Independent Contractor Archives - Business RadioX ®

Employee or Independent Contractor?: Analyzing New Department of Labor Guidelines

January 31, 2024 by John Ray

Employee or Independent Contractor: New Labor Department Guidelines, Jacqueline Voronov, Shylie Bannon, Hall Booth Smith

Hall Booth Smith Podcast Network

Employee or Independent Contractor?: Analyzing New Department of Labor Guidelines

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Employee or Independent Contractor?: Analyzing New Department of Labor Guidelines (Litigators Lounge, Episode 5)

On this edition of Litigators Lounge, hosts Shylie Bannon and Jackie Voronov discuss the recently announced final rule by the U.S. Department of Labor on the classification of a worker as either an employee or independent contractor under the Fair Labor Standards Act. The conversation explores the impact of the rule, which rescinds a Trump Administration regulation that made it easier for employers to categorize workers as independent contractors. Jackie and Shylie elaborate on the six-factor test to determine whether a worker is an independent contractor or an employee, touching on aspects like control over work performance, opportunity for profit and loss, and the nature of the work relationship. They also express views on the rule’s implications and advise employers to consult legal counsel to ensure compliance.

You can find the final Department of Labor rule on employee or independent contractor classification under the Fair Labor Standards Act by following this link. This rule goes into effect on March 11, 2024. For further commentary on the rule change and its implications from Hall Booth Smith partners Jackie Voronov and Jeffrey Daitz, follow this link.

Litigators Lounge is underwritten and presented by Hall Booth Smith. The show is produced by John Ray and the North Fulton studio of Business RadioX®.

Topics in this Episode

00:01 Introduction to Litigators Lounge

00:49 The Age-Old Decision: 1099s vs W2s

01:36 The Latest on Independent Contractors

03:59 Impact of the New Rule

04:36 Industries Affected by Independent Contractor Agreements

05:23 Understanding the New Rule: The Six Factor Test

15:12 The Role of Control in Determining Employment Status

20:23 The Curious Case of Pizza Chains

20:53 Understanding the Integral Part of Employer’s Business

22:16 The Intricacies of Outsourcing

23:41 The Role of Skill and Initiative in Classification

25:05 The Mysterious Seventh Factor

26:04 The New Rule: A Blessing or a Curse?

27:53 The Impact of the New Rule on Different Sectors

33:16 The Dilemma of Independent Contractor Agreements

34:33 The Final Verdict: A Call for Legal Consultation

35:59 Closing Remarks and Future Discussions

About Litigators Lounge

Jackie Voronov and Shylie Bannon, attorneys at Hall Booth Smith who specialize in labor and employment law, are the hosts of the engaging podcast Litigators Lounge. Listen as they delve into the intricate world of workplace legal issues as they explore real-life examples, unpack legal scenarios, and offer expert insights to help organizations and employees navigate the ever-changing legal landscape. With engaging discussions, diverse viewpoints from expert guests, and an ample touch of humor, Litigators Lounge is the go-to source for in-depth analysis and expert advice on law and the workplace.

Litigators Lounge is underwritten and presented by Hall Booth Smith. The show is produced by John Ray and the North Fulton studio of Business RadioX®.

If you have questions or feedback for Jackie and Shylie, feel free to follow this link and email them.

Jackie Voronov, Partner, Hall Booth Smith

Jackie Voronov is a Partner in Hall Booth Smith’s office in Paramus, New Jersey, and she represents management in a wide variety of employment matters and litigates employment claims before administrative agencies and state and federal courts. Her clients include major hotels, retailers, shipping companies, assisted living facilities and nursing homes, manufacturers, and national fast-food franchisees.

Jackie’s litigation experience includes the defense of employers in single and multi-plaintiff actions on claims of wrongful discharge, sexual harassment, race, national origin, gender, disability and age discrimination, breach of contract, family medical leave, failure to accommodate, retaliation, wage/hour laws, and related tort claims. Jackie also works with her clients to prepare various employment agreements (including non-compete, confidentiality, independent contractor, and separation agreements). She has extensive experience before various administrative tribunals, including the Equal Employment Opportunity Commission (EEOC), the State Division of Human Rights (SDHR), the Division of Civil Rights (DCR), and other state, federal, and local agencies.

In addition, Jackie frequently conducts management training for employers on a wide variety of employment law topics, such as:

EEO/anti-harassment
employee recruiting and hiring practices
family and medical leave
reasonable accommodations for disabilities and religion
preventing and investigating harassment, discrimination, and whistleblower claims
wage and hour compliance
discipline and termination of employees
privacy in the workplace

Jackie is regularly invited to speak nationally on best practices and other employment-related issues. Before joining Hall Booth Smith, she worked for one of the country’s largest law firms, where she defended employers in a wide range of labor and employment matters, including wage and hour class actions under the Fair Labor Standards Act (FLSA), claims related to the New York State Human Rights Law (NSHRL), the New Jersey Law Against Discrimination (LAD), the Americans With Disabilities Act (ADA), the New Jersey Conscientious Employee Protection Act (CEPA), and Title VII.

Jackie was selected for inclusion as a New Jersey Rising Star by Super Lawyers® for six consecutive years (2010-2016), which honors the top 2.5% of young lawyers in New Jersey.

Shylie Bannon, Partner, Hall Booth Smith

Shylie Bannon is a Partner in Hall Booth Smith’s Jacksonville, Florida, office. She also serves as Hiring Partner for the region of Florida, where she oversees associate attorney hiring endeavors. Prior to joining Hall Booth Smith, Shylie was a partner in both a multi-state, multi-specialty firm and a boutique practice.

At Hall Booth Smith, Shylie continues to represent physicians, mid-level providers, and health care providers in high-exposure medical negligence claims and in administrative proceedings before the Florida Department of Health. She also represents national retailers in high-exposure premises liability, negligent security, and transportation litigation with our National Trial Counsel team.

In addition to litigating matters involving personal injury and negligence, Shylie also represents management in all aspects of employment-related litigation arising from allegations of sex, disability, race, and pregnancy discrimination; whistleblower actions; and alleged violations of the National Labor Relations Act and Fair Labor Standards. She does so in administrative proceedings before both the Florida Commission on Human Relations and the US Equal Employment Opportunity Commission, as well as in all of the state and federal courts in Florida. She also provides employment-related counsel to clients, helping them avoid employment-related litigation through the implementation of best employment, investigation, and risk management practices.

Shylie earned a Juris Doctor from the University of Florida Levin College of Law, cum laude, and graduated magna cum laude from Tulane University with a Bachelor of Arts in Political Science and History.

Shylie volunteers with the Guardian Ad Litem program and supports child welfare advocacy efforts in Northeast Florida. She is also a Member of the Board for the Jewish Federation & Foundation of Northeast Florida.

About Hall Booth Smith, P.C.

Established in 1989, Hall Booth Smith, P.C. (HBS) is a full-service law firm headquartered in Atlanta, Georgia, with regional offices strategically located throughout Georgia and the United States. Experienced across a wide range of legal disciplines, HBS prides itself on providing knowledgeable, proactive, client-specific counsel to individuals, domestic and international corporations, state and federal agencies, and nonprofit organizations.

HBS possesses the legal knowledge, skill, and experience to meet their clients’ needs wherever they do business. HBS maintains the highest commitment to ethically and professionally serve their clients by providing the highest quality legal representation.

They deliver quality legal services in a variety of service areas. Experience across legal disciplines combined with a focus on the unique business or personal requirements of the client is the hallmark of the firm. Their clients receive the attention, expertise, and cost-effectiveness of a smaller law firm with the full-service and strong regional presence typical of a larger one.

Company website | LinkedIn | Facebook | Instagram

Disclaimer

Litigators Lounge is a production brought to you by Hall Booth Smith, PC. This podcast is published for the purposes of providing general information and education on topics which include those related to the law and legal issues, but the contents of the podcast do not constitute legal advice. Listening to this podcast or utilizing the information contained in it in any way does not constitute nor does it create an attorney-client relationship between you and Hall Booth Smith or its lawyers. The contents of this podcast should not be used as a substitute for competent legal advice from a professional attorney licensed in your jurisdiction.

IRS Employee or Independent Contractor Classification

April 14, 2023 by John Ray

Advisory Insights Podcast

IRS Employee or Independent Contractor Classification

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IRS Employee or Independent Contractor Classification (Advisory Insights, Episode 39)

On this episode of Advisory Insights, Stuart Oberman of Oberman Law Firm discussed the IRS’s Independent Contractor Test and how it can be used to determine the status of workers. He also explained that there is a presumption that independent contractors are employees in most states, how that can be overcome, and much more.

Advisory Insights is presented by Oberman Law Firm and produced by the North Fulton studio of Business RadioX®. The series can be found on all the major podcast apps. You can find the complete show archive here.

TRANSCRIPT

Intro: [00:00:01] Broadcasting from the studios of Business RadioX, it’s time for Advisory Insights. Brought to you by Oberman Law Firm, serving clients nationwide with tailored service and exceptional results. Now, here’s your host.

Stuart Oberman: [00:00:20] And welcome everyone to Advisory Insights. Stuart Oberman here, your host. All right, folks, we’re going to talk a little bit about IRS, the government. So, today’s topic, IRS: Employee or Independent Contractor Classifications.

Stuart Oberman: [00:00:37] I can’t tell you how many times I get this request for information on a weekly basis, hot topics during speeches. But I want to run through some basics as to whether or not you are on the professional side doing working interviews – which is a no-no – or you are right on the edge of that employee contractor relationship, or you know it should be employee but you don’t want to pay taxes on that person, or whether that person just wants to be either an employee or independent contractor.

Stuart Oberman: [00:01:13] But I want to pass the test in case you’re audited. I want to write out some clear guidelines as to what you need to look at to determine if that particular person is either an employee or independent contractor. So, the IRS has numerous, numerous things they look at, but I want to drill it down to the simplest form. Because there’s always variations., the economic test, the reality test, and need tests, there’s 20 million tests, but they all come back to the same thing, and I want to work on these scenarios.

Stuart Oberman: [00:01:52] So, there’s three things the IRS look at. I don’t care what the FTC has put out, what the government has put out on advisories, they’re looking at three things. Behavioral. Does the company control behavior? Do they have the right to control the worker? How does the worker do the job? Test one.

Stuart Oberman: [00:02:18] Test two. Financial control. Does the business have direct or control of the finances and the business aspects of the worker’s job? Finances, how are they paid? Economically, what’s the schedule? Are expenses reimbursed? Are tools or supplies provided?

Stuart Oberman: [00:02:46] Test three. Relationship of the parties. Is there a written contract? Benefits. I often sort of chuckle when I see independent contractors’ agreements coming to our office that are written by the business owner, and every phrase in that agreement, although it’s supposed to be an independent contractor agreement, says employee. How can you have an independent contractor agreement and everything in that agreement says employee, employee? And then, the employee is getting benefits, insurance, vacation pay. Folks, that’s not an independent contractor. There’s certain wording you need to look at and employee is not one of them in those contracts.

Stuart Oberman: [00:03:41] So, that’s a three part test. Behavior control, financial control, relationship of the parties.

Stuart Oberman: [00:03:49] Now, I want to drill this down just a little bit more. Well, in Georgia or Florida or Mississippi or Kansas, each state has their own requirements as to what they also think is an independent contractor. And most of the time, the State Department of Revenue departments are much more vindictive and aggressive than the IRS. So, each state has different laws, rules, criterias, and you have to know what those are in addition to what the IRS overview is.

Stuart Oberman: [00:04:36] So, I want to take a look at a couple of historical things for you guys to consider with independent contractors. First and foremost, what’s the control an employer exercises over the individual? Does the individual provide services for other clients, other companies? Or is that “independent contractor” the only person that works for you? If they are, potential problem. If they’re working with five other companies, two other companies, and they’re not necessarily economically dependent on you, your criteria gets a little bit better.

Stuart Oberman: [00:05:25] The level of education and training. What is the training of that particular person as an independent contractor? Generally, someone who is of a professional degree, CPA, attorney, what have you, architect will probably have a little bit more leeway as to whether or not they’re an independent contractor because of their education and training.

Stuart Oberman: [00:05:55] So, I want to look at tools, equipment. Is that person coming to your office? Is that person coming to your job site? Is that person working in your warehouse? Are you providing the backhoes? Are you providing the trucks, equipment, bobcats, whatever it is?

Stuart Oberman: [00:06:16] The timing of the performance. Are you telling them, “John, Mary, I want you there at 9:00 to 5:00. I want you there at 8:30 to 5:00. You get an hour lunch or half hour lunch and then you’re back to work.” Are you going to punch in? Are you going to punch out?

Stuart Oberman: [00:06:32] And I may or may not pay you overtime, I don’t know. But because you’re an independent contractor, I may or may not pay you overtime. I don’t care if you work 60 hours a week. You’re an independent contractor, I’m paying you $100 a week and that’s all. You need to look at that really, really close. Are they hour-based requirements or are they project-based – project? Or is it performance and service-based?

Stuart Oberman: [00:07:02] Agreement. Is there an agreement between the parties? Is there a contract? If not, you need one. The length of time. You’re going to be an independent contractor for three days, you’re going to be an independent contractor for three years, not so much. Is the term open-ended? Are the terms of the contract open-ended?

Stuart Oberman: [00:07:29] And then, one of the things that I always look at, is, how essential is that person to your continued operation of the business? If they are absolutely critical to your infrastructure, your revenue, your ongoing process, it’s going to be an employee. You got to look at that. So, the less control you have over that person, the better off you’re going to be. Now, the more control, obviously, you’re going to be closer to an employee status.

Stuart Oberman: [00:08:06] Now, the IRS has listed out 20 factors, 20 factors. At some point, every independent contractor is going to hit at least one of those factors. I don’t care what it is. They’re going to hit something. You’ve got to take a look at, “Okay. John and Mary is coming in as independent contractor.” Do they pass or how much of that test of the 20 factors do they pass what the IRS put out?

Stuart Oberman: [00:08:36] I believe it was in 1987, so this is nothing earth shattering. They revised it. Things come in. Things come out. But you look at the guts of it, the three factors. You look at the control, the financial and relationship, you look at those 20 factors, and then you have to determine the statuses of the parties.

Stuart Oberman: [00:08:57] Folks, that’s a long, long 20 explanation matter. But, again, keep it basics. We’re going to have tweaks. We’re going to have three or four parts or test or whatever it is. The bottom line is, is that the courts are going to decide whatever they want to decide, the IRS is going to decide whatever they want to decide, and so is the State Department of Revenues, but you got to have a background.

Stuart Oberman: [00:09:23] There’s a presumption, presumption in most states that an independent contractor is an employee. Presumption. Overcome it. Overcome that obstacle if you wanted to. Folks, that’s the IRS in its simplest.

Stuart Oberman: [00:09:39] Advisory Insights. Thanks for joining us today. Feel free to reach out, phone number 770-886-2400, or email me, stuart, S-T-U-A-R-T, @obermanlaw.com. Thanks, folks. Have a fantastic day.

Outro: [00:09:57] Thank you for joining us on Advisory Insights. This show is brought to you by Oberman Law Firm, a business-centric law firm representing local, regional, and national clients in a wide range of practice areas, including health care, mergers and acquisitions, corporate transactions, and regulatory compliance.

About Advisory Insights Podcast

Presented by Oberman Law Firm, Advisory Insights Podcast covers legal, business, HR, and other topics of vital concern to healthcare practices and other business owners. This show series can be found here as well as on all the major podcast apps.

Stuart Oberman, Oberman Law Firm

Stuart Oberman is the founder and President of Oberman Law Firm. Mr. Oberman graduated from Urbana University and received his law degree from John Marshall Law School. Mr. Oberman has been practicing law for over 25 years, and before going into private practice, Mr. Oberman was in-house counsel for a Fortune 500 Company. Mr. Oberman is widely regarded as the go-to attorney in the area of Dental Law, which includes DSO formation, corporate business structures, mergers and acquisitions, regulatory compliance, advertising regulations, HIPAA, Compliance, and employment law regulations that affect dental practices.

In addition, Mr. Oberman’s expertise in the healthcare industry includes advising clients in the complex regulatory landscape as it relates to telehealth and telemedicine, including compliance with corporate structures, third-party reimbursement, contract negotiations, technology, healthcare fraud, and abuse law (Anti-Kickback Statute and the State Law), professional liability risk management, federal and state regulations.

As the long-term care industry evolves, Mr. Oberman has the knowledge and experience to guide clients in the long-term care sector with respect to corporate and regulatory matters, assisted living facilities, and continuing care retirement communities (CCRCs). In addition, Mr. Oberman’s practice also focuses on healthcare facility acquisitions and other changes of ownership, as well as related licensure and Medicare/Medicaid certification matters, CCRC registrations, long-term care/skilled nursing facility management, operating agreements, assisted living licensure matters, and health care joint ventures.

In addition to his expertise in the healthcare industry, Mr. Oberman has a nationwide practice that focuses on all facets of contractual disputes, including corporate governance, fiduciary duty, trade secrets, unfair competition, covenants not to compete, trademark and copyright infringement, fraud, and deceptive trade practices, and other business-related matters. Mr. Oberman also represents clients throughout the United States in a wide range of practice areas, including mergers & acquisitions, partnership agreements, commercial real estate, entity formation, employment law, commercial leasing, intellectual property, and HIPAA/OSHA compliance.

Mr. Oberman is a national lecturer and has published articles in the U.S. and Canada.

Oberman Law Firm

Oberman Law Firm has a long history of civic service, noted national, regional, and local clients, and stands among the Southeast’s eminent and fast-growing full-service law firms. Oberman Law Firm’s areas of practice include Business Planning, Commercial & Technology Transactions, Corporate, Employment & Labor, Estate Planning, Health Care, Intellectual Property, Litigation, Privacy & Data Security, and Real Estate.

By meeting their client’s goals and becoming a trusted partner and advocate for our clients, their attorneys are recognized as legal go-getters who provide value-added service. Their attorneys understand that in a rapidly changing legal market, clients have new expectations, constantly evolving choices, and operate in an environment of heightened reputational and commercial risk.

Oberman Law Firm’s strength is its ability to solve complex legal problems by collaborating across borders and practice areas.

Connect with Oberman Law Firm:

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Overview of Potential HR Employer Violations

July 29, 2022 by John Ray

Advisory Insights Podcast

Overview of Potential HR Employer Violations

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Overview of Potential HR Employer Violations (Advisory Insights Podcast, Episode 2)

On this episode of Advisory Insights, Stuart Oberman gave an overview of potential HR employer violations he’s seeing with clients. Several of these violations can prove to be quite costly.

TRANSCRIPT

Stuart Oberman: [00:00:19] Welcome everyone to Advisory Insights Podcast. I am your host, Stuart Oberman.

Stuart Oberman: [00:00:25] Well, you know, for those that know me, I tell you, we do a lot of H.R. as a firm. We see a lot of problems locally, nationally, regionally, globally on H.R. violations. So, I want to talk a little bit about H.R. violations, really an overview of potential H.R. employer violations. That is such a wide area. I mean, we’re talking about employment law. We’re talking about State, Federal regulatory issues. We’re talking about EEOC. And we’re talking about audits. We’re talking about, you know, employee complaints.

Stuart Oberman: [00:00:57] So, what I want to do is to just talk about a couple of things top of mind that can really get you into trouble. And I’ll tell you, we see a lot of these areas of concern that can really, really be avoided. But it’s going to take some soul searching. It’s going to take some drilling down. It’s going to take some hard decisions. Look, you can’t turn a ship around overnight. You’ve got to make small steps.

Stuart Oberman: [00:01:23] And if you do anything on these podcast, it’s take a look at what we’re talking about and apply it to what you have, whether you’re a health care practice, whether you are a startup, whether you are a billion dollar construction company. It doesn’t matter, the same law applies. So, let’s take a look at some of the most common ways that we feel that employers violate the law.

Stuart Oberman: [00:01:47] It this Great Resignation world that we’re in, our employers use prohibited questions during job interviews. You have to be very, very careful. And we’re going to cover this in future podcasts. So, a lot of these areas we’re going to expand upon, but we’re just going to have top of mind issues. Job interviews, questions, are you prepared? The answer is probably not. Are your candidates recording your conversations? You bet they are.

Stuart Oberman: [00:02:21] So, one of the things that we take a look at also is not allowing employees, depending on the size of the business, a lot of ramifications of employees discuss their pay. Now, we’re looking at National Labor Relations Board issues. So, yeah, the National Labor Relations Board, you bet, will apply to small businesses.

Stuart Oberman: [00:02:42] Overtime, one of the biggest, biggest errors that our employers get in trouble with are overtime. And I say this all the time when I speak, when I talk, overtime is a lot of things. You’re working 40 hours a week, so you’re texting your employees after hours. Yeah, that’s overtime. Your emailing your staff, overtime, yeah. You’re calling your office manager, depending on where they’re located at, if they make $100,000 hours or more, they are still subject to overtime. You’ve got to be careful with this. We’re going to take a look at some of the issues coming forward also.

Stuart Oberman: [00:03:17] Huge issue, independent contractor versus employee. The IRS loves these kind of reviews. Key, are you controlling a time, place, and manner? That’s a whole topic for discussion on employee versus independent contractor. It is very tough to win that argument. It is very tough to win an audit on that.

Stuart Oberman: [00:03:37] So, one thing, this great, great social media world that we live in, are you disciplining your employees who are complaining about you – small, medium, large company – on social media? Do you have restrictions? Are you following them on social media? Are you looking for things that they’re saying about you?

Stuart Oberman: [00:04:07] How to prevent also a hostile work environment, and I’m talking about gender neutral. I’m talking about harassment. I’m talking about all forms of harassment, bullying. I can’t believe what some of our clients tell us happens in their employment situations. I’m talking about Title VII violations. I’m talking about sexual orientation issues. I’m talking about gender identity. I’m talking about religion. I’m talking about race, color, national origin. These are all the things that occur on a hostile work environment that are a violation of Federal Law.

Stuart Oberman: [00:04:45] Look, I could probably take any one of these topics and discuss an hour on them. Again, what do we do with Advisory Insights Podcast? What are we doing? We’re taking the high level topics with a 10,000 foot view and are you looking at these particular areas. Six, seven, eight areas, are you looking at them? Again, short, sweet bullet point topics that we could talk an hour on. That’s the goal on Advisory Insights Podcast. That’s what we want to do. We want to take things at a very high level, apply it to what you’re looking at, whether you’re, again, small, startup. Are you looking at these things?

Stuart Oberman: [00:05:24] We’re going to continue talking about these things in greater detail. We’re going to continue talking about what affects our employers on a regional, national, local basis – excuse me – global basis. I want to talk about also some of these things on future podcasts. And, also, don’t forget, we also cover these on our newsletter, Advisory Insights. If you want to get a copy of our newsletter, please let us know.

Stuart Oberman: [00:05:49] Folks, thank you very much for joining us on our Advisory Insights Podcast. Please visit us at advisoryinsightspodcast.com. If you want to reach me, please feel free to call the office, 770-886-2400 or visit Oberman Law Firm, obermanlawfirm.com, or send me an email, stuart, S-T-U-A-R-T, @obermanlaw.com.

Stuart Oberman: [00:06:14] Thank you, everyone for listening to us. Keep listening to our podcast. If you have any questions, let me know. Have a fantastic day, everyone. Thank you.

Outro: [00:06:24] Thank you for joining us on Advisory Insights. This show is brought to you by Oberman Law Firm, a business-centric law firm representing local, regional, and national clients in a wide range of practice areas, including health care, mergers and acquisitions, corporate transactions, and regulatory compliance.