Imagine you continuing your first year as a human resource specialist at Sugar Estates estate planning firm. As a first-year human resource specialist, your boss (Son Ray) presents you with the following scenario.
Scenario:
Donny, an estate planner, works on a contract basis for our clients at Sugar Estates. On occasion, we contract John to handle a specific client for a specific estate planning job. Per our contract with Donny for these specific clients, he is paid a commission on a weekly basis based on the overall fee received by the firm. When working for these specific clients, Donny is able to use our office space, equipment, and any supplies necessary to complete the job. To ensure a consistent work product and regulatory compliance, Donny submits his work to a supervisor, who approves it and sends it to the client on behalf of our firm. Recently, we had to lay Donny off in the middle of a job, and he filed for unemployment compensation.
Research relevant U.S labor laws on employee protection and personnel management.
Write a 850-word paper that will create awareness of the basic labor laws related to personnel management among the organization's employees.
Address the following in your paper:
· What legal tests could be employed to determine whether Donny is an independent contractor or employee?
· Based on these tests, what is your conclusion as to Donny’s status: independent contractor or employee?
· Discuss the applicable labor laws for protecting 1) the employee and 2) the independent contractor.
· Discuss your thoughts on the organization’s liabilities when a contractor gets terminated from service.
Full Answer Section
Under the economic realities test, Donny would likely be considered an employee. This is because Sugar Estates exercises a significant amount of control over Donny's work. For example, Sugar Estates provides Donny with office space, equipment, and supplies. Donny also submits his work to a supervisor, who approves it and sends it to the client on behalf of the firm.
Another common test is the
right-to-control test. This test asks whether the employer has the right to control the manner and means by which the work is performed. Under the right-to-control test, Donny would also likely be considered an employee. This is because Sugar Estates has the right to control the way that Donny performs his work. For example, Sugar Estates can specify the hours that Donny works, the tasks that he performs, and the methods that he uses to complete his work.
Based on these tests, it is likely that Donny would be considered an employee of Sugar Estates. This means that he would be entitled to certain benefits, such as minimum wage, overtime pay, and unemployment benefits.
Applicable Labor Laws
There are a number of labor laws that apply to both employees and independent contractors. Some of the most important labor laws include:
- The Fair Labor Standards Act (FLSA): The FLSA sets minimum wage and overtime pay standards for most workers in the United States. It also prohibits child labor.
- The Family and Medical Leave Act (FMLA): The FMLA allows eligible employees to take unpaid leave for certain family and medical reasons.
- The Occupational Safety and Health Act (OSHA): OSHA sets safety and health standards for most workplaces in the United States.
- The Americans with Disabilities Act (ADA): The ADA prohibits discrimination against people with disabilities in employment, public accommodations, and transportation.
Liabilities of the Organization
When a contractor is terminated from service, the organization may be liable for certain benefits, such as unemployment compensation. The organization may also be liable for other damages, such as breach of contract or wrongful termination.
The organization's liabilities will depend on the specific facts and circumstances of the case. However, in general, the organization will be more likely to be liable if the contractor was actually an employee rather than an independent contractor.
Conclusion
The employment status of Donny is a complex issue. However, based on the legal tests that have been discussed, it is likely that Donny would be considered an employee of Sugar Estates. This means that he would be entitled to certain benefits, such as minimum wage, overtime pay, and unemployment benefits. The organization should be aware of the applicable labor laws and should take steps to ensure that it is in compliance with these laws.
Recommendations
In order to avoid any legal issues, Sugar Estates should take the following steps:
- Review its contracts with contractors to ensure that they clearly state the contractor's status as an independent contractor.
- Provide contractors with written instructions that clearly define the scope of their work and the expectations of the organization.
- Retain documentation of the work performed by contractors, such as timesheets and invoices.
- Consult with an attorney if there is any question about the employment status of a contractor.
By taking these steps, Sugar Estates can help to ensure that it is in compliance with the applicable labor laws and that it is not exposed to liability.
Sample Answer
Determining the Employment Status of Donny
The employment status of Donny, an estate planner who works ones
a contract basis for Sugar Estate, is a matter of some debate. There are a number of legal tests that can be used to determine whether Donny is an independent contractor or an employee.
One common test is the
economic realities test. This test considers the following factors to determine whether a worker is an independent contractor or an employee:
- The degree of control the employer has over the worker's work
- The worker's opportunity for profit or loss
- The worker's investment in equipment or materials
- The worker's skill level
- The permanency of the relationship between the worker and the employer