Author: TSA Press

Calling All Legal Ops Leaders: The 2019 LDO Survey Is Live

Calling All Legal Ops Leaders: The 2019 LDO Survey Is Live

LDO and Above the Law

—ADVERTISEMENT—

Calling All Legal Ops Leaders: The 2019 LDO Survey Is Live

Calling All Legal Ops Leaders: The 2019 LDO Survey Is Live

LDO and Above the Law

New Orleans rightfully sees itself as a bit of a carveout from the rest of the country — a place where the rules are just a bit different than one might expect in other major markets. It’s also a city that treats showing breasts in the center of downtown as perfectly normal behavior for a religious holiday.

Still, would a law firm event with a burlesque show qualify as professionally appropriate, even in New Orleans?

The Charbonnet Law Firm in New Orleans has an event coming up with the following invitation which is… something.

Why the boob-forward flyer? Because Trixie Minx is a noted burlesque performer in New Orleans with a striptease/comedy routine that’s a throwback to a Lili von Shtüpp kind of thing. Granted, the Trixie Minx entertainment empire goes beyond striptease into variety shows, tarot readings, and stilt walkers. But given the flyer, employees would be within their rights to assume this is going to be a more clothing-optional show.

Clearly a strip club routine would be inappropriate for a law firm event regardless of locale. But where does a burlesque/showgirl/comedy set fit in? For some reason people treat Vegas shows as cultural events despite offering basically the same state of undress and those lack any link to a century old artistic tradition in the area.

But still, there are all sorts of events that people go to that they don’t want to attend with their bosses and this feels like it should be on that list. Even if no-bra Barbie up there represents a hallmark of mainstream entertainment in the area, a law firm probably should keep itself well clear of this scene.

Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

A new California law that reclassifies some independent contractors as employees, requiring they be offered a range of benefits and worker protections, will likely expand health insurance coverage in the state, health policy experts say.

But it might end up harming some workers.

That’s in part because the law, which takes effect Jan. 1, could cut two ways. While inducing many employers to extend health insurance to newly reclassified employees, it might prompt others to shift some workers from full-time to part-time status to avoid offering them health coverage, or — in the case of some small firms — to drop such benefits altogether.

Some companies might trim their workforce to limit cost increases. Benefits typically account for about 30 percent of total employee compensation costs, and health insurance is the largest component of that.

“I think we will see more people classified as employees over time,” said Ken Jacobs, chair of the Center for Labor Research at the University of California-Berkeley. “And that is very likely to expand the number who are offered and take coverage. But the situation is definitely fluid.”

Adding to the fluidity: Some large employers are contesting the new law. Uber, the ride-sharing app company, has said the law does not apply to its drivers and indicated it is prepared to defend its position in court. The company has joined competitor Lyft in broaching the idea of a 2020 ballot initiative to challenge the law.

California Gov. Gavin Newsom has indicated a willingness to negotiate changes and exemptions with those companies and others.

Uber did not respond to requests for comment, and Lyft declined to comment.

In addition to shared-ride drivers, the law affects construction workers, custodians and truck drivers, among others.

Some independent contractors prefer the flexibility that comes with setting their own hours, but others are eagerly eyeing health coverage.

Steve Gregg, a resident of Antioch, Calif., is among them. Gregg, 51, is uninsured and makes too much to qualify for Medi-Cal, the state’s version of the Medicaid program. He hopes to be reclassified as an Uber employee in 2020, primarily to gain access to health insurance.

“The only medical care I can really afford right now is to use an online doctor for my blood pressure medicine,” said Gregg, who typically logs 50 hours or more a week driving for Uber in the Bay Area.

Under the Affordable Care Act, companies with at least 50 full-time employees must pay a penalty if they don’t offer health insurance to those who work 30 hours or more a week.

California’s new “gig economy” law requires employers to treat independent contractors as regular employees if the work they perform is central to the core mission of the company and they operate under the company’s direction.

Several kinds of workers are exempt from the law’s provisions, however, including insurance and real estate agents, investment advisers, doctors and nurses, direct sales workers and commercial fishermen.

Jacobs said other states will closely watch what happens in California, given that some tech companies hire large numbers of independent contractors.

New Jersey, Massachusetts and Connecticut have similar labor laws on the books. Lawmakers in Oregon and Washington state are eyeing legislation akin to California’s.

Independent contractors in the Golden State are nearly twice as likely to be uninsured as regular employees, according to an analysis by UC-Berkeley’s Center for Labor Research, known as the Labor Center. From 2014 to 2016, just under 70 percent of workers classified as employees had employer-sponsored health insurance, compared with 32 percent of independent contractors, the study shows.

An estimated 1.6 million of the state’s 19.4 million workers are full-time independent contractors, according to another analysis by the Labor Center. It is unclear precisely how many contractors are “misclassified,” but sponsors of the new law, led by Assemblywoman Lorena Gonzalez (D-San Diego), put the number at around 1 million.

Whatever the exact number, employers who rely on contract workers will need to make complex health insurance decisions.

A company whose contract workers average 35 to 40 hours a week, for example, could reclassify them as employees for the purpose of complying with the new law but try to limit their weekly hours to fewer than 29, thus avoiding the ACA coverage requirement, said Dylan Roby, an associate professor of health policy and management at the University of Maryland and an adjunct associate professor at UCLA.

A large proportion of small companies that are not required by the ACA to cover their employees do so anyway, and the ones that hire independent contractors will also face hard choices.

“If they have to expand that to reclassified employees, the cost could be substantial,” said Christen Linke Young, a health insurance researcher at the Brookings Institution in Washington, D.C.

A small firm with a skilled and relatively high-wage workforce might choose to absorb the cost of expanding coverage to reclassified workers, Young said, because those workers might not qualify for subsidies to buy health insurance on their own through Covered California, the state’s ACA marketplace. Offering insurance is also a retention tool.

Other small companies, however, could choose to drop coverage altogether rather than pay the tab for newly reclassified workers.

And some might be able to place the new employees in a separate category and offer them no health benefits, or less generous ones than the existing employees get. But under federal law, an employer can do that only if the new employees are doing a different kind of work than the current ones, Young said.

Companies of all sizes can wait a year before offering new employees coverage, to establish what their average weekly hours are. That buys firms with 50 or more employees time to decide whether the reclassified workers qualify for health benefits under the ACA.

The uncertainty about how the new law will play out is sowing confusion among many independent contractors.

Vanessa Bain, a resident of Menlo Park, Calif., who works full time as a contract worker for Instacart — a same-day delivery service for groceries — worries about what her employer will do.

Bain and her family are enrolled in Medi-Cal, California’s version of the Medicaid program for people with low incomes. But she would rather get insurance through Instacart.

“What will they offer us?” Bain, 33, wonders. “If the premiums are too high or the coverage crappy, we may be better off buying it on our own through Covered California. We’ll have to see.”

Photo: Mykola Velychko, Getty Images

This KHN story first published on California Healthline, a service of the California Health Care Foundation.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

The Harare City Council approved the signing of the deals on October 7, 2019.

Our call for transparency and accountability comes in the wake of previous deals worth millions of dollars having faied to improve the water situation in Harare due to misuse of funds.

The issue of the US$144 Million Chinese loan is a case in point following revelations of misuse of the first US$72 million that had been released to council. What followed after the release of the US$72 Million was a blame game between officials and consequently, the remaining USD$72 Million was withheld.

And now we have been told that the President, Emmerson Mnangagwa is making frantic efforts for the release of the other US$72 Million.

On the latest US$868 Million water and wastewater deals, we implore the government, in this case as the guarantor of the deals to comply with section 300 (3) of the Constitution of Zimbabwe which states that, “Within sixty days after the Government has concluded a loan agreement or guarantee, the Minister responsible for finance must cause its terms to be published in the Gazette.”

CHRA expects the Minister of Finance to follow the law in the administration of these loans by giving updates to the Parliament of Zimbabwe on the performance of these loans in line with section 300 (4) (a) (ii) of the Constitution.

In line with our efforts to ensure that the dire water situation in Harare is addressed we will keep an eye on any deliberate circumventing of accountability mechanisms.

We further call upon the City of Harare to be accountable and disclose all the information and conditions related to the loan to the public.

This is line with Section 62 (1) of the Constitution states: “Every Zimbabwean citizen or permanent resident, including juristic persons and the Zimbabwean media, has the right of access to any information held by the State or by any institution or agency of government at every level, in so far as the information is required in the interests of public accountability.”

As CHRA, we will also push for the establishment of a citizen monitoring taskforce before any disbursement of the loans.

Any abuse of water funds as witnessed in the past  is a serious threat to water security.

We have noted that in the case of the recent US$868 Million loans, land will be used as security and we sincerrely hope that this is not another way of selling Harare.

CHRA will be mobilising grassroots communities, CSOs, and Residents Associations in demanding transparency and accountability on the water deals.

We would also like to urge parliamentarians to defend the Constitution by reclaiming their role in scrutinising and approving loans acquired by the government.

Post published in: Featured

Last week, I wrote a column stating that increased use of gig economy jobs will further blur the line between who is an employee and who is an independent contractor.

The blur has created some unexpected results. For example, you might be surprised to learn that professional athletes are employees of either their team or their league (MLB, NFL, NBA, etc.). You would think that with their endorsement contracts, and possible side ventures, they would want to be independent contractors and take advantage of the more generous tax write-offs. On the other hand, if they were to get injured during a game, they would prefer that their employer foot the medical bills and qualify for disability benefits.

Today, I want to look at why it is hard to draw the line between who is an employee and an independent contractor.

Different Rules For Determining Employee/Independent Contractor Status

One reason for the confusion is because different agencies use different tests, mainly because they have different goals. For example, the U.S. Department of Labor, which enforces the Fair Labor Standards Act, wants to ensure that workers have access to minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. So to determine employee status, the Department of Labor uses the “economic reality” test. This test looks at whether the worker follows the usual path of an employee and is economically dependent on the business which he or she serves. If the worker is economically dependent on the business, the worker should be classified as an employee.

The IRS on the other hand, wants employers to pay federal payroll and unemployment taxes for every employee they hire. They use the common law rules to determine employee status. Generally, this test looks at three key factors: 1) Whether the company controls or has the right to control how the workers perform their duties; 2) Whether the company controls how the employee is paid, whether expenses are reimbursed, or whether the employer provides the necessary tools for the job; and 3) Whether there are written contracts or employee type benefits (i.e., pension plan, insurance, vacation pay, etc.) and whether the work performed is a key aspect of the business. In addition, the IRS has additional categories for specific professions such as statutory employees and statutory nonemployees.

Finally, state labor and tax agencies have their own tests to determine employee status such as California’s recently adopted ABC test.

Most employers generally want to classify workers as independent contractors to cut costs. But to do so, they will have to comply with all kinds of federal and state laws.

Employment Classification Audits Are Usually Decided Arbitrarily

Thankfully, the factors used to determine employee/independent contractor status under both federal tests are mostly similar. But when making the determination, agency rules and court rulings generally state that the examiner must look at all of the facts and circumstances of each case. Depending on the situation, one factor may be more relevant than another, or all factors should be weighed equally.

So if a business is selected for an employee classification audit, the auditor makes their own decision using the factors as a guide rather than a rule. If the auditor decides unfavorably on a case, it will proceed to appeal or litigation where a new examiner, an appeals officer, or a judge will make a final decision. Even then, cases can be decided inconsistently and generally there are few published court or agency decisions to provide guidance, especially where a worker is found to be an independent contractor.

This means that it will be difficult to advise clients on close cases and counsel cannot guarantee that the people they hire will pass an employee classification audit. Even if the workers meet a majority of the factors that shows that they are independent contractors, an auditor may decide otherwise based on his or her interpretation of the rules and application of the factors. This can mean that it can take months or even years before a case is concluded.

Politics And Innovation Can Change The Game

As I mentioned in my previous column, I use a local transportation service if I need to get somewhere and I am too lazy to drive. The owner networked and advertised for customers. Or he may just drive around an airport or a bar in order to pick up a customer who needed a ride home. In this case, most would agree that he is an independent contractor since he sets his schedule and finds his own customers. But services like Uber provide the customers to the driver so long as he turned on the app and reported for duty. Would that automatically make him an employee? He might be an employee under the ABC test, but not under the common law test, according to an opinion from the general counsel of the National Labor Relations Board.

When California was in the process of passing AB 5, the legislation that would codify the ABC rule to determine employee/independent contractor status, there were massive lobbying efforts on both sides. Business groups advocated maintaining independent contractor status, particularly for certain professions. Employment advocate groups asked for employee protections and benefits to cover a larger class of workers as they have less money to pay for rent, food and health care.

Even though the ABC test is California law, it is expected to be heavily litigated as it can cripple small businesses that are used to hiring contract workers for piecemeal work.

In addition, Uber, Lyft, and Doordash have announced that they will launch a voter initiative to exempt their industries from AB 5. They are likely to argue that the bill will increase costs to consumers thus creating an “access to transportation” problem in the state. If the initiative passes, it might lead the way to laws allowing self-driven cars controlled by artificial intelligence.

As new technology changes how people work, traditional job classifications may change, especially if there is enough political will.

Determining the line that separates an employee from an independent contractor is difficult due to different rules being enforced differently. This creates inconsistencies and uncertainty. This can be particularly harmful for small businesses that want to run simple operations and allow their workers to be flexible with their time. While new laws like AB 5 may provide simpler solutions, the devil is in the details. And the details will be fleshed out in litigation as businesses and their lawyers come to terms with how the ABC test will apply to their workers.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

If you’ve been paying attention to Biglaw trends, this is not a surprise. The growing trend of nonequity or income partners has long been seen as a kind of legal career limbo that lets firms tick off diversity boxes while not truly diversifying the top levels of the partnership. And now we’ve got some hard numbers that correspond to the trend many have seen.

American Lawyer has looked at five years worth of data at 148 firms that have this increasingly popular two-tiered structure. And that found that minority lawyers are being “promoted” to the nonequity ranks at triple the rate of white lawyers. Yikes.

That’s right, between 2014 and 2018, minority nonequity partners grew 34 percent compared with 10 percent growth for white nonequity partners. If you were a minority attorney you were also more likely to become a nonequity partner — 54 percent of minority partners were denied equity status. While white attorneys fared differently — they were more likely to become equity partners with 58 percent of them moving to the equity ranks.

While it is true the nonequity ranks at firms are growing in general — what better way to boost those profits per equity partner numbers, after all? The data shows a disturbing trend of minority lawyers being disproportionally impacted by the profit-driving trend. And, to be clear, it matters who is getting the nod to join the highest levels of law firms:

“Equity partners are the ones that have the power at a law firm. Who’s being hired, who’s getting choice work. They’re the ones that control the politics of the firm,” said Michelle Fang, chief legal officer at alternative rental car company Turo, who wrote an open letter in January signed by more than 200 general counsel demanding increased diversity in the legal profession.

As you might imagine, some firms were better than others when it comes to making minorities equity partner. American Lawyer specifically called out a handful of Am Law 100 firms for their “notable discrepancies in their minority and white nonequity partner representation,” which are: Proskauer Rose; Latham & Watkins; McDermott Will & Emery; Crowell & Moring; Pillsbury Winthrop Shaw; Quinn Emanuel Urquhart & Sullivan; and Duane Morris.

Duane Morris’s diversity and inclusion officer, Joe West, blamed the firm’s lateral strategy as part of their issue:

“We’ve grown organically by following the business and by adding groups in subject matter and geographic areas that make sense for our strategy,” he said. “You have much less control, and that act alone could skew the numbers.”

Crowell & Moring’s management committee chair Philip Inglima pointed to larger systemic changes that need to happen to more meaningfully diversity leadership at the firm:

Both Duane Morris and Crowell & Moring say they are making systemic changes to try to get more minority lawyers on the equity track—overhauling their assignment systems to reduce bias and working with outside organizations such as Diversity Lab, for example.

“That kind of change is needed to overcome the effects of multiple generations of lawyers at firms like ours which had few diverse partners,” he said.

It’s certainly true that Biglaw has a long way to go.

Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).