What Employers Should Know About Retaliation Claims

Retaliation Claims May Include Emotional Distress Damages A precedent has been set in relation to retaliation claims brought against employers. Two courts of appeals, the Sixth and Seventh Circuit Court of Appeals had both ruled that employees have the right to recover for emotional distress damages in retaliation claims brought under the Fair Labor Standards Act (FSLA). The National Law Review reported that a third court, the Fifth Circuit Court of Appeals also delivered the same ruling regarding damages for emotional distress. What Are the Case Details in This Third Ruling? A maintenance man, Santiago Pineda, while working for an apartment complex owned by JTCH Apartments, LLC received discounted rent as part of his compensation for doing apartment maintenance. After Pineda sought unpaid overtime, he and his wife received notice to vacate the apartments with the reason being given that they had failed to pay rent. JTCH at that point was claiming Pineda owed rent for the course of his employment. Pineda sued for damages based on the eviction and demand for back rent. He also entered an appeal regarding the district court’s failure to instruct the jury about his ability to claim damages for emotional distress related to his retaliation claim. The Fifth Court of Appeals ruled that the court was in error when declining to instruct the jury regarding Pineda’s right to damages for emotional distress, and it reversed and remanded the case for trial so the jury could decide on this potential damage. How Could the Ruling About Retaliation Claims Impact Employers? Employers should be aware that employees who also file for emotional distress damages could...

Guidelines for Classifying Workers as Independent Contractors or Employees

Why is worker classification important? If a worker is an employee, you as the employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on the wages paid to the worker. Workers who are independent contractors are responsible for paying their own Social Security and Medicare taxes, which is called self-employment tax. The employer pays half of the employee’s self-employment tax and the employee pays the other half. Independent contractors pay the full amount of self-employment tax themselves. What Factors Determine Whether a Worker is an Independent Contractor or Employee? According to the IRS website, the three main factors that help an employer decide whether a worker is an employee or independent contractor are: Behavioral control Financial control Relationship How Does Behavioral Control Factor into Work Status? The employer has more control over an employee than an independent contractor. Control includes factors such as instructing the worker when and where to do work, specifying what tools to use or where to buy tools. Employees receive detailed instruction and employers may have evaluation systems in place to measure the end result of their work. Also employees often receive job training that specifies procedures and methods to be used. This is true whether the training is periodic or ongoing. How Does Financial Control Affect Work Status? Examples of financial control that would apply to employees are substantial investment in the worker’s equipment, reimbursed expenses, no opportunity for profit or loss, and method of payment, such as a regular wage for hourly, weekly or some other time period payment. Even when the employer supplements pay by commissions, workers...

Misclassifying Workers as Independent Contractors

How Would Your Small Business Fare with the IRS for Worker Status? Did you know that misclassifying workers is one of the top problems that small business owners face? Many small businesses hire independent contractors as part of running their businesses and delivering services or products. It is vital for employers to ensure that they classify workers correctly. What Can Happen as Result of Misclassifying Workers as Independent Contractors? The IRS website explains that misclassified workers can file a Social Security Tax Form 8919. Form 8919 is a request for uncollected Social Security and Medicare taxes due on their compensation. In other words, the employer could owe a considerable amount of compensation to the worker because the worker paid the Social Security and Medicare taxes instead of the employer, due to the fact the worker was misclassified as an independent contractor. What Recourse Do You Have If You Believe the Worker Has Not Been Misclassified? The IRS recognizes the fact that you may have had a reasonable basis for classifying a worker as an independent contractor and not as an employee. Therefore, relief provisions are granted in such cases. However, you must file all the necessary federal information returns to establish your basis for relief. (See section 530 Employment Tax Relief Requirements). What is the Voluntary Classification Settlement Program? The Voluntary Classification Settlement Program (VCSP) offers employers the option of reclassifying workers as employees for future tax periods. It also provides partial relief from federal employment taxes when the employers agree to classify their workers or a class or group of workers as employees. Employers must meet certain eligibility...

Employee Salary Histories

Can Employers Ask Employees About their Salary History? On May 4, 2017, the New York City Council passed a bill that limited what an employer can ask job candidates about their salary history, compensation history and other past benefits when interviewing them for a job. The law went into effect on October 31, 2017. The National Law Review explains that new law was part of the New York City Human Rights Law. What this means for employers is that violations are subject to compensatory damages, which could include back pay, front pay, punitive damages, attorneys’ fees, emotional distress, etc. What was the purpose of passing the law? The law had the purpose of preventing employers from using a job applicant’s past salary history to determine compensation. The employer cannot ask the job applicant about previous salary history for a current or prior wages, about benefits or other job compensation they have received. It is also unlawful for an employer to ask the previous employer what the individual was being paid or to ask about salary history. The employer also is prohibited from searching public records to obtain a job candidate’s salary history. When the job candidates volunteer their salary history without any prompting, the employer can legally verify the information with the previous employer and use the salary history in determining the current salary. What can an employer ask? Employers can ask about the job candidate’s previous production at the job, such as how much revenue or sales they brought in or about other production statistics related to their work. Employers can inform job candidates in writing or verbally...

More About Employee Wage Deductions

As an employer, have you ever wondered if a wage deduction you made was legal? New York Labor Law establishes what is legal and what is not for wage deductions. If you have questions, it is always wise to seek legal counsel from an experienced employment law defense attorney. The NY legislature passed an amendment to NY Labor Law 193 Deductions from Wages in October 2015. The amendment went into effect on November 6, 2015 and expires on November 6, 2018, unless the legislature renews it. Two main features of the amendment are allowing employers to deduct for over payments and salary advances. Overpayments The amendment permits employers to make wage deductions for accidental overpayments. Overpayments refer to payments made due to a mathematical or clerical error by the employer. Note that the employer must provide the employee with a notice of the overpayment deduction prior to commencing the recovery. Also, regulations govern how the deduction is made based on the size of overpayment along with the timing, frequency, duration and method of recovery. In addition, the employer must provide a procedure for the employee to dispute overpayment amounts and the procedure for recovering it. Salary Advances The employer must abide by rules the Commissioner has established for the timing, frequency, duration and method of deduction of a salary advance. There are also limitations on the periodic amount of repayment of the advance. Employers must provide employees with a notice before commencing repayment and also provide a procedure for the employee to dispute the amount or to seek delay of repayment. In addition to wage advances and overpayments, some...

Restaurant Industry: FAQs about Tips

Owners in the restaurant industry often have questions about tips. As a restaurant owner, it’s important to know your rights and responsibilities regarding tips so you can avoid disputes with employees and not put your business at risk. The Fair Labor Standards Act (FSLA), which is federal law, and the New York Labor Law (state law) determine how restaurant owners must deal with tips. In the past, people paid restaurant bills with cash, but today credit cards are a popular and common form of payment. How must a restaurant owner deal with credit card tips? When tips are received by credit card, the owner must pay the employee the tip amount due no later than the regularly scheduled payday. Credit card companies charge a fee to the merchant for use of credit cards, and the fee is a percentage of the total amount paid on the card. The employer deducts the pro-rated share of the credit card company charge from the tip when calculating the employee’s tip. How must an employee’s wage statement reflect wages and tips? The wage statement must indicate the amount being paid to the employee in wages and the amount paid in tips. How should employers handle cash tips? Employers can allow employees to leave their cash tips with the employer during a particular pay period. However, doing so must be voluntary and up to the employee. Employers can hold tips as a service to the employee, and employers would indicate the amount in tips and wages in the wage statement. Employers cannot make their service of keeping cash tips as a mandatory hiring condition...