Independent Contractor Status Isn’t Always Clear : Q

Q. I am a home care worker who works for various agencies in my area. One agency has me on its payroll as an employee. It takes care of my withholding, contributes to my Social Security and provides other benefits such as workers’ compensation and unemployment insurance. Another agency treats me as an independent contractor and does not contribute to my Social Security or workers’ compensation.

Both agencies call me with assignments to work in the community with people who have health problems and need home care. Both tell me which days I am to work and what hours. Both agencies also collect from the family members and then turn around and pay me.

Is it legal for one agency to treat me as an independent contractor?

--D.D., Irvine

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A. How an employer classifies its workers--either as employees or independent contractors--can have severe consequences. Employers can be assessed massive penalties, liabilities and possibly even criminal charges for misclassifying workers.

Employees who are misclassified may unnecessarily be liable for increased taxes, lose insurance coverage and incur liabilities to third parties.

Despite these problems, employers continue to misclassify their workers as independent contractors. This may be understandable since the test for an independent contractor is by no means clear. In fact, there are several different types of tests that are used, depending on which government entity or other party is evaluating the employment status. Most states and many government agencies use a six-factor list:

* control

* opportunities for profit or loss depending on a worker’s managerial skill

* investment in facilities or employment of helpers

* need for special skills

* permanent relationship

* integration into employer’s business.

As a home care worker, it appears you should be classified as an employee rather than an independent contractor. It is actually possible for you to be an employee for one agency and an independent contractor for the other, though it does not seem likely. One agency may not have as much control over you, give you as much discretion, require your purchase and use of expensive tools or equipment, insist upon special skills or training, or consider you as integral a part of the business as the other agency.

If you complain to the agency that has perhaps misclassified you as an independent contractor and are terminated, you may have a wrongful-termination case as a whistle-blower. I suggest that you make the request by putting it in writing in a diplomatic manner.

--Don D. Sessions

Employee rights attorney

Universal City

When a Manager Is the ‘Employer’

Q. I am a mid-level human resources manager for a large company. On occasion, I am asked to implement decisions with which I disagree.

For example, I was recently told by my boss to inform an employee that she was not entitled to further family and medical leave because she had used up all of her available leave time. I did not agree with my boss, but felt that I had no choice but to implement her decision.

I wrote the employee a memo telling her that she had to return to work or we would consider her absence a resignation. Could I face any personal liability when implementing personnel decisions like these?

N.N., Los Angeles

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A. It depends how various statutes define “employer,” and how courts interpret those definitions.

The federal Family and Medical Leave Act, for example, defines an employer as “any person who acts, directly or indirectly, in the interests of an employer to any of the employees of such employer.”

But two federal courts have disagreed on whether this means that individual employees can be held liable. One court held that individual managerial-level employees could be sued for violating the act, while another held that they could not.

Even if you are named as an individual defendant in a lawsuit while acting within the course and scope of your employment, however, your employer may be required to indemnify you for any losses you incur and pay the costs of your defense.

--Josephine Staton Tucker

Employment law attorney

Morrison & Foerster

Getting Jobless Benefits and Pension

Q. I was laid off. Because of previous health problems, I was concerned about the cost of medical insurance. As a retiree, I could get health insurance at a low cost.

I was told to sign up for unemployment benefits and come back in a month to retire. Then the Employment Development Department told me I couldn’t collect both a pension and unemployment.

Do I have grounds for an appeal to receive full unemployment benefits? What is the time limit to appeal?

--R.K., Orange

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A. Perhaps. Generally, a terminated employee may recover unemployment benefits so long as the employee was terminated for reasons other than misconduct and is able to work and actively seeks work after his or her termination. In your case, the EDD may have assumed that your receipt of a pension meant that you were not actively seeking work. If that is not true, and you continue to seek work during your retirement, you may be able to appeal the EDD’s decision successfully.

Generally, a determination of the EDD must be appealed within 20 days, but there are grounds for waiving that time limit.

--Michael A. Hood

Employment law attorney

Paul, Hastings, Janofsky & Walker