by Kim, Lahey & Killough Law FirmNew DOL Rule Independent Contractor Classifications
New Department Of Labor Rule in Effect March 11 Affects Employee/Independent Contractor Classifications
Businesses relying on independent contractors need to know about the US Department of Labor’s new 6-factor test for determining worker classification under the Fair Labor Standards Act. This test narrows who is an “independent contractor,” and goes into effect March 11, 2024.
Key Changes in Worker Classification: New 6 Factor Test Used In Determining Worker Status. Factors considered:
- Opportunity for profit or loss depending on managerial skill;
- Investments by the worker and the potential employer;
- Degree of permanence of the work relationship;
- Nature and degree of control;
- Extent to which the work performed is an integral part of the potential employer’s business; and
- Skill and initiative.
DOL says these factors aren’t exhaustive. Instead, the analysis uses a totality-of-the-circumstances “economic reality” approach, allowing consideration of other relevant factors that “in some way indicate whether the worker is in business for themself.” Where the worker is dependent on the employer for work, they will not qualify as an independent contractor under this rule. Importantly, only the courts, federal and state agencies decide classification, not the employer or the worker.
Diverse Classification Standards:
Notably, this rule solely addresses DOL’s interpretation under the FLSA and does not supersede other law, such as state “ABC Tests,” IRS interpretations of common law, etc.
Serious Consequences for Misclassifying Workers:
- Owing double the worker’s damages
- Paying the other side’s attorney’s fees and costs
- Individual liability: individuals with a hand in misclassification aren’t shielded by the corporation; and
- To the extent a settlement is reached, the agreement itself—and the amounts paid—is public information.
- Not including IRS and/or DOL penalties.
What Employers Should Do Now:
- Review existing and future independent contractor arrangements against the new framework.
- Consider conducting a worker classification audit using the updated criteria.
- Explore the IRS Voluntary Classification Settlement Program (VCSP) with guidance from a CPA.
- Seek legal advice to understand the implications and ensure compliance.
If you would like for us to assist you in navigating the complexities of worker classification, please contact attorney Casey Martens at cmartens@kimandlahey.com or 864.973.6688.
by Kim, Lahey & Killough Law FirmB C Killough named Thomson Reuters Stand-Out Lawyer
CHARLESTON, SC – Kim Lahey & Killough law firm is pleased to announce that B.C. Killough has been named to the list of “Stand-out Lawyers” by Thomson Reuters. Each year, thousands of senior in-house legal counsels from around the world nominate the top three attorneys they have worked with during the past year.
Bill Killough has been recognized for decades by his peers in publications such as The Best Lawyers in America, South Carolina Super Lawyers and Charleston Business Magazine’s Legal Elite. Best Lawyers named him the “Corporate Lawyer of the Year” for the Charleston area in 2015. These client-nominated attorneys are “real stand-out lawyers [and] are distinctive because, in combination with their technical competence, they offer business savvy advice, deliver exceptional service, or integrate well with the client team,” according to Thomson Reuters.
Bill Killough practices law in the areas of intellectual property and business law, including commercial transactions. He is a registered patent attorney and has obtained more than 350 patents for clients and filed more than 1500 trademark applications on behalf of clients. He has experience as an intellectual property litigator, with at least one of his cases setting precedent. As a certified mediator, Killough assists parties in intellectual property and corporate disputes in coming to a resolution outside of a courtroom.
With offices in Greenville and Charleston, SC and Brevard, NC, the Kim, Lahey & Killough Law Firm is devoted to helping clients achieve their business goals and establish, enforce, and leverage their intellectual property rights from the Upstate, to the Lowcountry to across the globe.
by Kim, Lahey & Killough Law FirmCasey Martens admitted to NC Bar and GA Bar
Congratulations to Kim, Lahey & Killough attorney Casey Martens, who has recently been admitted to both the North Carolina and Georgia Bars. Casey heads up our Brevard, NC office and serves clients in GA, NC and SC in the areas of employment law counseling and compliance, employee investigations, wage and hour disputes, business disputes and litigation, contracts, and trademark analysis and registration.
A graduate of the University of Colorado and the Charleston School of Law, Casey has regularly been named as a Legal Elite of the Upstate by Greenville Business Magazine and a South Carolina Super Lawyers Rising Star as a Top Rated Employment and Labor Attorney.
With offices in Greenville and Charleston, SC and Brevard, NC, the Kim, Lahey & Killough Law Firm is devoted to helping clients establish, enforce, and leverage their intellectual property rights from the Upstate, to the Lowcountry to across the globe.
by Kim, Lahey & Killough Law Firm“Risky Business” in the COVID-19 Reopening Era
As businesses begin to open their doors again, there are many questions, including legal liability risks, that come with reopening in light of COVID-19. As of May 22, a large national firm has identified nearly 2,300 COVID-19 related claims, a clear sign this risk is not “hypothetical.”
So far, we have general guidelines from the federal government, but the states have been tasked with the final decision on reopening requirements and regulations, which makes it difficult because they will vary state-by-state.
In South Carolina, most restaurants, gyms, salons, and other close-contact businesses were allowed to reopen last week, but were given eight pages of suggested guidelines. In contrast, North Carolina allowed restaurants and personal care services, like hair salons, to reopen, but has provided a lengthy list of businesses that must remain closed, like bars, nightclubs, indoor fitness facilities, public playgrounds and indoor entertainment facilities, like movie theaters and bowling.
Further, NC requires that customer occupancy be limited to 50% of the fire capacity. Georgia has the most liberal position, as it allowed all businesses to reopen in late April.
In deciding to reopen, businesses must balance the need to generate revenue with the need to protect the health of employees and clients. If someone claims to have contracted COVID-19 due to acts or omissions of the business, employment claims, Workers’ Compensation claims, personal injury claims, and potentially wrongful death claims can be implicated.
The mitigation of this risk, based upon the differing regulations and guidelines, has to be determined on a state-by-state basis. “In South Carolina, a COVID-19 Workers’ Compensation claim is likely to be diverted to the Worker’s Compensation system, which can limit exposure for the business. This may not be true for other states,” says Casey Martens, an employment lawyer for the Kim & Lahey Law Firm.
“Failure to follow basic guidelines, such as the CDC’s, could result in negligence claims, such as the business breaching its duty to provide a safe work environment, or failure to provide proper equipment,” says Martens, “These risks are increased for businesses that rely upon close customer contact, like restaurants, salons, retail and other businesses with frequent customer interactions. The risk to the business is not just from the customer, but from the employee as well.”
There is also a risk associated with a business’s reputation and customer confidence in the business. “A business’s brand is one of its most valuable assets,” says Douglas Kim of the Kim & Lahey Law Firm. “For example, the most valuable brand in the United States is reported to be Apple at $316 billion, followed by Google at $313 billion.” So, understanding the significant risk of a negative news article reporting an employee or client contracting COVID-19 in your establishment should not be underestimated as businesses consider reopening.
Reopening is not a simple or risk-free endeavor: it requires weighing multiple factors on deciding when and how to reopen. Factors to consider include the applicable guidelines from federal, state, and local regulatory and health organizations (e.g. from the CDC to the Greenville City Council). Guidelines and safety protocols vary from business to business and state to state, and failure to follow them can significantly increase the risk to businesses. Business owners should also keep in mind that regulations, protocols and guidelines are constantly changing. It is important to be aware of all updates, and to communicate them to employees to give them the assurance and impression of compliance.
Resources:
- First Response Training International is offering free training on everything from how a virus spreads to utilizing personal protective equipment (PPE) and even documentation and cleaning procedures.
- For updated information regarding reopening in South Carolina after COVID-19, visit the accelerateSC website.
- Download the South Carolina Chamber’s new guide for employers operating during the pandemic: Business in the Era of COVID-19: A Guide for Moving Your Business Forward.