Are you running a business, hiring freelancers, or working as one yourself? You may want to pay attention because on May 1st, the Department of Labor (“DOL”) changed the rule, again, for who counts as an “independent contractor.” 

In a May 1st memo, the DOL stated it is no longer following its own 2024 rulebook when deciding how one is classified as an independent contractor versus an employee. The 2024 test required courts to look at two factors: 

1. How the business controls the employee’s work (how much the business directs the worker); and 
2. If the worker can make (or lose) money based on their own decisions (or, to put it another way: does the worker have opportunity for profit or loss?) 

Instead of following the 2024 rules, DOL investigators will revert to using the 2008 “economic reality” test. Instead of two, this test has seven factors, which include but are not limited to questions like: 

• Is the worker’s role central to the business? 
• Do they work there long-term? 
• Who controls how the work gets done? 
• Did the worker invest in their own tools or equipment? 
• Can they make a profit, or suffer a loss, based on how they work?
• Does the worker need entrepreneurial skill to succeed at the job?
• Is the worker's business their own, or an extension of their employer's?

So, what does this mean for you? 

It means no one factor decides the issue; just calling someone a “contractor” in a written agreement doesn’t and never cut it. But here’s the twist: the 2024 rule is still in effect for private litigation. So, if an employee sues a business, courts might still apply the newer framework. On the other hand, if the DOL comes calling instead of a private employee, courts will use the 2008 test.  

For now, businesses should tread carefully. Abiding by two separate standards can be difficult; one can imagine, for example, that one court could decide that a worker is an employee under the 2008 test, but another court determines the same worker is an independent contractor under the 2024 rule. The rules got fuzzier, and the risks grew larger. Misclassifying employees and contractors can have major consequences: unpaid wages, liquidated damages, lawsuits, and more.

So, what’s your take? Should “employee versus independent contractor” classification hinge on a set checklist? Or is a flexible, case-by-case approach the better path? 

On January 15, 2025, the U.S. Supreme Court ruled in E.M.D. Sales, Inc. v. Carrera that employers only need to prove that employees are exempt under the provisions of the Fair Labor Standards Act ("FLSA") by a "preponderance of the evidence" (more likely than not) to defeat a wage and hour claim. This decision replaces the tougher "clear and convincing" standard that had been applied by some courts prior to this decision.

The FLSA requires an employer to pay overtime to employees unless the employer can prove that the employees fall under an exemption, such as being an Executive, Administrative, Professional, Computer & Outside Sales Employees.

In the case before SCOTUS, the employees claimed that they were misclassified as outside salesmen and sued their employer for overtime pay, liquidated damages (double damages), and attorneys' fees. 

The lower court sided with the employees, in using the tougher "clear and convincing" standard, but the employer appealed while arguing that it only had to prove that the exemption applied by a preponderance of the evidence. SCOTUS agreed with the employer and sent the case back to the lower court to reexamine the facts to determine the applicability of the exemption under the preponderance of the evidence standard. 

Regardless, the message is clear: Employers now have a lower hurdle when defending a wage and hour case in proving that an exemption applies to a wage and hour claim under the FLSA. 

Today, we bring to your attention the recent release of pivotal data by the U.S. Equal Employment Opportunity Commission (EEOC). This data, encompassing information from 2017 and 2018, provides an insightful glimpse into the state of pay disparities in American workplaces., which is illegal based on the Equal Pay Act. To learn more about the Equal Pay Act, take a CLE from Attorney Andrew Lieb here.

Key EEOC Findings:

The EEOC's data dashboard reveals a troubling reality: pay disparities based on sex and race persist across nearly every industry and state. Here are some crucial highlights:

• Gender Disparities: The data unequivocally shows that men continue to outearn women, with the median pay band for men consistently higher than that for women. In 2018, this gap was particularly pronounced, with men's median pay band being one or even two bands higher than women's.
• Racial Disparities: The disparities deepen when considering race and ethnicity. Black or African American women and American Indian or Alaska Native women find themselves in the lowest median pay bands, reflecting a distressing pattern of inequality.
• Industry and Job Category Trends: Across various industries and job categories, men consistently occupy higher median pay bands compared to women. While some sectors exhibit equal median pay bands, such as Accommodation and Food Services, these instances remain exceptions rather than the norm.
• Geographical Disparities: Disparities are not confined to specific industries or job categories but are pervasive across different states. For instance, in 2018, Wyoming, Louisiana, and West Virginia exhibited significant differences in median pay bands between men and women.

• Equal Pay Act and Title VII: The EEOC enforces both the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964, which prohibit pay discrimination based on sex, race, color, national origin, and religion. If you believe that you have experienced pay discrimination, you may have legal grounds to pursue a case and if you live in a State, like New York, you can go back up to 3 years on the state's anti-discrimination law to bring your case.
• Data as Evidence: The aggregated data provided by the EEOC can serve as compelling evidence in legal proceedings. If you find that your pay is unfairly lower compared to colleagues of a different
  gender or race in similar roles, this data can bolster your case.
• Consultation: If you suspect pay discrimination in your workplace or have questions about your rights, we encourage you to seek legal consultation. Lieb at Law, P.C. is here to provide guidance and support as you navigate the complexities of employment law.

*attorney advertising

On February 15, 2024, The New York State Court of Appeals issued their decision in the Matter of Clifton Park Apts., LLC v. New York State Div. of Human Rights. 

We now know that the "threat of litigation" may support a retaliation claim under the New York State Human Rights law (Executive Law 296). So, if you notice a claim of discrimination and the perpetrator then threatens suing you for other reasons, you likely have a retaliation claim in NYS. 

That's why it is imperative that victims immediately notice perpetrators of their claims in a notice of preservation, notice to insurance, and demand letter. This is how you protect yourself. 

To read the decision, click here.

Attorney Andrew Lieb is conducting a Continuing Legal Education course on Thursday, March 14, 2024 through the Connecticut Bar Association. 

Proving and Calculating Front Pay and Back Pay in Employment Cases (EDU240314)

Governor Hochul enacted significant legislation this week marking a pivotal moment for freelancer workers across New York State by signing BillA06040, known as the "Freelance Isn't Free Act".

Before the introduction of this law (Labor Law 191-d), problems for freelancers included:

1. Delayed or Non-Payment: Without legal mandates, there was little to no consequence for payment terms leaving freelancers financially vulnerable.
2. Lack of Written Contracts: Many freelance engagements proceeded without formal written contracts, leading to misunderstandings and disputes about work scope, payment terms, deadlines, and other essential aspects of the work arrangement.
3. Limited Recourse for Contract Violations: Prior to this law, there was no straightforward legal recourse if an agreement was violated. Pursuing legal action was often costly and time-consuming, making it an impractical option.
4. Absence of Standardized Contract Terms: With no standardization of contract terms, freelancers often agreed to unfair or exploitative conditions due to lack of industry standards or fear of losing work.
5. Retaliation: Freelancers often hesitated to assert their rights or demand fair treatment due to the fear of being blacklisted or losing future work opportunities
6. Administrative Burdens: Freelancers were often burdened with the responsibility of chasing payments and resolving disputes on their own

Attorney Andrew Lieb shared insights with the NY Post on workplace rights and union implications. While unions offer protections, they come with legal nuances. Addressing concerns internally, like through HR, is advised, yet unresolved issues may call for legal steps. Strikes, powerful yet consequential, need judicious thought. Lieb delves into factors like "strikes as a last resort" and the importance of a compliant workplace culture.  #WorkplaceRights #UnionConsiderations #LegalInsights #StrikeResponsibly #LiebatLaw #EmployeeAdvocacy #attorneyandrewlieb #employmentlawyer #Sagaftra

In Attorney Andrew Lieb's discussion about the legality of In-N-Out's mask policy with Scripps News, Lieb emphasizes its potential issues regarding discrimination. Although it's legal in the majority of states as a general matter, the way the policy is worded could inadvertently lead to discrimination by not providing exemptions for religious reasons. He suggests that employees might have a chance to oppose this policy through unionization, concerted activity, or lawsuits related to religious accommodations and disability accommodations. 

Before pursuing a medical exemption, Lieb advises employees to consult a discrimination lawyer to better understand what counts as a statutorily recognized disability that would qualify for such an exemption. He also addresses the problematic nature of the restaurant chain's requirement for only company-provided masks, which could fail to accommodate those who might need different kinds of masks due to their religion or medical condition. He specifically points out that "Many Muslim women might need to cover their face. So the way they articulate it is really problematic and potentially discriminatory."

The U.S. employment law landscape has been transformed with the implementation of the Pregnant Workers Fairness Act (PWFA). This law, endorsed by President Joe Biden, extends protections to employees dealing with pregnancy, childbirth, or related conditions. The U.S. Equal Employment Opportunity Commission (EEOC) will now begin processing discrimination charges under this fresh statute, opening a new chapter in labor rights.

Legal Provisions:

The PWFA mandates employers to provide reasonable accommodations for pregnancy, childbirth, or related conditions, except when these adjustments impose an undue hardship on the employer. The PWFA thus augments protections under Title VII of the Civil Rights Act. As EEOC Chair Charlotte A. Burrows stated, the PWFA aids workers in securing their entitlements under this new law.

EEOC's Role and Resources:

The EEOC has introduced educational materials to aid workers and employers in understanding the new law. These include a "Know Your Rights" video series, a revised poster, and a guide to the PWFA. The EEOC is also set to accept discrimination charges under PWFA.

The Bottom Line:

The Pregnant Workers Fairness Act fills a gap in employment rights, fostering a more equitable and inclusive working environment. It is a substantial step towards legally addressing the unique challenges faced by pregnant workers, fostering a fair workspace for all.

If you are a victim, you can bring a discrimination case and recovery monetary damages for your lost pay and emotional distress. You have rights. 

The state's taxpayer whistleblower law was recently expanded by Part DD of S4009C, the state budget, and employers should be nervous because now employees can bring lawsuits on suspicion that their employer evaded their tax obligations. 

The whistleblower law, which is formally called The New York False Claims Act (FCA), allows whistleblowers to bring suits against individuals and entities that knowingly submit deceptive claims to the government, including tax fraud. Initially, claimants were limited to individuals with specific knowledge of the taxpayer's preparation process. However, as amended under S4009C, New York State Finance Law Art. 13 §189-h now enables claims against individuals or entities who deliberately evade tax obligations where claims can be advanced solely on suspicions. 

Given that the FCA allows whistleblowers to recover monetary damages of 30 percent of the government's recovery and that the government can recover three times the loss sustained by the state, it bodes to reason that disgruntled employees are quite incentivized to bring claims in selling out their employers. 

The amendment permits claims on tax concealments from May 3, 2020, but does not allow raising retroactive claims in pending cases. Individuals and business entities should immediately reassess their filing obligations and be clear on which employees have access to their records. 

As amended, the FCA is very likely to shake up the dynamic between bosses and employees. With enticing financial incentives on the line for successful whistleblowing claims, things are about to get interesting. 

The New York City Pay Transparency Law is, as of November 1, 2022, in effect. As previously reported in our Blog on March 29, 2022 and May 6, 2022, the law requires all employers, with 4 or more employees, to include a "good faith" salary range in all advertisements for a job, promotion or transfer opportunity that is to be performed - in whole or in part - in NYC.

The following are additional requirements/clarifications of the Law:

• The Law covers full-time/part-time positions, interns, domestic workers and independent contractors.
• "Advertisements" include all written descriptions of an available job, promotion or transfer opportunity publicized to a pool of potential applicants including internal postings.
• The salary range must include both a minimum and a maximum salary (if employer has no flexibility, the minimum and maximum can be identical). 
• The stated amounts should be the annual salary or hourly rate. Other forms of compensation (e.g. bonuses, tips, commissions, insurance, over time pay, etc.) do not need to be included.
• The New York City Commission on Human Rights ("Commission") will investigate compliance with the new law (on its own and/or in response to complaints). 
• Potential applicants can file claims with the Commission or can file a lawsuit in court.
• The Commission will not assess a penalty for the first violation of the Law if cured within 30 days. However, the Commission may assess penalties of up to $250,000 for the first uncured violation and all subsequent violations. 

 Attorney Andrew Lieb discusses employment discrimination in the quiet workplace environment including quiet quitting and quiet firing on Newsy.