Tennessee News & Analysis

  • Workplace Trends

    Survey shows attitudes about talking politics at work. Job search platform Indeed in September reported results of a survey of 2,000 U.S. employees showing that 20% of those workers felt the workplace wasn't politically censored enough. The research also showed that 54% were comfortable with the current amount of sharing of political beliefs at work. Just 10% of respondents said they believed the workplace needed more political talk. The survey found that 23% of the respondents felt certain groups were being silenced at work. Of those, 60% reported that the source of silencing was statements or actions of peers, and 40% said it came from statements or actions from leadership.

  • Flu season is back: Can you require employees to get a shot?

    It's that time of year again, with many employers offering free flu shots to employees in hopes of reducing flu-related absences and resulting productivity decreases in the months ahead. Most often, a flu shot is offered as a choice and presented as an optional benefit. But can you require employees to get one? Let's take a look at the issues arising from that question.

  • TN Court of Appeals offers guidance on when preparing to compete crosses the line

    All Tennessee employees owe a duty of loyalty to their employer. Among other things, that means they can't compete with their employer while still employed. In addition, certain employees may be subject to noncompete agreements that restrict their activities both during and after their employment. But what if the employee isn't actually competing but instead is only taking preliminary measures to prepare to compete? In two recent decisions, the Tennessee Court of Appeals has offered guidance on this issue.

  • Don't forget to properly classify independent contractors

    You likely recall a time not so long ago when the improper classification of employees as independent contractors was the hot topic for the IRS and the U.S. Department of Labor (DOL). In 2011, the agencies entered into a "Memorandum of Understanding" in which they agreed to share information about potential misclassifications in an effort to crack down on the common practice. The DOL also entered into similar agreements with roughly 30 state departments of labor.

    If you haven't heard much about independent contractors lately, you're not alone. Nevertheless, we consider this an important issue that presents serious risks to employers that get it wrong. So in case it has fallen off your radar, consider this your refresher course.

    General principles

    Employers are prohibited from classifying a worker as an "independent contractor" if the nature of the working relationship is, for all intents and purposes, that of "employer-employee." If certain factors are met, you cannot classify employees as independent contractors even if, for example, they are begging you to do so or they sign an apparently ironclad contract in which they specifically acknowledge being independent contractors.

    The IRS is concerned about misclassification because employers that misclassify employees as independent contractors don't pay employment taxes or withhold them on the employees' behalf. The DOL's concern lies primarily in the fact that employees who are misclassified as independent contractors are deprived of key benefits and legal protections under such laws as the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Employee Retirement Income Security Act (ERISA).

    Factors to consider

    So how can you be sure your independent contractors are properly classified? The easier question is, how can you tell they aren't? Here are some of the biggest red flags that employees have been misclassified as independent contractors:

    • You require them to follow instructions on when, where, and how the work is to be done. This is the single most important factor.
    • You provide training for them (which can be as informal as requiring them to shadow more experienced employees).
    • The nature of the relationship precludes them from making a profit or suffering a loss. (In other words, employees get paid no matter what, while independent contractors have a financial stake in their enterprise.)
    • You pay them on an hourly, weekly, or monthly basis (as opposed to a per-project fee).
    • They provide services that are integral to the success of your business. (In other words, they do what your business was formed to do.)
    • They perform services for you on an ongoing (not necessarily continuous) basis.
    • You require them to perform the work personally.

    On the other hand, there are certain factors that may weigh in favor of concluding the workers are properly classified as independent contractors:

    • You have a written agreement with them reflecting that (1) they are independent contractors who will be paid by the job or project, (2) they will provide all necessary tools or equipment for the performance of the work, and (3) there is a defined duration for the contract/project and a set project fee.
    • They are incorporated or have their own employees.

    Just keep in mind that you can't be certain either of those "green flags" will protect you if other factors weigh in favor of classifying the workers as employees.

    Final thoughts

    While the federal agencies may be taking a less aggressive (and less collaborative) enforcement approach, remember that the underlying legal requirements have not changed. If someone you have classified as an independent contractor files a complaint with the DOL (or a state agency), there's a good chance you will receive a call or visit from an agency official who will want to take a close look at your independent contractors. Once the DOL is involved, there is a chance the IRS will come knocking as well.

    More important, if one of your contractors consults an attorney, you could quickly find yourself on the receiving end of a lawsuit. If you happen to have a number of independent contractors performing similar services, that lawsuit could turn into a costly and time-consuming class action.

  • DOL issues FMLA opinion letters after a long break

    For the first time in nearly a decade, the U.S. Department of Labor's (DOL) Wage and Hour Division (WHD) has issued opinion letters interpreting the requirements of the Family and Medical Leave Act (FMLA). This may be a sign that the Trump administration intends to rely heavily on opinion letters as a form of guidance for employers, a practice that had been discarded by the Obama administration.

  • Election leave rules in Tennessee

    With election time here, you probably have received questions about voting leave for employees. Here is a brief overview of Tennessee law in this area.

  • Working off the clock is off-limits

    I was reading recently about a lawsuit in which four plaintiffs' law firms tried for years to pursue a class action lawsuit against a Chipotle operation up in Minnesota. The claim was that a shift supervisor at one of the restaurants had required hourly employees to work off the clock, which, if it occurred, would be a violation of the Fair Labor Standards Act (FLSA). A handful of employees came forward to make these claims, with the lawsuit asserting that their claims were representative of hundreds of employees companywide.

  • Workplace Trends

    Salary increases expected to remain flat. Research from workforce consulting firm Mercer shows salary increase budgets for U.S. employees are at 2.8% in 2018—no change from 2017. Salary increase budgets for 2019 are projected to be just 2.9%, despite factors like the tightening labor market and a high rate of workers voluntarily quitting their jobs. The information comes from Mercer's "2018/2019 US Compensation Planning Survey." Mercer's research shows that even newly available investment dollars from the new Tax Cuts and Jobs Act aren't enhancing the compensation budgets for most companies. Mercer says just 4% of organizations have redirected some of their anticipated tax savings to their salary increase budgets.

  • 6th Circuit finds denial of orange juice request violates ADA

    A recent case from the U.S. 6th Circuit Court of Appeals (whose rulings apply to all Tennessee employers) illustrates the pitfalls of failing to modify workplace policies to accommodate workplace requests and highlights the importance of supervisory training.

  • New technologies create new employee privacy issues

    Unless you work for a company that's very small or very low-tech by nature, chances are, one of your biggest challenges is keeping up with technology. If your competitors are taking advantage of the many new technological advances that promote efficiency and productivity while you're stuck in 1999, your business will struggle to compete.