who does ofccp think is an "employee?" who should be in your aaps and disparity...

WHO DOES OFCCP THINK IS AN “EMPLOYEE?” WHO SHOULD BE IN YOUR AAPS AND DISPARITY ANALYSES…AND THEN, WHAT IS THE RIGHT ANSWER?

FEBRUARY 11, 2015

John C. Fox, Esq. Fox, Wang & Morgan P.C. 315 University Avenue Los Gatos, CA 95030 Phone: (408) 844-2350

© 2015 Fox, Wang & Morgan P.C.

Candee J. Chambers, SPHR, CAAP VP - Compliance & Partnerships Direct Employers Association 9002 N. Purdue Road, Suite 100 Indianapolis, IN 46268 Phone: (317) 874-9052

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AGENDA

I.  BACKGROUD........................................................................ p. 6

A.  There Are 5 Creatures On This Planet From A Labor Lawyer’s Perspective........................................................ p. 6

B.  Key Concepts………………………………………………... p. 8

Ø Key Concept 1: All Workers Are 1 Of 4 Legal Creatures………………………………………………….. p. 8

Ø Key Concept 2: Different Definitions…………………. p. 9

Ø Key Concept 3: Volunteer Definition (Very) Narrow (The “Intern” Problem)................................................. p. 13

Ø Key Concept 4: Joint Employment Can Occur (The “Temps” and “Leased Employees” Problem).............. p. 20

C.  Classic Example Of An Independent Contractor: Wagon Wheel Maker…..................................................... p. 28

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AGENDA (CON’T.)

II.  OFCCP Regulations Of Interest……………………………. p. 29

III.  Selected Significant Excerpts from OFCCP Regulations Addressing Themselves To Kor “Employees”…………….. p. 36

IV.  What Is The Common Law Definition Of The Term “Employee”……………………………………………………... p. 53

A.  Restatement (Third) Of Agency (2006)……………….. p. 54

B.  The 10 Common Law Factors…………………………... p. 57

C.  The Common Law Test For Joint Employment……… p. 60

D.  Special Issues……………………………………………… p. 65

1.  Interns………………………………………………….. p. 65

•  Conclusion 1: Interns……………………………… p. 71

2.  Temporary Employees………………………………. p. 76

•  Conclusion 2: Temporary Employees…………… p. 80

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AGENDA (CON’T.) 3.  Partners………………………………………………….. p. 81

•  Conclusion 3: Partners……………………………… p. 83

4.  Medical Residents………………………………………. p. 84

•  Conclusion 4: Medical Residents..………………… p. 85

5.  Student RAs/Tas..………………………………………. p. 86

•  Conclusion 5: Student RAs/TAs………………….. p. 88

6.  Part-Time Employees………………………………….. p. 89

•  Conclusion 6: Part-Time Employees……………… p. 91

7.  Co-op Students………………………………………….. p. 92

•  Conclusion 7: Co-op Students……………………… p. 95

8.  Seasonal Employees……………………………………. p. 97

•  Conclusion 8: Seasonal Employees………………... p. 98

V.  Recap……...…………………………………………………….. p. 99

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ABBREVIATION KEY

Ø  DOL = U.S. Department of Labor Ø  Ees = Employees Ø  EO = Executive Order Ø  FR = Federal Register Ø  IC = Independent Contractor Ø  K = Contract Ø  Kor = Contractor Ø  SCOTUS = Supreme Court of the US Ø  WHD = Wage Hour Division of the DOL

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A.  There Are 5 Creatures On This Planet From A Labor Lawyer’s Perspective

1)  Sole Proprietor

2)  Partnership

3)  Corporation

4)  Independent Kor

5)  Employee

I.  BACKGROUND

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A.  There Are 5 Creatures… (con’t.)

Most employment statutes/regulations provide “employees” with rights in the workplace, but not Independent Contractors.

Ø  This is changing

Neutral term if I don’t know whether it is an “Ee” or “IC” = “worker”

Practice Tip - In General:

If you control the work = Ee

If you control (only) the result = Independent Kor

I.  BACKGROUND (CON’T.)

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B.  Key Concepts

KEY CONCEPT 1: All Workers are 1 of 4 Legal Creatures:

1)  Sole Proprietor

2)  Partner

3)  Independent Kor

4)  Employee

“Temp,” “Casual,” “Seasonal,” “Co-op,” “Interns,” etc. are all HR terms which tell you NOTHING, without more info, re which of the 4 legal creatures the worker is. Rather, these HR terms are slang job description references local to each company.


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B.  Key Concepts (con’t.)

KEY CONCEPT 2: Different Definitions:

There is a different legal definition of the term employee for every employment statute/regulation

•  There is not one homogenous definition of the term “employee”

•  Your challenge: What definition applies to the statute or regulation of concern to you?

−  Federal law not the same as state law −  Not every federal law or every state law uses same definition

−  Federal law + 50 state laws + _______ federal territories −  See 41 CFR § 60-1.3 (United States)


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JEOPARDY QUIZ!

Under the heading of U.S. Territories:

Question: What is 7 (seven)?

Answer: The number of territories within the OFCCP’s definition of the “United States.”


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THE DAILY DOUBLE!!

Question: What do the following have in common?

Ø  The District of Columbia; Ø  Virgin Islands; Ø  The Commonwealth of Puerto Rico; Ø  Guam; Ø  American Samoa; Ø  The Commonwealth of the Northern Mariana Islands; and Ø  Wake Island

Answer: These are the 7 territories over which OFCCP regulations assert jurisdiction as being in the “United States.”


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KEY CONCEPT 2: Different Definitions (con’t.)

•  There are five major definitions:

1)  The “Common Law test”

2)  The 20 factor “IRS test”

3)  The “Economic Realities” test [think: “Fair Labor Standards Act” (“FLSA”)]

4)  The “Hybrid Test” (often used in discrimination cases)

5)  “Social remedial test” (for “safety-net” laws like workers compensation, unemployment insurance, etc.)


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KEY CONCEPT 3: Volunteer Definition Narrow

There is almost no such thing as a “volunteer” in the private sector under the FLSA

Ø  Hence the current slew of “Intern” lawsuits

Ø  The public sector is different


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KEY CONCEPT 3: Volunteer Definition Narrow (con’t.):

Ø  FLSA definition of “volunteer” is exceptionally narrow

•  Even volunteering for non-profit corporations problematic

o  See, Susan and Tony Alamo Foundation vs. Secretary of Labor, 471 U.S. 290 (1985)


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“Petitioner Foundation is a nonprofit religious organization that derives its income largely from the operation of commercial businesses staffed by the Foundation's ‘associates,’ most of whom were drug addicts, derelicts, or criminals before their rehabilitation by the Foundation. These workers receive no cash salaries, but the Foundation provides them with food, clothing, shelter, and other benefits.”


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HELD: The Foundation's associates are "employees" within the meaning of the Act [FLSA] , because they work in contemplation of compensation.

NOTE: All of the Foundation’s Associates “vehemently protest”[ed] the threatened payment of wages to them, but rather wanted to work without pay (as part of their rehabilitation)

HELD: In-kind benefits, like board and lodging, are wages. “The test of employment under the Act is one of ‘economic reality’…in this case, the associates were entirely dependent upon the Foundation for long periods, in some cases several years."


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Recap: FLSA applies a so-called “economic realities test” (i.e. measuring the worker dependency on the employer for sustained wages and livelihood)

So, what is the FLSA test for Interns to not be employees?


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WHD has developed a 6-part test:

1.  The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2.  The internship experience is for the benefit of the intern;

3.  The intern does not displace regular employees, but work under close supervision of existing staff;

4.  The employer that provided the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;


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WHD has developed a 6-part test (con’t.):

5.  The intern is not necessarily entitled to a job at the conclusion of the internship; and time spent in the internship;

6.  The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the employer fails any part of the above test (as most will), the intern must be treated as an employee.

NOW, is the FLSA the OFCCP’s legal test to define “employment” or “employee”?


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KEY CONCEPT 4: An Ee may, simultaneously in time, serve more than one master and thus be an Ee of two employers… so-called “joint employment”

Ø  Classic contexts of concern = temporary staffing firm workers (i.e. “Temps”) and so-called “Leased employees”

•  NOTE: “Leased employees” are generally associated with the relatively recent arrival in the marketplace of PEOs (Professional Employer Organizations) which “loan” the worker to a host employer which directs the worker’s day-to-day work activities even while the PEO does all the “backroom” HR and ostensibly retains all employment liability


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KEY CONCEPT 4: Joint Employment (con’t.)

WHD has applied a legal (rebuttable) “presumption” pursuant to FLSA that workers of temporary staffing firms are jointly employed by both the staffing firm and the host company for which the worker is providing service

Worker is presumed to be an “employee” of both companies


Host Company

Staffing Firm

Worker Supplies services to host company

Takes direction from staffing firm

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WHD Regs: 29 CFR 791.2 “Joint Employment”

Ø  3 part test:

•  Do the 2 employers share the employee’s services?

•  Does one employer act in the interest of the other?

•  Are the employers completely dissociated with respect to the employment of the individual or may one deem the two employers to share control of the employee?


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WHD Regs: 29 CFR 791.2 “Joint Employment” (con’t.)

Ø  Courts often look to other factors, including,

•  The nature and degree of control over the workers; •  The degree of supervision, direct or indirect, of the

work; •  The power to determine the pay rates or the methods of

payment of the workers;


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WHD Regs: 29 CFR 791.2 “Joint Employment” (con’t.)

Ø  Courts often look to other factors, including (con’t.),

•  Do the workers perform specialty jobs within the host company’s workforce;

•  Whether the workers may work for others.

NOTE: No OFCCP case law on Joint Employment

CONCLUSION: Look to normal OFCCP law defining the term “Employee”

•  See Slide 35, going forward


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NOTE: If you are thinking holistically, and not just about OFCCP, keep in mind many states have their own definition of the term “employee”:

Ø  Ee (state law): See Massachusetts General Laws, c. 149 § 148B

•  Worker is Ee unless:

(1) Worker is free from control and direction; and

(2) Service is performed outside the usual course of the business of the employer; and

(3) The worker is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.


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Many states have their own definition of the term “employee” (con’t.)

Ø  Joint Employment (state law): See Driesse v. National Oilwell Varco, L.P. (Louisiana C. App 01/14/2015)

•  Driesse filed a Charge with state claiming he was sexually harassed at NOV

•  Driesse was a temp Ee a staffing agency supplied to NOV. The agency paid Driesse’s wages

•  Driesse claimed joint-employment


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Ø  See Driesse v. National Oilwell Varco, L.P. (con’t.)

•  Louisiana Employment Discrimination Law defined “employer” to be:

“a person, association, legal or commercial entity, the state, or any state agency, board, commission, or political subdivision of the state receiving services from an employee and, in return, giving compensation of any kind to an employee.” (emphasis in original)

•  HELD: NOV an “employer” of Driesse since NOV received services from Driesse and, in return, gave compensation “of any kind” to Driesse, “albeit through an intermediary” (the staffing agency) (emphasis added)


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C.  Classic example of IC = Wagon Wheel Maker:

•  Brings own skills •  Brings unique skills you don’t have (more

difficult to control workers) and not just “mirror-image” workers to supplement your existing workforce o  Brings own tools

o  Bills by the project/piece

o  Works off-site

These factors all help reveal little or no control over this wagon wheel maker


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II.  OFCCP REGULATIONS OF INTEREST

A.  Make discrimination against “applicants” and “employees” unlawful if based on race, sex, religion, national origin, and color (and soon to be based on “sexual orientation” and “gender identity”) under all 3 of the statutes OFCCP enforces; and

B.  Require “affirmative action” on behalf of each applicant and each employee in the Kor’s workforce.

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II. OFCCP REGULATIONS OF INTEREST (CON’T.)

C.  Do not define the term “employee”

OFCCP has also in the last year published FAQs addressing the definition of employee and titled: “Employer–Employee Relationship”:

http://www.dol.gov/ofccp/regs/compliance/faqs/Employer-Employee_Relationship.html

What law applies when a federal agency like OFCCP, fails or refuses to define the term “employee”?

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Answer: T N

Hint: Buy vowels.


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T E O O N A

Well, actually that was not so helpful.


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Does this help? Select the letter “M”.

T E O M M O N A


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Two more hints? Select letters “C” and “L”

T E C O M M O N L A


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T H E C O M M O N L A W

Numerous U.S. Supreme Court decisions hold that The Common Law definition of the term employee applies to federal statutes and regulations which do not define the term “employee”

OFCCP agrees as to all three of the “statutes” OFCCP enforces: See OFCCP’s FAQs


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III.  SELECTED SIGNIFICANT EXCERPTS FROM OFCCP REGULATIONS ADDRESSING THEMSELVES TO KOR “EMPLOYEES”

OFCCP Regulations address themselves only to “employees” or “employment”

1) 41 CFR § 60-1.4 Equal opportunity clause.

“(a) Government contracts. Except as otherwise provided, each contracting agency shall include the following equal opportunity clause contained in section 202 of the order in each of its Government contracts (and modifications thereof if not included in the original contract):”

Con’t. on next page

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41 CFR § 60.1.4(a) (con’t.)

“During the performance of this contract, the contractor agrees as follows:

(1) The contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to the following:”


III.  SELECTED SIGNIFICANT EXCERPTS… (CON’T.)

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41 CFR § 60.1.4(a) (con’t.)

“Employment, upgrading, demotion, or transfer, recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination clause.”



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41 CFR § 60.1.4(a) (con’t.)

“(2) The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin.” (Emphases added)

* * * * * * * * *



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§ 60-1.12 Record retention.

“General requirements. Any personnel or employment record made or kept by the contractor shall be preserved by the contractor for a period of not less than two years from the date of the making of the record or the personnel action involved, whichever occurs later. However, if the contractor has fewer than 150 employees or does not have a Government contract of at least $150,000, the minimum record retention period shall be one year from the date of the making of the record or the personnel action involved, whichever occurs later.” (Emphases added)

* * * * * * * * * Con’t. on next page


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§ 60-1.20 Compliance evaluations.

“OFCCP may conduct compliance evaluations to determine if the contractor maintains nondiscriminatory hiring and employment practices and is taking affirmative action to ensure that applicants are employed and that employees are placed, trained, upgraded, promoted, and otherwise treated during employment without regard to race, color, religion, sex, or national origin.” (Emphases added)

* * * * * * * * *



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§ 60-1.40 Affirmative action programs.

“(a) (1) Each nonconstruction (supply and service) contractor must develop and maintain a written affirmative action program for each of its establishments, if it has 50 or more employees and: … .” (Emphases added)

* * * * * * * * * § 60-1.41 Solicitations or advertisements for employees.

“In solicitations or advertisements for employees placed by or on behalf of a prime contractor or subcontractor, … .” (Emphases added)



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§ 60-2.2 (d) “Who is included in affirmative action programs. Contractors subject to the affirmative action program requirements must develop and maintain a written affirmative action program for each of their establishments. Each employee in the contractor's workforce must be included in an affirmative action program, … .” (Emphases added)


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“§ 60-2.17 Additional required elements of affirmative action programs.

(b) Identification of problem areas. The contractor must perform in-depth analyses of its total employment (emphasis added) process to determine whether and where impediments to equal employment opportunity exist. At a minimum the contractor must evaluate:”



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§ 60-2.17 (con’t.)

“(2) Personnel activity (applicant flow, hires, (emphasis added) terminations, promotions, and other personnel actions) to determine whether there are selection disparities;

* * * * * * * * *

(4) Selection, recruitment, referral, and other personnel procedures to determine whether they result in disparities in the employment (emphasis added) or advancement of minorities or women; and … .”


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WAIT A MINUTE! TIMEOUT!

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DETOUR! WHAT ARE DISPARITY ANALYSES?

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CLASS-TYPE DISPARATE TREATMENT

£  There are two very different types of statistical class claims:

�  Class-Type Disparate Treatment (Disparity Analyses) 41 CFR § 60-2.17(b); and

�  Adverse Impact Analyses (OFCCP argues that 41 CFR § 60-3.15 requires AI analyses)

£  Proof of “Class-Type Disparate Treatment” requires showing of a “pattern or practice” of discriminatory intent.

�  Treatment must be the “standard operating procedure.”

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DEFENDANT

(1) Plaintiff must prove that a pattern orpractice of intentional discriminationwas Defendant's standard operatingprocedure by showing a "gross" and"long lasting" statistically significantdisparity.

(2) Defendant can rebut Plaintiff's showing byattacking Plaintiff's statistical case, introducingalternative statistical evidence, or articulatinglegitimate non-discriminatory reasons for each atissue selection.

(3) Plaintiff then bears the burden to proveDefendant's evidence is unworthy of credence.

2

1

3

PLAINTIFF

(2) Defendant can rebut Plaintiff’s showing by attacking Plaintiff’s statistical case, introducing alternative statistical evidence, or going forward with evidence of legitimate non-discriminatory reasons for each at-issue selection

(1) Plaintiff must prove that a pattern or practice of intentional discrimination was Defendant’s standard operating procedure by showing a “gross” and “long lasting” statistically significant disparity and by showing no legitimate reason explains Defendant’s adverse actions

TRI-PARTITE “CLASS-TYPE” DISPARATE TREATMENT BURDEN OF PROOF 41 CFR § 60-2.17(b)

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STATISTICAL SIGNIFICANCE IN DISPARITIES REQUIRED

£  Statistical significance measures whether the observed disparity is the product of chance or inferred [race, or sex-based, or age-based, etc] unlawful discrimination.

£  This is an unremarkable conclusion of disparate treatment class-type discrimination law.

£  The disparity must be “more than 2-3” standard deviations to prove up prima facie case.

£  These are “disparity cases” and not “adverse impact” cases.

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TRI-PARTITE ADVERSE IMPACT DISCRIMINATION BURDEN OF PROOF

PLAINT IFF DEFENDANT

(1) Plaintiff must show by a preponderance of the evidencethat an employer's practice or policy, neutral on its face,nonetheless causes a statistically significant disparity.

(2) Defendant can rebut plaintiff's prima facie case byattacking Plaintiff's statistical case, introducing alternativestatistical evidence, or show ing that the policy or practiceis "job-related" and "consistent w ith business necessity."

(3) To rebut Defendant's proof of "business necessity",Plaintiff can show that Defendant refused to adopt anequally effective alternative employment practice thatw ould have a lesser adverse impact.

1

3

2

(1) Plaintiff must show by a preponderance of the evidence that an employer’s specific practice or policy, while neutral on its face, nonetheless causes a statistically significant disparity (> 2 Standard Deviations)

(3) To rebut Defendant’s proof of “business necessity”, Plaintiff must show that Defendant refused to adopt an equally effective alternative employment practice that would have a lesser adverse impact

(2) Defendant can rebut Plaintiff’s prima facie case by attacking Plaintiff’s statistical case, introducing alternative statistical evidence, or showing that the challenged policy or practice is “job-related” and “consistent with business necessity.”

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Construction Contractors/Subkors:

§60-4.1 “Scope and application. This part applies to all contractors and subcontractors which hold any Federal or federally assisted construction contract in excess of $10,000. The regulations in this part are applicable to all of a construction contractor's or subcontractor's construction employees who are engaged in on site construction including those construction employees who work on a non-Federal or nonfederally assisted construction site, … .” (Emphases added)


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IV.  WHAT IS THE COMMON LAW DEFINITION OF THE TERM EMPLOYEE?

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A.  Here is the current Restatement (Third) of Agency (2006) definition of the term employee:

“§ 7.07 Employee Acting Within Scope Of Employment

(1) An employer is subject to vicarious liability for a tort committed by its employee acting within the scope of employment.”


IV.  WHAT IS THE COMMON LAW (CON’T.)

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A.  Restatement (Third) (con’t.):

§ 7.07 Employee Acting Within Scope Of Employment (con’t.)

“(2) An employee acts within the scope of employment when performing work assigned by the employer or engaging in a course of conduct subject to the employer's control. (emphasis added) An employee's act is not within the scope of employment when it occurs within an independent course of conduct not intended by the employee to serve any purpose of the employer.”



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A.  Restatement (Third) (con’t.):

§ 7.07 Employee Acting Within Scope Of Employment (con’t.)

“(3) For purposes of this section,

(a) an employee is an agent whose principal controls or has the right to control the manner and means of the agent's performance of work, (emphasis added) and

(b) the fact that work is performed gratuitously does not relieve a principal of liability.”


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B.  The 10 Common Law Factors Many courts adopted the following 10 factors, still in use today, to determine whether a worker is an employee following publication of the Restatement (Second) of Agency [now superseded by the Third Restatement (2006)]:

1.  The degree of “employer” control over the details of the work;

2.  Whether the individual’s business is a distinct occupation or business;

3.  Whether the individual’s occupation usually is done without supervision;

4.  Whether a high level of skill is required by the occupation;


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B.  The 10 Common Law Factors (con’t.)

5.  Whether the worker provides the supplies, tools and the place of work;

6.  The length of time the services were provided;

7.  Method of payment, by the job rather than the hour or day;

8.  Whether or not the work is part of the regular business of the employer;

9.  Whether the parties believe they are creating an independent contractor;

10. Whether the hiring entity is not in business.


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�  NOTE: The Common Law test is not the FLSA test

−  So, you could prove the worker is not an “employee” within the meaning of the Common Law, but lose that same case under the FLSA

B.  The 10 Common Law Factors (con’t.)

These 10 factors examine whether a worker exercises entrepreneurial discretion. If so, a court will find that the worker is an independent contractor. If not, then the company’s right to direct or control the means and manner of performing the work is dispositive regarding the existence of an employer-employee relationship, whether or not the employer has in fact exercised that right.

�  So, this is a “gobbelty-goop” (technical legal term) legal test


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C.  The Common Law Test for “Joint Employment”?

Let the chaos begin since there are different legal tests for different federal appellate circuit courts: Really!!

Fifth and Second Circuits: They apply a hybrid economic realities/common law control test to determine whether two entities may be held liable as a “joint employer”:

“The test analyzes four factors when considering a possible joint employer relationship:

(1)  interrelation of operations, (2)  centralized control of labor relations, (3) common management, and (4) common ownership or financial control.”


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C.  The Common Law Test (con’t.)

Right to control is the most important. The “centralized control of labor relations" factor "has been considered the most important, such that courts have focused almost exclusively on one question: which entity made the final decisions regarding employment matters relating to the person claiming discrimination?”

See, Burton v. Freescale Semiconductor, Inc., 2014 U.S. Dist. LEXIS 108791, 9-10 (W.D. Tex. Aug. 7, 2014) (internal citations omitted) [Note: Burton is an ADA case involving a staffing agency]. The Fifth and Second Circuits adopted this test from the NLRB interpreting the NLRA.


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Ninth Circuit: “Whether one employer, while contracting in good faith with an otherwise independent company, has retained for itself sufficient control of the terms and conditions of employment of the employees who are employed by the other employer.” Jenkins v. Jewell, 2014 U.S. Dist. LEXIS 22382, 8-9 (D. Idaho Feb. 20, 2014) (internal citations omitted).


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Seventh Circuit five-factor test: “The test requires [a court] to consider five factors:

(1) the extent of the employer's control and supervision over the worker,

(2) the kind of occupation and nature of skill required,

(3) which party has responsibility for the costs of operation, such as the provision of equipment and supplies and the maintenance of the workplace,

(4) the source of payment and benefits and

(5) the duration of the job.”


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“The extent of control and supervision over the worker is the most significant in determining the employment status.” Daniel v. Sargent & Lundy, LLC, 2012 U.S. Dist. LEXIS 34013 (N.D. Ill. Mar. 14, 2012).

Third Circuit three-factor test:

“(1) authority to hire and fire employees, promulgate work rules and assignments, and set conditions of employment, including compensation, benefits, and hours;

(2) day-to-day supervision of employees, including employee discipline; and

(3) control of employee records, including payroll, insurance, taxes and the like.” Ginsburg v. Aria Health Physician Servs., 2012 U.S. Dist. LEXIS 124243, 10-11 (E.D. Pa. Aug. 31, 2012).”


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D.  Special Issues

1)  Interns Under The Common Law:

POLL 1: Do you currently (or 51% or more of your clients) put Interns you pay into your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes

o No


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1)  Interns Under The Common Law:

POLL 2: Do you currently (or 51% or more of your clients) put unpaid Interns into you your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes

o No


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1)  Interns Under The Common Law (con’t.):

See, O'Connor v. Davis, 126 F.3d 112 (2d Cir. N.Y. 1997)

�  Very rare Common Law case decision concerning whether a worker (an Intern in this case) is an “employee”

−  sexual harassment case at major hospital filed pursuant to Title VII: Plaintiff claimed a doctor harassed her

−  Plaintiff was a student intern


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D.  Special Issues (con’t.)

1)  Interns (con’t.):

See, O'Connor v. Davis (con’t.)

−  Court applied Common Law test

−  Held: she was not an employee of the hospital because it did not pay her

•  She did not receive direct or indirect remuneration from the hospital (instead received work study funds from federal government)

−  Analysis: Court outlined a two-step analysis to determine whether an intern is an “employee” under common-law agency principals.


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Step 1: Has a hire taken place such that there is a “plausible” employment relationship?

−  An “essential condition” of a plausible employment relationship is “direct or indirect remuneration.”

−  If the intern is not receiving any financial benefit from the alleged employer, the analysis stops. (i.e. no Step 2): i.e. no employment relationship!!


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Step 2:

−  If, however, the intern is receiving a direct or indirect financial benefit from the alleged employer, the court will then undertake a Step 2, or traditional agency Common Law analysis, i.e.:

•  right to control manner and means of work •  skill required •  tools and instrumentalities •  location of the work •  duration of the relationship •  method of payment (hourly or by the piece/project), and •  whether the work is part of the regular business of the hiring

party, etc.


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CONCLUSION 1 = INTERNS: The test would be the same for interns of federal contractors under THE COMMON LAW.

a)  If a federal contractor is NOT paying its interns, OFCCP SHOULD find the intern is NOT an employee. “The analysis stops.”

•  The Intern is not within OFCCP’s jurisdiction for ANY purpose: not in the AAP, not in Disparity Analyses, not in recordkeeping; no job listing, etc.


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CONCLUSION 1 = INTERNS (con’t.):

b)  But what if you pay the Intern? Ø Then go to step 2 of Common Law test

•  Lifeline: See slide 62, above

− If Intern is a Common Law Ee, s/he, goes in AAPs for all purposes as to Applicants, Organizational Profile, Job Groups, Availability, etc., Disparity Analyses, Recordkeeping, Job Listings, etc.

QUESTION: w But, has OFCCP uniformly enforced?


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�  Extra Points: However, compare and contrast what the result would be under the FLSA.

− Please review Slides 18-19, above.

• NOTE, among other things, free work is NOT an escape from FLSA liability, even though it is the “winning card” in a Common Law analysis

− So, you could win the OFCCP claim, but lose the Wage-Hour minimum wage and overtime case


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� Extra Points (con’t.)

POLL 3: What do you think the likelihood is that OFCCP Compliance Officers will apply the FLSA test in audits?

Possible Answers:

o 100% o 50% o 25% o 0%


75


� Extra Points (con’t.)

POLL 4: What do you think chances are that your OFCCP Compliance Officer will ever have heard of the O’Connor case decision or even the 2-Step Common Law test?

Possible Answers:

o 100% o 50% o 25% o 0%


76


2) Temporary Ees Under The Common Law Test

POLL 5: Do you currently (or 51% or more of your clients) put temporary employees from a staffing agency in your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes o No


77

D.  Special Issues (con’t.) 2) Temporary Ees Under The Common Law Test

See, e.g., Francis v. Town of Brookneal, 2007 U.S. Dist. LEXIS 36608 (W.D. Va. May 18, 2007) (temporary maintenance workers hired through a staffing company were NOT common law employees of the defendant Town for purposes of Title VII because they failed the Step 2 analysis):

(1) Town managers did not have the right to control the workers;

(2) workers were not on the defendant’s payroll;


78

D.  Special Issues (con’t.) 2)  Temporary Employees (con’t.)

See, e.g., Francis v. Town of Brookneal… (con’t.):

(3) workers did not receive benefits through the Town;

(4) workers were short-term; and

(5) because the contract between the defendant and the staffing agency clearly stated the workers were employees of the staffing agency.


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2) Temporary Employees (con’t.)


$64,000 Question: Is there an FLSA problem in this case, (if, for example, the workers were suing for minimum wage or overtime?)

Why not? (Lifeline: See Finding of Fact #4 on prior slide: i.e. workers not economically dependent)


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D.  Special Issues (con’t.) 2)  Temporary Employees (con’t.)


�  Extra Points: Is there a “Joint Employment” problem in this case?

•  Why not? (Life-line: Look at Finding of Fact # 1, on slide 71, above: The Town would defeat the presumption by going forward with evidence of no control, or even right to control).

− Can your company/institution say that about its agency-supplied workers?

CONCLUSION 2: They are paid, so go to Step 2: measure the Common Law control factors

− Lifeline for Step 2 analysis: See slide 77


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MEGA Extra Points: Is there a legal PRESUMPTION under the Common Law that staffing agency workers are joint employees of both the agency and the host company?

3)  Partners Under Common Law Test

See, e.g. Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440 (2003)

−  Issue: Were Shareholders/Directors/Owners/Doctors (“SDODs”) “employees”?


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3)  Partners (con’t.)

POLL 6: Do you currently (or 51% or more of your clients) put partners in your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes o No


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3)  Partners (con’t.) −  Wells was an employee who filed an ADA charge.

Clackamas, however, lacked 15 employees, unless one counted the SDODs as “employees.”

NOTE: ADA does not define “employees” … so, Common Law test applies

−  Applying common law, SCOTUS held the SDODs were “employees” because Clackamas exercised control over the SDODs

CONCLUSION 3: Partners who are under the control of the management, who do not have equity stake in business, are “employees,” and go in AAPs, Disparity Analyses and job listings, etc.


84


4.  Medical Residents under the CL Test:

POLL 7: Do you currently (or 51% or more of your clients) put Medical Residents in your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes o No


85


4.  Medical Residents (con’t.): Definitely employees under Common Law Test (under hospital control)

─  Now subject to FICA withholding: Mayo Foundation For Medical Education and Research vs. U.S., 562 U.S. ___, 131 S. Ct.704 (2011)

CONCLUSION 4: Medical residents go in AAPs for all purposes, in Disparity Analyses and job listings, etc.


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5.  Student Research Assistants (typically the issue is Teaching Assistants (TAs) and Research Assistants (RAs)).

POLL 8: Do you currently (or 51% or more of your clients) put Student Research Assistants in your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes o No


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5.  Student Research Assistants (con’t.)

─  This issue typically arises under National Labor Relations Act

─  Work at University/teach other students but also undertake research to further their own education (often to help with their thesis)

─  WHD: Field Manual instructs that TAs/RAs = “employees”

─  OFCCP: Inconsistently believes TAs/RAs = “employees”: NOTE: Executive Order usually follows NLRA definitions


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5.  Student Research Assistants (con’t.)

─  NLRB: Flip flops with each Administration:

•  TAs/RAs/Proctors =

•  Ees: (New York University, 332 NLRB 1205 [Clinton Administration])

•  Not Ees: (Brown University, 342 NLRB 42 [Bush Administration])

•  Ees: Obama: NLRB threatening to again flip-flop

CONCLUSION 5: TAs/RAs, more likely than not, are not “employees” for any OFCCP purpose


89


6.  Part-Time Ees Under The Common Law Test

POLL 9: Do you currently (or 51% or more of your clients) put Part-Time Ees in your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes o No


90


6.  Part-Time Ees (con’t.)

─  OFCCP intended in 2000 to sweep “all” Ees into AAPs/Disparity Analyses, etc. - - including part-time Ees:

“Each employee in the Kor’s workforce must be included in an affirmative action program.” (emphasis added)

•  See 41 CFR § 60-2.2 (d)

−  However, OFCCP has waived its “all-in” regulation, in my judgment, since OFCCP has not uniformly or consistently enforced the requirement to include part-time Ees in AAPs


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6.  Part-Time Ees (con’t.)

CONCLUSION 6: You have choices: a) Kors may decline to include PT Ees in their AAP/Disparity Analyses, etc. Ø  Such a position will undoubtedly provoke “headknocking”

with OFCCP auditors, but you will more likely than not win in court

b) If a Kor elects to include PT Ees in its AAPs/Disparity Analyses, etc., the Kor may choose any form of display it wants: Ø  uncritically displayed in AAP/Disparity Analyses (i.e.

intermingled with full-time Ees with notation)? or

Ø  separated out within each display/analysis of the AAP?


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7.  Co-op Students Under The Common Law Test

POLL 10: Do you currently (or 51% or more of your clients) put Co-op Students in your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes o No


93


7.  Co-op Students (con’t.)

Ø  Students getting school credit for working and also getting pay, in part

Ø  Common Law Analysis:

•  Not “volunteers” pursuant to Common Law because paid: So, proceed to Step 2

•  Step 2 Lifeline: See Slide 70, above


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7.  Co-op Students (con’t.) •  right to control manner and means of work

•  skill required •  tools and instrumentalities •  location of the work •  duration of the relationship •  method of payment (hourly or by the piece/project), and •  whether the work is part of the regular business of the

hiring party, etc.).


95



QUESTION: But, has OFCCP uniformly enforced?

CONCLUSION 7: Co-op Students are almost undoubtedly Common Law Employees and thus go in AAPs/Disparity Analyses, etc. (unless you can prove inconsistent enforcement)

•  Separate Job Title from any non-co-op employees who do the same work?

•  Separate Job Group (How do you calculate availability? Lifeline: Factor 3: Applicant Flow)


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− But, will your co-op students be there on “school picture” day?

− If not, these Ees are not in AAP, but will nonetheless be in the subsequent Disparity Analyses

•  List jobs? [Yes]


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8.  Seasonal Ees Under The Common Law Test

POLL 11: Do you currently (or 51% or more of your clients) put Seasonal Ees in your E.O. 11246 AAPs and Disparity Analyses?

Possible Answers:

o Yes o No


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8.  Seasonal Ees (con’t.)

Ø  These are Common Law Ees

−  What’s the issue? They are “employees”

CONCLUSION 8: Seasonal Ees go in AAPs/Disparity Analyses, etc.

−  But, are they on-roll on school picture day?

−  If so, separate JT? Separate JG? (How to calculate availability? Applicant Flow?)

−  Disparity Analyses? [Absolutely!]


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V.  RECAP ISSUE: COMMON LAW Ee?

1 Interns No, if not paid. If paid, apply Common Law test. If control, then Ee.

2

Temporary Employees through staffing company

Apply Common Law test: If control, then Ee.

3 Partners Apply Common Law test: If control, then Ee, not “Partner.”

4 Medical Residents Always employees.

5 Student TAs/RAs Apply Common Law test: Typically not employees, but issue is “hot.”

6 Part-Time Employees

Ees, but no legal duty to include in AAPs, Disparity Analyses, etc. due to OFCCP waiver.

7 Co-op Students Yes.

8 Seasonal Employees Yes, but they often miss E.O. 11246 AAP “School Picture Day,” but will go in the Disparity Analyses, etc.

100

Questions?

101

THANK YOU

who does ofccp think is an "employee?" who should be in your aaps and disparity...

Business

kor employees

seasonal employees

temporary employees

parttime employees

key concepts key concept

independent kor

employees eo

legal creatures