Employment law for business owners

Employment law for business owners

• 1.
  The Law Firmof Ekaterina Mouratova, PLLC 154 Grand Street New York, NY 10013 Tel.: (212) 203-2406 Fax: (212) 279-9743 Email: [email protected] www.mouratovalawfirm.com Business Immigration Intellectual Property Real Estate
• 2.
  Employment Law forBusiness Owners © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 3.
  “Teamwork is theability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.” - Andrew Carnegie
• 4.
  Employment “At-Will” • InNew York, employment is generally resumed to be “at-will” • An employer has the right to discharge an employee at any time for any reason, or no reason at all • An employees is equally free to resign at any time without being required to explain his/her decision • Exception to “at-will” doctrine – when parties entered into a written employment agreement, proving for a specific term of employment and/or that termination can be only for cause • Other writings that can change “at-will” status include codes of conduct and employee handbook provisions • When examining whether an employment was “at-will” or not, courts examine the entire course of conduct between the parties. So employers must be careful what they promise to employees in pre- hiring negotiations © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 5.
  Claims for UnlawfulTermination • “At-will” employment does not protect employers against claims for unlawful termination • Discrimination – an employer cannot terminate or harass an employee based on race, creed, nationality, age, disability, gender, sexual orientation, or marital status • Retaliation - an employer cannot terminate or harass an employee based on employee’s opposition to a discriminatory practice, or participation in a discriminatory investigation • Wrongful termination in violation of other public policies - an employer cannot terminate or harass an employee in violation of a public policy if such public policy is embodied in a statute or constitutional provision (e.g., cannot terminate if an employee reports wrongful conduct to authorities, if an employee is absent due to jury service, takes medical leave, etc.) © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 6.
  Other Major EmploymentLaws • Equal Pay Act – requires that men and women receive “equal pay for equal work”. However, an employer may establish a pay system based on seniority, merit, quantity and quality of production, or any factor other than sex • The Family and Medical Leave Act – provides of up to 12 weeks of unpaid leave during any 12-month period for certain medical and family situations of an eligible employee. “Eligible employee” is the one who have worked for an employer for a total of 12 month and have worked not less than 1,250 hours during the previous 12 months. This act applies to employers with 50 or more employees • The Fair Labor Standards Act – prescribes standards for minimum wage and overtime pay • Taxation - employers must withhold income tax and pay unemployment insurance, worker’s compensation insurance, Medicare, Social Security and payroll taxes for every employee they have • Work Place Safety Requirements – an employer must maintain a work place safe for its employees to be present there and perform their functions © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 7.
  Independent Contractors vs. Employees • Properly classified independent contractors are not employees and therefore, are not covered by the various federal and state employment laws • Independent contractors are paid what they bargained for. They are not entitled to minimum wages and overtime pay as employees are • Independent contractors are not entitled to take medical or family leave with the presumption that an employer will continue professional relationship with them once their circumstances have changed as a case may be with employees • An employer is not required to withhold income tax or pay unemployment insurance, worker’s compensation insurance, Medicare, Social Security and payroll taxes for independent contractors • Relationships between an employer and independent contractor are temporary in nature and are terminated once job is completed. There are much less chances that an employer may face claims from independent contractor for unlawful termination based on discrimination, retaliation, or in violation of other public policies • Employers are vicariously liable for the actions of their employees committed within the scope of the employment. In case of independent contractors, employers do not control the manner of the job performance, accordingly they are not liable for the independent contractor’s misconduct unless the independent contractor was engaged in an “ultra hazardous activity” (that is most likely to cause damages to third-parties if proper precautions were not taken) © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 8.
  Independent Contractors • Sometimesit is more beneficial for employers to utilize independent contractors rather than employees to cut labor costs without sacrificing productivity • But improper classification of workers is risky and can lead to administrative audits, assessments, fines, penalties and civil litigation • An employer can be liable for back wages, overtime pay and the taxes it should have paid • Courts and IRS have certain guidelines in determining whether a worker is an employee or an independent contractor regardless how an employer presents him/her • Due to employers’ misclassifications of their workers as independent contractors the Federal government and state agencies lost billions of dollars in tax revenue in the past years. Now they have renewed interest in collecting payroll taxes and enforcing employment laws against companies that improperly classify their workers. • The Federal and state agencies set much bigger budgets than before to increase audits of the companies © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 9.
  Classifying Workers • Thereis no bright line test to determine if an independent contractor relationship exists. The combination of all aspects should be evaluated • Generally, an individual is an employee if the employer controls his/her with respect to the results of the work and the manner and means used to achieve the results • An independent contractor relationship typically exists where an employer may only control or direct the result of the work and not the manner and means by which the work is performed • For example, an employee works from the employer’s space using employer’s technology; an independent contractor organizes his/her working conditions himself/herself and delivers the final product to the employer. The employer does not control the time, place, and methods of independent contractor’s performance © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 10.
  Signs of Employer-Employee Relationship • Employer’s control over individual’s activities (e.g. full-time service, work schedule, meeting attendance, training, permission for absences) • Employer’s control over the time, place, and method of performance • The use of employer’s facilities, equipment and tools • Employer’s payment of an hourly or other regular fee, rather than commissions or per-job fee • Employer-provided fringe benefits • Reimbursement of expenses • Employer’s determination of the rate • Employer’s control over solicitation and billing of customers • The individual’s failure to maintain indicia of an independent business, such as business cards • Employer’s restriction of the individual’s performance of services to others © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 11.
  Independent Contractor Relationship •Independent contractors (ICs) should be allowed entrepreneurial control over the manner and means by which services are performed • ICs should make important business decisions, including whether to hire additional help, what equipment to use, where performs the services, when to service other clients (can have multiple customers) • ICs should be allowed flexible work time on specific projects of limited duration (i.e. a client can set a deadline, but cannot direct the hours, during which an IC must work) • ICs should have the resources to operate as an independent business (e.g. have own office or shop, business cards, websites, their own support personnel and consultants) • ICs should bear the risk of profit and loss • ICs should be compensated for work completed rather than for hours worked • ICs can perform the same services for multiple clients during the same period of time they are working for a particular organization © 2012 The Law Firm of Ekaterina Mouratova, PLLC
• 12.
  The Importance ofWritten Agreements • Two main written documents are Employment / Independent Contractor Agreement and Handbooks • These documents are the first place attorneys turn to when contemplating a claim against an employer • These documents are the first place an employer’s counsel turns to when preparing a defense • An Employment / Independent Contractor Agreement should unambiguously state the terms and conditions of the employment, including the reasons and procedures for its termination • An Employment Agreement should clearly define the scope of the employment (remember, employees as well as independent contractors can bind a company to certain liabilities when they act as company’s agents) • Handbooks should address important policies of the company, including at-will employment, anti-harassment, use of technology, vacation, timekeeping, confidentiality matters, reasons and procedures for disciplinary actions, and many others • Handbooks should be the primary source, to which employees turn with day-to-day questions • These documents should be prepared by a business attorney to ensure that all aspects of the employment relationships are covered and various outcomes are foreseen © 2012 The Law Firm of Ekaterina Mouratova, PLLC