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What is at Stake When a Worker is Misclassifed?
 

What is at Stake When a Worker is Misclassifed?

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    What is at Stake When a Worker is Misclassifed? What is at Stake When a Worker is Misclassifed? Document Transcript

    • Construction Seminar Series February 24, 2011What is at Stake When aWorker is Misclassified?Presented by Laura Kipnis of Stinson Morrison Hecker LLPFebruary 24, 2011 | 7700 Forsyth Blvd., Suite 1100, St. Louis, MOKansas City | St. Louis | Jefferson City | Overland Park | Wichita | Omaha | Washington, D.C. | Phoenix
    • DisclaimerThis booklet is designed to give general information only. It is not intended tobe a comprehensive summary of the law or to treat exhaustively the subjectscovered. This information does not constitute legal advice or opinion. Legaladvice or opinions are provided by Stinson Morrison Hecker LLP only uponengagement with respect to specific factual situations.
    • What Is At Stake When A Worker Is Misclassified Laura J. Kipnis LKipnis@stinson.com 314-719-3022 © Stinson Morrison Hecker LLP, 2011 Increased Scrutiny By Taxing Authorities• Federal estimate: – Employees report 99% of wages – Independent contractors report 43% of earnings i• Federal - $1.6 billion annually © Stinson Morrison Hecker LLP, 2011 2 Increased Scrutiny By Taxing Authorities• MO: – $423 million annually – $10 million in lost unemployment contributions – $21 million in lost workers’ compensation premiums © Stinson Morrison Hecker LLP, 2011 3 1
    • Reasons Why Classification Matters • Federal, state and local tax withholding • FICA and FUTA • State unemployment taxes p y • Workers’ compensation coverage • Employer provided benefits • Wage and hour laws • Form I-9s © Stinson Morrison Hecker LLP, 2011 4Reasons Why Classification Matters• Missouri Revised Statutes § 285.500 et seq• New Hire Reporting• OSHA training and recordkeeping• Subject to discrimination and other claims• 1 advantage – intellectual property © Stinson Morrison Hecker LLP, 2011 5 Why Businesses Get It Wrong• Don’t know there are rules• No bright line test – confusion• Desire to avoid costs and obligations g• Desire to avoid unions © Stinson Morrison Hecker LLP, 2011 6 2
    • Guiding Principle• If business controls the process of work = employee• If business dictates only the end result = independent contractor• Tests generally consider the “totality of the circumstances” © Stinson Morrison Hecker LLP, 2011 7 IRS 20 Factors1. Instructions2. Training3. Integral to operations g p4. Personally rendered services5. Hiring, paying and supervising assistants6. Continuing Relationship © Stinson Morrison Hecker LLP, 2011 8 IRS 20 Factors 7. Set hours of work 8. Full-time work 9. Work required on business’ p q premises 10. Order or sequence set by business 11. Reports required 12. Basis of payment for services 13. Business and travel expenses © Stinson Morrison Hecker LLP, 2011 9 3
    • IRS 20 Factors14. Tools and materials15. Investment in facilities16. Opportunity for p pp y profit or loss17. Simultaneous work for multiple businesses18. Services available to the general public © Stinson Morrison Hecker LLP, 2011 1 IRS 20 Factors19. Right of business to discharge worker20. Right of worker to terminate relationship © Stinson Morrison Hecker LLP, 2011 1 Unwelcome Attention• Independent contractor files for unemployment benefits• IRS audit• Wage/hour audit• Worker complaint• Future – greater Form 1099 scrutiny © Stinson Morrison Hecker LLP, 2011 1 4
    • Proactive Steps• Self-audit – Beware written internal report – Attorney/client privilege• Enhance the attributes of an independent contractor – How to make a chicken look like a duck © Stinson Morrison Hecker LLP, 2011 1 Federal: Section 530 Safe Harbor• Applies only to federal taxes• Section 530 Criteria o Constantly treated all similarly situated workers as independent contractors o Complied with 1099 reporting o Had reasonable basis for treating worker as independent contractor © Stinson Morrison Hecker LLP, 2011 1 5
    • Laura J. Kipnis Partner DIRECT CONTACT ST. LOUIS 314.719.4022 7700 Forsyth Blvd., Suite 1100 lkipnis@stinson.com St. Louis, MO 63105 Laura has practiced exclusively in the areas of employment and labor law for more than 25 years. She has extensive experience counseling and representing employers in a wide variety of employment and labor matters including employment discrimination claims, the implementation and enforcement of employment and non-compete agreements, the creation and enforcement of policies and procedures for hiring, disciplining and terminating employees without generating legal claims, drug testing and background checks. Her experience also includes compliance with federal and state wage and hour laws, the Family and Medical Leave Act and state leave laws, COBRA and state health insurance continuation laws, and federal and state plant closing laws. Laura’s experience with unionized labor includes representing employers in collective bargaining negotiations, union organizing campaigns, picketing and boycotting matters and unfair labor practice charge cases before the National Labor Relations Board. Laura strives to provide practical solutions that enable clients to achieve their goals, and that are sensitive to the interplay between human resources policies and good employee relations. Practice Areas • Employment Law • Labor Law • Trade Secrets • OSHA and Workplace Safety Representative Experience • Obtained favorable results for numerous clients before the EEOC, state fair employment practices agencies and the U.S. Department of Labor, Wage & Hour Division. • Represented clients in matters involving the implementation and enforcement of non-compete agreements. • Successfully negotiated settlement or separation agreements for various clients involved in claims of discrimination, retaliation and/or wrongful termination in violation of public policy. • Provided training to managers for various clients regarding best practices for dealing with problem employees, dealing with employee health issues and sexual harassment. • Assisted clients buying or selling businesses with employment matters related to the transactions. • Represented an employer in collective bargaining negotiations. Education Duke University, J.D., with honors, 1984 Brown University, A.B., magna cum laude, 1981 Of Note Laura is a regular speaker at human resource management seminars and has appeared on television commenting on employment law issues. She is also a member of the firm’s Diversity Committee. Community Involvement • Washington University Human Studies Committee, Memberstinson.com Kansas City | St. Louis | Jefferson City | Overland Park | Wichita | Omaha | Washington, D.C. | Phoenix
    • Bar Admissions • Missouri, 1984 • United States District Court for the Eastern District of Missouri • United States Court of Appeals for the Eighth Circuit • United States Supreme Court Professional Activities • American Bar Association • Labor Law Section • The Missouri Bar • Bar Association of Metropolitan St. Louis • Labor and Employment Law Section Articles • Contributor to the Human Resources Column, Illinois Banker Magazine, January 2008. • “Employment Law for Doctors,” Missouri Medical Law Report, February 2005. • “Selling or Buying a Business When Employees Have Contracts Containing Post-Employment Restrictions,” St. Louis Small Business Monthly, March 2005 (Co-author). • Various client alerts on employment topics. Presentations • “Employment Law Outlook: The Good, the Bad and the Ugly,” Business Law Update, Clayton, Missouri, May 21, 2008. • “Negotiating Separation Agreements in Difficult Termination Situations,” St. Louis, Missouri, January 9, 2008. • “Best Practices for Protecting Yourself from Dishonest Employees: Hiring and Firing,” Protecting Your Business from Dishonest and Disloyal Employees, Clayton, Missouri, Oct. 26, 2006. • “Managing the Complexities of the Overlapping Web of FMLA, ADA, Workers’ Comp and Antidiscrimination Laws,” FMLA Update 2006, St. Louis, Missouri, March 31, 2006. • “Avoiding Employment Litigation,” Employee Discharge and Documentation in Illinois, Fairview Heights, Illinois, April 28, 2005. • “Avoiding the Legal Snares When Negotiating the Complex Maze of FMLA, ADA, PDA and Workers’ Comp Laws,” Missouri Personnel Law Update 2004, St. Louis, Missouri, June 16, 2004. • “Labor and Employment Records,” Document Retention and Destruction, St. Louis, Missouri, July 13, 2004.stinson.com Kansas City | St. Louis | Jefferson City | Overland Park | Wichita | Omaha | Washington, D.C. | Phoenix
    • Construction Our Construction Group is known for giving practical and timely assistance to clients in an industry where time literally is money. Whether it is drafting and negotiating contracts, using “industry forms” or creating documents to meet special client needs; advising on issues during design and administration of projects; or representing clients in arbitrations, lawsuits and other means of resolving disputes, our focus is never off of the ultimate goal, which is to just “solve the problem.” Practice Overview: Our experience includes representing all participants in both public and private projects, including: • Office buildings • Transportation • Power and utility plants • Environmental • Industrial and process • Residential • Manufacturing • Employing all project delivery systems, including: • Design-bid-build • Project financed • Design-build • Build operate transfer • Construction management • Master agreements • Fast-track • Job/task order The attorneys in our Construction Group have cultivated “liaisons” with attorneys in other practice groups to allow us to assist clients when issues arise in non-core construction areas such as: • Bankruptcy • ERISA • EEOC and employment issues • Zoning and development • Environmental • Tax • Wage & hour/prevailing wages • Copyright and software development • Strikes, pickets, salting • Estate and business succession planning Part of our service to clients is to hold regular “mini-seminars” on topics of interest to the construction community, and to notify clients whenever we become aware of a new law or court decision that could affect their business. Recent topics have included • Pay-when-paid vs. Pay-if-paid clauses • New AIA and ConsensusDOCs • New I-9 procedures • Liens and Lien waivers • Warranties and call backs • Prevailing Wage issues • False claims acts • Employment contracts and non-competes • Issues Unique to Design-Build • Missouri Retainage Statute • Subcontractor Administration • Bid, Performance and Payment bonds • Public Procurementstinson.com Kansas City | St. Louis | Jefferson City | Overland Park | Wichita | Omaha | Washington, D.C. | Phoenix