“So You Now Want To Come Back To Work – How Do I Know You Can Do Your Job?
The Goldstein Law Firm
October 2009 Newsletter
“So You Now Want To Come Back To Work – How Do I Know You Can Do Your Job? The Tax Man Comes Calling and Claims Your Independent Contractors Are Employees; and The Fall 2009 Labor and Employment Seminar – Making Hard Employment Decisions to Survive the Great Recession and Prosper in the Great Recovery”
By: Charles H. Goldstein, Esq.
The Goldstein Law Firm
The Great Recession of 2008-2009 will give way to a Great Recovery and a return to prosperity, growth, and economic security. However, the challenging economic environment has not suspended laws requiring reasonable accommodation of disabled employees or the obligation of Employers to engage in a good faith interactive process to reasonably accommodate a disabled employee. In this article, I discuss the steps that Employers have to take to prevent employees who seek to return to work after a workers’ compensation injury or other medical leave from returning to work when they are not medically released to perform their job.
The challenging economic environment has also created increased pressure on federal and state taxing authorities to increase revenue collections to close budget gaps, which means an increase in the number of investigations/prosecutions of employee misclassification cases. In this article, I also discuss practical tips for increasing the chances that your independent contractors are not found to be employees, thereby creating an employee-employer relationship and liability for employee taxes. Lastly, I look forward to seeing each of you at our 32nd Annual Labor & Employment Law Seminar on October 14th at the Cerritos Center for the Performing Arts from 9:00 a.m. to 12:00 p.m.
1. How Do You Prevent a Return to Work From Family Medical Leave From Turning into a Disability Discrimination Lawsuit?
An Employer has the right to request that an employee provide a fitness for duty release before returning to work. In order to retain this right, employees have to be put on notice of this requirement before going on leave. Many Employers advise employees of this requirement in the Employee Handbook and the notice granting the leave. However, the legal challenge is to avoid an employee’s return to work from a medical leave turning into a disability discrimination lawsuit.
Indergard v. Georgia-Pacific Corp. 2009 DJDAR 14192 (September 28, 2009) was a recently decided case before the United States Ninth Circuit Court of Appeals which illustrates one of the most significant legal pitfalls that an Employer faces when trying to make certain that the employee is medically fit to return to work. The Plaintiff, Indergard was a Napkin Operator in a mill. The position required her to be able to lift various amounts of weight from the floor. She was on leave to undergo knee surgery and recuperate from December 9, 2003 to March 21, 2005 when her orthopedic surgeon authorized her return to work with permanent restrictions. Her Employer sent Indergard to an independent occupational therapy provider for what it must have thought was a fitness for duty examination, a Physical Capacity Evaluation (“PCE”). When Indergard failed the test, the Employer refused to return her to work. Indergard sued for disability discrimination under the Americans with Disabilities Act (“ADA”) and other claims.
The Court found that under the ADA, the PCE test was more than a fitness for duty test permitted by law, but was instead a “medical examination”. Therefore, the Employer violated the ADA by requiring the employee, as a condition of returning to work, to undergo such an examination unless it could prove that the examination was job related and required by business necessity. The significant issue raised by Indergard v. Georgia-Pacific Corp. is not whether an Employer can require a returning employee to be medically tested to determine if the employee can perform the essential duties of his or her job; but whether the nature of the medical test given to the employee goes beyond the narrow issue of fitness for duty and becomes a general medical examination.
The problem for Employers attempting to comply with the ADA – but at the same time wanting to make certain that employees returning from medical leaves, including workers compensation leaves are fit for duty – is to make certain that the examination performed by the Employer designated health care provider does not exceed the bounds of a fitness for duty examination and becomes a medical examination. In her dissenting opinion, Circuit Judge O’ Scannlain makes the point that the “essential difference between a medical examination and a physical fitness and agility test for the purposes of the ADA is that the former is designed to reveal disability while the latter is designed to determine whether an employee can perform her job.”
Tips for Complying with the Indergard Case
Ø Make certain that your Employee Handbook has a provision requiring employees returning from medical leaves to submit to, and pass, a fitness for duty examination before being allowed to return to work.
Ø Request your health care provider to narrowly tailor any examination to a fitness for duty or agility test that is directly related to the job duties performed by the employee.
Ø Affirmatively and expressly direct your health care provider to not give the returning employee a complete “medical examination.”
Ø Make certain that the fitness for duty or agility test only tests whether the employee can safely perform the essential duties of his or her job.
Ø If the employee required a reasonable accommodation to return to work, request that your health care provider determine whether the reasonable accommodations are necessary for the employee to return to work.
2. Federal and State Governments Searching for Tax Revenues Go After Employers Who Misclassify Employees as Independent Contractors
The severe economic downturn has caused pressure to be placed on federal and state taxing authorities to increase revenue collections to support government programs. With California having a tax revenue shortfall of 12%, state taxing agencies are looking for ways to close the budget revenue gap which means an increase in the number of investigations and prosecutions of employee misclassification cases.
Increasing Your Chances That Your Independent Contractors Are Not Found to be Employees
Ø Make certain that you have a clearly drafted independent contractor agreement with your independent contractors.
Ø Make certain that you exercise no control over the methods and means by which the independent contractor performs services. Your only interest should be in the ultimate outcome of the performance of the independent contractor’s services.
Ø Make certain that your independent contractor provides his or her own tools, equipment, and instrumentalities to perform the services for which you have contracted.
Ø Make certain the independent contractor has all proper licenses necessary to perform the work.
Ø If the independent contractor hires other employees to perform the work, make certain that the independent contractor has workers compensation insurance to cover his or her or its employees.
Ø Look at the “economic reality” of the relationship to determine if the relationship really is that of an independent contractor relationship or an employer –employee relationship.
Ø Make certain that the independent contractor is not barred from providing services to other customers.
Ø Make certain that you do not provide independent contractors with any benefits provided employees such as vacation, health insurance, etc.
Ø Make certain that you do not discipline independent contractors or treat independent contractors as at-will employees because this would be considered strong evidence of an employer-employee relationship.
Ø File all necessary reporting forms for independent contractors with taxing agencies.
In addition to these factors listed above, federal and state taxing agencies, labor and wage and hour enforcement agencies and the Courts may use other factors to decide whether an independent contractor or an employer-employee relationship exists.
3. Making Hard Employment Decisions to Survive the Great Recession and Prosper in the Great Recovery:
The Goldstein Law Firm, a nationally recognized labor and employment law firm, is hosting its 32ND Annual Labor and Employment Law Seminar and inviting each of its clients to spend a morning from 9 a.m. to noon on Wednesday, October 14, 2009, at the Cerritos Center for the Performing Arts with me. A continental breakfast will be provided at the Seminar. The following Seminar Topics will be discussed:
· The mistakes employers make when terminating or laying off employees that lead to costly lawsuits and how to avoid them.
· The best way to remove “deadwood” employees who are impeding the company’s recovery.
· How to avoid costly lawsuits during the recovery from disappointed employees who are not recalled to work.
· Avoiding the pitfalls that trigger wage and hour class actions and how to prevent them from ruining your recovery.
· New labor and employment law developments including the proposed Employee Free Choice Act that could trigger, if enacted, a new massive waive of union organizing in the private sector, attempts to ban mandatory arbitration agreements, and new immigration “no match” policy.
The Goldstein Law Firm A Professional Corporation 8912 Burton Way Beverly Hills, California 90211 Telephone: (310) 553-4746 Facsimile No: (310) 282-8070