July 20, 2015
by Jean Ohman Back, Brian K. Keeley, Thomas M. Triplett, Attorneys at Law
Does your business or organization use independent contractors? Do you report any payments using Form 1099? Does your business have “owners,” “partners,” or “members of a limited liability company” who receive payments as distributions in those roles but not compensation as employees? If so, your business or organization might want to re-evaluate (or evaluate) those relationships in light of new guidance issued by the U.S. Department of Labor’s Wage and Hour Division (US DOL WHD).
On Wednesday, July 15, 2015, the WHD provided an “Administrator’s Interpretation” about employers’ classification of workers as independent contractors. This guidance document by David Weil, the Administrator of the WHD (the highest-ranking person in the division) explains why the WHD takes the position that “most workers are employees” under the laws that the WHD enforces. These laws include the federal Fair Labor Standards Act (FLSA), the federal minimum wage and overtime law; the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), the federal law regarding payment for many or most agricultural workers; and the federal Family and Medical Leave Act (FMLA), the federal law that provides job-protected unpaid leave for workers to address their own or their family members’ health conditions.
The FLSA does not define the term employee. However, the WHD Administrator defines “employ” to mean “to suffer or permit to work,” and thus a person suffering or permitting a person to work is an employer. The WHD and courts interpreting the FLSA have applied an “economic realities” test to determine whether a particular worker is “employed” and therefore covered under the FLSA, or is instead an independent contractor to whom the FLSA does not apply. The “economics realities” test is intended to determine whether a worker is economically dependent on the employer (and therefore an employee) or whether a worker is in business for himself or herself (and therefore an independent contractor, and not an employee). The test involves several factors to be considered and weighed in each case, in a non-mechanical, non-formulaic way, in an effort to answer the ultimate question of whether a worker is economically dependent on the employer. The WHD discussed the factors that it does consider to be important:
1) Is the work an integral part of the employer’s business?
2) Does the worker’s managerial skill affect the worker’s opportunity for profit and loss?
3) How does the worker’s relative investment compare to the employer’s investment?
4) Does the work performed require special skill and initiative?
5) Is the relationship between the worker and the employer permanent or indefinite?
6) What is the nature and degree of the employer’s control?
The WHD’s interpretation suggests that the control factor, which has over time been given less and less weight, might now be given so little weight that a worker could be deemed an employee even if the employer exercises almost no control over the worker. And the WHD noted, as it has historically done, that an independent-contractor label that an employer gives a worker or the existence of a contract between an employer and a worker that designates or describes the worker as an independent contractor is irrelevant to this analysis, and not even considered as a factor.
The WHD’s explanation of these factors is here:
The WHD looks to continue its focus on workers who have been classified as independent contractors and increase its enforcement efforts on this area. Businesses should remember that the WHD shares information with the IRS and with state enforcement agencies in a number of states, including Washington and Oregon, about businesses that it determines are incorrectly classifying workers as independent contractors. Given the WHD’s apparent increased emphasis on this area and these information-sharing agreements, employers should be prepared for a greater possibility of audits by the WHD or state agencies. The financial risk of misclassification is substantial: the employer may be required to pay back income tax withholdings and payroll taxes with interest and penalties, or may be required to pay workers additional compensation above minimum wage or for overtime, along with penalties and possible attorney fees.
Any business or nonprofit organization that engages any person as an independent contractor should consider evaluating those relationships against this guidance document and assessing whether any independent-contractor relationships should be characterized as employment relationships. In addition, businesses and organizations with independent contractors should take care to ensure that the independent-contractor agreements document as thoroughly as possible the reasons why those relationships are consistent with the WHD’s interpretation. Your Schwabe employment lawyers can help you navigate this tricky area.
June 24, 2015
By Leora Coleman-Fire, Attorney
Employers with any employees in Oregon will now be required to provide sick leave to employees starting next year. Nearly all of the Senate’s Democrats and none of the Senate’s Republicans voted on June 10th in favor of the sick leave bill. The House voted 33-24 late Friday, June 12, in favor of the bill, sending it to Governor Kate Brown, who is expected to sign the bill. The bill is detailed, lengthy, and in many respects replicates pieces of the Portland Protected Sick Time Ordinance. The following provides a brief overview of what the new law will require and a few exceptions:
1. All businesses will be required to provide their Oregon employees with up to 40 hours of protected leave per year.
2. However, the law does not apply to properly classified independent contractors, a limited group of employees whose terms and conditions of employment are covered by a collective bargaining agreement, and certain home care workers.
3. Businesses with 10 or more employees will be required to provide workers with paid leave. Businesses with fewer than 10 employees will be required to provide employees with unpaid leave.
4. Adding complexity, for employers located in Portland, the threshold number that requires employers to provide paid leave will be 6 employees. In other words, employers located in Portland will be required to provide paid leave to workers if they have 6 or more employees working anywhere in Oregon. If a Portland employer has fewer than 6 employees working in Oregon, it will only be required to provide unpaid leave. This requirement comes directly from the Portland Protected Sick Time Ordinance, which you can Click Here to read more about.
5. Employees will accrue 1 hour of leave for every 30 hours that they work. Employers can avoid the administrative hassle of accrual calculations if they choose to “front-load” employees with their total sick leave for the year as soon as the employee is eligible to use sick leave and at the start of each subsequent year.
6. Employees are eligible to use sick time on the 91st calendar day of their employment regardless of the number of hours worked in the interim, so long as it exceeds 30.
7. The law will cover much more than “sick leave.” Employers generally must allow employees to take time off for everything from a family member’s illness to a regular doctor’s visit to assisting a family member with a domestic violence situation.
8. Employees may take sick leave in increments as small as one hour, unless this causes an undue hardship on the employer and the employer allows employees to take at least 56 hours of paid leave per year in increments as small as four hours for any of the reasons allowed by the new law.
9. Employers are not required to pay out accrued but unused sick time at an employee’s termination from employment. However, if employees return to the same employer within 180 days, the employer will have to restore the employee’s progress toward eligibility and any accrued but unused sick time.
10. Employers with paid time off (”PTO”), paid vacation policies, or other similar paid time off programs that are substantially equivalent to or more generous than the requirements of the new law will be deemed to be in compliance with most of the requirements of the law. In addition, if employees use all of their PTO, the employer is not required to provide additional leave based on this law (although other laws may require that an employee receive unpaid leave).
11. Employers can require that employees follow certain policies and procedures for requesting leave and providing medical verification, but there are strict limitations on when and how this is done.
12. Employers will be required to provide at least quarterly notice to each employee of the amount of accrued and unused sick time available for use by the employee.
13. Employers are prohibited from denying, interfering with, restraining, or failing to pay sick time or taking any steps to discriminate or retaliate against an employee who requests or takes sick leave.
14. The law will preempt all local sick leave laws. Thus, when this law becomes effective, neither the ordinance in Eugene nor the ordinance in Portland will remain enforceable.
There is no need to take action on this new law quite yet. It will become effective on the 1st day of January, 2016. However, well before the end of the year, you should review your handbook and other policies regarding employee leave. In reality, all employers with Oregon workers will need to make some adjustments to their policies and provide new notices and postings. This new law is complicated. Consult your trusted legal advisor to ensure that you are prepared for next year. We are closely following the development of sick leave laws in the Pacific Northwest and will continue to keep you informed.
April 16, 2015
By Rebecca Boyette, attorney
Many employers have policies that reserve light duty work assignments for employees who would otherwise be on time loss because of a work-related injury. On March 25, 2015, the Supreme Court released a ruling under the Pregnancy Discrimination Act (PDA) that limits an employer’s right to reserve light duty work for on-the-job injuries. The name of the case is Young v. United Parcel Service.
Plaintiff Peggy Young requested a light duty assignment after she became pregnant and her doctor recommended that she not lift packages heavier than 20 pounds. UPS required employees in Young’s position to be able to lift up to 70 pounds. UPS denied Young’s request for light duty work, citing an internal policy that reserved light duty for employees who had been injured on the job, had a condition that qualified as a disability under the ADA, or had lost their license to drive a commercial vehicle.
Young sued UPS in federal court, arguing that UPS’s policy violated the PDA, which prohibits employers from discriminating against employees who become pregnant and are unable to perform some or all of their job duties. The specific section of the PDA that was at issue in Young provides that it is a form of pregnancy discrimination for an employer to treat pregnant employees differently from other employees with similar limitations on their ability to perform job duties. The lower courts dismissed Young’s claim. But on March 25, the Supreme Court announced a new standard for proving PDA claims and decided to give Young another opportunity to prove her claim against UPS under that new standard.
The Supreme Court’s decision in Young requires a PDA plaintiff to show that (1) she sought a modification to her job duties when she became unable to perform all or part of her normal job due to pregnancy, (2) the employer refused to provide the requested modification, and (3) non-pregnant workers with a similar inability to perform their normal jobs were treated more favorably. Once a female employee makes this preliminary showing, the burden shifts to the employer to demonstrate that it did not intentionally discriminate against the employee based on her pregnancy but was instead motivated by a neutral, business-related policy. The female employee then has an opportunity to show that the policy, though neutral, places a significant and unjustified burden on female workers.
Since Peggy Young filed her pregnancy discrimination claim, UPS modified its policy to allow for light duty assignments to pregnant employees. In light of the Supreme Court’s decision, employers across the country should revisit their light duty policies to assess whether they are at risk for pregnancy discrimination claims. In particular, employers should be aware that policies reserving light duty assignments for workers with on-the-job injuries will likely not pass muster under the new standard for PDA claims.
March 19, 2015
By Amanda Gamblin, employment attorney
Oregon’s Measure 91 will go into effect July 1, 2015, allowing personal non-public use and possession of small amounts of marijuana. What does this mean for employers? Not much. An employer can prohibit an employee from coming to work high, just like it can prohibit an employee from coming to work drunk. Impairment is impairment. However, employers will want to make a few policy changes to ensure it maintains maximum flexibility and protection with respect to drug testing. And employers will need to keep apprised of possible changes in the law with respect to whether an employer may have to reasonably accommodate a disabled employee’s medical marijuana use.
1. Employers Do Not Have to Accommodate a Disabled Employee’s Marijuana Use Despite Measure 91
Measure 91 expressly states that it does not affect state or federal employment laws or the Oregon Medical Marijuana Act. Under Oregon’s Medical Marijuana Act, some disabled employees have attempted to persuade courts that an employer should accommodate their off-duty use of marijuana by allowing them to continue working (or to escape discipline) if they test positive for marijuana in violation of the employer’s drug and alcohol policy.
The Oregon Supreme Court has held that employers have no such obligation to make exceptions to their policies or otherwise accommodate a disabled employee’s marijuana use. This is true, in part, because marijuana is illegal under federal law. The law makes sense because the sophistication of marijuana testing makes it difficult to identify if an employee is currently impaired. An employee could say he or she smoked marijuana the night before, and the employer has no way of verifying. Because Measure 91 expressly does not affect state or federal employment laws, the law should remain that an employer has no obligation to allow a disabled employee to fail its drug test.
2. Over Time, the Law May Change if Social Attitudes Change
This law could change, but it is unlikely to do so in the short term. Measure 91 does contain some language that appears to be intended to get around the Oregon Supreme Court’s ruling. And although marijuana is illegal under federal law, the federal government is currently refraining from enforcing that law in states with recreational marijuana laws. If recreational use results in a shift of public opinion about marijuana and testing improves such that employers can more accurately test for current impairment, a future court could hold that an employer must accommodate a disabled employee’s off-hours marijuana use. Even if a change does occur, it will not be immediate.
3. Federal Contractors and Federal Grant Recipients Must Continue to Comply with Federal Laws
Measure 91 expressly does not require anyone to break federal law, exempt a person from federal law, and change a federal contractor’s obligations under a federal contract or a federal grant recipient’s obligations under a grant. Therefore, companies that are required to comply with federal drug-free workplace laws must continue to do so.
4. Review Your Drug and Alcohol Testing Policies
Federal contractors, federal grant recipients, maritime industry employers, the manufacturing industry, drivers regulated by DOT, and employers with other safety-sensitive positions may need to maintain a zero tolerance drug and alcohol policy. If your company employs a zero-tolerance policy, review it for the following areas:
- Do not use an “under the influence” standard. Rather, use a “no detectable amount” standard. Therefore, any positive urine test could result in discipline up to and including termination.
- Use random testing in addition to post-accident and reasonable suspicion testing.
Other employers may wish to have more tolerance. If so, consider the following:
- Consider an “under the influence” standard or a mixture of an “under the influence” and a “no detectable amount” standard. For certain drugs, any detectable amount could result in termination, but for others the employer could have the discretion to reasonably discern impairment.
- Consider blood tests. Blood tests allow the employer to more accurately test for impairment. If a company decides to include the option of blood tests, be sure to include a notice that the employer may use a blood test. Otherwise, a blood test could be considered an invasion of an employee’s privacy.
- Even with a tolerance policy, prohibit possession, distribution, and use at the workplace. Marijuana is still illegal under federal law.
- Ensure no safety risks and no federal contracts or grants.
- Consider limiting testing to only post-accident or reasonable suspicion.
For all drug and alcohol policies, consider the following in light of Measure 91:
- Call it a “Drug and Alcohol Policy,” or similar name. Avoid calling it an “abuse” policy.
- Clearly state that it covers drugs illegal under local, state, or federal law.
- Explicitly include marijuana. Employees are confused given Measure 91. Make it clear.
- Include a prescription drug policy to avoid an employee arguing that he or she has a “prescription” for marijuana. Employees may not use prescription drugs that may cause impairment, or use (or test positive for) drugs for which they do not have a prescription.
5. Update Your Driving Policy
Measure 91 includes a specific provision prohibiting marijuana use while driving. Revise your policy to prohibit marijuana use in company vehicles or while driving on company time.
February 18, 2015
By Leora Coleman-Fire and Nathan Sramek, Attorneys at Law
On February 16, 2015, the Oregon Senate Workforce Committee and the House Business and Labor Committee held a joint public hearing on the proposed statewide mandated paid sick leave legislation, HB 2005 and SB 454. Over the course of two and a half hours, the committees heard extensive testimony in support of and in opposition to the legislation. In addition to those who testified, hundreds of people—many wearing stickers in support of paid sick leave—attended the hearing, filling three legislative hearing rooms and spilling out into the capitol’s halls.
Among those who testified, many employers voiced concerns that the added cost of providing paid sick leave would result in increased costs to consumers, reduced pay and benefits to employees, and decreased staffing levels. Some, opposing the legislation outright, urged the committees to recognize the unique position of an individual employer to craft benefits packages tailored to their employees’ needs. They contended that a statewide, one-size-fits-all paid sick leave requirement would eliminate their ability to offer employees alternative benefits, pay raises, or bonuses. Others emphasized that the legislation would be particularly onerous on small businesses, and they urged the committees to adopt a definition of “employer” in line with the Oregon Family Leave Act, which applies only to employers with twenty-five or more employees. Still other employers that already offer paid sick leave testified in support of the bill, arguing that it increases employee morale and retention. They urged the legislature to level the business playing field so that employers that offer paid sick leave cannot be undercut by competitors that do not.
One common theme between many witnesses in support and in opposition of the legislation was the need for statewide preemption. Business owners cited the increased cost of complying with multiple regulations, and county representatives described the tension and division that currently exist between Portland, Lane County, Eugene, and their neighboring cities.
In addition, agricultural employers were particularly well represented at the hearing. They voiced concerns over the difficulty of administering the paid sick leave requirements in the context of a small farming operation, with predominately seasonal and transient employees, an unyielding harvest timeline, and a general lack of human resources or other administrative support. In addition, to the extent that the legislation will increase their operating costs, farm and orchard operators emphasized they operate on very tight margins with little or no control over the prices that they can charge for their produce, which is overwhelmingly purchased by five national retailers. Given those unique hardships, many of them asked the committees to consider adding an agricultural exemption to the legislation. However, the Oregon Farmworkers Union opposed an agricultural exemption, citing the low wages and frequent illnesses and injuries that stem from farm work.
Finally, numerous employees testified about the hardships they face when they must either go to work while they or a family member are sick, forego their own wages to stay home, or find someone else to care for their sick family members. Several home-care providers testified that, because of the lack of available paid sick leave, they are often forced to care for their elderly and medically fragile patients while ill. And several education professionals testified that frequently children will attend school while ill, exposing teachers, administrators, and other children, because their parents cannot afford to miss work in order to care for them at home.
If you have any concerns of your own, the committees are still accepting written testimony until this Friday, February 20. To submit your written testimony, e-mail both email@example.com and firstname.lastname@example.org.
February 13, 2015
As published, Portland Business Journal, Feb. 13, 2015
Statewide paid sick leave may soon be a reality in Oregon. This Monday, February 16, at 6 p.m., the legislature will hold a public hearing on the pending statewide sick leave bills (House Bill 2005 and Senate Bill 454).
This is an opportunity for businesses to send in comments or appear in person to voice their feedback, including how mandatory paid leave will affect their business, whether they support the bills, and any proposed changes.
Don’t have time to read the bills? Below is a cheat sheet of ten important points that every business should be aware of.
1. The draft bills will require all employers to provide at least 56 hours of paid leave to each employee per year.
2. “Employees” include home care workers, temporary workers, and seasonal workers.
3. Employers must give employees at least 1 hour of protected paid sick leave for every 30 hours of work.
4. After 89 days of employment, employees can use their accrued sick leave in increments as small as 1 hour.
5. Employees can use their paid leave for everything from feeling sick to taking care of a family member dealing with mental health issues or needing a ride to the dentist and more.
6. The definition of who qualifies as a “family member” is broader than other Oregon laws and includes someone who is “related by blood or affinity” to the employee.
7. The statewide bills do not preempt, limit, or otherwise affect any other law, policy, or standard that provides for greater use of paid or unpaid sick time. This means that the City of Portland’s current Protected Sick Time Ordinance, as well as the City of Eugene’s Sick Leave Ordinance, which will be effective on July 1, 2015, will still apply. Employers with employees in or around these cities will need to be aware of what specific sections of each law provide a greater benefit to these employees and then meet the higher requirements.
8. Not all employers are required to comply with these statewide sick leave bills. For example, employees in the building and construction industry, longshoremen, or stage hands whose terms and conditions of employment are covered by a collective bargaining agreement do not have to comply.
9. Employers can require notice for an employee’s need for leave. However, the draft bills permit an employer to require only up to 10 days’ advanced notice “or as soon as otherwise practicable” if an employee’s need for paid leave is foreseeable. If the employee’s need for leave is not foreseeable (injured in a car accident, domestic violence situation, sudden sickness, etc.), then the employer can only require notice as soon as is practicable for the employee.
10. If an employee takes more than 24 consecutive hours of paid sick time, the employer may require medical verification or certification of the employee’s need for leave.
The draft bills are lengthy and complex, but the above ten points should help you assess what a statewide paid sick leave law will mean for your business.
Then, head to the Oregon State Capitol (900 Court Street NE, Hearing Room F) in Salem on Monday, February 16th at 6 p.m. for the public hearing to voice your thoughts.
If you are unable to attend but want the legislature to hear your thoughts on the statewide mandatory sick leave bills, email me, Leora Coleman-Fire, at email@example.com, and I will make sure your comments are heard.
Leora Coleman-Fire is an Employment Law Attorney at Schwabe, Williamson & Wyatt.
January 22, 2015
By Leora Coleman-Fire
But It’s Not Identical to Other Mandatory Sick Time Ordinances
The 2015 Oregon legislative session is set to include debate over state-wide mandatory sick time. In the 2013 legislative session, legislators discussed mandatory sick leave, but ultimately did not enact any sick leave law. Now, Senator Elizabeth Steiner Hayward (D-Beaverton) and Representative Jessica Vega Pederson (D-Portland) have proposed a new draft bill to provide all Oregon workers with paid sick time.
This new state-wide mandatory sick leave draft bill differs from Portland’s, Eugene’s, and Seattle’s respective mandatory sick time ordinances in several ways, including the following:
- Waivers: Workers in the building and construction industry, longshoremen, or stage hands whose terms and conditions of employment are covered by a collective bargaining agreement are not required to comply. While the Seattle ordinance permits employers and employees who are part of a bona fide collective bargaining agreement to enter into a written waiver, the Portland Protected Sick Time Ordinance does not provide this exemption, nor does the Eugene Sick Leave Ordinance provide such a broad exemption.
- 56 hours of paid sick leave: Workers will be permitted to earn and use at least 56 hours of paid sick leave per year. This follows the Seattle Sick and Safe Time Ordinance’s requirement for “tier two” employers, which are those employers with 50 to 249 full-time equivalents per calendar week during the previous calendar year. However, the Portland and Eugene ordinances require employers to provide eligible workers with up to 40 hours of sick time.
- 1 hour increments: Accrued sick time may be taken in increments as small as 1 hour. This follows the Portland Protected Sick Time Ordinance, but not the Eugene draft administrative rules (which you can read more about here).
- 3-year recordkeeping: Employers will be required to maintain records for 3 years from the date paid sick time accrues.
- More potential for liability: The draft bill provides for numerous revisions to laws governing damages and penalties for employer violations, including compensatory and punitive damages against employers. In addition, employers could face a civil penalty of up to $50,000 for a first violation and up to $100,000 for subsequent violations.
We will keep a close watch on what happens to Oregon’s state-wide mandatory sick leave draft bill. In the meantime, if you have questions or concerns about policy issues or how to implement sick leave (including drafting policies, working with and disciplining workers, etc.), let us know. These are complex laws that we are committed to helping your business navigate while it continues to thrive.
January 15, 2015
By Leora Coleman-Fire
The City Manager of Eugene published the draft Eugene Sick Leave Administrative Rules for review. These rules help explain the Eugene Sick Leave Ordinance, which provides for mandatory paid sick time for workers in the Eugene area. The Eugene City Council passed the Eugene Sick Leave Ordinance on July 28, 2014, and it goes into effect on July 1, 2015.
However, these are draft rules for public comment, which means that the rules may change. Here are some of the most important draft rules to consider commenting on (more details below on how to submit comments) by January 21, 2015:
- Workers who will be eligible to accrue and use paid sick time are those who work in “[t]he City of Eugene, Oregon, or the area within the territorial City limits of the City of Eugene, Oregon, and such territory outside this City over which the City has jurisdiction or control by virtue of ownership or any Constitutional or Charter provisions, or law.” This is a difficult requirement to implement, particularly for employers with workers who perform work in multiple locations.
- But the ordinance does not apply to independent contractors or workers in the building and construction industry whose terms and conditions of employment are covered by a collective bargaining agreement, among others. If you plan to rely on your workers not being covered under the Eugene Sick Leave Ordinance based on these or other exceptions, talk with legal counsel to confirm.
- All workers in the Eugene area will not be eligible to use paid sick time during their first 90 calendar days of employment. In addition, employees based outside of the Eugene area will have to work 240 hours in a year within the Eugene area to become eligible to use sick time.
- Like the Portland Protected Sick Time Ordinance and Administrative Rules, which require employers to provide sick leave to workers in the Portland area (read an earlier published article), the Eugene Sick Leave Ordinance allows workers to accrue 1 hour of sick time for every 30 hours of work, up to 40 hours per year, with the right to carry over up to 40 hours, unless the employer front-loads 40 hours of sick time to the worker at the start of each year. Workers are also permitted to use up to 40 hours of sick time per year.
- Unlike the Portland Protected Sick Time Ordinance, the draft Eugene Sick Leave Administrative Rules provide a different rule for what increments of time a worker may take sick leave. Eugene’s draft rules provide that an employee may take sick time in increments as small as 1 hour to care for a family member. But if an employee wants to take leave because the employee is sick, then she or he may take sick time in increments as small as 2 hours.
- Like other mandatory sick leave ordinances, the Eugene draft administrative rules require employers to create written policies, post notifications, and meet certain recordkeeping requirements. Employers will need to prepare these documents in advance of July 1, 2015, when the Eugene Sick Leave Ordinance takes effect.
- Employers will have a three-month grace period where, from July 1, 2015, through September 30, 2015, there will be no civil penalties. However, the City will require violating employers to compensate their workers.
The above covers only select draft rules. If you would like more information or need assistance in navigating mandatory sick leave requirements, we are here to help. If you would like to provide comments or suggestions on the draft rules, write to Jason Dedrick, 125 E. 8th Avenue, Eugene, Oregon 97401, or via e-mail at firstname.lastname@example.org no later than 5:00 p.m. on January 21, 2015.
August 11, 2014
By Stephanie P. Berntsen, Attorney
On August 7, 2014, the Washington Supreme Court unanimously adopted the “economic reality” test to determine whether a joint employment relationship exists under Washington’s minimum wage state (”MWA”), chapter 49.46 RCW in Becerra et al. v. Expert Janitorial LLC and Fred Meyer Stores, Inc. (Case No. 89534-1).
In Becerra, the plaintiffs worked as independent contractors (the validity of that classification was not at issue on appeal) for subcontractors who provided janitorial services to Expert Janitorial LLC. Expert then had a contract with Fred Meyer to provide janitorial services in Fred Meyer stores in the Puget Sound while those stores were closed and locked at night. None of the plaintiffs were formally employed by Expert or Fred Meyer. The plaintiffs were regularly required to work more than eight hours per day because they were locked in the store and could not leave until the Fred Meyer employees reviewed their work and signed them out the next morning. The subcontractors paid the plaintiffs less than the minimum wage and did not pay them overtime.
The plaintiffs sued the subcontractors, Fred Meyer and Expert for violation of the MWA among other things. Fred Meyer and Expert moved for summary judgment on the grounds that they were not the plaintiffs’ employers. The trial court applied the joint employment test set forth in Bonnette v. California Health and Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983) and granted summary judgment as to both, primarily on the ground that they were not involved in the hiring and firing of the plaintiffs.
The plaintiffs’ appealed the trial court’s summary judgment orders. The Court of Appeals reversed. Expert and Fred Meyer petitioned for review.
The Washington Supreme Court confirmed that the MWA is “remedial in nature and is liberally construed.” *8. Washington courts “look to FLSA jurisprudence in interpreting our act.” *8. In reviewing that jurisprudence, the court adopted the “economic reality” test as set forth in Torres-Lopez v. Robert May, 111 F.3d 633 (9th Cir. 1997). In Torres-Lopez, the Ninth Circuit articulated 13 nonexclusive factors to determine whether a joint employment relationship exists. These factors include, but are not limited to: (1) the nature and degree of control of the workers; (2) the degree of direct or indirect supervision of the work; (3) the power to determine rates of pay; (4) the right to directly or indirectly hire, fire, or modify employment conditions; (5) the preparation of payroll. In addition, the court articulated eight additional “functional factors.” The court further cautioned that these factors “are not exclusive and are not to be applied mechanically or in a particular order.” In concluding that the trial court did not apply these factors, it remanded to the trial court.
Becerra instructs that a company may be held jointly responsible for compliance with federal and state minimum wage requirements under a “joint employer” theory even if those functions have been subcontracted out. Companies that subcontract work at their facilities, such as janitorial work or other services, should carefully review those contracts and ensure that the subcontractor is responsible for complying with federal and state wage laws and that appropriate indemnification provisions are in place. Simply accepting the lowest bid from a subcontractor without regard to whether those who would be actually performing the job could or would be receiving appropriate pay under federal and state wage laws could lead to joint employer liability if those wages were not paid properly.
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May 28, 2014
By Leora Coleman-Fire, attorney
Less than a few months after Portland’s Sick Leave Ordinance was enacted to cover the broader City of Portland area, the City of Eugene appears to be gearing up to follow in Portland’s footsteps with its own mandatory sick time law. Keep reading to learn what we know now, where things are going next, and how you can get involved in this important process of shaping what Eugene’s mandatory sick leave law, if passed, will look like.
1. What has happened and next steps
The City of Portland passed a mandatory sick leave law, which began on January 1, 2014, that requires all employers with workers within the greater geographic area of the City of Portland to provide those workers with sick leave. Employers with six or more workers are required to provide paid leave to eligible workers, while employers with fewer than six workers are required to provide unpaid leave. In addition, employers are required to make various administrative changes in order to be in compliance with the Portland ordinance, as discussed in more detail here. Employers’ reactions to the Portland ordinance have been varied, but many expressed concern about not being included earlier in the process of formulating the new law.
In Eugene, on February 24, 2014, a coalition of advocacy groups that organized a sick leave campaign called “Everybody Benefits Eugene” proposed to the Eugene City Council that Eugene enact a mandatory sick leave ordinance. The City Council then met again on April 9, for a work session to discuss the timeline and process for developing a draft sick leave ordinance to consider for adoption.
Next, a task force was assembled to create a draft sick leave ordinance. Members of that task force include the following: United Food and Commercial Workers Staff Director Kevin Billman; Painters Local 1277 Business Representative Pat Smith, who is also Secretary-Treasurer of the Lane, Coos, Curry, Douglas Building Trades Council; Eugene Mayor Kitty Piercy; and Eugene City Council members Claire Syrett and Alan Zelenka. The task force first met on May 20th and plans to meet again on May 29th. The City Council plans to have a draft ordinance for public review sometime between mid-June and the first week of July, followed by a public hearing approximately two weeks later, and then the City Council will meet to decide whether to adopt the draft ordinance.
2. What you can do to get involved
While the members of the task force have already been chosen, you can still be involved in the process and provide feedback. Feedback can be provided to the above members of the task force or directly to us, if you would like us to provide feedback on your behalf or anonymously.
Moreover, when the draft ordinance is published to the public, that is the time to make your voice heard. We have seen the challenges of the Seattle and Portland mandatory sick leave laws for employers and it is important that Eugene’s City Council recognizes these challenges before adopting the same issues. In addition, we encourage you to attend the public hearing to participate in the discussion and voice your concerns then as well.
We are closely monitoring developments related to mandatory sick leave laws in Oregon and Washington, including these latest efforts in Eugene. These issues are complicated and raise numerous legal concerns. We are here to help guide you through these issues as they are developing and once any new law is enacted. If you have questions, please do not hesitate to contact us.