Legal Compliance 1

1
Legal Compliance 1

• MANA 4328
• Dr. George Benson
• benson_at_uta.edu

2
Classifying Employees

• Flexible employment practices have risen
  sharply last 10-15 years.
• Independent Contractors
• Temporary Employees
• FLSA (Salaried vs. Hourly)

3
What is an Independent Contractor?

• An employer does not generally have to withhold
  or pay any taxes on payments to independent
  contractors.
• W2 vs. 1099
• General rule An individual is a contractor if
  the employer controls only the result of the work
  and not the means and methods of accomplishing
  the result.
• Behavioral control
• Financial control
• Relationship with firm
• http//www.irs.ustreas.gov/pub/irs-utl/emporind.pd
  f

4
IRS Example

• Vera Elm, an electrician, submitted a job
  estimate to a housing complex for electrical work
  at 16 per hour for 400 hours. 
• She is to receive 1,280 every 2 weeks for the
  next 10 weeks.  This is not considered payment by
  the hour.  Even if she works more or less than
  400 hours to complete the work, Vera will receive
  6,400. 
• Vera sets her own schedule but is required to
  complete the work in 10 weeks subject to
  inspection upon completion. She also performs
  additional electrical installations under
  contracts with other companies, that she obtained
  through advertisements. 

5
IRS Example

• Vera Elm, an electrician, submitted a job
  estimate to a housing complex for electrical work
  at 16 per hour for 400 hours. 
• She is to receive 1,280 every 2 weeks for the
  next 10 weeks.  This is not considered payment by
  the hour.  Even if she works more or less than
  400 hours to complete the work, Vera will receive
  6,400. 
• Vera sets her own schedule but is required to
  complete the work in 10 weeks subject to
  inspection upon completion. She also performs
  additional electrical installations under
  contracts with other companies, that she obtained
  through advertisements. 
• Vera is an Independent Contractor

6
Temporary Employees

• Temps are employees of an employment agency, not
  the organization where they work.
• Companies cannot use long-term temporary
  employment only to deny benefits to employees.
• Vizcaino vs. Microsoft
• Microsoft Corp. will pay 97 million to settle a
  federal lawsuit from employees who claimed the
  software giant classified them as "temporary"
  workers for years to deny them standard benefits
  such as health insurance and the lucrative
  employee stock purchase plan, thereby saving the
  company millions.
• Between 8,000 and 12,000 people are eligible for
  a share of the settlement.
• LA Times 12.13.00

7
Changes at Microsoft

• Guidelines to help managers figure out when a job
  shouldn't be given to a temporary employee.
• Policy prohibiting temporary employees from
  working more than 12 months at a stretch without
  taking at least a 100-day break.
• Temporary workers wear orange badges instead of
  the blue badges for permanent employees.
• Temporary workers are not permitted to use the
  company health club, play on the company baseball
  and soccer fields or allowed to attend company
  parties.

8
Fair Labor Standards Act (FSLA)

• Passed in 1938 and amended many times
• Nonexempt workers earn a minimum wage of not less
  than 5.15 an hour, effective September 1, 1997.
• Overtime pay at not less than one and one-half
  times regular pay is required after 40 hours a
  workweek.
• An employee must be at least 16 years old to work
  in most non-farm jobs and at least 18 to work in
  non-farm jobs declared hazardous by the Secretary
  of Labor.
• Youths 14 and 15 years old may work outside
  school hours in various non-manufacturing,
  non-mining, non-hazardous jobs under certain
  conditions

9
FSLA Special Cases

• Tipped employees
• Domestic service workers
• Teachers and administrative personnel in
  elementary and secondary schools
• Outside sales employees
• Employees in certain computer-related occupations
  
• Employees of certain seasonal amusement or
  recreational establishments
• Employees engaged in fishing operations
• Employees engaged in newspaper delivery
• Farm workers
• Casual babysitters
• Certain commissioned employees of retail or
  service establishments
• Employees of railroads and air carriers
• Taxi drivers
• Nurses
• Announcers of certain non-metropolitan
  broadcasting stations
• Employees of motion picture theaters
• Employees of certain bulk petroleum distributors
• Many others.

10
New Overtime Rules

• First major change to FSLA in 50 years.
• http//www.dol.gov/esa/regs/compliance/whd/fairpay
  /
• In 2003 record 212.5 million in back wages was
  collected from employers a 20 increase from
  2002.
• RadioShack will pay 29.9 million in unpaid
  overtime claims of 1,300 managers in California.
  Similar suits at Eckerd, Starbucks, and Farmers
  Insurance.

11
To be exempt from FLSA

• Salary Basis Test
• Be paid a salary
• Salary Level Test
• Earn a minimum of 23,660/yr (old 8060/yr)
• White collar workers who earn more than 100k are
  exempt
• Blue collar workers skilled trades
• Duties Test
• Administrative
• Professional
• Executive
• Outside Sales
• An employee who leads a team of other employees
  assigned to complete major projects

12
Administrative Duties

• Whose primary duty (50) is the performance of
  office or non-manual work directly related to the
  management or general business operations of the
  employer or the employers customers and
• Whose primary duty includes the exercise of
  discretion and independent judgment with respect
  to matters of significance.

13
ADEA (1967) and Age Discrimination

• Age Discrimination in Employment Act of 1967
• Protects employees 70 million workers over 40
• Nearly 50 of workers
• Cases most often arise from layoff or dismissal
• It is legitimate to consider salary in layoffs
• No standard of reverse discrimination for age
  suits
• Disparate impact rules apply
• Adams vs. Florida Power Corp
• Dismissed by the Supreme Court 2002
• Smith vs. City of Jackson
• Affirmed by the Supreme Court 2005

14
Americans with Disabilities Act (ADA)

• Discrimination is prohibited against individuals
  with disabilities who can perform essential job
  functions with reasonable accommodation unless it
  would cause undue hardship.
• Employers not required to change work rules if
  they are business necessity.
• OFCCP vs. Ozark Airlines (1986) employers must
  prove applicant could not perform the job safely.

15
Man fired for getting gassed on spilled ethanol
at work

• An Iowa judge has denied unemployment benefits
  to a man who claimed discrimination after being
  fired from an ethanol plant for drinking
  "automobile fuel" produced by the company.
  According to Neddermeyer, he showed up for work
  and saw that there had been a spill of 190-proof
  fuel alcohol contained in a 6-inch-deep holding
  pond.
• I am a recovering alcoholic, and curious
  about the taste and its effects, I dipped into
  this lake of liquor . At a subsequent state
  hearing, the plant manager expressed shock. This
  is a fuel alcohol, he said, This is an
  explosive product.
• Neddermeyer argued that his employer shared
  responsibility by providing an opportunity for
  him to drink. He also argued that Amaizing Energy
  was discriminating against him due to his
  disease of alcoholism and asked the judge
  whether ADA protections could be applied to his
  request for unemployment benefits. The judge
  denied the request for benefits. "The employer
  has a right to expect employees not to drink the
  fuel,"
• Des Moines Register 7.9.06

16
Americans with Disabilities Act (ADA)

• Disability is a physical or mental impairment
  that affects a major life activity.
• Essential vs. marginal job functions
• Categories of "reasonable accommodations"
• changes to a job application process
• changes to the work environment
• changes to the way a job is usually done
• employee training

17
Undue Hardship

• Undue hardship means significant difficulty or
  expense.
• Not only financial difficulty
• Those that would fundamentally alter the nature
  or operation of the business.
• Every request for reasonable accommodation should
  be evaluated separately taking into account
• Nature and cost of the accommodation needed
• Overall financial resources of the business
• Number of persons employed by the business
• Impact of the accommodation on the business