Part 1
The Benefits and Burdens of
Employment
Chapter 1
The Stakes of “Employment”
Problem 1.1
Problem 1.1 (cont.)
Gardeners
Floral designers
Software engineer/IT expert
Salesperson
Workers for transport, manual labor
McCary v. Wade
Δ Wade & WLM
K
Georgia Pacific
Myrick
π McCary & Fulwiley
McCary v. Wade
Issue: Whether Myrick was “employee” of Wade at
the time of the accident.
Myrick liable but bankrupt
∆: Myrick independent hauler
∆: Wade not liable to π via respondeat superior.
Summary judgment granted
– No public policy override
– Private ordering reigns
McCary v. Wade
Multi-factor balancing test to determine
whether Myrick is employee of Wade
Deciding factors:
– Myrick owned his own equipment
– Wade exercised little control
Ergo: Wade not Myrick’s employer.
Did Wade choose this structure to insulate
itself from liability to third parties?
Downsides of Wade being an independent
contractor?
Fitzgerald v. Mobil Oil Corp.
TLI
…had to pass road test given by…
π Fitzgerald
…delivered oil to various customers from...
Jerry Reiger
MTL
Δ Mobil
Fitzgerald v. Mobil Oil Corp.
“Exclusive Remedy” -Workers’ Comp is
employee’s only remedy
against employer.
Mobil Oil argues that it
was Fitzgerald’s employer
“Employer” status benefits
Mobil in this case
Court agrees that Mobil =
employer.
Fitzgerald v. Mobil Oil Corp.
“Economic Realities Test”
–
–
–
–
(1) control of worker’s duties
(2) payment of wages
(3) right to hire/fire/discipline, and
(4) performance of duties = integral part of business.
Less exacting than McCary test as to degree of
control required?
Mobil Oil has conflicting incentives:
– “Leases” TLI employees; TLI pays them
– yet successfully argues Fitzgerald its employee.
Natkin v. Winfrey
π Natkin & Green
…were retained as “staff
photographers” by…
Δ Winfrey
…who published photos
taken by Natkin & Green
without permission
Natkin v. Winfrey
∆ claims photos “works for hire” by employees
Court: πs independent contractors, not employees.
Court uses nonexhaustive, 13 factor Reid test.
Critical factors:
–
–
–
–
(1) highly skilled professionals;
(2) who owned & insured equipment;
(3) who exercised considerable discretion;
(4) not treated by Oprah as employees for
compensation/taxes.
Notes
If private ordering always trumped
Then employers would often define
workers as independent contractors
Why “employ” at all?
– Worker’s Comp exclusivity
– nonlegal reasons
control over work product
Morale
Competitiveness
Balancing?
– By employers in private ordering?
– By courts in implementing public policy?
The Reid 13
1. Right to control
8. Method of payment
2. Skill required
9. Hired party’s role re
assistants
10. Is work regular
Location of work
business of hirer?
Duration of relation
Right to give more work 11. Is hirer in business?
Hired party’s discretion 12. Employee benefits
13. Tax Treatment
over when to work
3. Source of tools
4.
5.
6.
7.
Problem 1.2
Gardners
Floral designers
Software engineer/IT expert
Salesperson
Workers for transport, manual labor
Clackamas Gastroenterology
Associates v. Wells
π sues under ADA
π = employee
Δ = statutory employer?
15-employee threshold
Are 4 physician-shareholders
“employees” under statute?
Court adopts 6 factor EEOC test
Remands for decision
What should happen below?
The Clackamas 6
1. Can firm hire/fire/set rules for the individual?
2. Does the organization supervise her work?
3. Does the individual report to a higher-up?
4. Is the individual able to influence the firm?
5. Intention of parties as expressed in contract?
6. Does individual share firms profits/losses?
Clackamas Notes
Not all employers are “statutory employers”
– Title VII/ADA = 15
– ADEA = 20
– FMLA = 50 & 50/75 miles
– FLSA = broad rule, riddled with exceptions
Not all employees are covered by all laws
– ADEA bars discrimination against over 40
– ADA protects “qualified individuals with a disability”
Some statutes impose personal liability on managers
(e.g., FLSA); some don’t (e.g., Title VII)
Yates v. Hendon
Yates = corporation’s
president/sole shareholder
Profit Sharing Plan bars
alienation of plan benefits
Benefits outside Bankruptcy
Yates’s creditors ask Bankruptcy
Court to avoid $50K payments
he made to the Plan to put them
back in Yates’s estate
Yates’ Creditors
Yates
Benefits
$50,000
Yates ProfitSharing Plan
Yates v. Hendon
Congress intended working
owners to qualify as participants
in ERISA employee benefit plan.
For most purposes, Yates is sole
proprietor of small business
For ERISA, he is an employee.
Clackamas owners can have
their cake and eat it too
Ansoumana v. Gristede’s
ΔDuane Reade
Δ Hudson/Chelsea
π
 πs delivered for DR
 HC paid πs $25-$30/day
HC paid #250-300 by DR
 πs claim FLSA minimum
wage/overtime
 πs New York law claim
Ansoumana v. Gristede’s
ISSUES
HOLDINGS
(1) Whether πs were employees or (1) πs were employees;
independent contractors of ∆s
H/C?
(2) Whether DR was also liable as
“joint” employer?
H/C liable to them
(2) DR a joint employer,
jointly/severally liable
Note:The Immigration Dilemma
 Immigrants often take lower-paying jobs
 IRCA bars discrimination against documented workers and
mandates it against undocumented ones
 UAs unlikely to seek wage/hours protection
 Should FLSA protect UAs?
 In terms of federal wage/hours policy?
 exploitation objectionable
 In terms of federal immigration policy?
 low wages incentivize employers to hire UAs
 higher wages incentive illegal immigration
Vizcaino v. Microsoft Corp.
πs classified as nonemployees by Microsoft.
πs sue for benefits available
to employees under
(1) SPP (ERISA)
(2) ESPP (Washington law)
Vizcaino v. Microsoft Corp.
HOLDINGS
(1) π workers covered
under ESPP plan.
(2) SPP issue remanded to
Plan Administrator
Vizcaino v. Microsoft Corp.
Plurality’s Opinion: focuses on plan
documents, which show an intent to include
all employees in plan.
O’Scannlain: focuses on particulars of what
parties negotiated; no contract for benefits
ever formed.
Microsoft Notes
The semantics of the opinions
Professionals different?
– Cf. “free lancers” in Ansoumana
– Did Microsoft workers benefit from higher pay?
The Plan Administrator denied the claims
– ERISA not very employee-friendly?
Microsoft planning for the future
Problem 1.3
Gardners
Floral designers
Software engineer/IT expert
Salesperson
Workers for transport, manual labor