WHOSE EMPLOYEE IS IT? Subcontracting & Joint Employer Considerations

1. WHOSE EMPLOYEE IS IT?Subcontracting & Joint Employer Considerations Heather Renée Adams & Patrick Devine Ice Miller LLP 250 West St., Ste. 700 Columbus, Ohio 43215

2. AGENDA • Independent Contractors, Employees, Joint Employers – “Oh, My!” • The Basics • Why you should care • Shifting Legal Landscape 2. Consequences of the Joint Liability Doctrine 3. Practical Considerations 4. Understanding DBE Relationships 5. Joint Employment Implications

3. THE BASICS • Independent Contractors: Independent of substantial control and direction. • Employees:Companies have the right to direct and control the manner in which employees perform their jobs. • Joint Employer Doctrine: The joint employment exists when the facts establish that employment by one employer is not completely disassociated from employment by the other employer. See Fair Labor Standards Act. Whether multiple employers should be treated as one.

4. THE BASICS KEY LEGAL PRINCIPLE • A party is liable for its conduct toward its employees • but is NOT liable for its conduct toward independent contractors

5. INDEPENDENT CONTRACTOR STATUS —WHY YOU CARE… • Tax Liability • Legal Liability • Common law • State law • Federal law • Trap: Joint Employment

6. SHIFTING LEGAL LANDSCAPE: Browning-Ferris Industries (August 27, 2015) • Decision broadened liability for companies that subcontract, outsource or use temp workers. • A prime contractor can be found to be the “joint employer” of its subcontractor’s employees if it is found to exercise direct or indirect control over the subcontractor’s employees.

7. SHIFTING LEGAL LANDSCAPE: Labor Department Rescinds Expanded 'Joint Employer' Rule NEWS RELEASE Date: June 7, 2017 Release Number: 17-0807-NAT US Secretary of Labor withdraws joint employment, independent contractor informal guidance WASHINGTON – U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors.  Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.

8. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Does the Law Apply? Nehls v. Quad-K. Advertising, Inc., 106 Ohio App. 3d 489 (6th Cir. 1995) • Secretary of company sued company for sexual harassment and discrimination. • Company argues law does not apply because it does not “employ” workers, rather it uses independent contractors. • Court disagrees. The independent contractors are actually employees.

9. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Identifying the Responsible Employer Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017) • Mario Salinas employed by subcontractor J.I. General Contractors (framing and drywall) • Mario worked almost exclusively for Commercial Interiors, Inc. This company offered general contracting and interior finishing services, including drywall installation, carpentry framing and hardware installation. • Mario alleged that he was not paid overtime in violation of the FLSA • Mario sought to hold both JI and Commercial liable of the aggregate number of hours he worked for both employers.

10. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Identifying the Responsible Employer Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017)

11. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Does the Law Apply? Sublett v. Edgewood Universal Cabling Systems, Inc., 194 F. Supp. 2d 692 (2002) • Troy Sublett was hired by Aerotek, Inc. a temporary employment agency. • Aerotek assigned Troy to work as a cable installer for a company called Edgewood. • During his time at Edgewood supervisor reprimanded Troy for his hair style (Dreadlocks) and said that he would “never go anywhere in the company” due to his looks. • Troy filed discrimination lawsuit against Edgewood. • Edgewood argued – Not the Employer! • Court disagreed.

12. CONSEQUENCES OF JOINT EMPLOYER DOCTRINE: Court Analysis Sublett v. Edgewood Universal Cabling Systems, Inc., 194 F. Supp. 2d 692 (2002)

13. CONTROL MATTERS: Independent Contractor vs. Employee • Extent of control over details of the work • Whether the one employed engaged in a distinct occupation or business • Whether the kind of occupation is done under the direction of an employer or by a specialist without supervision • The skill required • Who supplies the tools and location for the work? • Length of time of employment • Method of payment • Whether the work is part of the regular business of the employer • What do the parties believe the relationship to be? • Whether the principal is in the business.

14. CONTROL MATTERS: Employee v. Joint Employee • Ability to Discharge • Mode of Payment • Supplying Tools or Equipment • Belief of the Parties • Control over the means used and the results achieved • Length of employment • Establishment of Work Boundaries

15. Practical Considerations: Independent Contractor v. Employee No. 1: Extent of control over details of the work • to whom does the person answer? • composition of crews? • crew shifts? • assignment? Whether the one employed engaged in a distinct occupation or business • --distinctive license • --clearly person’s business • --no exclusive relationship

16. Practical Considerations: Independent Contractor v. Employee No. 3: Whether the kind of occupation is done under the direction of an employer or by a specialist without supervision No. 4: The skill required • “Skilled labor is often performed by an independent contractor” • licensed?

17. Practical Considerations: Independent Contractor v. Employee No. 5: Who supplies the tools and location for the work? • Often a combination of players • If so, neutral factor No. 6: Length of time of employment • Seasonal? • Not a long term relationship?

18. Practical Considerations: Independent Contractor v. Employee No. 7 Method of payment • Not hourly? • Set rate/piece rate? • Payment by hour or month indicates employer-employee relationship • Who pays whom? No. 8: Whether the work is part of the regular business of the employer • How essential to business? • Specific examination • Could alleged employer do it? • License?

19. Practical Considerations: Independent Contractor v. Employee No. 9: What do the parties believe the relationship to be? • Contract? • Understanding? • Stray remarks? No. 10: Whether the principal is in the business • Often the case • Not determinative

20. Practical Considerations • What the parties call a relationship is NOT controlling! • How individual views their relationship with a company is NOT controlling? • Does your subcontract contain an indemnity/defense provision? What are the terms? • Has the subcontractor listed the prime as an additional insured on its certificate of insurance?

21. UNDERSTANDING DBE RELATIONSHIPS

22. CONCLUSION All battles are won or lost before they are ever fought” --The Art of War

23. Questions?

24. WHOSE EMPLOYEE IS IT?Subcontracting & Joint Employer Considerations Heather Renée Adams & Patrick Devine Ice Miller LLP 250 West St., Ste. 700 Columbus, Ohio 43215