Federal Government Update


Employee versus Independent Contractor

We have written frequently about classifying workers as independent contractors. The government wants people who work for you to be classified as employees. Why?

  • You withhold taxes;
  • They are eligible for benefits including health insurance for those who work sufficient hours;
  • They can be covered for unemployment assistance and workers’ compensation benefits; and
  • Those in non-exempt positions can earn premium overtime.2000px-US-DeptOfLabor-Seal.svg

On July 15, 2015, the U.S. Department of Labor issued an interpretation signaling a change in the DOL’s test to determine whether personnel are employees or independent contractors. Historically, the DOL has considered several factors to weigh the extent of a company’s control over a worker. The DOL will now use an “economic realities” test in which a worker is considered an employee if economically dependent on the employer.

The economic realities test includes the following factors:

  1. The extent to which work performed is an integral part of the employer’s business. Those engaged in activities important for selling or servicing motor vehicles in a full service car dealership will probably be considered integral to the business.
  1. The degree of control exercised or retained by the employer. A worker who must accept assignments and direction how and when the work will be done is probably an employee. An independent contractor may turn down work and work as he or she wishes.
  1. The extent of relative investments of the employer and the worker. Those in their own business – independent contractors – will invest to start up and expand their own businesses. They may buy a vehicle not suitable for personal use, acquire work space, advertise and take other actions of those supporting their own businesses..
  1. The permanency of the relationship. Someone who has done work for the same company for an extended period is more likely to be seen as an employee. Someone who works for the company and others and can choose assignments may be an independent contractor.
  1. Whether the work performed requires special skill and initiative. Special skills are unnecessary to be an independent contractor, but it is more likely that those who uses specialized skills for many companies are supporting their own businesses.
  2. The worker’s opportunity for profit or loss depending on his or her managerial skill. If the worker is using managerial skills to support his or her company, he or she will probably be considered an independent contractor.

The DOL stressed that no single factor is determinative. The “control factor”, formerly the critical issue, should not be given undue weight. All factors should be considered to determine the economic dependence of the worker on the business. The more economically dependent, the more the worker will be seen as an employee. A worker supporting his or her own business, however, is not economically dependent on the employer and is more likely to be seen as an independent contractor.

If all of this seems unclear, you would be safe in concluding this is how it is meant to be. There is no bright line test. The potential costs to an employer for coming to the wrong conclusion are significant. Businesses will err on the side of caution and treat workers as employees. And the government wants that.

Text Messages and the TCPA

The Federal Communications Commission has released a Declaratory Ruling and Order that provides further guidance on the status of text messages under the Telephone Consumer Protection Act (TCPA). The Ruling clarified “Internet-to-phone text messages require consumer consent; and text messages are ‘calls’ subject to the TCPA, as previously determined by the [FCC].”  

Congress enacted the TCPA in 1991. The TCPA and the FCC’s implementing rules prohibit: (1) telemarketing calls using an artificial or prerecorded voice to residential telephones without prior express consent; and (2) a non-emergency call using an automatic telephone dialing system (“autodialer”) or an artificial or prerecorded voice to a wireless telephone number without prior express consent. For calls or text messages that include or introduce an advertisement or constitute telemarketing, the prior express consent must be in writing. For autodialed or prerecorded calls or texts to a wireless number not for telemarketing purposes, but for informational purposes, the prior express consent may be oral or written.

What does this mean for a dealership? For prerecorded or autodialed calls or for texts that are informational to a wireless device – such as a message to advise about the status of a customer’s vehicle in for service that does not include an advertising message – dealers may show express consent by the customer giving express oral or written consent or, absent instructions to the contrary, by the customer giving his or her wireless number to the dealer making the or prerecorded call or sending the text. The best practice is to have an authorization to receive such a call or a text message on the service document signed by the customer.

Light Duty Accommodations for Pregnant Women

Because of a decision by the U.S. Supreme Court earlier this year, the Equal Employment Opportunity Commission (EEOC) recently updated its Enforcement Guidance on Pregnancy Discrimination and Related Issues that was originally released on July 14, 2014.

The Pregnancy Discrimination Act of 1978 (PDA) prohibits discrimination based on pregnancy, childbirth, or related medical conditions as sex discrimination. The PDA requires that employers treat women affected by pregnancy and related medical conditions the same as non-pregnant applicants or employees who are similar in their ability or inability to work. Though pregnancy is not a disability, impairments related to pregnancy can be disabilities under the Americans with Disabilities Act (ADA) if they substantially limit one or more major life activities or substantially limited major life activities in the past. Private employers, such as dealerships, with 15 or more employees are subject to the PDA and ADA.

Because of this year’s Supreme Court decision, an employer may not deny light duty accommodations that are available for other disabled workers to pregnant employees. If your dealership has a policy of light duty accommodation for employees injured on the job or who have disabilities, provide the same accommodations to pregnant employees who request light duty accommodations.