May 2019 – Vol. 21, No. 5
Employer E-Letter: Labor and Employment Law News
from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.
Co-Editors, Scott A. Witty, firstname.lastname@example.org and Richard R. Burns, email@example.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
This Month’s Topics:
- Independent Contractor v. Employee Analysis
- Discrimination Claims Not Barred By Workers’ Compensation Exclusivity
- Record Retention is Key in FMLA disputes
- Overtime Exemptions Regarding “8 and 80” Pay
- Tip Of The Month
Independent Contractor v. Employee Analysis
The Wage and Hour Division of the Department of Labor (“DOL”) recently issued an opinion letter regarding whether service employees working for a virtual marketplace company (“VMC”) are employees or independent contractors. A VMC is an online based referral service. The most well-known examples of VMC’s are ride sharing services Uber and Lyft. The DOL applied the six factor test set forth by the U.S. Supreme Court for determining whether a worker is economically dependent upon the company. The six factors are: 1. employer control; 2. permanency of relationship; 3. investment by the potential employer in facilities, equipment, or helpers; 4. skill, initiative, judgment, and foresight required by the worker; 5. opportunity for profit and loss; and 6. extent of integration with the potential employer’s business. The amount of weight given each factor is dependent upon the facts of each specific situation. The DOL provided an analysis of each factor and determined the company did not exert control over the workers and afforded them flexibility, including the ability to work for other companies. The DOL also cited to the fact that the workers were not provided mandatory training, could choose how to perform their job, had the ability to choose different jobs in various locations with different compensation levels, could cancel a job, and could choose to work for different platforms. This is an issue that will likely be further discussed in the future. WHD Opinion Letter FLSA 2019-6 (April 29, 2019).
Discrimination Claims Not Barred By Workers’ Compensation Exclusivity
In Minnesota, employer liability for employee personal injuries arising out of and in the course of employment is limited to that provided under the Workers’ Compensation Act. This is often referred to as the “exclusivity” rule, meaning that liability under the workers’ compensation rules displaces any other liability of the employer with respect to such injuries. In a recent case, the Minnesota Supreme Court was presented with the question of whether a disability discrimination – failure to accommodate claim was barred under the workers’ compensation exclusivity rule. The employee at issue was a firefighter who injured his ankle and was prescribed supportive tennis shoes. The employer allowed the shoes as an accommodation (they did not meet the dress policy) for a period of time. The employer then informed the employee that he had to wear shoes that complied with the department’s policy. Shortly thereafter, the employee reinjured his ankle and also injured his shoulder when he slipped climbing down from a fire truck. He was placed on light duty but not allowed to wear the prescribed shoes. The employee claimed he was unable to perform light duty unless he was permitted to wear the shoes, so the employer put him on leave. The employee sued claiming disability discrimination based on failure to provide reasonable accommodation. The employer sought dismissal of the claim under the workers’ compensation exclusivity rule, citing precedent from 1989. The Court overturned that precedent, however, concluding that discrimination is distinguishable from the personal injury, whether mental or physical injury, compensable under the workers’ compensation system. Thus, an employee can simultaneously maintain a workers’ compensation claim for qualifying injuries and a disability discrimination claim arising from the same injury. Daniel v. City of Minneapolis, 923 N.W.2d 637 (Minn. 2019).
Record Retention is Key in FMLA disputes
In the recent case Holladay v. Rockwell Collins, the U.S. District Court, Southern District of Iowa, allowed an employee’s FMLA claim to proceed to trial because the employer did not preserve records relating to the employee’s notification that she was taking FMLA leave. The employee in Holladay suffered from recurring migraines and had obtained approval to take intermittent leave. One particular day, the employee called in and left a voicemail regarding missing work. The employee claimed she expressly mentioned she needed leave because of her migraines. Yet, the employer’s notes regarding the voicemail message indicated the employee merely stated she was ill. Thereafter, the employer terminated the employee and the employee sued. The employer moved for summary judgment claiming the employee did not provide sufficient notice of her need to take FMLA leave. However, the employer did not preserve the voicemail message, which ultimately led the court to conclude there was a factual dispute over whether the employee’s notice was sufficient. Thus, the employee’s suit was allowed to proceed. Had the employer preserved the voicemail it is entirely possible, even likely, the employer would have prevailed on summary judgment. The Holladay case highlights the need for employers to preserve all records relating to FMLA leave requests, especially those records relating to unapproved absences, because failure to do so could mean the difference between a claim, dismissed and one allowed to proceed to trial.
Overtime Exemptions Regarding “8 and 80” Pay
The Department of Labor (“DOL”) recently issued an opinion letter in response to an inquiry from an employer asking for advice as to whether it could implement an “8 and 80” overtime pay system under section 7(j) of the Fair Labor Standards Act (“FLSA”). The “8 and 80” system, which can only be adopted by certain employers, allows an employer to compute overtime over a consecutive 14 day period. During that time period, an employee is required to be paid overtime for every hour they work that is over 8 hours in a day or over 80 hours in a 14 day time period. The DOL’s advisory opinion specifically addressed whether a youth residential care facility qualifies as a residential care institution, which is permitted to implement an “8 and 80” policy under the FLSA. The DOL examined whether the facility was “an institution primarily engage in the care of the sick, the aged, or the mentally ill … who reside on the premises of such institution.” 29 U.S.C. §§ 203(s)(1)(B), 207(j). To meet this standard, it must be determined that at least 50% of the clients treated are admitted by a qualified physician, psychiatrist, or psychologist; the facility retains a qualified physician psychiatrist, or psychologist who regularly engages in therapy with residents who constitute more than 50% of the residents; or that more than 50% of the income for the facility is attributable to providing domiciliary care to individuals who reside on the premises and who have a disability or who are suffering from a sickness and require observation of a less critical nature than that of a hospital. In this case, the DOL was unable to determine whether the employer could implement the “8 and 80” plan due to insufficient information, but if you are in a similar situation the factors stated here would be applicable. WHD Opinion Letter FLSA 2019-3 (April 2, 2019).
TIP OF THE MONTH: We had previously talked about the new “primary beneficiary” test to examine whether unpaid interns get more out of their relationship with an employer than the employer. In general, it must be all about the intern, and so many employers have looked at developing checklists to analyze the seven factors with a focus on the educational component of the relationship. Certainly a conservative approach is to pay interns a minimum wage providing a good educational experience, but maintain maximum flexibility, including allowing them to perform clerical duties.
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty. Richard Burns is now of Counsel.
The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.
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Copyright 2019 by Hanft Fride, P.A. All rights reserved. Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802. Phone 218.722.4766; Fax 218.529.2401.