The recent crash of Flight 9525 where a co-pilot allegedly intentionally crashed the airplane could lead to unlimited liability for Lufthansa. Under international rules for commercial flights, families of victims are usually entitled to $150,000. However, in this case Lufthansa will have to prove it wasn’t at fault in the crash. This might be difficult for it to do as Plaintiff’s lawyers will claim that there was inadequate psychological monitoring of the pilots, and that the airline failed to have a two-pilot in the cockpit policy, as they do in the US. Luckily for Lufthansa, its insurer will need to pay these amounts together with their reinsurer.
Two San Francisco judges have allowed cases against ride-sharing companies Lyft and Uber concerning whether their drivers are independent contractors or employees. Under Florida Law, 10 factors are used to determine employment status:
(1) The extent of control which, by the agreement, the business may exercise over the details of the work.
If the employer retains the right to dictate how the work should be done, the worker is an employee. If the employer decides what work the worker will do and how the worker will do it, then the worker is considered an employee. When an employer hires an independent contractor, the employer is normally interested only in the end result, not in the details of how the contractor performs the work. An independent contractor is not subject to the will and control of the employer. The employer can decide what results are expected from the independent contractor, but cannot control the methods used to accomplish those results. This factor is the most important of the 10 common law factors.
(2) Whether the one employed is engaged in a distinct occupation or business.
A person engaged in a distinct occupation or business is more likely to be an independent contractor if the occupation or business is separate and distinct from the employer’s business.
(3) Whether the work done in a certain locality is usually done under the direction of the employer or by a specialist without supervision.
If the work is usually done in that locality under the direction of an employer, then the worker is more likely to be an employee. If the work in that locality is usually done by a specialist without supervision, then the worker is more likely to be an independent contractor.
(4) The skill required in the particular occupation.
The greater the skill required for the occupation, the more likely the worker is an independent contractor. A contract for labor only will normally be considered a contract of employment while the hiring of a licensed professional is more likely to be considered the hiring of an independent contractor.
(5) Whether the employer or the worker supplies the instrumentalities (for example: equipment, vehicle, materials), tools, and the place of work for the person doing the work.
Independent contractors are generally expected to provide or purchase everything they need to do the job. Employees are not expected to provide their own workplace, materials, tools, and supplies, or to otherwise invest their own money in the business.
(6) The length of time the person is employed.
The more long-term, continuous, and exclusive the relationship is, the more likely it is to be employment.
(7) The method of payment, whether by the time or by the job.
Independent contractors generally perform their work one job at a time and are paid by the job. An employee is paid for his time.
(8) Whether the work is a part of the regular business of the employer.
If the service provided by the worker is an integral part of the service the employer provides to the public, the worker is more likely to be an employee. If certain services are so essential to a business that it will succeed or fail based upon how well those services are performed, the business will often want to exercise enough control over the services to ensure they are good. That can make a business the employer of such workers.
(9) Whether the parties believe they are creating the relationship of employer and employee.
If there is a written agreement between the parties describing the relationship it should be honored, unless other provisions of the agreement, or the actual practice of the parties, show that the agreement is not a valid description of the status of the working relationship. If the actual practice of the parties shows an employee relationship, an agreement which describes the worker as an independent contractor will be disregarded. How the worker is treated, not the language of a written agreement or the issuance of a 1099, determines whether the worker is an employee or an independent contractor.
(10) Whether the hiring party is or is not in business.
If the hiring party is in business, it is more likely that the worker is an employee. If the hiring party is an individual, the worker is more likely to be an independent contractor.
The Plaintiffs in the ride-sharing cases argue that they should be considered employees, and not independent contractors, because the companies exert significant control over the driver’s work, the companies set compensation and vehicle standards and can terminate drivers at will. According to Judge Vince Chhabria in the Lyft case, California’s test for determining employment status “provides nothing remotely close to a clear answer, it will often be for juries to decide”. Further, US District Court Judge Edward Chen in the Uber case stated that the question of employment status “presents a mixed question of law and fact that must typically be resolved by a jury”.
The New York Times had an interesting article recently in which it discussed whether a babysitter could be considered an employee and thus subject to withholding taxes. In Florida, Florida Statute Chapter 443 governs whether a worker should be classified as an employee or independent contractor. In Florida, if a worker is considered an employee, he or she becomes subject to the Florida Reemployment Assistance Program Law. The statute lays out 10 factors to determine whether a worker is an employee or independent contractor. These 10 factors are taken from the common law rules and those used by the IRS in making classifications. The factors are:
1) The extent of control which, by the agreement, the business may exercise over the details of the work;
2) Whether the one employed is engaged in a distinct occupation or business;
3) Whether the work done in a certain locality is usually done under the direction of the employer or by a specialist without supervision;
4) The skill required in the particular occupation;
5) Whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
6) The length of time the person is employed;
7) The method of payment, whether by time or by the job;
8) Whether the work is part of the regular business of the employer;
9) Whether the parties believe they are creating the relationship of employer and employee;
10) Whether the hiring party is or is not in business.
The New York Times article discusses the “nanny tax” whereby the worker is considered an employee and the employer is therefore responsible for paying payroll taxes and reporting the details to the IRS. The article notes that this “nanny tax” can also apply to other workers such as caregivers for the elderly as well.
The IRS looks at factors like the amount of control you have over the job, such as directing the times worked and the methods used. Also looked at is the amount paid – for 2014, if the worker was paid $1,900 for the year, or $1,000 in a quarter, the IRS considers that worker an employee. On the other hand, if the worker controls how they do the work and provide their own tools and work for other people as well, they might be considered independent contractors.
If considered employees, the employer is required to pay federal payroll taxes, including social security and medicare taxes and provide the worker with a W-2 form. In addition, the employer might also have to pay federal and state unemployment taxes.
IRS Publication 926 Household Employer’s Tax Guide lists the requirements for determining the taxes due if a household worker is considered an employee.
The 4th District Court of Appeal has ruled that a banks failure to send a notice of default to the property address violated the terms of the mortgage, and therefore the foreclosure case could not go through. Deutsche Bank Trust Co. sent a notice of default to the property owners post office box, rather than the home address (which happened to be vacant). The appeals court remanded the case back to the trial court to dismiss with prejudice for failure to comply with the mortgage acceleration requirement. The bank can still file a motion for rehearing, though if denied, the case will go back to the trial court to dismiss with prejudice.
JPMorgan has entered into a settlement with 25,000 homeowners for its failure to properly review payment-change notices sent to homeowners in bankruptcy. These payment change notices were sent to homeowners without proper review and were signed by employees who no longer worked at the company, or who hadn’t checked the payment change notices for accuracy. Other forms were signed by employees of another company who weren’t responsible for checking whether the filings were accurate. According to the Department of Justice, the settlement includes cash, mortgage loan credits principal forgiveness, and second loan forgiveness. The amount of the settlement is $22.4 million. This settlement, is, however, still subject to approval by the US Bankruptcy Court in Michigan.