CWS 3.0: August 27, 2014

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Legal roundup: Stay current and be prepared

The day-to-day tasks of getting talent in the door and engaged can leave contingent workforce managers little time to focus on the latest legislation and legal implications for their companies. But failure to keep up can cause trouble for CW programs. Staffing Industry Analysts' report, the North America Legs and Regs Advisor, covers recent legal activity buyers need to know about.

Many recent events highlight the need to careful consideration when developing contracts.

Joint Employment

Buyers in the state of Washington may be more at risk of contingents alleging joint employment status and pursuing those claims under the Minimum Wage Act of Washington (MWA) as a result of Becerra v. Expert Janitorial.

The case.  Becerra v. Expert Janitorial LLC, involved contingents who were assigned to work as night janitors at Seattle-area Fred Meyer grocery stores. Fred Meyer contracted with Expert Janitorial, which in turn contracted with All Janitorial to provide janitors. All Janitorial classified the workers as independent contractors.

A number of janitors sued all three companies for minimum-wage, overtime and rest/meal break violations. Asserting they were not the janitor’s employers and thus could not be held liable under the MWA, Fred Meyer and Expert Janitorial moved for summary judgment. However, plaintiffs argued the opposite, that as a matter of economic reality, Fred Meyer and Expert Janitorial were their joint employers for purposes of MWA liability and both companies knew plaintiffs were misclassified as independent contractors and denied overtime wages.

The decision. The MWA has a broad definition of employee: “any individual permitted to work by an employer.” Based partly on this, the court looked to Fair Labor Standards Act jurisprudence and held the parties’ characterization of their employment relationship had no bearing. Rather, the court held Washington courts must examine the facts in each case to determine whether a worker is, in fact, employed by two or more employers for purposes of minimum wage and overtime liability.

So, Washington state buyers of staffing services need to be alert to layers of employers (subcontracting) and keep temporary workers separate economically in addition to monitoring staffing agency MWA compliance.

NLRB. Last month, the National Labor Relations Board proposed a new Joint Employer Standard with more expansive factors that are aimed at the franchise business model. The implication of this, too, could be to increase potential legal exposure for NLRA violations and as a byproduct, federal agencies may expand their standards when they look at joint employer situations. In addition, the Department of Labor is also taking a look at joint employer situations. This is not unusual given its interest in wage and hour compliance. Buyers should be cautious and examine their organizations' exposure when it comes to joint employment, particularly those firms with franchise relationships.

ICs and Right of Control

In California, make sure your contracts do not give you the right of control over independent contractor performance or you could face a class action. As we reported in July and the Advisor covers more deeply, the California Supreme Court ruled an employer’s right to control its workers was relevant in misclassification suits, whether the employer exercised that control or not.

Consider auditing your contracts annually to make sure you show the differentiation of independent contractors in supplying tools, place of work, payments and more in order to mitigate the risks of misclassification.

Training on Accommodations

Finally, buyers should look at manager awareness for all types of accommodations and protected classifications. The Hobby Lobby decision addressed religious accommodation, the EEOC issued enforcement guidance on pregnancy discrimination and an executive order banned Federal Contractor lesbian, gay, bisexual, and transgender (LGBT) workers from employment discrimination. Review your policies, train your managers and make sure your staffing firms are doing the same. 

The Legs and Regs Advisor is a quarterly summary of the latest legal developments affecting  the contingent world and discusses the implications and suggested actions for buyers and their staffing providers. It is produced by Staffing industry Analysts in partnership with Littler Mendelson. The latest report is available to CWS Council members here.