1. Chapter 20: Agency

2. TRAP #1: TREATING AN EMPLOYEE AS AN INDEPENDENT CONTRACTOR Thousands of businesses make the mistake of treating an employee as an independent contractor so they can save money on taxes and benefit coverage. Some “lay off” employees only to hire them back as independent contractors, then expect not to have responsibility for payroll deductions, insurance benefits, or third-party liability claims. Yet the risks associated with this approach are often not worth it. 2

3. 3 Is person an employee or independent contractor. Lots of new issues with temp services Agency Relationships

4. 4 Why does it make a difference Agency Relationships

5. Why it is imp if employee or independent contract? Discrimination Laws Workers compensation Torts FLSA - overtime laws Taxes Unions Unemployment 5

6. 6 Liability for Agent’s Negligence: Applies only to Employer-Employee relationships. Doctrine of Respondeat Superior: Employer is vicariously liable for Employee’s negligent torts committed within the Agent’s “course and scope of employment.”

7. Walmart is stepping up... saying it will pay expenses for the victims in the crash that left Tracy Morgan in critical condition Saturday morning if its driver is found at fault... this according to their CEO. Simon says, "We can't change what happened, but we will do what's right for the family of the victim and the survivors in the days and weeks ahead." Prosecutors have already charged the driver, Kevin Roper, with death by auto... among other charges. Why is Wal-Mart liable? What if driver was an independent contractor 7

8. 8 Factors: EE v. IC YesNoIs there a great degree of skill required? YesNoIs the worker paid at the end of the job? NoYesDoes Employer control hours worked? NoYesDoes Employer provide the tools? NoYesIs the work usually done under Employer’s supervision? NoYesDoes the Employer exercise a great degree of control over the details of the work? I.C. Emp. Factors Courts Consider:

9. Fed Ex Thirty-one lawsuits have been filed against FedEx Ground and/or FedEx Home. The lawsuits challenge FedEx's classification of pick up and delivery drivers as independent contractors. FedEx requires drivers to purchase or lease their trucks and pay for all operating expenses. Drivers presented documents and testimony that demonstrated constant micro-management of drivers by FedEx. FedEx alleged that they only offers “suggestions and best practices” but does not dictate delivery requirements.

10. Fed Ex The Internal Revenue Service has also tentatively concluded that the contractors at FedEx Ground should be reclassified as employees and that the company owes more than $319 million in taxes and penalties for 2002. 10

11. 141 drivers classified as independent contractors by FedEx Ground will receive $5.8 million in settlement of their misclassification lawsuit brought under federal and Maine wage and hour laws. Scovil v. FedEx Ground Package System, Inc., d/b/a FedEx Home Delivery, Case No. 1:10-cv-00515-DBH (D. Maine, March 14, 2014). The federal court lawsuit in Maine alleged that the FedEx Ground improperly denied the drivers' overtime pay for hours worked over 40 in a workweek, improperly made deductions from the drivers' pay, and improperly required the drivers to pay for their own expenses. 11

12. Another Company - Lowe’s The plaintiffs in this case are home improvement contractors. They allege that Lowe's Home Centers offered its customers the opportunity to hire contractors to install products and services purchased from Lowe's. 12

13. The complaint, originally filed in state court, alleged that Lowe's had the right to control, and did control, all aspects of installation jobs by, among other things, requiring that the installers: identify themselves as "installers for Lowe's" or "I work for Lowe's"; wear Lowe's hats and shirts at work sites; use signs stating "Lowe's Installation"; attend training by Lowe's; and comply with Lowe's production requirements; 13

14. The complaint also alleged: 1. That Lowe's Production Office managed each installation project; 2. Lowe's set the fees to be earned by each home improvement contractor; 3. Imposed a non-compete covenant on installers; 4. Marketed the contractors' services on its website on an "Installation" page that provided "Let Us Do The Installation For You" with our "trained installers," who services were "guaranteed by Lowe's warranty." 14

15. Lowe’s – yes or no? 15

16. The installers alleged that Lowe's failed to provide them with benefits that were available to employees, including comprehensive group medical insurance, prescription drug coverage, vision care, group life insurance, paid sick leave, paid vacation, tuition reimbursement, employee discounts for purchases, short and long term disability coverage, a stock purchase plan, and a matching 401(k) savings plan. 16

17. On Friday, May 23, 2014, Lowe's Home Centers agreed to settle a class action brought by its home improvement contractors who allege that they were misclassified as independent contractors instead of employees. The maximum settlement amount, depending on the number of contractors who file claims, is $6,500,000, 17

18. IC or Employee Jane works for you delivering flowers. You just give her the flowers and tell her where to go and that she must have the flowers delivered by 2pm. Jane uses her own car – can set her route, her hours and gets paid per delivery. Is Jane an IC or Employee? 18

19. 19 Liability For Agent’s Torts and Crimes 1. Is Jane IC or Employee 2. If Jane is an Employee Was Jane in the scope and course of employment.

20. Jane from previous slide – runs a red light and hits Joe. 1. What claim does Jane have 2. What claim does Joe have 20

21. Joe’s claim – who is it against? –1. Is Jane an employee or IC? –2. If Jane is an employee – was she in the scope and course of her employment –Was she delivering flowers or shopping? 21

22. 22 Employer Liability Negligent hiring – Discuss in Ch 21 –1. Was Jane IC or EE –2. If EE was Jane in the course and scope

23. Joe is paid by the job which is delivering products to customers. Joe controls his own hours so long as every delivery is made by 3pm. The employer pays Joe $50 for each delivery. While delivering the product, Joe runs a red light and hits Alice. Is Joe or his employer responsible.

24. Joe is an employee and he runs a red light hitting Alice. Discuss the claims that Joe has and Alice has.