Knowledge Exchange

Robert G. Brody

Call Me When… You have an employee-related issue including court and agency cases, governmental personnel-related audits, or you need counsel on addressing any employee-related issue.

Southern States Fight Back Against Union Wins in South

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
1 day ago

For five decades, the southern United States has been an attractive location for automakers to open plants thanks to generous tax breaks and cheaper, non-union labor. However, after decades of failing to unionize automakers in the South, the United Auto Workers dealt a serious blow to that model by winning a landslide union victory at Volkswagen. In an effort to fight back, three southern states have gotten creative: they passed laws barring companies from receiving state grants, loans and tax incentives if the company voluntarily recognizes a union or voluntarily provides unions with employee information. The laws also allow the government to claw back incentive payments after they were made. While these laws are very similar, each law has unique nuances. If you are in an impacted state, you should seek local counsel. In 2023, Tennessee was the first state to pass such a law. This year, Georgia and Alabama followed suit. So why this push? In 2023, the American Legislative Exchange Council (“ALEC”), a nonprofit organization of conservative state legislators and private sector representatives who draft and share model legislation for distribution among state governments, adopted Tennessee’s law as model legislation. In fact, the primary sponsor of Tennessee’s bill was recognized as an ALEC Policy Champion in March 2023. ALEC’s push comes as voluntary recognition of unions gains popularity as an alternative to fighting unions. We recently saw this with the high-profile Ben & Jerry’s voluntary recognition. Will this Southern strategy work to push back against growing union successes? Time will tell. Brody and Associates regularly advises its clients on all labor management issues, including union-related matters, and provides union-free training.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.  

Jul 25, 2024
Tri-State
Business Value Growth

The First Amendment Prevails: Florida’s Stop WOKE Act Unconstitutional

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
4 weeks ago

In March 2022, Florida enacted the politically charged Individual Freedom Act, informally known as the STOP WOKE (Wrongs to Our Kids and Employees) Act. Less than two years later, the U.S. Court of Appeals of the Eleventh Circuit blocked the enforcement of the Act on the grounds it violates employers’ right to free speech. This decision directly impacts employers in the Eleventh Circuit and will have a ripple effect on employers nationally.   How did the Individual Freedom Act (Stop WOKE Act) affect employers? The Act attempted to prevent employers from mandating training or meetings for employees which “promote” a “certain set of beliefs” the state “found offensive” and discriminatory. There are eight prohibited beliefs each relating to race, color, sex, and national origin. According to the Act, employers must not teach the following: Members of one race, color, sex, or national origin are morally superior to members of another race, color, sex, or national origin. An individual, by virtue of his or her race, color, sex, or national origin, is inherently racist, sexist, or oppressive, whether consciously or unconsciously. An individual’s moral character or status as either privileged or oppressed is determined by his or her race, color, sex, or national origin. Members of one race, color, sex, or national origin cannot and should not attempt to treat others without respect due to race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, bears responsibility for, or should be discriminated against or receive adverse treatment because of, actions committed in the past by other members of the same race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, should be discriminated against or receive adverse treatment to achieve diversity, equity, or inclusion. An individual, by virtue of his or her race, color, sex, or national origin, bears personal responsibility for and must feel guilt, anguish, or other forms of psychological distress because of actions, in which the individual played no part, and were committed in the past by other members of the same race, color, sex, or national origin. Such virtues as merit, excellence, hard work, fairness, neutrality, objectivity, and racial colorblindness are racist or sexist, or were created by members of a particular race, color, sex, or national origin to oppress members of another race, color, sex, or national origin. Employers still had the ability to mandate employees attend sessions that either refute these concepts or present them in an “objective manner without endorsement.” This dictates how an employer deals with its employees and is particularly limiting in how employers address discrimination training. Employers who failed to adhere to the law were liable for “serious financial penalties—back pay, compensatory damages, and up to $100,000 in punitive damages, plus attorney’s fees—on top of injunctive relief.”   The Ruling – Honeyfund.com Inc. v. Governor [2024] In March 2024, the U.S. Court of Appeals of the Eleventh Circuit served an injunction preventing enforcement of the Act. Despite the state insisting the Act banned conduct rather than speech, the court ruled the Act unlawfully violated the First Amendment’s right of free speech by barring speech based on its content and penalizing certain viewpoints. While certain categories of speech such as “obscenity, fighting words, incitement, and the like” are traditionally unprotected, the court pointed out that “new categories of unprotected speech may not be added to the list by a legislature that concludes certain speech is too harmful to be tolerated.” Florida is keen to appeal against the decision.   What does this mean for employers? Regardless of one’s opinions on the matter, this can be viewed positively from an employer’s standpoint. Employers in the private sector can control speech in the workplace, and this ruling confirms their autonomy will continue. Whether or not the rest of the country will follow suit remains to be seen. This case, in tandem with the US Supreme Court’s ruling to ban race based affirmative action, signals today’s intense political climate is likely to continue to impact how employer diversity, equity and inclusion (DEI) initiatives are approached. Employers should continue to review their DEI initiatives, ensuring they are in line with the latest precedents. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560      

Jun 27, 2024
Tri-State
Business Value Growth

Unraveling Affirmative Action: Are Employers in the Clear or Are They the Next Target?

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
1 month ago

Last March, a federal judge ruled The Minority Business Development Agency (MBDA) was discriminating on the basis of race by only offering grants to minority-owned businesses. This ruling is one in a string of recent court decisions that have declared race-based preference systems illegal. As the crusade to gut affirmative action continues, challenges to employers’ DEI initiatives continue to rise. Activist groups, investors, state attorney generals, and employees are all attacking such programs on multiple fronts. As an employer, you must tread carefully. Background In Nuziard v. Minority Business Development Agency, the MBDA was sued by three white business owners (“Plaintiffs”) who sought grants. The Plaintiffs were deemed ineligible for the grants because they were not “socially or economically disadvantaged individual[s].” While this phrase seems race-neutral, the term “socially or economically disadvantaged individual” was defined to mean “an individual who has been subjected to racial or ethnic prejudice or cultural bias.” Certain racial groups were automatically included in the MBDA’s definition, including: (i) Blacks or African Americans; (ii) Hispanics or Latinos; (iii) American Indians or Alaska Natives; (iv) Asians; and (v) Native Hawaiians or other Pacific Islanders. Unlisted racial groups were presumptively ineligible. The judge focused on the presumption that the Plaintiffs were not disadvantaged merely because of their race. This presumption, the judge ruled, was race discrimination and, therefore, illegal. The judge barred the MBDA from continuing its racial classification system. The Ripple On its face, Nuziard has no legal impact on employers. But some players are pushing for affirmative action to be struck down everywhere — including in the workplace. The principal lawyer representing the Plaintiffs, Dan Lennington, said, “We hope this is a precedent to eliminate all [affirmative action] . . ..  Automatically labeling a group of people as disadvantaged is ridiculous.” And it seems Mr. Lennington may be on to something. Recently, Jonathan Bresser, a white, male, law student at DePaul University College of Law, filed a complaint against the Chicago Bears. Bresser applied to be the Chicago Bears’ “Legal Diversity Fellow”. Bresser was rejected from the program, which was only open to “people of color and/or female law students.” Bresser’s lawsuit is just an example of the many legal challenges by conservative groups to stop corporate diversity, equity, and inclusion initiatives following last year’s US Supreme Court decision curtailing the use of race as a factor in college admissions. Discrimination is Still Discrimination (but you may need to prove it) While affirmative action is on rocky footing, the law is clear about one thing: discrimination laws prohibit discriminating against “majority” identities, such as white males. In fact, reverse discrimination claims are on the rise. But that’s about all that is clear. Courts across the country are conflicted on how discrimination laws apply to “reverse discrimination” claims. In reverse discrimination claims, some courts apply heightened evidentiary burdens for plaintiffs from majority groups. In 1981, the United States Court of Appeals for the D.C. Circuit became the first court to adopt the “background circumstances” rule. This rule requires plaintiffs from majority groups to show background circumstances that substantiate that the defendant is “that unusual employer who discriminates against the majority.” In total, five Circuits have adopted the “background circumstances” rule. Two other circuits expressly rejected it. The remaining five never addressed the background circumstances rule and treat discrimination claims from majority groups the same as claims from plaintiffs in other groups. Weathering the Chaos As new cases on affirmative action and reverse discrimination muddy the waters, the risk of maintaining DEI programs has increased. Companies should internally assess their risk tolerance, assess their DEI programs, and develop a responsive strategy. Not all DEI programs are made equal. Your DEI program could be protecting your company or exposing it to substantial risk. You should work with skilled counsel to evaluate your situation.    

Jun 20, 2024
Tri-State
Business Value Growth

Textualism Gets Liberal – A Unanimous Supreme Court Reduces Employment Discrimination Standard

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
2 months ago

In Muldrow v. City of St. Louis, the Supreme Court tackled a very important question: under Title VII (the federal civil rights law), when is a job transfer discrimination? The Background Title VII makes it unlawful for an employer “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.”  42 U.S.C.S. § 2000e-2(a)(1) (emphasis added). Under Title VII, certain job transfers fall within the “otherwise to discriminate” catch-all. But not all job transfers are illegal. Most circuit courts have read in the requirement that a job transfer be “significant.”  This standard yielded some surprising results: An engineering technician is transferred to a new job site— a 14-by-22-foot wind tunnel. The court rules the transfer does not have a “significant detrimental effect.” Boone v. Goldin, 178 F.3d 253 (4th Cir. 1999). A shipping worker is transferred to a night shift position; a court decides the assignment does not “constitute a significant change in employment.” Daniels v. UPS, 701 F.3d 620 (10th Cir. 2012). A school principal is forced into a non-school-based administrative role supervising fewer employees; a court again finds the change in job duties was not “significant.” Cole v. Wake County Board of Education, 834 F. App’x 820 (4th Cir. 2021). The Ruling In Muldrow, Muldrow alleged she was transferred to a lesser position because she is a woman.  Both parties agree that the transfer implicated “terms” and “conditions” of Muldrow’s employment, changing the what, where, and when of her police work. The lower courts ruled the job transfer was not discrimination because the changes were not “significant.” The Supreme Court rejected the lower court’s analysis—asserting that “significant” is not statutorily derived and, therefore, is an improper inquiry. Moreover, “neither [the Statute] nor any other [law] say anything about how much worse [the transfer must be].  There is nothing in the provision to distinguish, as the courts below did, between transfers causing significant disadvantages and transfers causing not-so-significant ones.” What did the Supreme Court offer in the place of “significant?” The Court explained, “[t]o make out a Title VII discrimination claim, a transferee must show some harm respecting an identifiable term or condition of employment.” With the stroke of a keyboard, the past 60 years of common law was vacated, and Muldrow’s case remanded. What This Means Underlying this case is the concept that illegal discrimination must involve not only discrimination, but discrimination that causes harm. Lower courts will now duke it out over what is “some harm.” However, the result is clear: it is no longer safe to assume job transfers rarely cause any “harm.”  If you are considering transferring an employee who may claim discrimination, you should evaluate the “harm” caused by the transfer. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560

May 23, 2024
Tri-State
Business Value Growth

NLRB Rules Dartmouth Men’s Basketball Players Are Employees and They Have Already Voted to Unionize

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
2 months ago

Last month, the Boston Regional Office of the National Labor Relations Board (the “NLRB”) ruled that members of the Dartmouth men’s basketball team are employees and as such have the right to unionize. Wasting no time, yesterday, the Dartmouth men’s basketball team voted 13-2 to unionize.  Many educational industry onlookers saw this as the necessary next step in granting employment status to all college athletes – not just the national powerhouses. Although the decision is expected to be appealed, there is no doubt the decision, if upheld, will mark a seismic shift in collegiate athletics.  Why?  Because if Dartmouth men’s basketball players are employees, then arguably all collegiate athletes, both men and women, in all divisions, should also be considered employees eligible for unionization and maybe even compensation. Why Does this Sound Familiar? For those of you who follow college athletics closely or who happen to be closet labor and employment law buffs, you will know the recent Dartmouth NLRB decision is not unprecedented.  In fact, a similar ruling was issued nearly a decade ago when the Northwestern football players were determined (by a different Regional Office of the NLRB) to be employees and able to unionize. However, back then, a unanimous NLRB overturned that decision. One of the reasons the NLRB overturned the lower decision was because the NLRB only has jurisdiction over private employers. Although Northwestern is a private school it competes in the Big Ten athletic conference, which, except for Northwestern, was comprised exclusively of public universities at that time.  The NLRB found it should not exercise jurisdiction over the matter because permitting one school in the conference to collectively bargain (and therefore pay their athletes) and not the others would be detrimental to college athletics because the playing field would no longer be level among different schools.  While some found this argument weak, it carried the day. What’s Next? Fortunately for the Dartmouth men’s basketball team, the above argument will not be an issue this time as Dartmouth competes in a conference composed entirely of private schools, the Ivy League. Likely even more important, the NLRB’s General Counsel (chief prosecutor), Jennifer Abruzzo, has previously come out strongly in favor of student-athletes being treated as employees protected under the National Labor Relations Act. Despite all of this, the process will not be a slam dunk for the basketball team (sorry, we could not help ourselves).  While the next step is a hearing before a pro-union, Biden-appointed NLRB, the following step(s) will be the federal courts and what happens there is uncertain. Both Dartmouth and the NCAA have come out strongly against the decision insisting that their athletes are not employees but rather unpaid amateur students. The NCAA also predicts dire consequences for college athletics if athletes become subject to the NLRA (and other federal and state employment laws). For example, if athletes are “employees” under the wage and hour laws, they are entitled to pay- which is a direct violation of the NCAA’s prohibition against “pay for play.” As a result, we expect an exhaustive legal battle that will take years to play out.  Unfortunately for Dartmouth and the NCAA, these legal challenges will work their way through a court system that recently delivered a major win to college athletes in an antitrust case that went all the way to the Supreme Court.  If that is where this latest case ends up, it will be heard before many of the same justices who unanimously found against the NCAA when it decided the NCAA’s imposition of strict limits on compensation for student-athletes for education-related benefits violated antitrust law. While the appeal is pending,  we expect to see an influx of other petitions filed by other student-athletes to have their teams unionized. Union activity on college campuses is already high; this decision will likely just make it higher. If the student-athletes are ultimately successful, these actions could lead to a complete upheaval of athletic programs on college campuses. Imagine if colleges can give their star athletes massive salaries. The smaller programs will almost never be able to attract top talent which means only the richest few will be competitive.  We may have seen our last Cinderella story. Closing Thoughts The time seems right for the NLRB to act on this issue. With the strong pro-labor tailwinds currently in Washington, D.C., it seems likelier than not that this ruling will be upheld by the NLRB.  What happens on appeal to the federal courts is anyone’s guess and could ultimately be decided by who wins the White House later this year. We will monitor this issue closely and provide our readers with updates as they become available.  Brody and Associates regularly advises its clients on union-related matters and provides union-free training.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.

May 8, 2024
Tri-State
Business Value Growth

Is BLM a Protected Symbol? It Depends

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
2 months ago

On February 21, 2024, the National Labor Relations Board (“NLRB”) ruled that Home Depot violated the National Labor Relations Act (“NLRA”) by terminating an employee who refused to remove the hand-drawn letters “BLM” (Black Lives Matter) from their work apron. This employee was one of several employees who concurrently drew BLM on their work aprons. Notably, the employees began drawing BLM on their aprons after complaining about racial discrimination at Home Depot. The NLRA protects employees’ right to partake in “concerted activities” aimed at “mutual aid or protection,” irrespective of union representation. In this case, the Board decided the employee’s refusal to remove BLM markings constituted a “concerted” action. The Board emphasized that the BLM markings were in response to allegations of racial discrimination at Home Depot. Because of this, the BLM markings were viewed as an effort to communicate collective grievances to Home Depot management. Given that racial discrimination affects all employees’ working conditions, the action was deemed “for mutual aid or protection.”   The Whole Foods Counterexample In contrast to this case, in May 2020, Whole Foods informed its employees that wearing BLM attire violated the company’s dress code and was not permitted. In this case, the Board ruled that wearing BLM attire did not constitute legally protected activity. Why? The BLM attire lacked a direct link to efforts aimed at enhancing employees’ working conditions. The judge highlighted, “There is no evidence indicating any employee concerns, complaints, or grievances regarding ‘racial inequality’ or racially-based discrimination at Whole Foods Market before or during the adoption of BLM messaging . . . . The evidence convinces me that the employer simply sought to avoid controversy and conflict within its stores, which it believed would arise from BLM messaging.”   Now what?          Employers aiming to uphold uniform or clothing regulations should exercise careful consideration. When employees unite behind a symbol to voice their workplace grievances, regardless of its broader political implications, that symbol is likely protected under the NLRA. Conversely, if employees wear a symbol entirely unrelated to the workplace that is merely social commentary, employers can prohibit such conduct.   Brody and Associates regularly advises management on all issues involving unions, staying union-free, complying with the newest decision issued by the NLRB, and training management on how to deal with all these challenges.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.  

May 1, 2024
Tri-State
Business Value Growth

New York State Prohibits Employers from Requesting Employee’s and Applicant’s Social Media Credentials

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
3 months ago

Effective March 12, 2024, New York Labor Law prohibits employers from requiring employees and job applicants to provide information about their personal accounts. If you think this sounds familiar, you are right. This idea has been in place in various states for years; now New York is joining in! Under the new legislation, “personal accounts” are broadly defined. It means “an account or profile on an electronic medium where users may create, share, and view user-generated content, including uploading or downloading videos or still photographs, blogs, video blogs, podcasts, instant messages, or internet website profiles used exclusively for personal purposes.” Specifically, Employers may not require employees or job applicants to: disclose the username, password, or “other authentication information” for accessing personal accounts; access a “personal account in the presence of the employer;” or “reproduce in any manner photographs, videos, or other information contained within a personal account.” However, nothing in the law prevents employers from: Accepting voluntary friend requests sent from an employee or applicant (although such actions may not be wise!); Accessing public social media accounts; Accessing information about an employee or applicant that can be obtained without any access information; Accessing information “for the purposes of obtaining reports of misconduct or investigating misconduct, photographs, video, messages, or other information that is voluntarily shared by an employee, client, or other third party that the employee subject to such report or investigation has voluntarily given access to contained within such employee’s personal account.” If your strategy is to argue that in response to an employer request, the applicant or employee “voluntarily” gave permission, that may be a very tough burden to meet! Employers who ask applicants or employees to share their social media accounts should proceed with caution. This area of law in New York is new and quickly evolving. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560    

Apr 16, 2024
Tri-State
Business Value Growth

Remember that COVID PPP Loan, So Does the Government!

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
3 months ago

Attention all Paycheck Protection Program (“PPP”) loan borrowers, the Federal Bureau of Investigation is combing through PPP loan records to identify borrowers who committed fraud related to the program, and they are not alone.  The U.S. Small Business Administration (the “SBA”) is auditing all PPP loans of $2 million or more, and the Department of Justice (the “DOJ”) is investigating and prosecuting a number of fraud cases related to the misuse of PPP funds. How Did We Get Here? Many of us will recall how the PPP saved millions of small businesses from financial ruin.  The program was a cornerstone of the CARES Act, which provided $2.2 trillion in economic aid in the face of the COVID-19 pandemic.  The program was designed to provide a financial life raft to employers trying to survive the pandemic. One of the few requirements of PPP was a minimum of 60% of each loan needed to be used for payroll expenses, with the balance being used for certain other related business expenses. Now we are learning the program was wrought with fraud. It appears to be one of the greatest victims of frauds ever perpetrated on the federal government with billions of dollars being improperly used. In fact, the SBA estimates of the 11.8 million PPP loans totaling $800 billion there was in excess of $64 billion in fraud across 17% of the loans.  This has led to thousands of investigations with the DOJ bringing charges against hundreds of individuals with many more cases pending. Just the Beginning The SBA estimates there will be thousands more investigations and related prosecutions.  This issue has gotten so much attention that Congress has increased the statute of limitations for prosecuting cases of fraud related to PPP borrowing to ten (10) years. Also, the government is investigating these cases even though the loan has been forgiven. Closing Thoughts If you’re wondering if you should worry, the answer is it depends. If you are part of that urban legend of someone who took out the loan, and used the proceeds to buy a Ferrari while closing down your business, you should be worried. If you are part of the approximate 80% who followed the rules, you should be fine. If you question where you stand, call competent counsel so you can sleep peacefully at night. Our hope is the investigations will be fair, abusers get caught and the well-intentioned are fine, but only time will tell. Brody and Associates regularly advises management on complying with the latest local, state, and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.

Apr 8, 2024
Tri-State
Business Value Growth

Unanimous Supreme Court shifts burden to employers in whistleblower case

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
4 months ago

Whistleblowers can blow their whistles a little louder tonight. The Supreme Court’s recent ruling, Murray v. UBS Securities, LLC, decided that an employee may prove a whistleblower retaliation claim without showing that their employer acted with retaliatory intent. As a result, it is now easier for employees to succeed on whistleblower retaliation claims under the Sarbanes-Oxley Act and probably beyond.   The Case In Murray, an employee, Trevor Murray, had worked for UBS as a research strategist. His role required him to certify his reports to UBS customers were independently produced. UBS terminated Murray shortly after he informed his supervisor that two leaders of the UBS trading desk were changing his reports thus undoing the “independent” nature of the reports. Murray filed a whistleblower case against UBS. After extensive legal maneuvering, the case boiled down to a singular issue: do whistleblowers need to prove that their employer had retaliatory intent?   The Outcome The Supreme Court decided that adding an intent requirement to whistleblower claims was imprudent: whistleblower’s need only prove that their protected activity was a contributing factor in the retaliation. Moreover, the Court said, “[the law’s] text does not reference or include a ‘retaliatory intent’ requirement, and the [law’s] framework cannot be squared with such a requirement.” This is another example of the Court following a strict interpretation of a statute, which is often a common theme for this Supreme Court.   The Takeaway The Murray decision clarifies that employees seeking whistleblower protection under the Sarbanes-Oxley Act are not required to prove any specific intent behind their employer’s decision to retaliate against them for protected activity. Instead, a whistleblower only needs to demonstrate their protected activity contributed to their termination, after which the burden shifts to the employer to prove they would have terminated the employee even without considering the protected activity. The heightened burden on employers is likely to raise the cost of defending these claims and makes winning that much harder. Also, while the case addresses the Sarbanes-Oxley Act, it will likely spill over to many other whistleblower cases. As such, taking appropriate/legal action against whistleblowers will be that much harder. Using skilled counsel can help companies best avoid liability. Brody and Associates regularly advises management on complying with the latest state and federal employment laws. The subject matter of this post can be very technical. It is also very fact specific. Our goal is to alert you to some of the new laws and trends which may impact your business.  It is not intended to serve as legal advice. We encourage you to seek competent legal counsel before implementing any of the new policies or practices discussed above.  If we can be of assistance, please contact us at info@brodyandassociates.com or 203.454.0560.  

Mar 25, 2024
Tri-State
Business Value Growth

DOL Enacts New Independent Contractor Test

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
4 months ago

On January 9, 2024, the Department of Labor (“DOL”) announced a six-factor test for determining whether a worker is an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”). This new rule takes effect on March 11, 2024. Classifying workers as independent contractors or employees is extremely important—independent contractors do not receive the protections afforded by the FLSA such as overtime pay, minimum wage, and other requirements. The DOL’s six factor test considers: opportunity for profit or loss depending on managerial skill; investments by the worker and the potential employer; degree of permanence of the work relationship; nature and degree of control by the company; extent to which the work performed is an integral part of the potential employer’s business; and skill and initiative. In addition, the DOL utilizes a totality-of-the-circumstances economic reality approach, which allows consideration of other relevant, but not named, factors, which “in some way indicate whether the worker is in business for themself.” Consider the following checklist if your company engages independent contractors. It encompasses the Department of Labor’s (DOL) new six factors along with a series of questions posed by the DOL pertaining to each factor. Each question is accompanied by a parenthetical indicating whether it favors Independent Contractor or Employee status. Every instance where you mark a box designated as “Employee” or refrain from marking a box labeled as Independent Contractor increases the likelihood of your worker being classified as an employee. Keep in mind, this area of law is highly intricate, and the repercussions for misclassification are substantial. If you harbor any uncertainties, it is advisable to seek the guidance of competent legal counsel. The Factor Things to Consider Opportunity for profit      Can the worker negotiate the charge or pay for the work?  (Independent Contractor)      Does the worker accept or decline jobs? (Independent Contractor)  Does the worker choose the order and/or times in which the jobs are performed? (Independent Contractor) Does the worker engage in marketing or other advertising efforts? (Independent Contractor)   Does the worker make decisions to hire others? (Independent Contractor)  Does the worker independently make decisions to purchase materials? (Independent Contractor) Investments by the workers  Does the worker receive unilateral directions to purchase specific equipment? (Employee)   Does the worker have investments in a business that indicate the worker has an entrepreneurial investment their own company? (Independent Contractor) Degree of permanence   Is the worker working for the company for an indefinite period? (Employee)    Is the worker exclusively working for the company? (Employee)    Is the worker project-based or sporadic? (Independent Contractor) Nature and degree of control     Does the worker set their own schedule? (Independent Contractor)      Is the worker’s work supervised closely? (Independent Contractor)  Is the worker permitted to work for others? (Independent Contractor)    Does the worker have the right to discipline their own workers? (Independent Contractor) Does the worker get to set prices or rates for services and the marketing of the services or products provided by the worker? (Independent Contractor) Relation to employer’s business      Is the work performed by the worker “critical, necessary, or central” to the company’s primary business? (Employee) Skill and initiative     Does the worker use specialized skills for the work and “those skills contribute to business-like initiative?” (Independent Contractor)    Did the employer provide training for the worker to attain the requisite skills? (Employee)   Brody and Associates regularly advises management on complying with the latest state and federal employment laws. The subject matter of this post can be very technical. It is also an evolving area of law and very fact specific. Our goal here is to simply alert you to some of the new laws which may impact your business.  It is not intended to serve as legal advice. We encourage you to seek competent legal counsel before implementing any of the new policies discussed above.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.  

Mar 19, 2024
Tri-State
Business Value Growth
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