Event Safety Insights Issue Two | Winter 2016 | Page 18

WAGES & HOURS Twice in the last year, the U.S. De- By Steven A. Adelman partment of Labor has issued important pronouncements about the way work is characterized and compensated. Together, these changes may have a significant effect on the way event operations professionals are hired, insured, and paid for their work. This article begins with the recently heightened scrutiny of employers’ characterization of their workers as “independent contractors,” which naturally leads into a discussion of the employee overtime rules scheduled to take effect on December 1, 2016. DISTINGUISHING EMPLOYEES FROM INDEPENDENT CONTRACTORS, AND THE PERILS OF MISCLASSIFICATION On July 15, 2015, DOL issued new guidance regarding who qualifies as an “employee” under the Fair Labor Standards Act (FLSA). To be clear, the government was not making any new law, or redefining any terms of art. Instead, it was (1) clarifying the meaning of existing legal terms, and (2) declaring that it intended, for the first time, to take those legal distinctions seriously in enforcing U.S. employment law. Without putting too fine a point on it, DOL aims to eliminate the misclassification of workers as independent contractors. Employers who hire independent contractors do not pay those workers’ unemployment insurance, workers’ compensation insurance, Social Security and Medicare taxes, or minimum wages and overtime premiums, as they are required to do for employees. During a panel discussion on this subject during LDI in October, retired IATSE counsel Jim Varga succinctly described employer misclassification as wage theft. Another co-panelist, Paul Kush of ProSight Specialty Insurance, noted that the insurer of an employer that mischaracterized employees could rescind its coverage in a way that denies either workers’ compensation or general liability coverage for an employee’s workplace injury. So the stakes are high, particularly in light of the impending overtime rule changes discussed further below. The distinction between an employee versus an independent contractor is based on substance, not mere names. DOL is not impressed with the title of the document by which an employer calls its hired workers “independent contractors,” or if whether 1099s are distributed at the end of the year. Instead, when a company raises a worker’s independent contractor status as a defense, as in a workers’ compensation claim, the key is whether the company has retained the right to control the manner and means of the work. Regardless of who writes the worker’s checks, if the right to control the manner and means is left with the company for whom the service is performed, then an employer/employee relationship exists.