New York Employment Lawyer Blog

Employers have a motive to improperly classify employees as independent contractors. Unlike employees, independent contractors are not entitled to overtime pay or minimum wage. Also, employers are not required to pay payroll taxes, reimburse the worker for business expenses, provide workers compensation insurance and they are not responsible for making payments to social security, disability or unemployment insurance. Companies are clearly better off if a worker is classified as an independent contractor. Workers, on the other hand, are better off being employees than independent contractors.

This begs the question - when is a worker legitimately classified as an independent contractor?

First, in most states, there is a presumption that a worker is an employee and not an independent contractor. In making the ultimate determination of whether a worker is an employee or an independent contractor, the driving factor is whether the company has control, or the right to control, the worker regarding the work being performed and the manner and circumstances under which the work is performed. If the company controls the manner in which the work is performed such as the time, place, equipment, and manages the day-to-day activities of the worker, then the worker is an employee. Depending on the case, other factors may also be considered such as:

1. Whether the work being performed is part of the regular business of the company;

2. Whether the work performed requires a special skill;

3. Whether the work is a short term temporary project or long term;

4. Whether the worker is paid by the job or based on time expended;

5. Whether the worker is engaged in a business that is different from that of the company; and

6. Whether the worker or the company owns the equipment used to do the work;

7. Whether the worker of the company provides the location or facility for the person to do the work;

These are factors that often considered in determining if a worker is an employee or an independent contractor. Even if there is an lack of complete control over the work, an employee-employer relationship will be found if (a) the worker's duties are an integral part of the operation, (b) the company has pervasive control over the operation generally, and (c) the nature of the work does not require detailed control.

Improper classification of workers as independent contractors is common and workers stand to lose benefits and overtime pay. If you believe that you have been improperly classified as an independent contractor, you should contact an employment lawyer or the Department of Labor.

IT and high tech workers are often entitled to overtime pay and some have recovered millions in back wages recently. If you work in IT or high tech and are wondering if you are entitled to overtime pay, you should consider the key factors that drive these cases. There is a general exemption that excludes some IT and high tech workers from receiving overtime pay, but it is a narrow exemption.

First, IT and high tech workers are often entitled to overtime pay even though they are salaried and well paid. You method of payment and title are not important. You are probably entitled to overtime pay if these factors are met:

- You are supervised and required to follow rules
- You are required to follow company procedures and protocols in doing your work
- You perform repetitive tasks
- You maintain existing computer systems
- Your work does not involve the design or creation of new systems or programs
- You do not work independently

In addition to these factors, you are likely to be entitled to overtime pay if you perform specific tasks such as installing software updates, configuring settings on systems and applications, and otherwise perform work that is geared to maintaining existing computer systems or helping users with routine trouble shooting and repairs.

However, if you generally do not work under close supervision and you work independently and focus on designing or creating new systems and applications or engage in long term research projects, then you may not qualify for overtime pay. The laws that require overtime pay apply to workers who perform routine or day-to-day upkeep and repair of existing systems.

If you are an IT or high tech worker and think that you may be entitled to overtime pay, give us a call and we will be happy to discuss your case to help you determine if you are entitled to overtime pay.

Do you ever find yourself performing work "off the clock" simply because your employer tells you that you must? You are not alone. Off the clock work is as American as apple pie. Fast food restaurants often require managers to perform scheduling and "shift change" activities such as register counts off the clock following the conclusion of a shift. Here's the catch - 10 minutes a day for a year adds up. If you believe that you are performing tasks without compensation, you should contact us for a free screening.

The Fair Labor Standards Act, and the Portal to Portal Act which followed, set limitations on "preliminary or postliminary activities" which are compensable under the FLSA. The Supreme Court has addressed this issue many times, most recently in 2005 in IBP v. Alvarez and Tum v. Barber Foods. In these cases, the Court addressed the question of whether or not "donning and doffing" equipment prior to and after the "principal activity" of an employee's work is compensable time. The Court held that donning and doffing gear that is "integral and indispensable" to employees' work is a "principal activity" under the FLSA, and that the time spent walking to and from the worksite after donning and before doffing, as well as the time spent waiting to doff, are compensable under the FLSA.

More often than not, employees who are required to wear heavy protective gear - HAZMAT employees and production line employees, for instance - are required to punch in after suiting up and getting to work. If you are one of these employees, find a lawyer and advocate for payment of your unpaid wages. If you are working a 40 hour week, the uncompensated "donning and doffing" activities may be compensated at overtime rates.

Over the past two days, I put up two posts that concerned severance agreements. Each post highlighted two important points to consider when reviewing a severance agreement. This is the last post in this series about severance agreements and it includes five more important points. Here they are:

1. Exercise Your Vested Stock Options

If you were provided stock options, make sure you have an opportunity to exercise them. Typically a departing employee will have 90 days to exercise vested stock options before they expire. But make sure this is clearly stated in your severance agreement and you can ask to extend the 90-day period.

2. Accelerate the Vesting Schedule for Unvested Options or Equity Grants

Executive compensation often comes in the form of unvested stock or options. For example, a company may offer an executive 300 shares of company stock and the shares will vest over three years. If you have unvested equity or options, you can ask your company accelerate the vesting date so they vest before you leave the company.

3. Convert Outplace Services into Cash

Companies often offer outplace services to departing employees. If you don’t feel that the outplacement service will provide a benefit, then ask your company to provide you with the cash value of these services.

4. Vacation Pay

Some companies allow an employee’s unused vacation time to accrue over time. Check your company policy manual or ask a human resources representative about this and if your have accrued vacation time, ask to have it paid in cash or ask to stay on the company payroll until the vacation time is used up.

5. Determine Why You Were Let Go

You may have leverage to negotiate a much better severance package if your employment was terminated illegally. Your termination may be illegal if you were let go for any of the following reasons: age if you are over 40, gender, race, religion, national origin, sexual orientation, disability or serious illness, sick family members, pregnancy, jury service, or for complaining about sex harassment, employment discrimination or failure to pay overtime. If any of these factors are at play, you may have grounds to substantially increase your severance package. If you sign your severance agreement, you will waive your rights permanently. If you believe that you were unlawfully terminated, you should consider contacting an employment lawyer.

Yesterday, I posted about two key points in a severance agreement. The first point was that you need to understand exactly what you are getting and what you are giving up by signing the severance agreement. The second point explained that the money portion of a severance agreement is usually expressed in terms of salary or pay over a period of time such as "your severance pay will equal two months of your salary...." In this post, I add two more important points to be considered in evaluating your severance package:

1. Health Benefits

Your employer will be required to offer you COBRA benefits. COBRA refers to a federal law (Consolidated Omnibus Budget Reconciliation Act of 1985) that requires companies to offer health insurance to terminated employees for 18 months at the corporate rate. For example, if you currently receive health benefits that cost $500 a month through your employer, your company is required under COBRA to offer this same health insurance policy to you at the same price of $500 a month for 18 months. Many severance packages include an offer to make your COBRA payments for a period of time or simply continue your existing health benefits for a period of time and defer the start of the COBRA period. Check your severance package to see if your company has offered to either extend your health benefits or make any of your COBRA payments. Remember that you can ask your employer to help make these payments for you as part of the severance package.

2. Unemployment Benefits

If you are about to lose your job, you are probably very interested in obtaining unemployment benefits. Typically, a person is only entitled to unemployment benefits if they are laid off due to a lack of work. A person who is terminated for cause or quits is not entitled to benefits. It is not uncommon for companies to challenge a former employee’s request for unemployment benefits on the ground that the employee was fired for cause or poor performance. You can make sure this does not happen to you by including the right language in your severance package. Obtain an agreement that your employer will not contest your right to unemployment benefits. In order to do this, add a sentence to your agreement with language similar to this: “It is agreed that [You] had been laid off for lack of work (or restructuring or downsizing etc…) and that [You] is entitled to receive unemployment benefits and X Company agrees that it will not contest any claim for unemployment benefits requested by [You].”

There are several other important points that will be covered in a subsequent post.

A severance package is designed to ease your transition out of the company. Your employer wants to make sure you leave quietly and you want to obtain a cushion to hold yourself over until you find a new job. The points below are important to anyone trying to evaluate their severance agreement.

1. Understand the Quid Pro Quo

The quid pro quo of a contract is the heart of the deal – the exchange of value. In reviewing your severance package, you need to understand what you are getting and what you are giving up. In most severance packages, you will be receiving a payment of money, possibly some health care coverage, stock options, and other things of value in exchange for your promise to leave the company and waive your right to sue them for anything or say anything bad about them. That is usually the quid pro quo of a severance package. Make sure you understand exactly what you are getting and what you are giving up.

2. The Money

Most every severance package contains a promise to pay money. Typically, the money is paid out as salary over a period of time. For example, your severance agreement might say that you will receive your salary for three months after your last day in the office. The money component of a severance agreement is almost always discussed in terms or weeks or months of a person’s salary. Be sure to check your agreement so you understand how much money is being paid to you. Remember, you can always ask for more money. If your severance package states that you will receive three additional months of salary after you leave, you can always ask them to increase the offer from three months to six months. You don’t need a reason for asking for more. But if the company asks why you want more money, you can say that you need more because you expect that it will take you more time to find a job.

The discretionary bonus is often the largest part of a Wall Street executive's compensation. Typically, the base salary for senior financial executives is small compared to their discretionary compensation. This can leave financial executives in a vulnerable position if they resign or get terminated before the distribution of bonuses. Departing executives frequently are denied their bonuses.

Wall Street firms usually deny the bonus on the ground that they have the discretion to do so. But this is not always true. If the bonus is an integral part of the executive's compensation, courts and arbitration panels will award the unpaid bonus to the executive. Companies do not have unfettered discretion to deny bonuses in certain situations. In fact, even if the parties have agreed that bonus payments are purely discretionary, courts and arbitrators will not allow blanket bonus denials if the decision appears arbitrary or irrational. Instead, courts look to the history of bonus payments and will apply the criteria used in the past to determine an appropriate bonus.