• Professor Question: Who is Subject to Regulation: Employer vs. Employee (Agency Law){PLEASE READ}
• Class,, feel free to extend the discussion by reviewing the "Professor Analysis" below and letting the class know your thoughts on this issue. What are your thoughts on"Who is Subject to Regulation: Employer vs. Employee" (Agency Law)(below). Discuss.
• Do you agree with the legal concept?why or why not? Why is this legal issue or concept important to the world of Employment Law? Discuss?
• Can you find a Florida state statute or other statutes that deals with this legal issue? (one website for Florida legal statutes iswww.flsenate.gov
• (Links to an external site.)
• ) Please list the statute information.What did you find interesting about the state statue?
• YOU BE THE JUDGE:Can you provide an example case related to this legal issue"? State the full name of the case, what was the IssueRuleAnalysisConclusion in this legal case?Do you agree with the decision in the case by the court? Why or why not? How would you have decided differently if you were the judge?
• Please feel free to provide any additional article or written analysis on this legal issue.
• In The News:Can you find any information "In The News" related to this legal issue? Feel free to
• NOTE: Responses must be based upon research from the course textbook and other official academic sources. Please feel free to include the page #'s referenced in the course textbook. (include websites as a supplement to these other sources)
• Professor Analysis: Who is Subject to Regulation: Employer vs. Employee (Agency Law) PLEASE READ}
• Learning Objective Two:Identify who is subject to which employment laws and understand the implication of each of these laws for both the employer and employee.

1. Who Is Subject to Regulation?

• The issue of whether someone is an employer or employee is a critical one when it comes to regulation, but like many areas of the law, it is not one with an easy answer. (See Exhibit 1.2, "Realities about Who Is an Employee and Who Is Not."). Defining an individual as an employee allows that person to pursue a claim that an independent contractor might not have.

1. Origins in Agency Law

• The law relating to the employment relationship is based on the traditional law calledmaster and servant,which evolved into the law of agency. In an agency relationship, one person acts on behalf of another. The actor is called theagent,and the party for whom the agent acts and from whom that agent derives authority to act is called theprincipal.The agent is basically a substitute appointed by the principal with power to do certain things. In the employment context, an employee is the agent of the employer, the principal.
• In an employment-agency relationship, the employee-agent is under a specific duty to the principal to act only asauthorized.As a rule, if an agent goes beyond her authority or places the property of the principal at risk without authority, the principal is now responsible to the third party for all loss or damage naturally resulting from the agent's unauthorized acts (while the agent remains liable to the principal for the same amount).
• Throughout the entire relationship, the principal/employer has the obligation toward the agent to exercise good faith in their relationship, and the principal has to use care to prevent the agent from coming to any harm during the agency relationship. This requirement translates into the employer's responsibility to provide a safe and healthy working environment for the workers.

1. Why Is It Important to Determine Whether a Worker Is an Employee?

• How does one know if one is being hired as an employee or as anindependent contractor? While some workers may have no doubt about their classification, the actual answer may vary, depending on the statute, case law, or other analysis to be applied. The courts, employers, and the government are unable to agree on one definition of "employee" and "employer," so it varies, depending on the situation and the law being used. In addition, some statutes do not give effective guidance.
• The definition of employee is all the more important as companies hire supplemental or contingent workers on an independent-contractor basis to cut costs. Generally, an employer's responsibilities increase when someone is an employee.
• Employer Payroll Deductions
• An employer paying an employee is subject to requirements different from those for paying an independent contractor. An employer who maintains employees has the responsibility to pay Social Security (FICA), the FICA excise tax, Railroad Retirement Tax Act (RRTA) withholding amounts, federal unemployment compensation (FUTA), IRS federal income tax withholdings, Medicare, and state taxes. In addition, it is the employer's responsibility to withhold a certain percentage of the employee's wages for federal income tax purposes.
• On the other hand, an independent contractor has to pay all of these taxes on his or her own. This is usually considered to be a benefit for the employer because it is able to avoid the tax expenses and bookkeeping costs associated with such withholdings.
• Benefits
• Benefitscost the employer money outside of the wages that the employer must pay the employee. In an effort to attract and retain superior personnel, employers offer employees a range of benefits that generally are not required to be offered such as dental, medical, pension, and profit-sharing plans. Independent contractors have no access to these benefits.
• The Fair Labor Standards Act of 1938 was enacted to establish standards for minimum wages, overtime pay, employer record keeping, and child labor. Where a worker is considered an employee, the FLSA regulates the amount of money an employee must be paid per hour and overtime compensation. Employers may intentionally misclassify employees in order to avoid these and other costs and liabilities. A willful misclassification under FLSA may result in imprisonment and up to a $10,000 fine, imposed by the Department of Labor.
• Discrimination and Affirmative Action
• Title VII and other related antidiscrimination statutes only protectemployeesfrom discrimination by employers; therefore, an independent contractor cannot hold an employer liable for discrimination on this basis and employers are protected from some forms of discrimination and wrongful discharge claims where the worker is an independent contractor.
• Merely labeling a worker as an "independent contractor" does not protect against liability under federal antidiscrimination statutes such as Title VII. Courts and the EEOC will examine a variety of factors to determine the true meaning of the relationship between the worker and the organization. If the worker is more appropriately classified as an employee, then the label will be peeled off, allowing for antidiscrimination statutes to apply.
• Additionally, the National Labor Relations Act of 1935 (NLRA) protects only employees and not independent contractors from unfair labor practices. Independent contractors may be considered to beemployers;so they may be subject to these regulations from the other side of the fence.
• Cost Reductions
• It would seem to be a safe statement that an objective of some, if not most, employers is to reduce cost and to increase profit. Hiring independent contractors avoids the cost of overtime (the federal wage and hour laws do not apply to independent contractors) and the employer is able to avoid any work-related expenses such as tools, training, or traveling. The employer is also guaranteed satisfactory performance of the job for which the contractor was hired because it is the contractor's contractual obligation to adequately perform the contract with the employer, while the employee is generally able to quit without incurring liability (the at-will doctrine). If there is a breach of the agreement between the employer and the independent contractor, the independent contractor not only stands to lose the job but also may be liable for resulting damages. An employee is usually compensated for work completed with less liability for failure to perfectly perform.
• The employee may actually cause the employer to have greater liability exposure. An employer hasvicarious liabilityif the employee causes harm to a third party while the employee is in the course of employment. Questions might arise in connection with whether the worker is actually an employee of the employer and, therefore, whether the employer is liable at all. However, in certain situations, businesses will be liable for the acts of their independent contractors, including when those contractors are involved in "inherently dangerous activities."
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• Remington Niccum
• Remington Niccum
• 7:12pm
• Oct 4 at 7:12pm
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• This is meant for the first discussion question... i was not able to access the screen to reply to that discussion question.
• Employment Laws play a vital role in our society, without them there would be many uncertainties regarding how the average person would work and receive money. I think back to learning of the industrial revolution and the terrible crimes committed against many children of America. According tohistory.com
• (Links to an external site.)
• " Boys began their apprenticeships between the ages of ten and fourteen". This is a stark difference to now, where many people do not receive their first job until at least 16 and it is almost always a part time position. This is why it is very easy for me to agree with the legal aspect of the government intervening into businesses whether they be private or public. Along with this, The Occupational Safety and Health Act brought must needed protection to employees. According to Business law (page1460)"duty on employers to provide their employees with a workplace and jobs free from recognized hazards that may cause death or serious physical harm.", the OSHA provides to this day extremely important benefits to employees.This is extremely important to the legal world and I believe that the industrial revolution is the best example as to why this is so.
• Perry, McCroy, Prenkert, Barnes, Langvardt. Business Law,The Ethical, Global, and E-commerce Environment,Employment Law, Seventeenth Edition, Page 1460.
• history.com
• (Links to an external site.)
• Editors. A&E Television Networks, Child labor, Accessed Oct.4 2020, Updated Sept. 1,2020,https://www.history.com/topics/industrial-revolution/child-labor#section_2
• (Links to an external site.)
• .
• Edited byRemington Niccumon Oct 4 at 7:13pm
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• Dwight Elliott
• Dwight Elliott
• Aug 11, 2020
• Aug 11 at 12:29pm
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• Professor Question: The Cost of Mistakes: Employee or Independent Contractor? {PLEASE READ}
• Class, feel free to extend the discussion by reviewing the "Professor Analysis" below and letting the class know your thoughts on this issue. What are your thoughts on"The Cost of Mistakes"(below). Discuss.
• Do you agree with the legal concept?why or why not? Why is this legal issue or concept important to the world of Employment Law? Discuss?
• Can you find a Florida state statute or other statutes that deals with this legal issue? (one website for Florida legal statutes iswww.flsenate.gov
• (Links to an external site.)
• ) Please list the statute information.What did you find interesting about the state statue?
• YOU BE THE JUDGE:Can you provide an example case related to this legal issue"? State the full name of the case, what was the IssueRuleAnalysisConclusion in this legal case?Do you agree with the decision in the case by the court? Why or why not? How would you have decided differently if you were the judge?
• Please feel free to provide any additional article or written analysis on this legal issue.
• In The News:Can you find any information "In The News" related to this legal issue? Feel free to
• NOTE: Responses must be based upon research from the course textbook and other official academic sources. Please feel free to include the page #'s referenced in the course textbook. (include websites as a supplement to these other sources)
• Professor Analysis: The Cost of Mistakes: Employee or Independent ContractorPLEASE READ}
• Learning Objective Three:Delineate the risks to the employer caused by employee misclassification.
• The Cost of Mistakes
• Workers and employers alike make mistakes about whether a worker is an independent contractor or an employee. If a worker is classified as an independent contractor but later is found to be an employee, the punishment by the IRS is harsh. The employer is not only liable for its share of FICA and FUTA taxes but is also subject to an additional penalty equal to 20 percent of the FICA taxes that should have been withheld. In addition, the employer is liable for 1.5 percent of the wages received by the employee. These penalty charges apply if 1099 forms (records of payments to independent contractors) have been compiled for the worker. If, on the other hand, the forms have not been completed, the penalties increase to 40 percent of the FICA taxes and 3 percent of wages. Where the IRS determines that the worker wasdeliberatelyclassified as an independent contractor to avoid paying taxes, the fines and penalties can easily run into six figures for even the smallest business.
• In 2011, the U.S. Department of Labor launched a major Misclassification Initiative, in cooperation with the Internal Revenue Service, to reduce the incidence of employee misclassification and to improve compliance with federal labor laws. On the federal level, the Employee Misclassification Prevention Act has been introduced in Congress, although it has not yet been passed.
• Misclassified workers are a significant portion of the employment tax gap, but just how big a portion is unknown, because the IRS's last comprehensive misclassification estimate was in 1984. At that time, the IRS found that 15 percent of employers misclassified 3.4 million workers as independent contractors, causing an estimated loss of $1.6 billion in Social Security tax, unemployment tax, and income tax.
• The IRS provides a small "safe harbor," called the Classification Settlement Program, through the 1978 Revenue Act for employers who have always and consistently defined a class of workers as independent contractors. Section 530 cites four criteria required to claim a worker as an independent contractor. Where these conditions have been satisfied, the employer is not liable for misclassification:
• The business must have never treated the worker as an employee for the purposes of employment taxes for any period.
• All federal tax returns with respect to this worker were filed consistently with the worker being an independent contractor.
• The company has treated all those in positions substantially similar to that of this worker as independent contractors.
• The company has a reasonable basis, for treating the worker as an independent contractor, which may include a judicial precedent or published IRS ruling, a past IRS audit of the company, or long-standing industry practices.
• In 2011, the IRS introduced the Voluntary Classification Settlement Program, which enables employers who are not currently subject to examination by the IRS, DOL, or a state agency to voluntarily reclassify their workers and to obtain substantial relief from federal payroll taxes, interest, and penalties. In both programs, the employer must agree to treat workers as employees prospectively.
• Lecture Note: It should be emphasized that each student is a unique individual. Even in a class where these types of issues are "on the table," students, of course, retain their biases from their culturalization process. In an effort to break these molds, instructors could play a game called Human Bingo. The purpose of this game is to make students aware that people are not always who one thinks they are, and that the one person in the class who appears to be the most reserved may also be the only person in the class who has jumped out of an airplane, or who speaks several languages, and so on.
• Prepare a grid on a regular sheet of paper with twenty-five boxes. Fill in twenty of the boxes with qualities such as "speaks more than two languages," "has skydived before," "knows a good joke and can tell it," "can name at least three Michael Jackson songs," "grew up in the city/suburbs," etc. Copy these sheets so that everyone has the same one and hand them out.
• Tell students to write a quality that an individual may have in each of the empty squares. This can be: skis downhill, reads People, lives more than thirty miles from school, can name three Michael Jackson songs, etc. The trick to listing these is that the quality must be one that the instructor expects less than half of the class to satisfy.
• The point of this exercise is to walk around the room and find people who satisfies that quality. The instructor may only ask, do you..., not whether they can sign any of the boxes. If they do, have them sign that square on the instructor's sheet. The instructor should collect as many signatures as she/he can. At the end of the time limit, the person who has the most bingo lines on their paper wins. Ties will be broken by the total number of squares signed. And those ties will be broken by the students voting on which of them listed the harder qualities to find.

1. The Definition of "Employee"

• Courts have offered various ways to determine whether a worker is an employee. Generally, the interpretation used depends on the factual circumstances presented by each case, as well as which law is at issue.
• Several tests have been developed and are commonly used by courts to classify employees and independent contractors. These tests include the common-law test of agency, which considers several factors but focuses on who has the right to control the work; the Internal Revenue Service (IRS) 20-factor analysis; and the economic realities analysis. Several courts also use a hybrid approach, using one test that combines factors from other tests. As the court explains inMurray v. Principal Financial Group, Inc., et al.,the three tests are "functionally equivalent," with the common-law test controlling.
• Murray v. Principal Financial Group, Inc.
• Learning Objective Four:Explain the difference between an employee and an independent contractor and the tests that help us in that determination.
• Under what is now considered to be the leading test to determine status, thecommon-law agency test,a persuasive indicator of independent-contractor status, is the ability to control how the work is performed. This test originated in the master and servant law. Using the language of those origins, since the master (employer) had control over the servant (worker), the servant was considered similar to common-law property of the master and, therefore, originally governed by property law rather than contract law.
• Under the common-law agency approach applied by the courts, the employer need not actually control the work but must merelyhave the right or abilityto control the work for a worker to be classified an employee. The common-law test is specifically and consistently used to determine employee status in connection with employment taxes, as well as in federal income tax withholding.
• The IRS does have a secondary analysis, called theIRS 20-factor analysishowever, even the IRS itself explains that "this Twenty Factor Test is an analytical tool andnotthe legal test used for determining worker status. The legal test is whether there is a right to direct and control the means and details of the work."
• The following 20 factors have been continually articulated by courts, regulatory agencies, commentators, and scholars as critical to the determination of the status of an individual worker. When these factors are satisfied, courts are more likely to find "employee" status. The twenty factors are as follows:
• Instructions
• Training
• Integration
• Personal rendering of services
• Hiring, supervising, and paying of assistants
• Continuing relationships
• Set hours of work
• Full-time requirement
• Work performed on the employer's premises
• Order or sequence set
• Oral or written reports
• Furnishing of tools and materials
• Payment by hour, week, or month
• Payment of business or traveling expenses
• Significant investment
• Realization of profit or loss
• Work performed for more than one firm at a time
• Service made available to the general public
• Right to discharge
• Right to terminate
• Finally, under theeconomic realities test, courts consider whether the worker is economically dependent on the business or, as a matter of economic fact, is in business for himself or herself. In applying the economic realities test, courts look to the degree of control exerted by the alleged employer over the worker, the worker's opportunity for profit or loss, the worker's investment in the business, the permanence of the working relationship, the degree of skill required by the worker, and the extent the work is an integral part of the alleged employer's business. Typically, all of these factors are considered as a whole with none of the factors being determinative.
• Juino v. Livingston Parish Fire District No. 5
• InJuino v. Livingston Parish Fire District No. 5, a volunteer firefighter faced sexual harassment at her station. The court chose to consider whether she was paid as the threshold test in determining whether she was an employee. Though Juino received some indirect benefits from her volunteer work (e.g., life insurance), the court ruled that they were not significant enough to pass this first test of employment.

1. Contingent or Temporary Workers

• As used by the EEOC, the termcontingent workerincludes those who are hired by an employer through a staffing firm, as well as temporary, seasonal, and part-time workers, and those considered to be independent contractors rather than employees.
• Although contingent or temporary workers provide a cost savings as a short-term benefit, depending on their classification they could be entitled to protection under employment laws. It is important to be sure the classification given is the true classification.

1. Joint Employers and Staffing Firms

• Title VII prohibits staffing firms from illegally discriminating against workers in assignments and opportunities for employment. Staffing firms can be considered to be employers, as well, such as when they pay the worker and provide training and workers' compensation coverage.
• If a client of a staffing firm supervises, trains, and otherwise directs the worker with whom it has a continuing relationship, then perhaps the client will become an employer of the worker. In this way,boththe staffing firmandthe client may share liability as employers of the worker. This is calledjoint and severalliability, and the worker may collect compensatory damages from either one or both of the entities combined if a wrong is proven.
• Whether a contingent worker who is placed by a staffing firm with the firm's clients qualifies as an employee depends on a number of factors, including whether the staffing firm or the client retains the right to control when, where, and how the worker performs the job and whether there is a continuing relationship with the worker, among other factors. What is unique about the worker placed by a staffing firm is the potential for joint liability between the staffing firm and the client.
• Further, employers may be held liable as "third-party interferers" under Title VII. For example, an employer using a staffing firm cannot avoid liability for discriminating against a temporary worker merely because it did not "employ" the worker.

1. Defining "Applicant"

• Since federal regulations often require employers to track applicants on the basis of race, gender, and ethnicity, it is important to have a clear and consistent definition of who is anapplicant. According to the EEOC's Uniform Guidelines on Employee Selection Procedures (UGESP), while the precise definition depends upon the employer's recruitment and selection procedures, in general it encompasses all individuals who indicate an interest in being considered for hiring, promotion, or other employment opportunities. This interest might be expressed by completing a written application form, or by expressing interest orally, depending upon the employer's practice.
• Technology has changed the way people apply for jobs and also has raised questions about who is an applicant in the Internet age. According to the U.S. Department of Labor Office of Federal Contract Compliance Programs, there are four criteria that define an Internet applicant:
• The individual submits anexpression of interestinemployment through the Internet or related electronic data technologies.
• The employerconsidersthe individual for employment in a particular position.
• The individual's expression of interest indicates the individual possesses thebasic qualificationsfor the position.
• The individualdoes not removehimself from the selection process at any time prior to receiving an offer or otherwise indicate that he isno longer interested in the position.
• Thus an e-mail inquiry about a job does not qualify the sender as an applicant, nor does posting a resume on a third-party job board.