Employee Misclassification As Prevalent As Ever

The Fair Labor Standards Act was passed in 1938 to establish a national minimum wage, and has been updated on numerous occasions since.  However, according to a recent article by Huffington Post, employer abuse has increased during the recession.  According to the article, one of the most common illegal practices is for employers to misclassify employees as independent contractors.

The article cited 2010 Senate testimony of the National Employment Law Project's Catherine K. Ruckelshaus, who detailed not only the abuses, but also the effects that employee misclassification can have on the broader economy. 

The distinction between employees and independent contractors always has been, and probably always will be, one of the most hotly contested legal issues.  Adding to the nuance, the distinction differs with respect to the particular area of law at issue:  an independent contractor for tax purposes may not be an independet contractor for purposes of determining principle liability in a tort; an employee under the FLSA may be an independent contractor for tax purposes and for purposes of employer liability.  I must say that much of the illegal activity on the part of the employers may be unwitting, or worse, the consequence of poor legal advice.  Indeed, well-seasoned attorneys are often unfamiliar with the FLSA and its practical applications. 

This behavior, whether intentional or accidental, is not only illegal, but it costs the economy billions of dollars every year.  Governments at every level lose tax revenues, and workers lose wages resulting in consumers losing buying power.  It's for this reason that FLSA and state wage litigation is so vital.  We've come a long way in the 75 years since the FLSA was implemented, but free and cheap labor still continue to plague the economy.

The Difference Between Discrimination and Harassment

The Iowa Supreme Court recently ruled that employers can fire workers for being "irresistible", or did they? If nothing else the case demonstrates perfectly the difference between two concepts that the public often confuse: gender discrimination and sexual harassment.

Let's review the facts. Melissa Nelson was fired from her job as a dental assistant for being "irresistible" to her employer. He stated that he made sexual advances to her, which she refused. She sued for gender discrimination, and not harassment. The Court held that the conduct did not arise to the level of discrimination.

I have no idea why her attorney didn't sue for both discrimination and harassment. For what it's worth, I think the Iowa Court either missed, or the attorney failed to argue a key discrimination point: I sincerely doubt this dentist would've found men irresistible (I'm not sure this fact was established, so I'm reluctant to critique the Court for not considering it; it may well have been the attorney's mistake for not establishing it); as a result, he had two different standards for how men and women were to be treated. This is the definition of discrimination.

Harassment exists in two forms: Quid pro quo, and hostile work environment.

Quid pro quo requires the following:

Unwelcome sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature by the employer when:

Hostile work environment is defined as follows:

(The employer's unwelcome advances or conduct of a sexual nature) has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment.

Clearly, harassment is more difficult to prove than gender discrimination. However, in this situation, the employer's conduct is likely more harassment than it is discrimination. The argument could be made that two different standards of conduct are expected of men and women, and this would most certainly constitute discrimination. But harassment is the better argument. The employer expected the employees to either put up with his lewd behavior, or behave in such a manner so as not to not make him ogle, even though other employees and even other female employees could behave the same way. Further, failure to do this was clearly grounds for termination.