As a result of the economic downturn, business at the Bedrock Granite Quarry was not rocking along. Mr. Slate, the owner of the quarry, was forced to reduce his workforce and hire “independent contractors”, like Barney Rubble, to perform work on an as needed basis. Rubble has been working at the Bedrock Granite Quarry since 2008. Last month, despite prior warnings, Rubble was caught operating a company vehicle while not wearing shoes and was terminated. Rubble then filed an unemployment claim with the Bedrock Workforce Commission maintaining that he was a Bedrock employee and not an independent contractor. What is the significance of the Bedrock Granite Quarry characterizing Rubble’s employment as independent contractor vs. an employee?

While you may not think that it matters much whether an individual pays their taxes or you withhold them, the IRS, the Texas Workforce Commission and the Texas Attorney General (for child support) care a lot. Mischaracterizing an independent contractor as an employee has nominal consequences, but the consequences of mischaracterizing an employee as an independent contractor can be significant. When the TWC investigates, it will determine whether you have properly characterized the worker. If you lose, the TWC will make you responsible for back taxes and interest and will, most certainly, contact the IRS.

The TWC and the IRS start with a presumption that the person is an employee. The following is an amalgamation of the tests that provide insight into which category a worker falls:

  1. Instruction and control – this is a key factor. If you say where to go and leave it up to the individual to get the work done, they may be an independent contractor. If you tell the individual how to do it, they start to look more like an employee.
  2. Training – if you are training the person, they are probably an employee.
  3. Equipment and expenses – if you provide equipment and pay expenses, they are likely an employee.
  4. Benefits—if you provide benefits, like healthcare and 401(k), they are most definitely an employee.
  5. Other work – if the person works solely for you, perhaps has set hours of work and would not have time for another customer or employer, they are probably an employee. Independent contractors regularly work for numerous customers or clients.
  6. How paid—if you pay a weekly salary or draw that is not dependent on performance, they are probably an employee. Independent contractors are usually paid by the job and don’t get paid if a job is done unsatisfactorily.
  7. Terminating the relationship – if you can unilaterally let the person go in the middle of a project or they can walk away from work in progress, they are probably an employee. Independent contractors cannot usually be terminated in the middle of a project without someone having a right to damages.

Tilting the Scales Your Way:

Conduct a review of those who work for you. In most cases, you will quickly be able to ascertain the individual’s status. For those more difficult cases, the factors above will provide some guidance. The safest course is to characterize the individual as an employee. Very often, an independent contractor grows into an employee over time as they become a more integral part of your business. Employers should create written job classifications for each position in the company. Some employers make a written contract with all independent contractors which clearly delineates their status (but do not include a covenant not to compete – which is a clear sign of an employee).

George McFly, a 9th grader at Texas Hill Valley High School, is dreading the first day of school. As has been the case since the 3rd grade, Biff Tannen has made McFly’s life at school absolutely miserable. First, there was the time that Biff accidentally tripped McFly in the cafeteria which sent McFly (along with his Salisbury steak, mashed potatoes and creamed corn) sailing through a crowded cafeteria. Next, there was the time that Biff stuffed McFly’s locker with a road kill armadillo. And who could forget the pantsing incident in front of the varsity cheerleading squad? Not to mention the naming daily calling, pushing, punching and bathroom swirlies. Determined to protect their son from another year of heartache, McFly’s parents approached the school’s board of trustees and announced that if the bullying continues during this new school year, they want McFly transferred to another campus. Must the school district honor this request?

Yes. With an estimated 15%-25% of children being bullied at school, state legislatures have passed laws to address the problem. Currently, 43 states have anti-bullying laws on the books. The Texas Education Code defines bullying as written, verbal, or physical action that physically harms a student or her property or causes a reasonable fear of injury. Schools are mandated to include in their student code of conduct specific language that prohibits bullying, harassment and “hit lists” and to ensure that the employees enforce the prohibitions. If a parent believes that his or her child is a victim of bullying, that parent may request a transfer to a different classroom or campus. Once a determination has been made (usually by the board of trustees) that bullying has in fact occurred, the Hill Valley High School will likely be required to grant the McFly’s transfer request.

Last month Bubba Gump Shrimp Company owners Forrest Gump and Lieutenant Dan realized they would not be able to deliver on their monthly promise of 10,000 pounds of shrimp to the Wok Ann Chu-gumm Seafood Restaurants. Because of this Bubba Gump Shrimp Company joined dozens of other commercial fishermen in a class action lawsuit alleging that a fire on Oyle E. Dryller’s rig caused millions of barrels of oil to be dumped into commercial fishing waters. When the government docked the commercial shrimp boats, Bubba Gump Shrimp Company saw its shrimping season and cash flow end. Do Bubba Gump Shrimp Company and its commercial shrimping buddies have a case, when “common sense says you shouldn’t get away with taking away someone’s livelihood and walk away without paying them anything for compensation?”

Like shooting fish in a barrel? Maybe. For Bubba Gump Shrimp and fellow commercial fishermen, there is a reasonable likelihood that they can prove Oyle E. Dryller took away their livelihood and they should be paid.

But what about Chef Red Fishy who sued complaining he can’t access his customary supplies of Gulf fresh seafood for his restaurant, or Bishop Carp who sued for “loss of enjoyment of the recreational saltwater fishing privileges bestowed on Louisiana residents” because he spends thousands of dollars every year to fish offshore so that his family has fish to eat throughout the year? Both of those scenarios are less likely to be successful in a lawsuit – Chef Red Fishy can still serve his customers fish caught outside the Gulf; Bishop Carp E. Diem’s vacation time does put fish on the table, but his vacation expenses may cost more than the fish he catches.

Then there is the even more damages speculative lawsuit filed by Flan Ounder and her partner Halli Bet who allege damages to their commercially zoned land in Florida because “falling real estate values are just one more consequence of this environmental disaster.” Even though it is not Gulf-front, surely it is “impacted by the perception that the entire Gulf Coast has been ruined.” Not being on the water raises questions about oil related damages, and the already significant impact of the recession on investment property makes a reduced property value argument even more speculative.

Tilting the Scales in Your Favor.

Sometimes there are other, and perhaps better, solutions to consider before first filing a lawsuit. While these scenarios present many opportunities to discuss facts, duties of negligent parties and damages to be argued, those with the best claims (like Bubba Gump Shrimp Company and the other trades who rely upon commercial fishing, like welderswho fix the shrimp boats) are likely to fare better by filing a claim first. As of last Friday, July 16th it is reported that 29,444 payments have been made by BP to Louisiana residents and businesses, including Louisiana fishermen (even with limited documentation), totaling more than $96 million.

It’s the bottom of the sixth and the home team, the Isotopes, is at bat. Adam Baum, the Isotopes’ all-star player, crunches a 98-mph fast ball down the right field line that heads toward the third deck. To everyone’s chagrin, the ball slices foul at the last moment and makes its way into the excited crowd. While the home crowd may be disappointed, this is the moment that Royal Paine has been waiting a lifetime for. You see, Paine has never caught a foul ball and has specifically purchased season tickets in the first row of the third deck waiting for just this opportunity to present itself. Paine will not be denied — as the speeding ball approaches, he holds out his Cabela’s fishing net to make the snag. Unfortunately, for Paine, things go terribly wrong. Perhaps it was his 6’6” frame against a 26” rail, perhaps it was the six pack he had to drink, or perhaps it was his general lack of coordination, but instead of catching the ball, Paine awkwardly stretches over the rail, completely missing the ball and topples thirty feet into the second deck. Paine suffers serious injuries. After 3 months in the hospital, Paine brings a lawsuit against the Isotopes and its owner, Montgomery Burns. Does Paine have a claim?

Probably not. Although the chances of a lawsuit being brought are high, the chances of a recovery for Paine are relatively low. Since the first baseball stadium was built, architects have been trying to balance safety against fans’ unobstructed site lines. Major League Baseball requires that the rails where Paine was seated be a minimum of 26” tall. The Isotopes complied with this requirement and also posted signs that clearly state, “Do not sit or lean on rail.” In a comparative fault state such as Texas, it is likely that a jury would find that Paine was more negligent than the defendant as he was likely intoxicated and knowingly assumed the risk when he leaned over the third deck rail to catch a $5 souvenir. If a jury were to find Paine 51% responsible for the fall, he would recover nothing.

Falls from the upper decks are rare, but occur with somewhat surprisingly frequency. Three fans have died from falls since 2000, while another 9 have survived similar accidents. In 1994, on opening day of the Texas Rangers’ new ballpark, a fan fell 35 feet from an upper deck while leaning against a rail to have a picture taken. The fan sued the Rangers and settled out of a court for an undisclosed sum.

Tilting The Scales Your Way

Know your environment and watch out for yourself. If you are a fan, know that the professional sports team probably adheres to governmental and league regulations. If you are the company, plan and respond to accidents in an organized fashion. For example, you may have seen stadium safety and medical personnel quickly moving to the aid of any fan hit by a foul ball or falling down. Even though the company may not be legally liable for the fan’s missteps or inattention, quickly responding to the accident is the right thing to do.

Forrest Gump and Lieutenant Dan committed Bubba Gump Shrimp Company to deliver 10,000 pounds of shrimp monthly to Wok Ann Chu-gumm Seafood Restaurants across the south. Unfortunately, the aftermath of a recent oil spill is likely to shut down Bubba Gump Shrimp boats all along the Texas Gulf coast. Forrest and Dan are worried they can’t deliver enough shrimp to cover their contract with Wok Ann Chu-gumm. The price of brown shrimp is already up 50% from the week before the oil spill. It’s time to fish or cut bait. Can Forrest and Dan just tell Wok they are terminating the agreement because it will now be impossible for them to deliver the shrimp?

It depends. The $25 legal (Latin) phrase for impossibility of performance is force majeure. Although some states recognize certain kinds of unforeseen events as excusing nonperformance of agreements even if there is nothing in writing, Texas courts require any forgivable events to be spelled out in the contract, i.e., what happens if the event is man-made (sabotage), natural occurrences or other “acts of God” (hurricanes, floods, tornadoes), market conditions (inability to obtain goods), political or governmental (changes in law or ruling regimes) or societal (riots, terrorism, labor strikes). So, if Forrest and Dan do not have a contract with Wok Ann Chu-gumm, they have to deliver – even if it means buying shrimp from other sources at higher prices to cover their shortfall.

Tilting the Scales in Your Favor.

If your company might face “acts of God” affecting timely delivery as promised, your customer contracts may need tweaking. First, whose law controls? If it’s Texas law, your written agreement must clearly spell out those circumstances that might cause an unexpected delay or impossibility of performance. Without such an agreement, Bubba Gump Shrimp Company has an absolute obligation to perform in full and on time, probably meaning that it must purchase shrimp from others and at higher prices. Other questions like duty to mitigate, what language in the contract takes priority, notice, type of relief, and even insurance that might cover such a loss, are also issues for you to consider.

Unambiguous language in your favor is critical. For example, in the right context a phrase “reasonably beyond its control” might take away everything that you think you bargained for. So, just like shrimp, whether you “… barbecue it, boil it, broil it, bake it, saute it. Dey’s uh, shrimp-kabobs, shrimp creole, shrimp gumbo. Pan fried, deep fried, stir-fried. There’s pineapple shrimp, lemon shrimp, coconut shrimp, pepper shrimp, shrimp soup, shrimp stew, shrimp salad, shrimp and potatoes, shrimp burger, shrimp sandwich,” make sure that your agreement is both to your liking, and that it reasonably covers those “impossible to perform” circumstances that are out of your control. “That- that’s about it.”

Soccer is Freddy Fifa’s favorite sport. Fifa just returned from South Africa after watching the United States’ disappointing round of 16 losses in the World Cup. As a souvenir of his experience, Fifa brought home a vuvuzela* and vows to be the first fan to introduce it to his second favorite sport – hockey. True to his word, Fifa brings his vuvuzela to the first game of the season and blows and blows and blows. After suffering a hard check into the boards and driven into a fit of rage as a result of the horn’s incessant droning, Ricky Rumble (who has a short-temper even for a hockey player) picks a fight with an opposing player, Sam Boney. The fight does not last long as Rumble skillfully lands a punch that breaks Boney’s nose. Does Boney have a claim against Rumble for the injuries sustained as a result of the fight?

Probably not. An opposing player’s conduct that would be clearly actionable outside the stadium is perfectly legal inside the stadium if the act is considered “part of the game.” If an act is considered part of the game (e.g. a tackle in football, a collision at home plate, or a foul in basketball), then players have assumed the risk of injury. This, of course, begs the question is fighting part of the game in hockey? Yes. Although fighting is considered illegal in hockey (it will get you a five minute major penalty), it happens all the time. In fact, fighting happens so often that the NHL has rules about how to fight (e.g. players must drop their sticks and gloves) and many teams maintain an “enforcer” on their roster to fight and protect the team’s star players. With over 700 fights during the 2008-2009 NHL season, one would be hard pressed to say that fighting is not part of the game. As Rumble’s actions do not appear to be blatantly outside the boundaries of hockey, Boney assumed the risk of injury.

However, when conduct goes so far beyond that which is normally tolerated, civil and criminal liability may follow. In 2004, Vancouver Canuck, Todd Bertuzzi, plead guilty to an assault charge after blindsiding Colorado Avalanche rookie Steve Moore with a punch to the back of the head which left Moore unconscious, with a concussion and three broken vertebrae. Moore subsequently brought a lawsuit against Bertuzzi alleging $38 million in damages as a result of the attack which ended his NHL career. Six years later, the case is still pending.

*BZZZZZZZZZZZZZZZZZ (deep breath) BZZZZZZZZZZZZZZZ. If you have watched even a second of the World Cup, you now know that a vuvuzela is a cheap, plastic trumpet that emits a buzzing noise so annoying it could drive a bumble bee crazy. The sound has quickly found its way into our pop culture and even YouTube has added a button so that users can listen to the horrendous sound while watching their favorite online videos.

Chris P. Letus doesn’t like burgers, shakes or Spam*. In 2008, Letus received an e-mail inviting him to King Burger to “taste the savory new bacon-loaded steak burger.” Letus immediately replied, “unsubscribe.” Two months later, King Burger sent Letus another e-mail about the bacon-loaded steak burger boasting about its “irresistible aroma.” Yet another e-mail was sent to Letus that summer urging him to “stop by King Burger for a refreshing mocha shake…the perfect mix of rich coffee and chocolate syrup.” Delicious as all of these offers sounded, this was all too much for Letus who brought suit against King Burger. His complaint alleged that King Burger caused actual harm and aggravation by harassing him with unsolicited e-mails. Damages sought…a tasty $5 million. Will Letus have it his way?

Quick debt solutions, on-line degrees, hot XXX action and Nigerian lottery winnings – Spam takes many frustrating forms. With Spam comprising almost 85% of the world’s e-mail traffic, legislatures around the world have enacted legislation to combat the problem. In 2003, the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) became the first U.S. legislation to set standards for commercial e-mail. Commonly referred to as the “You Can Spam Act” because it effectively legalizes most e-mail spam (e.g. the Act does not require senders to obtain permission before sending e-mail), the Act implements certain requirements and imposes civil and criminal penalties. One such requirement would be that King Burger timely honor Letus’ opt-out request. While Letus may have a good claim for the e-mails he received following his opt-out, it’s unlikely his award will sniff $5 million.

Tilting the Scales In Your Favor

To avoid being a CAN-SPAM violator, be aware that:

  • Senders must not use a false or misleading e-mail address or subject line;
  • The e-mail must tell the recipient how to opt-out from future e-mails and the sender must honor opt-out requests within 10 business days;
  • The e-mail must disclose the sender’s physical address;
  • Recipients must be warned of sexually explicit content;
  • The e-mail must be identified as an advertisement;
  • Senders must monitor what is being sent on their behalf by marketing companies that they hire. In other words, you cannot contract away liability; and
  • Violations can be costly — each e-mail in violation of the Act is subject to a fine of up to $16,000.

* As you undoubtedly know, Spam is the name for all of those unsolicited e-mails and text messages that find their way into your computer inbox. As you probably also know, the term Spam is derived from a 1970 Monty Python sketch where 2 customers are trying to order breakfast from a menu where every item includes the delicious and ubiquitous canned meat.

Boisterous Billy Clint is a TV and film director in Los Angeles. With the economic downturn, times are slow in the film business. Billy laid off most of his corporate staff last year just to keep the doors open. Hoping to get the rights to produce the next big show, Billy still has administrative work to do. In what he thought was a stroke of genius, Billy contacted University of Big Dreams. For a small fee, UBD offered to find Billy a college student hankering to get an inside look at the entertainment industry to work without pay as Billy’s summer intern. Monica Lansky is a sophomore majoring in film and economics, having work experience in neither. Monica leapt at the chance to work for Billy even though she would not be compensated.

Everybody wins, right? Or, does Boisterous Billy Clint have a problem?

Just in time for the arrival of summer interns at many companies, the U.S. Department of Labor issued its Fact Sheet #71 announcing that it will be “cracking down” on unpaid internships. For-profit, private sector employers will be very limited in the circumstances in which they can offer an unpaid internship. All of six criteria must be satisfied to avoid the DOL from finding that there is an employment relationship requiring that the intern be paid at least minimum wages. They are:

  1. the intern should not replace a regular paid worker,
  2. the work should be similar to the training an intern would receive at an academic or vocational school,
  3. the employer should derive no immediate advantage from the activity of the intern, and on occasion, the employer’s operations may actually be impeded,
  4. the internship experience is for the benefit of the intern,
  5. the intern is not necessarily entitled to a job at the conclusion of the internship, and
  6. the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

TILTING THE SCALES IN YOUR FAVOR

If your company elected to hire interns this summer, you might consider the following:

The more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience. Oversight by UBD over the internship program and educational credit would be a plus. In addition, the more Billy can provide job shadowing opportunities that allow an intern to learn about the film business under the close and constant supervision of regular employees (with the intern providing minimal or no work), the more likely the activity will be viewed as a bona fide educational experience.

The internship should be of a fixed duration, established prior to the outset of the internship. An employer should avoid using unpaid internships as a trial period to determine whether to hire the intern full time at the conclusion of the internship period. If the intern is placed with the employer for a trial period expecting to be later hired on a permanent basis, the student generally will be considered an employee under the FLSA. Finally, if your intern is later determined to really be an employee, the Act’s minimum wage and overtime provisions carry forward if the intern accepts full employment.

See US DOL Fact Sheet #71 at http://www.dol.gov/whd/regs/compliance/whdfs71.htm

Ivana Cut owns Curl Up & Dye, a successful chain of hair salons.  Curl Up & Dye currently employs 47 full time stylists and, with the promising positive turn around in the economy, is planning to hire 5 new employees within the next year.   The company does not currently provide health insurance benefits to its employees.   Like many small business owners, Cut is closely watching President Obama’s health care legislation to assess how it will affect her business and whether she will be penalized for not providing health insurance to her employees.

The 2400 page Patient Protection and Affordable Care Act requires nearly every American to obtain health insurance.  Not surprisingly, the law envisions that most workers will obtain coverage through their workplace. The Act provides a system of “carrots” and “sticks” to motivate employers to provide health insurance coverage to all their employees.  Most likely, the biggest change to Cut’s business will be that once she hires 50 employees, Curl Up & Dye will be considered a large employer under the Act.  Beginning in 2014, large employers, those who have at least 50 full time employees, must make available an Act mandated minimum level of health care coverage or pay an annual penalty of $2000 per employee.  Also beginning in 2014, businesses of less than 100 employees will be able to buy health insurance through state-based exchanges known as “SHOPS,” allow small businesses to pool together to purchase insurance at prices historically enjoyed only by larger businesses.  Accordingly, while Curl Up & Dye would currently be exempt under the new Act from having to provide health insurance coverage, any anticipated growth will push it over the “play or pay” threshold.

Tilting the Scales in Your Favor

Small businesses will need to closely monitor the number of their full time employees to determine their options and potential penalties.  Critical to the counting of full time employees is the impact of part time employees who may be counted as partial employees to determine whether a business has 50 employees.  Human resource managers would be wise to calendar employee counts on a monthly or quarterly basis.  Also, small businesses may want to take advantage of certain tax incentives in the short term.  In tax years 2010-2013, small businesses with less than 25 employees and annual wages of $40,000 or less are eligible for a 35% tax credit if they pay 50% or more of their employees’ health insurance costs.  Starting in 2014, small businesses that purchase health insurance through a SHOP can receive a two year tax credit of 50% of the cost of the premiums.

Ricky Bacardi was throwing a bachelors party for groom to be Harvey Wallbanger at the Tropicabana Hotel in Florida on March 31, the night before Harvey’s April  1st wedding . As the night wore on, Ricky suggested that they all play last man standing with shots of Aha Loco tequila. While Harvey was drinking real tequila, he had no idea that his friends were actually drinking water. With every shot of Aha Loco, Harvey became increasingly tipsy. Once he was wallbanging drunk, Harvey’s friends took his wallet, his identification, belt and shoes and carried him to the AeroSunshine airport where they booked Harvey on a cross-country flight to California, telling the flight attendant that he had to make it to his wedding the next morning and to please make sure he got off the plane -in California (obviously, this was a time of kinder, gentler airport regulations!).

Well, the next morning Harvey woke up in a California airport with no money, no identification, no wallet, barefoot and pants fitting loosely. He wandered out to the curb trying to make sense of what had happened. When Harvey asked the local constabulary where he was, he was arrested for vagrancy and public intoxication. Needless to say Harvey missed his wedding in Florida later that day. Not appreciating the humor of the prank, Harvey’s bride-to-be (actually, no his former bride-to-be) and her family declared war on Ricky Bacardi and his band of fellow groomsmen. The end result? Scorched earth litigation between the bride’s family and the groom’s friends that resulted in a law suit for the wedding, the reimbursed guest expenses, the reception at the Tropicabana, and the honeymoon expenses all of which were non-cancellable on short notice. The bride’s family won the suit and the ordeal ended all of their friendships, not to mention the engagement.

Tilting the Scales in Your Favor.

When does an April Fool’s prank become a joke? Perhaps, when a lawsuit is filed and friendships are flushed. When is going too far, too far? Maybe when the prank eliminates all options for recovery. Think ahead! IS there a way for the person on the receiving end of the prank to recover to the same status he or she was in before the prank? If not, better tone it down a bit. On the other hand, you can be like Google and Topeka, KS and use April to “fool” everyone else. Google created the biggest joke of the day by changing its name to “Topeka.”  It was a gesture based on a Google contest for American cities to compete to host and test Google’s high-speed Internet service.

Arguably, both Google and Topeka “won” because of the favorable media coverage that both received for pulling an April Fool’s prank on the rest of us. Great prank, great interest, great advertising, no harm done.

http://www.associatedcontent.com/article/1734318/practical_jokes_gone_wrong_pg2.html

http://www.examiner.com/x-30717-Kansas-City-Web-20-Examiner~y2010m4d1-Toto-I-Have-A-Feeling-Were-Not-In-Google-Anymore