Construction Today - September/October 2017 - 119
IN THIS SECTION
taxes, pays unemployment insurance, and considers eligibility for
overtime pay and minimum wage.
The Obama administration guidance was openly intended to make
it more difficult for a person to be classified as an "independent contractor." In fact, the DOL specifically instructed that its opinion was
that "most workers are employees," not independent contractors.
With the withdrawal of the guidelines, the DOL presumably
returned to its less expansive definition of "employee" as determined
by the "right to control" test.
What Happens Next?
Though the DOL inevitably will continue to challenge misclassification and assess joint liability at some level, its recent move
indicates that it likely will do so by applying a lower level of
scrutiny. The DOL is only one possible challenger on these questions, however. State and federal agencies, along with individual
plaintiffs will continue to contest these issues, with little regard for
the DOL's recent actions.
Further, in the absence of new guidelines from the DOL, courts
will likely revert to pre-guidance interpretations of independent
contractor classifications and joint employment as determined by
courts in each jurisdiction, causing inconsistency from state to state.
As a result, businesses still lack a bright-line standard on either issue.
Joint employer determinations vary widely from jurisdiction to jurisdiction, though many courts use a version of the "economic realities"
test. Courts in the Fifth Circuit, including Texas, consider the below
factors in determining employer status. Whether the employer:
* Has the power to hire/fire;
* Supervises and controls the employee's work schedule or conditions of employment;
* Controls the employee's rate and method of pay; or
* Maintains the employee's personnel records.
Courts make independent contractor determinations by applying
a traditional economic realities test, which usually examines some
combination of the following factors:
* The degree of control exercised by the alleged employer over the
manner in which the work is performed;
* The alleged employee's opportunity for profit or loss and investment in the business;
* The degree of skill and independent initiative required to perform the work;
* The permanence or duration of the working relationship;
* The extent to which the work performed is an integral part of the
Happy and repeat clients
are the best reward HDC
says it can receive.
120 Galaxy Builders
122 John Moriarty and Associates
Florida office - Vice
127 DLC Residential -Millennium
130 Williams Co. - Providence One
132 HDC Development Companies
134 Harvey-Cleary Builders - The
Village on Triangle Avenue
136 Hudson Meridian 86 fleet
140 Stoneleigh Construction Co.
142 Buch Construction - The Vine
144 Camden Development -
146 Maplewood Senior Living/
T.G. Nickel & Associates
150 Alliance Residential Co.
* The extent of the relative investments of
the employer and worker.
Courts have interpreted each of these
factors differently, depending on the facts of
the case, and the jurisdiction the court sits
in. Absent guidance from the DOL, courts
will continue to engage in this type of factor-by-factor, fact-intensive analysis.
The safest course for businesses is to
regularly review the details of independent
contractor and third party arrangements to
ensure they will pass muster with state and
federal agencies and courts.
Brenna Hill is an associate in the litigation section of the Houston office of
Munsch Hardt Kopf & Harr, P.C. She can be reached at firstname.lastname@example.org.
Michael A. Harvey is a shareholder in the business litigation section of the
Houston office of Munsch Hardt Kopf & Harr. He can be reached at mharvey@
SEPTEMBER/OCTOBER 2017 CONSTRUCTION-TODAY.COM