That’s always a bad sign…


I just posted on a travel time case the other day but I have a special fondness for these kinds of cases and enjoy watching the numerous, creative ways that plaintiffs try to convert ordinary travel into working hours, i.e. compensable.  In a recent case, a class of employees whose job function was directing traffic around construction sites sued for overtime, alleging that their time traveling to and from the job site in a company pickup truck was compensable.  The federal judge rejected that contention, ruling that the commuting time was neither “indispensable” nor “integral” to their jobs.  The case is entitled Luster et al. v. AWP Inc. and was filed in federal court in the Northern District of Ohio.

The Judge ruled that the job functions, including daily vehicle inspections and giving rides to other workers who were going to the job site, were not fundamental components of their job duties.  As the Judge aptly stated, the “plaintiffs here simply have not shown that the activities they highlight are intrinsic aspects of the work of a traffic control specialist or are indispensable to that work.”

The plaintiffs claimed that they could not perform their jobs without picking up their fellow employees, completing vehicle inspections and gassing up.  They alleged these duties took up to fourteen (14) hours per week.  The Judge disagreed.  The Judge referenced the exceptions Congress engrafted into the Employee Commuting Flexibility Act, which allowed the use of Company vehicles for commuting or doing other kinds of preliminary activities.  The Judge cited the fairly recent US Supreme Court decision in Integrity Staffing Solutions v. Busk where the Court held that preliminary activities are compensable only if they are “an intrinsic element” of the worker’s primary duties.  Guided by Busk, the Judge ruled that the workers could not succeed on the simple/sole basis that the employer required these duties to be performed.

The Judge noted that there was a clear demarcation between tasks that might be necessary for work and those which were “integral and indispensable” to the duties that the employee was charged with performing.  Tellingly, the Judge noted the plaintiffs did not allege that were compelled to report to a central location or meeting place prior to going to the job site.  That meant that the time spent prepping the truck and then transporting co-workers was not compensable “shop time.”  There would have been almost two-thousand workers in the class.

The Takeaway

I like the direction that the Judge took in this case, relying on an “integral and indispensable” theory and the rationale of the Busk case.   The mere fact that the drivers had to pick up workers did not convert their travel into compensable time.  Significantly, the workers were not compelled to drive to a central location or Company “yard” before they picked up the workers and travelled to the job site.  That might have changed things.

But not this time…

I have handled many travel time cases and can report, regretfully, that plaintiff-side lawyers are always seeking new and creative ways to make certain kinds of travel time compensable.   A new case has been filed on this issue where oil and gas workers claim they are owed overtime for travel between company housing to their job locations.  The case is entitled Copley v. Evolution Well Services LLC, and was filed in the Court of Common Pleas of Allegheny County, Pennsylvania.

The Complaint alleges that the named plaintiff and other employees were “on call” and compelled to live in company-specified housing.  They then had to meet at the beginning of each work day and ride in Company vehicles to the job sites, some of which were an hour distant.  The workers lament, however, that they were only paid when they arrived at the job site and started working.

The Complaint asserts that “on any average day, Mr. Copley would be required to arrive at the pickup location, where and others would be transported to a location determined by the defendant. … Mr. Copley had no option to choose to live closer to the worksite, nor did he have the option to transport himself to the worksite.  This pick up point was the start of Mr. Copley’s work day, and the subsequent commute via company mandated transport was time that Mr. Copley was ‘clocked in’ for, however he was not paid for any time during this commute, again equaling up to 2 hours per day on average.”

The Complaint asserted the men lived in Company provided housing, then met at a pick-up point and were then transported to the job site every day.  At the end of the day, they were taken back to the pick-up point and then transported back to the Company housing.  The drivers were paid but the men who were transported as passengers were not.  The Complaint alleges that the time should be “hours worked” because the men were allegedly required to be on duty or at a “prescribed work place,” meaning that they were in a travel “work” status.

The case is couched as an overtime case because the alleged compensable travel time pushed the weekly hours beyond forty.  The Complaint asserts that “when the time between his reporting to the designated location for transport and his arrival at the jobsite and his subsequent transport at the end of the day is added to Mr. Copley’s number of hours worked, the total surpasses 40 hours worked in one week.”  There are 5-10 workers alleged to be in the putative class.

The Takeaway

When workers are sent to a distant location and are staying at a hotel, that hotel then becomes their “home” for purposes of determining whether a particular commute from home is somehow converted to compensable time.  Further, there are cases standing for the premise that when workers have to go to a meeting place or pick up location to then be transported to the job site, the fact that they go to a meeting place does not convert that time to working time.   In sum, this case goes nowhere.

Nor should it…

I have defended many cases in which the employee(s) claim they worked through lunch and are owed wages (or, usually, overtime).  These cases are usually difficult to defend unless the employer either compels employees to punch out and in for lunch or has another kind of fail-safe mechanism to account for this time, if legitimately worked.  A recent case, however, gives me hope as it stands for the premise that the plaintiffs have to make some evidentiary showing.  In this case, a federal Judge has dismissed a lunch-time class action because of a failure to make even a modest showing that violations occurred.  The case might have involved 15,000 people and is entitled Marshall v. Novant Health, Inc.   It was filed in federal court in the Western District of North Carolina

The Court concluded that the plaintiff did not show that the Company systematically and consistently denied her the full lunch periods.  The Judge also found that there was no policy that prevented her from recording this time or seeking compensation for it.  The Court succinctly stated that “Marshall has failed to present evidence that there was no way for her to record a meal break that is less than 30 minutes.  Her argument is contradicted by her sworn testimony and that of every other witness in the case.”

The Company had an automatic lunch deduction policy, where a half-hour was deducted every day for employee lunches.  Significantly the employee could utilize a “No Lunch” code if that worker did not take a lunch (or claimed not to) so the person could get paid.  In fact, the named plaintiff herself used the No Lunch code “at least 19 times.”  She claimed, however, that her meal times were often interrupted and that she was “discouraged from using the code if it would result in overtime hours worked and that there is no way for her to record time worked when her meal break is interrupted.”  The Judge noted that the named plaintiff acknowledged that she was directed to use the No-Lunch code if she missed a meal break or she was interrupted and then she would be paid for that half-hour.

Significantly, the Court found that was “simply no evidence to support the argument that Novant prevented Marshall from recording and being paid for interrupted meal breaks.”  The Court also noted that the FLSA allowed the kind of automatic lunch-time deductions that the Company was utilizing.  The Court also found important that the employees were directed to use the No-Lunch code if they missed a meal break.  There was no evidence adduced showing that the plaintiff’s lunches were interrupted a majority of the time and, tellingly, even the plaintiff acknowledged that she “had no difficulty” taking lunch breaks.

The Takeaway

This gives me heart.  I am a big believer in these automatic deduction policies, provided that there is a fail-safe mechanism for employees to be able to report supposedly missed lunches.  The employer had that mechanism in this case, the employee could not prove or make a showing she was somehow excused from using it.  This makes for a very solid defense.

And makes a winner…

Over these last years, there have been a number of lawsuits by domestic employees against their employers and I have defended some of those.  They present a unique kind of case as these domestic servants are usually on very close terms with their employers, not the typical employer-employee relationship, but then, something happens and it goes south.  A recent illustration of this is a real estate executive who is now responding to an overtime lawsuit from his housekeeper of many years.  The case is entitled Lopez v. Barnett et al., and was filed in federal court in the Southern District of New York.

The plaintiff claims that she was paid on a weekly basis and worked many overtime hours, including her allegation that she sometimes worked more than eighty (80) hours per week.  The Complaint alleges that “throughout her employment, defendants required Lopez to work, on average, between 65 and 86 hours per week, yet paid her on a weekly salary basis that failed to compensate her at 1.5 times her regular hourly rate for hours worked over 40 each week.  The housekeeper worked as a live-in from 2010-2017 and then as a regular employee from 2018-2020.

The plaintiff had to clean nine bedrooms and eleven bathrooms; she also did the laundry, ran errands, as well as cooking and cleaning up from dinner.  She also cared for three of the ten family children.  She claims she started work in the morning and would work through the day, into the night many times, sometimes finishing almost at midnight.

The suit is brought under the Fair Labor Standards Act, as well as the New York Labor Law, the Domestic Workers’ Bill of Rights and the New York Wage Theft Prevention Act.  Her attorney
Louis Pechman, gave his view on the situation, asserting that “over the last few years we have seen an uptick in cases involving domestic workers employed by high-net-worth families who are not paid overtime even though they are working extraordinary hours.  Unfortunately, there is a common misconception that housekeepers, nannies and other domestic workers can be paid on a salary regardless of hours worked.”

The Takeaway

The way to defend these cases is to attack the often inflated claims of the hours “actually” worked.  It has been my experience, in defending these cases that the domestic worker has large chunks of time during the day in which they can follow their own pursuits and are not working or expected to be working.  I think big holes can be punched into these extreme claims, if you know how to use the hammer.

Big holes…

The Trump Administration has tried to help business and employers in many ways, including loosening USDOL rules (and views) over many things.  One topic of special interest on this front has been on the independent contractor issue.  The USDOL has taken another step now in that direction, by proposing a new rule on the classification of workers as independent contractors and this new rule would be a distinct deviation from prior issuances.

The proposed rule sets forth a five-factor test that will focus on the “economic reality” of a given relationship between a worker and a putative employer.  Two of these are so-called “core factors,” which are the most significant in this calculus.  They are: 1) the control that a worker has over their work; and, 2) the worker’s potential for profit or loss.  The rule then posits that if both of these militate the same conclusion, then “their combined weight is substantially likely to outweigh the combined weight of other factors that may point towards the opposite classification.    As the proposal states, “in other words, where the two core factors align, the bulk of the analysis is complete.”

The USDOL noted that the emphasis of these factors is a departure from judicial views on this important issue.  The agency explained that it emphasized these factors because they are essential in determining whether an individual is in their own business or they are reliant on another entity for their livelihood.  The DOL views the control factor as involving analysis of whether a worker can decide when to work, or not, and for what length of time.

These regulations jump off from earlier issued (4/2019) DOL guidance that sought to find workers in the on-demand’ or sharing’ economy” were independent contractors under a six-part test.  The agency now explains that it is memorializing the test it had set out in an Opinion Letter, the goal being to set down a standard, uniform analysis, rather than the diffuse and numerous tests that have been applied.

As to the other major factor, profit and loss, when a person can earn a profit or suffer a loss based on that person’s “exercise of initiative (such as managerial skill or business acumen or judgment) or management of his or her investment in or capital expenditure on, for example, helpers or equipment or material to further his or her work” that will facilitate an independent contractor conclusion.  If someone “is unable to affect his or her earnings or is only able to do so by working more hours or more efficiently,” they will likely be found to be an employee.”  Thus, if a worker earns more money by working fifty, as opposed to forty, hours, this factor would point to “employee” status.

The Takeaway

There is now a very short comments period, thirty days, instead of the usual sixty.  It is clear that the agency, i.e. the Trump Administration, wants to finalize the rule before December 31.  Even if the rule does go into effect, a new Congress could throw it out pursuant to the Congressional Review Act.  But, I like it anyway.

It’s a good start…

When people are employees, the deductions that may be made from their wages are limited and many items that would be classified as employer business expenses cannot be deducted from worker pay.  When individuals are independent contractors, these otherwise forbidden deductions may be effected because of this supposed non-employee status.  When those two worlds collide, there is litigation, as evidenced by the refusal of a New Jersey federal judge to dismiss a proposed class action, finding that the workers supported their assertions that they were not true independent contractors, making the deductions possibly unlawful.  The case is entitled Ortiz et al. v. Goya Foods Inc. et al., and was filed in federal court in the District of New Jersey.

The Judge concluded that the sales representatives “have pled sufficient factual allegations that plausibly state that plaintiffs are employees of defendants, that the sales commissions under the broker agreement constituted plaintiffs’ wages, and that the wages earned were not paid in full, as required by the PWPCL.”  The workers alleged that they were misclassified, alleging that the Company placed significant control on the manner in which they performed their services.  Thus, the commissions the workers were paid were actually “wages,” they claim and thus the deductions, such as when a customer did not pay an invoice, were unlawful.

The Company argued that there were no “employment contracts” under which the Company was obligated to pay “wages” to the workers.  The Company also contended that the contracts also explicitly disclaimed “any employment relationship, and thus, make clear that they are not employment contracts to pay wages.”  The Judge rejected this argument because he found that the mere disavowal of an employment relationship was not determinative.  Neither was the fact that the contracts provided for payment of commissions, as opposed to “wages.”

The Judge also rejected the Company’s contention that the deductions were allowed by the broker agreements.  The Judge found that, “taken as true, the allegations of the amended complaint suffice to establish that defendants violated the PWPCL by reducing wages earned by plaintiffs.”  The Judge did not credit that these workers only earned the alleged wages after deductions were made from their gross commissions.

The Takeaway

I think the Company has interposed, an interesting, if not novel defense to this action, which may have (or will get) traction.  I know that proving a worker is an independent contractor is often a challenge for the putative employer and the traditional arguments often fail.  This new defense may provide a vehicle to short-cut those traditional defenses and inject something brand new, something, which if successful, would be the “magic bullet” for the employer that all defense-side practitioners are looking for.  The Company has filed a motion for re-consideration on this case.

Let’s see what happens…

Last year, in August, the State of New Jersey enacted the Wage Theft Act (“WTA”) which strengthened the wage hour protections for employees across the State, including expanding the statute of limitations from two years to six years.  As might be expected, almost immediately, an enterprising plaintiff lawyer sought to amend his lawsuit to extend the statute of limitations to the maximum allowed by the law.  That effort has failed; a decision has issued that emphatically and clearly held that the WTA is not retroactive.  The case is entitled Magee v. Francesca’s Holding Corp., and was filed in federal court in the District of New Jersey.

The Court started with the maxim that New Jersey courts have long followed a general rule of statutory construction that favors a prospective application of statutes.  The Court noted that it should look at and start with the legislative intent and then had to determine whether the retroactive application of the statute would be an unconstitutional interference with vested rights or a manifest injustice.

The Court noted that when the legislature dealt with the issue of whether a statute should apply retroactively, the expression of that intent must be given effect unless a compelling reason existed to not to do so.   The Court found nothing in the statutory language that suggested retroactivity.  The Court noted that the Supreme Court of New Jersey has held the phrase “take effect immediately” implies that the statute should not be given retroactive application.  The Court observed that the Supreme Court of New Jersey held that “had the Legislature intended an earlier date for the law to take effect, that intention could have been made plain in the very section directing when the law would become effective.”

The Court noted that the WTA amendments “shall take effect immediately, except that section 13 shall take effect on the first day of the third month following enactment.”  Thus, given the presumption that statutes are presumed to apply prospectively and the interpretation by the highest New Jersey court of laws that take effect “immediately,” the legislative intent was that the law was not retroactive.

The Court acknowledged that a law might be retroactive if it was “curative,” meaning that it was designed to “remedy a perceived imperfection in or misapplication of a statute.”  The Court again looked to the guidance from the New Jersey Supreme Court which has stated that an amendment is curative if it does “not alter the act in any substantial way, but merely clarified[s] the legislative intent behind the [previous] act.”  The Court noted that the amendment herein changed the statute of limitations from two years to six years.  The Court agreed with the Defendants who contended that the amendment was not curative given that it is a “300 percent expansion of the limitations period, likely implicating dozens of additional claims and a commensurate 300 percent increase in damages.”  Thus, the Court found the change was not a “curative” amendment as defined by the New Jersey Supreme Court.

The Takeaway

This is an eminently correct and logical decision.  This opinion was very well reasoned and hearkened back continually to pronouncements of the New Jersey Supreme Court as to when, or not, a statute should be given retroactivity.  Ironically, I almost feel sympathy for all the plaintiff lawyers out there who were gleefully looking to take advantage of this change in the law.

Too bad…


I have often blogged about the thorny issue of bonuses under the FLSA and when those bonuses must be included in the regular rate of employees for overtime purposes.  The crucial test is whether the bonus is discretionary, meaning it need not be included, or is “promised” to employees, meaning it does have to be included, thereby raising the regular rate.  A recent federal appellate court decision fleshes this principle out in an interesting manner.  The case is entitled Edwards et al. v. 4JLJ LLC and issued from the Fifth Circuit Court of Appeals.

The Court ruled that the employees i.e. the plaintiffs, must prove that the bonuses were not discretionary and therefore includible.  This is significant and is an issue of first impression.  With that said, the Court reversed a jury verdict in favor of the Company and held that the men were not properly compensated because the first bonus at issue was not discretionary and should have been figured into the regular rates of the employees for overtime.  The three Judge panel observed that the Court had never addressed the issue of which side had the burden of proof on bonus inclusion into overtime rates.

The employees had contended that two bonuses should have been included.  On the first bonus, the possible payment was promised in writing and set down with a pay scale.  On that basis, the Court ruled that these bonuses were “nondiscretionary under the FLSA, and 4JLJ ought to have included them in the regular rate.”  The Court noted that “based on the performance bonus agreement, and the complete absence of any evidence contradicting the universal applicability of the agreement, a reasonable jury could not have concluded that 4JLJ maintained discretion over the amount of performance bonuses.”

The second bonus was different.  The lower court had held that the second bonus, the one that was paid out when the next phase of a fracking operation was completed, was not includible because the workers had not proven it was non-discretionary.  The Court reasoned that the payment was not promised in writing, in any document or policy, and the workers could not show any evidence that “elucidates how employees came to expect stage bonuses, who determined the amount, when the amount was determined, whether all employees typically received such bonuses, or whether the amount ever varied.”  As the plaintiffs had not shown that the bonus was issued at a designated time for a fixed amount, the Court would not overturn the jury verdict on this issue.

The Takeaway

This is a great decision.  It starts to turn the pendulum back on the disturbing trend of over inclusion of different kinds of monies in employee regular rates.  I also applaud the shifting of the burden onto the employee plaintiffs to prove that the sums were ascertainable and promised to the employees, rather than contingent or discretionary.   There are lessons here for employers to learn.

The case is a road map…