This was posted in December of this year but the content was too good not to share with our readers.
By: Christopher Andree, Gowlings
New rules for temporary employees were recently put into force in Ontario. In addition to affecting the temporary employees 
themselves, the new rules affect the temporary help agencies who place the temporary employees, as well as the clients who use the temporary employees in their businesses. Following are some of the highlights of the new rules enacted in Bill 139, Employment Standards Amendment Act (Temporary Help Agencies) 2009.
Which employees are affected by the new rules? The new rules apply to “assignment employees”. An assignment employee means an employee who is employed by a temporary help agency for the purpose of being assigned to perform work on a temporary basis for clients of the agency.
Which businesses fall within the definition of "temporary help agency"? If a business employs individuals for the purpose of assigning them to perform work for a client on a temporary basis, the business may be considered to be a temporary help agency for the purposes of Bill 139.
What obligations does Bill 139 impose on temporary help agencies?
1. Finder’s Fee Restrictions: Temporary help agencies are prohibited from restricting clients and temporary employees from entering into an employment relationship. If a client and temporary employee enter into an employment relationship directly at any time 6 months after the temporary employee first performed work for the client, the agency is prohibited from charging a fee to the client.
2. Prohibition against charging fees to temporary employees: Temporary help agencies are not permitted to charge temporary employees fees for things such as joining the agency, being assigned by the agency, receiving assistance with resume writing and job interviews, or entering into an employment relationship with a client.
3. Information regarding assignment: Temporary help agencies have an obligation to provide the following information in writing to the temporary employee: legal/business name of agency and client, contact information for agency and client, remuneration and benefits associated with an assignment, hours of work, general description of the work to be performed, pay period/day, and estimated term of assignment (provided that information is available).
4. Temporary Layoffs: For the purposes of triggering a deemed termination of employment under the Employment Standards Act, a temporary employee will be on temporary layoff during any week he/she is available to work but not assigned to a client.
5. Termination and Severance Obligations: Termination and severance pay (subject to some exceptions) is payable upon the termination of employment of a temporary employee and will be calculated based upon the greater of actual earnings during the notice period or the temporary employee's average earnings during the 12 week period immediately preceding his/her last day worked.
What restrictions does Bill 139 place on clients of agencies? No client of a temporary help agency will be allowed to refuse or end the assignment of a temporary employee who makes enquiries, or seeks compliance or enforcement of his/her rights under the Employment Standards Act. A breach can result in an order for both compensation and reinstatement.
Does Bill 139 have any impact on existing temporary help arrangements? Bill 139 applies to all temporary employees, including those assigned before it came into force. Any provision in an existing client or temporary employee contract which is inconsistent with the provisions of Bill 139 is void and unenforceable. Further, if the agency has not already provided the required information regarding an assignment to its existing temporary employees, it is required to do so immediately.
What should temporary help agencies do as a result of the changes? Temporary help agencies should familiarize themselves with the provisions of Bill 139 and undertake a review of any fees charged to clients and/or temporary employees, the wording of their client and temporary employee agreements, and any related policies and practices to ensure that they are compliant with Bill 139. Agencies may also wish to advise their clients of the new requirements and the restrictions placed upon them.
What should clients of temporary help agencies do as a result of the changes? Clients of temporary help agencies should familiarize themselves with the provisions of Bill 139 and undertake a review of their agreements with temporary help agencies. They should also review their practices regarding the use of temporary employees to ensure their practices are consistent with the new legislation.
Where can you go for more information? For further information, you may want to review the text of Bill 139 and the accompanying Explanatory Notes by clicking on the following link:
http://www.labour.gov.on.ca/english/es/ib_tha.html
Fifty-eight percent of Canadian hiring managers said they plan to add new employees in the second half of the year, according to a survey by CareerBuilder.
Information technology ranked as the top area for recruitment with 30% of hiring managers saying they are adding jobs in that area. It was followed by customer service with 26% of managers hiring in this area.
"While companies plan to hire more workers in the second half of the year, they report they will do so gradually," said Brent Rasmussen, president of CareerBuilder North America. "In addition, they will continue to focus on revenue generating positions and maintaining their current staff levels in an effort to facilitate growth and sustain their businesses through the rest of 2010."
The survey included interviews with 239 Canadian hiring managers conducted between May 22 and June 3.
Source: SIA
On June 17, 2010, the Senate Committee on Health, E
ducation, Labor and Pensions conducted a hearing on the Employee Misclassification Prevention Act, S. 3254 (EMPA). The bill, which was introduced by Sen. Sherrod Brown (D-Ohio) on April 22, 2010, seeks to amend the Fair Labor Standards Act in several significant respects relating to the classification of workers as employees or independent contractors. The proposed legislation would:
Require employers to keep records of persons treated as independent contractors with respect to the hours worked by such individuals and the remuneration paid to them;
Require employers to maintain a record of the classification of each worker as an independent contractor or employee and to provide written notice of such classification to the worker, along with other notifications specified by the bill;
Provide for penalties to be imposed on businesses of up to $1,100 per person for violations of the recordkeeping requirements or for misclassifying workers as independent contractors, and up to $5,000 per person if the violation is found to be repeated or willful;
Provide for a presumption that any worker for whom the required records are not maintained is an employee of the company, which could only be rebutted by clear and convincing evidence that the worker is an independent contractor;
Provide for treble damages for willful violations of minimum wage and overtime requirements if the affected employee was misclassified as an independent contractor;
Require the secretary of labor to create a website that explains the rights that a person misclassified as an independent contractor may have and that would enable workers to file complaints online;
Provide for information sharing and coordination between the Internal Revenue Service (IRS) and the Department of Labor (DOL) with respect to misclassification issues; and
Restrict federal grants to state unemployment compensation systems unless the state has an auditing and investigation program that identifies employers not reporting compensation for unemployment compensation purposes.
In prepared remarks, Seth Davis, Deputy Secretary of DOL, made clear that DOL and the Obama Administration strongly support EMPA. Mr. Davis also noted that DOL’s Wage and Hour Division is actively considering a rule that would require employers, before classifying a worker as an independent contractor, to perform a written analysis of the worker’s status under applicable FLSA precedent, to provide a copy of the analysis to the worker, and to maintain a record of the analysis in the company’s files.
Opponents of EMPA remarked that the proposed legislation would impose enormous costs on owners of small businesses. Sen. Mike Enzi (R-Wyoming) estimated that it would cost billions of dollars for small businesses to comply with the recordkeeping requirements and would, for example, nonsensically require employers to notify employees that they were employees. He also noted that the audits would focus on recordkeeping rather than misclassification and fine employers simply for failing to keep proper records.
Although not the subject of the June 17 hearing, EMPA has been linked to the Taxpayer Responsibility and Consistency Act (TRCA), which was introduced by Sen. John Kerry (D-Massachusetts) on December 15, 2009. TRCA would amend §530 of the Internal Revenue Code in ways that would effectively remove the availability of the Code’s Safe Harbor provisions to all but a very few employers. The §530 Safe Harbor was originally enacted in the late 1970s to protect businesses that were relying on their industry’s long-standing practice of using non-employee workers for the performance of certain services, or on prior IRS audits that made no determination that independent contractors were misclassified. The idea was that the Safe Harbor would be temporary until a new independent contractor standard could be developed that was clear and objective and could be reliably and consistently applied. Contrary to that intent, TRCA would eliminate the availability of §530, except in a very few cases, without the adoption of a law that made the determination of independent contractor status clear and objective.
These legislative efforts, together with increased funding and enforcement efforts applied at both the federal and state levels, provide clear evidence of the increased risks and potential liabilities imposed on companies that use the services of independent contractors. Now is the time for employers to examine their independent contractor relationships and determine whether changes need to be made to those relationships or to the company’s practices in dealing with independent contractors.
By Lindsay Beyerstein, In These Times
O
ver 10 million American workers are classified as independent contractors. But how many of them are really self-employed and how many are falsely labeled as such by unscrupulous employers?
That's one of the questions the Senate Committee on Health, Education, Labor and Pensions (HELP) set out to answer in a hearing on employee misclassification last week.
Employers mislabel their employees as contractors in order to avoid paying Medicare, UI and Social Security taxes. Amazingly there are no legal consequences for misclassifying workers, even if the employer does it on purpose. Committee Chair Tom Harkin (D-Iowa) pointed out this kind of tax evasion is costing cash-strapped state unemployment insurance funds billions of dollars a year.
A 2000 study commissioned by the Department of Labor found that up to 30% of employers misclassify at least some of their employees. The practice is rampant in the construction industry and in low-wage and gray market sectors of the economy.
By breaking the law, employers can cut their labor costs by up to a third. Frank Battaglino, who owns a sheet metal company in Maryland, testified about how hard it is for law abiding employers to compete with companies who cut corners.
"Increasingly we were being beat out of competitive bids by unusually low bids," Battaglino said. "We know this is a direct result of companies deliberately misclassifying their workers as independent contractors."
Who counts as an employee? The law takes a pretty commonsense view of the question. Basically, if you work for wages with the employer's tools at the employer's workplace under the employer's supervision, you're an employee. True independent contractors are literally in business for themselves. They invest capital in their own ventures and share in the profits or losses of their enterprises.
Deputy Secretary of Labor Seth Harris told the committee about one Wisconsin family restaurant that tried to evade minimum wage laws by classifying the dishwashers in their kitchen as "independent contractors."
Most workers don't realize that most of the rights they take for granted in the workplace derive from their legal status as employees. For example, most anti-discrimination laws are written in terms of what employers can do to their employees. Contractors may not be protected.
Help may be on the way for misclassified workers. In January of 2010, the DOL hired more inspectors to combat misclassification. The President's 2011 budget calls for an additional $25 million to help the DOL, IRS and other agencies address the problem.
Finally, Harkin and Sen. Sherrod Brown (D-OH) have introduced the Employee Misclassification Prevention Act, which would impose penalties for misclassifying employees as contractors and require employers to keep records on non-employees who work for them.
Last week the American Teamster's union announced that they are in favor of the Obama administrations crack down on misclassified workers. You can read more 
about the announcement in our news section. Teamsters Support Senate Efforts to Protect Misclassified Workers.
No real surprise here as the unions continue to try and remain stable in light of the trouble economy. They are going to be behind any efforts to corral jobs from both misclassified union and non-union work locations to help bolster their declining ranks. According to the Bureau of Labor Statistics, "The number of wage and salary workers belonging to unions declined by 771,000 to 15.3 million in 2009, largely reflecting the overall drop in employment due to the recession." In 1983, the first year for which comparable union data are available, there were 17.7 million union workers.
Certainly many union shops have been impacted by the down economy that has hit hard in the manufacturing areas like Autoworkers, etc. As the unions can enlist the government to help them identify what would or should be union positions will continue to bolster their ranks and dues.
Let us know how your company has been effected by unions and contract workers. Share information that might help another company challenged with this area of employment processing.
The impacts of the new health care laws on contingent workforce management will not be fully understood for some time, and could be subject to change before they
take effect. But some provisions of great concern are approaching rapidly, including a little understood and newly highlighted 1099 reporting provision slated to take effect on January 1, 2012.
Like the proposed Employee Misclassification Prevention Act (EMPA) bill, this new requirement would “pierce the corporate veil” of hidden independent contractor vendors and require immediate discovery and control over challenging spend categories such as statement of work consultants and sub-contractors.
According to Michael Tanner, a senior fellow of the CATO Institute:
The latest surprise is Section 9006(b)(1) . . . which requires that businesses provide a 1099 form to every vendor with whom they do more than $600 worth of business over the course of a year. . . Of course businesses already have to file 1099s for outlays on items like consultants. But the new rule will mean that even the smallest of businesses will have to issue a form — and file with the IRS — for virtually every purchase or payment. Consider how many business transactions go on every single day in a $14 trillion U.S. economy. Millions, perhaps hundreds of millions, of forms will be winging their way between businesses and between businesses and the IRS. The potential for mistakes and lost forms would be tremendous. And with errors would come audits and penalties."1
With legislation like this already passed into law, there is no need to wait for the Employee Misclassification Prevention Act to start bringing SOW consultants and incorporated independent contractor vendors -- including project services spend -- into your centralized Contingent Workforce Management program.
You will be required to not only track this spend, but issue 1099s, starting in just a year and a half. Given the tremendous amount of organizational change such a requirement represents, enterprises should look to starting the process of a deep contractor risk assessment now.
After all, even if this particular provision affecting 1099s laws is extended or overturned, the message from legislators and regulatory agencies is clear -- there will be no more hiding of independent contractors for purposes of misclassifying workers.
1. Tanner, Michael. CATO Institute. “Health Bill Floods Business In Paper.” May 6, 2010. http://www.ajc.com/opinion/health-bill-floods-business-521926.html?tag=content;selector-perfector
Posted by Liz Greene
FIRST SUMMARY JUDGMENT RULING FROM THE FEDERAL MDL COURT HOLDS THAT ILLINOIS FEDEX DRIVERS ARE EMPLOYEES, NOT INDEPENDENT CONTRACTORS
In PSC's ongoing coverage of the Federal Express Cases on Employee Misclassification, we bring you the latest update from Illinois District Court.
June, 2010. Source: http://www.fedexdriverslawsuit.com/
FedEx Ground and Home Delivery drivers have been found to be employees under the Illinois Wage Act. The decision was issued by U.S. District Court Judge Robert Miller in the multi-district litigation that Judge Miller has been presiding over for the past five years. (In re: FedEx Ground Package System, Inc. Employment Practices Litigation, Cause No. 3:05-MD-527 RM) This holding came in a May 28, 2010 Opinion and Order granting summary judgment to the Illinois drivers under the Wage Act. The Court did not rule on other claims made by the Illinois drivers, but indicated it will address those claims separately. The decision is important in that it is one of a growing number of decisions in the past few years holding that the FedEx Ground drivers are employees and not, as FedEx claims, independent contractors. The essence of the cases consolidated before Judge Miller is that FedEx Ground has intentionally and consistently misclassified drivers as independent contractors, when they are in reality employees. Judge Miller specifically found that the Illinois drivers were employees under the Wage Act because their work was an essential and a necessary part of FedEx's business. As former CEO Dan Sullivan testified, the drivers are the "centerpiece" of FedEx's "workforce" and they are an "essential component" of the company's business. The Court noted the fact that drivers must wear FedEx uniforms and maintain a personal appearance satisfactory to FedEx. Contractors supply their own vehicles, but they must bear FedEx's logos and advertising. Further, FedEx structures the routes so that the trucks are in use 9 to 11 hours a day. Contractors can hire replacement drivers, but only with FedEx's approval. Finally, the Court noted that FedEx managers were obligated to have business discussions and customer service rides each year in order to maintain FedEx's image and reputation. Drivers' motions for Summary Judgment in 40 other states are pending. Currently, there are 63 lawsuits consolidated in the multi-district litigation. Motions for Summary Judgment have been filed, briefed and are awaiting decisions in almost all of these cases.
Labor Department Announces Enforcement Actions Against More Than Half of the Subcontractors on 'The Province' at RIT Project
Enforcement actions part of statewide crackdown on employers who mis
classify workers as independent contractors or pay them "off the books"
Albany, NY (June 08, 2010) -
State Labor Commissioner Colleen Gardner announced today the results of two enforcement sweeps at the ‘The Province' at RIT (Rochester Institute of Technology) construction project. Widespread violations of State labor laws were found, including nonpayment of overtime, off-the-books employment, failure to carry workers' compensation insurance, and
misclassification of employees as independent contractors by more than half (12 of 21) of the subcontractors interviewed by DoL on the site.
The sweeps were carried out by the New York State Joint Enforcement Task Force on Employee Misclassification on January 26 and February 9 of 2010. The Task Force is an interagency strike force formed in 2007 to address the problem of employers who improperly classify employees as independent contractors or who pay workers "off the books." The strike force that visited ‘The Province' work site included investigators from the NYS Department of Labor and the Workers' Compensation Board.
"In each of these cases, employers brought in crews of out-of-state workers who were typically paid off-the-books," said Commissioner Colleen Gardner of the New York State Department of Labor. "Our announcement today is a victory for workers and taxpayers. We were able to recover these workers' hard-earned wages from out-of-state contractors within a few months."
Gardner added, "The problem of employers misclassifying workers as independent contractors or paying them "off-the-books" is happening statewide. My message to those employers, whether you are from New York or another state, is: ‘You are cheating your workers and the taxpayers, and undercutting honest businesses. We are looking for you - and the chances that you will get caught have never been better.' "
Chair Robert Beloten of the New York State Workers' Compensation Board said, "A business that doesn't carry insurance threatens its workers' well-being and gains an unfair advantage over its law-abiding competitors. Our stop-work order program is an essential tool in dealing with employers who refuse to follow the law and provide workers' compensation coverage for their employees."
Four subcontractors were found to owe a total of $42,835.32 in unpaid overtime wages and liquidated damages. An additional $22,500 in penalties was assessed by the Department of Labor's Division of Labor Standards. The department has already collected $33,728.13 for the labor law violations from three subcontractors, and a fourth subcontractor has agreed to pay a balance due of $31,607.19.
The Department of Labor's Division of Unemployment Insurance found that 12 of the 21 contractors on the site had misclassified 211 workers and owe the Unemployment Insurance Trust Fund more than $80,000 in unemployment insurance taxes.
Three subcontractors were also issued stop-work orders by the Workers' Compensation Board for not carrying workers' compensation insurance.
To learn more about the entire release visit the NYS DOL website.
To learn if you are at risk and how your company can save thousands to millions, please click on our Risk/Reward icon below.
Continuing a trend in Congress to limit employers’ use of independent contractors, on April 22, 2010, Rep. Lynn Woolsey (CA) and Senator Sherrod Williams (OH) introduced the Employee Misclassification Prevention Act (H.R. 5107, S. 3254) (“EMPA”) in the House and Senate respectively.
The EMPA would amend the Fair Labor Standards Act (“FLSA”) and render worker misclassifications a violation of federal law. Employers would be required to maintain records reflecting hours worked and wages paid for employees and non-employee workers. They also would be required to provide workers a “notice” that identifies:
- The worker’s classification
- A yet to be created, Department of Labor website (containing an on-line complaint link)
- Contact information for the applicable Department of Labor office
- Other additional information as prescribed by regulation.
For workers classified as non-employees, the Notice would be required to state:
Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.
Employers who violate the notice and/or record keeping requirements or misclassify a worker would be subject to a civil penalty of up to $1,100 per worker for a first offense and up to $5,000 per worker for willful or repeated violations. Employers who misclassify workers and violate the minimum wage and overtime requirements would be subject to
treble damages (3X). The proposed legislation also contains broad anti-retaliation/discrimination provisions.
To enforce the Act’s provisions, the Department of Labor would be directed to perform targeted audits focusing on employers in industries that frequently misclassify employees. The Department of Labor and Internal Revenue Service would be permitted to refer incidents of misclassification to each other. The states would be directed to increase their own penalties for worker misclassification, conduct audits for the purpose of identifying employers who misclassify workers, and report the results of the audits to the Department of Labor on a quarterly basis.
While the EMPA is in the earliest stages of consideration by both houses of Congress, its introduction is significant because it follows introduction of the Taxpayer Responsibility, Accountability, and Consistency Act of 2009 (“TRAC”) (H.R. 3408, S. 2882), which would revise the Revenue Act of 1978’s safe harbor provision (the safe harbor provision allows an employer to treat a worker as a contractor if certain requirements are met), make it more difficult for employers to classify workers as independent contractors, and significantly increase employer penalties in the event of misclassification. It also follows President Obama’s proposed budget for 2011, which includes significant funding for the U.S. Department of Labor’s Wage and Hour Division to increase the Division’s number of investigators, train investigators to detect misclassification of workers, and focus on industries where misclassification is most prevalent. In sum, the EMPA serves as a reminder that curtailing employers’ use of independent contractors remains a significant issue in Congress. Employers who have not yet done so would be well-advised to review their independent contractor relationships and ensure that they are on the up and up before the Department of Labor and/or a corresponding state agency does it for them.
By James Heeney, special to
CBC News
It's a matter of days before Bill 168 comes into force in Ontario, providing new 
protections to employees regarding workplace violence and harassment. Is your business ready?
The legislation takes effect on June 15, 2010. It's important to understand that all employers are required to meet these legal requirements, no matter how large or small the company is.
While large corporations with significant budgets and human resources departments have extensive resources to put these legal requirements into place, navigating through the legal responsibilities may be significantly more difficult for smaller businesses.
Employers who leave these tasks to the last minute may find themselves in non-compliance with the law once the amendments come into force. The Occupational Health and Safety Act indicates that corporations that are in non-compliance will face penalties, including significant fines. Programs are already in place to audit workplaces in Ontario to determine compliance.
To help smaller businesses make the transition, here are five things all businesses need to do before June 15:
1. Conduct a risk assessment
The purpose of this assessment is to determine if any parts of the employer's operation are vulnerable to acts of violence. This assessment is later used to update or develop policies to control the identified risks.
Employers must ensure that they do a complete evaluation of their operations to ensure that the vulnerabilities to violence are identified and addressed. Unfortunately, the bill does not explain how such an assessment is to be done.
An assessment doesn't have to be a complex undertaking, though. It can generally be accomplished by creating a questionnaire and meeting with employees to help identify areas of concern in the workplace.
2. Make necessary changes to the workplace
Using the information gathered during the risk assessment, employers then need to make the necessary changes to reduce the vulnerability to violence in the workplace.
For example, in the retail, bar and restaurant industries an employee may be susceptible to client outbursts. If an employer identifies this as a risk for violence in the workplace, measures should be taken to reduce this risk by installing easily accessible emergency security buttons.
The installation of these security buttons will allow employees to call security and/or the police when they see suspicious, escalating or illegal behaviour. It is easy to see how the ability to contact emergency services can significantly reduce the risk of employees being subject to violence.
However, just because your workplace does not have high risk for this type of behaviour doesn't mean you can avoid making changes. Even offices have risks and the task for employers is to identify them and to make changes where applicable.
3. Develop and review policies with respect to workplace violence and harassment
Employers must ensure that policies are in place with respect to workplace violence and harassment. For employers with five employees or more, the bill says this policy must be in writing and posted in the workplace.
Using the example given above, if there is a susceptibility to client outbursts, it may be necessary for employers to have a policy in place to address this issue. The policies can give employees a guide of the proper protocol to follow when faced with unruly, aggressive or violent customers.
Employers also must ensure that a policy is in place to address the procedure for the reporting and investigating of workplace harassment complaints.
After the initial development, these policies must be reviewed as often as "necessary" (i.e., when there are significant changes in the workplace which may affect violence and/or harassment), but a review must also be done at least annually. These policies are critical documents. Employers can face penalties from the Ministry of Labour for not developing policies in accordance with the new act, and/or not complying with the policies when faced with a workplace violence or harassment issue.
4. Develop and maintain programs to implement the policies
Employers must include in the programs these specific measures and procedures:
- To control the risks identified in the risk assessment.
- For summoning immediate assistance when workplace violence occurs or is likely to occur.
-
For workers to report incidents of workplace violence or harassment.
- To state how the employer will investigate and deal with incidents or complaints of workplace violence or harassment.
5. Train employees
Employers must provide information and instruction to their employees regarding the contents of the policies and programs. This training is critical, as it implements all of the previously mentioned steps. Employees have the opportunity to learn what they can and what they must do to minimize risks in the workplace, what their obligations are in regards to the policies in place, and what the consequences are for non-compliance with the policies.
After reviewing the policies and programs with employees, an effective form of training is to present employees with realistic fact patterns (a legal term for a summary of events or presentation of the facts surrounding an event) and to demonstrate how to apply the policies and programs to the fact patterns.
Preparing for the changes in the Occupational Health and Safety Act will be a lengthy and detailed process for employers, particularly smaller businesses with limited resources. However, the changes to the legislation are an essential step in ensuring that employers are doing their part in reducing the risk of violence and harassment in their workplaces and to avoiding possible fines and liability.
Read more:
http://www.cbc.ca/money/story/2010/05/28/f-james-heeney-workplace-harassment.html#ixzz0pbbIov9n
James Heeney, a partner at Rubin Thomlinson LLP in Toronto who provides counsel to employers and employees on all areas of employment law.