Connecticut Employment Law Blog : Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

It has been widely reported over the last month that the United States Department of Labor is planning some new initiatives to crack down on usage (or abuse) of independent contractors by companies. 

Several blogs have done a thorough job on reporting about it including the Delaware Employment Law Blog, Point Of Law, Florida Employment & Immigration Law Blog, and Minnesota Labor & Employment Law Blog. 

But beyond this, there is also talk about revising some of the exemptions to federal overtime laws, including the domestic service exemption for home health care aides, as discussed by the Prima Facie Law Blog. 

In short, 2010 is likely to mean further changes and focus on wage and hour laws for employers. 

What does this all mean for employers? For starters, it means its time for companies to do a hard look at their wage/hour practices and how they classify their workforce.  As one post stated: 

Don’t let your business get caught with misclassified employees. Review the business relationship between you and anyone currently classified as an independent contractor to prevent any litigation or penalties for your business.

Because it is such a hot topic, this month's installment of our webinar series will focus on these initiatives from the federal government.  The next webinar is set for March 17, 2010 at 12 p.m. EDT and, as always, is free of charge. You can sign up here.  My colleague, Joshua Hawks-Ladds (who currently chairs the Connecticut Bar Association's Labor & Employment Law Section) will lead the discussion.

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The Second Circuit Court of Appeals (which includes Connecticut) recently ruled on two cases of keen interest to employers. The first relates to enforcement of EEOC subpoenas and the second relates to the classification of some financial services workers.

First, in EEOC v. United Parcel Services, the Court allowed the EEOC to press forward with its subpoena of UPS for records related to the religious rights of employees.  The Court stated that courts that review administrative subpoenas from agencies like the EEOC have a limited role and that if the subpoena meets certain criteria, it will be deemed to be reasonable. 

For employers who are faced with EEOC subpoenas, the case is important because it limits the avenues that employers have to challenge the breadth and scope of the subpoena. 

Second, as pointed out by the California Workforce Resource blog in an excellent post,  "Loan officers, analysts, and brokers of various financial products are generally considered to be well compensated and prestigious positions."  And yet a new decision from the Second Circuit will have employers in Connecticut challenging that assumption. 

In Davis v. J.P. Morgan Chase & Co., the Second Circuit held that "a given position cannot be considered exempt unless it falls on the correct side of the so-called 'production/administrative dichotomy.' According to this 'dichotomy' test, the administrative exemption cannot apply if a worker's services are not being performed for the purpose of internally running the company, but are instead being sold to customers to generate revenue."

Here, an underwriter was deemed to be eligible to receive overtime. 

As you might imagine, the Connecticut Employee Rights Blog lauds the decision suggesting that even insurance underwriters might be eligible to receive overtime under this decision. 

I would not take the analysis that far (yet) but this financial services companies ought to be examining their job descriptions closely after this case and apply the Davis decision carefully to ensure that proper classifications are met. 

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As I've cross-posted over at Overlawyered.com today, three wrestlers have sued Connecticut-based World Wrestling Entertainment, Inc. (WWE) claiming that they have been improperly classified as "independent contractors" and not employees.

On Friday, WWE removed the lawsuit to federal court from state court claiming that federal questions are implicated in what would otherwise seem to be a "breach of contract" claim.  (You can read the removal papers here.) What federal questions? Well, federal employment tax questions for one.

But the interesting part of the case is not the removal papers, but the underlying lawsuit itself. (You can download the complaint here.) The wrestlers -- who are seeking class-action status -- claim that they were required to sign a "booking contract" that specified the terms of their engagement such as their training regiment, costumes, and -- to the surprise of no one -- the "outcome of each match".  They claim that they were akin to "employees" and should have been paid as such.  WWE denied the allegations in a 10-Q filing late last month.

While the employees are seeking damages, typically, the penalty for employers is to pay the employment taxes of the employees with some penalties.  It's unclear here what else the wrestlers are actually seeking.  The case has been assigned to Senior Judge Peter Dorsey.

The proper classification of workers has been a thorny issue for employers, going back to the days of the landmark Microsoft lawsuit from the late '90s.    As an employer, you can get a headstart on the issue by going to the IRS website which has lots of commentary and resources on the subject. 

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