Blood Money: "What was your previous salary?"
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David Blanchard and Angela Walker have served Ann Arbor’s employees and business community for over ten years.
Every client deserves to be heard.
David Blanchard and Angela Walker have worked together for over ten years to provide high quality and timely responses to the emerging legal needs for individuals and businesses in Ann Arbor and Southeast Michigan.
David Blanchard focuses on helping people get back to work, stay at work, fighting wage theft, and preventing retaliation and wrongful termination.View full bio
Since at least 2013, the Michigan’s Unemployment Insurance System has had its computers set on data-mining old claims data, sometimes going back up to six years, to find data discrepancies and automatically issue “Robo-Fraud” determinations against unemployment claimants.
Now, just more than a year after we filed the federal court lawsuit challenging the constitutionality of the state’s unemployment fraud accusations, the UIA is showing the first signs of a break under mounting pressure from multiple quarters. In April, the federal judge hearing the constitutional challenge issued an Order denying the State’s motion to dismiss and clearing the way for the case to move forward. Meanwhile in Lansing, Reforms to the State System are being contemplated in the Michigan Legislature, where attorney David Blanchard testified last week on the impact of the system for Michigan UIA claimants and on the need to strengthen protections.
Last week saw another major development as U.S. House Representative Sander Levin has taken the Agency on directly – in letters to Governor Snyder and to the UIA demanding a review. Now, in an MLive article reported Friday, the State’s Unemployment Insurance Agency is quoted as saying they are working on a plan to reach back to review all the robo-fraud determinations, even those over a year old.
Up to fifty thousand residents have been swept up in the system – many facing wage or tax garnishments or forced make monthly payment plans to pay back up to five times the original amount of benefits collected. Some restitution notices have sought over $100,000 in repayment from the state’s current or formerly unemployed. Only about seven percent of these determinations ever got appealed, according Agency statements. No doubt because the UIA’s baseless robo-determinations were paired with an antiquated and ineffective notice system that often failed to provide notice of the accusations – as outlined in a scathing Auditor General Report issued in April.
First the UIA claimed that it had done nothing wrong, then it claimed that it had no power to review determinations going back more than a year – no matter how defective. Now there is finally hope for tens of thousands of Michigan residents swept up in the system. A spokesperson for the UIA reportedly announced Friday that its review effort “is being expanded after getting an OK from the federal government to proceed with reviewing cases going back more than a year.” The announcement gives hope but also leaves many unanswered questions.
At Blanchard & Walker PLLC hardly a day goes by where we don’t get a call from a new victim of robo-fraud. We continue to handle our own backlog of robo-fraud cases – representing individual claimants and moving one at a time to reopen cases for new hearings. At least so far, we aren’t seeing any sign that the abusive collection practices and baseless assumptions of fraud have ceased. Moreover, the Agency has yet to clarify how far back its review will go, or whether it will issue new determinations and provide new opportunities to appeal for claimants who disagree with its determinations. We will continue to closely monitor the rapid developments, and fight for those wrongfully accused – in the legislature, in the courts, and in the UIA system.
In a 6-2 decision that broadens First Amendment protections for public employees, the U.S. Supreme Court ruled that the lower court erred when it dismissed a lawsuit brought by a New Jersey police officer who was demoted after fellow officers saw him with a campaign sign for the challenger to the incumbent police chief.
As it turned out, the plaintiff in Heffernan v. City of Patterson was not actually supporting the challenger – he was picking up the sign for his bedridden mother. The defendants were not aware of this fact. They tried to use their ignorance to their advantage, arguing that the City should not be liable for retaliation since supervisors were actually wrong about Mr. Heffernan engaging in protected speech.
Writing for the Court, Justice Breyer rejected the defendants’ argument:
“the government’s reason for demoting Heffernan is what counts here. When an employer demotes an employee out of a desire to prevent the employee from engaging in political activity that the First Amendment protects, the employee is entitled to challenge that unlawful action under the First Amendment and 42 U. S. C. §1983—even if, as here, the employer makes a factual mistake about the employee’s behavior.”
Justice Breyer reasoned that a contrary rule would have a chilling effect on other employees, observing that “[t]he discharge of one tells the others that they engage in protected activity at their peril.”
In dissent, Justice Thomas, writing for himself and Justice Alito, argued that the plaintiff had conceded that he never exercised his First Amendment rights, and that “federal law does not provide a cause of action to plaintiffs whose constitutional rights have not been violated.” The dissent’s position does have logic to it – in a formalistic sense. But it would have left many government employees unprotected from retaliation and created a chilling effect on protected speech – a point the majority seized on. It would have also invited a battle about whether protected speech occurred in every retaliation case – even where the intent and the impact are not in dispute.
The Heffernan opinion strikes a practical balance that creates a workable rule for government employers and a clear framework for judges handling retaliation cases. Questions about this post, the status of employment rights law and developments under the First Amendment can be directed to the author.
Daniel C. Tai is an employment rights attorney practicing at Blanchard & Walker PLLC. For questions about your individual rights, consider retaining a skilled employment rights lawyer. Only your own lawyer can give you legal advice.
Blanchard & Walker lawyers have been fighting for over a decade to secure the rights of cable technicians and other laborers who have been deprived of overtime pay by the use of “independent contractor” labels. Still, we are amazed by the depth of the problem and astonished to hear how extreme and widespread the abuse of “independent contractor” classifications has become. Writing for Slate, author Virginia Sole-Smith has done an excellent job to document the scope and extent of predatory misclassification of employees. Thank you to Virginia for explaining the human toll behind these practices.
With one swift re-classification, the otherwise “employers” are able to reduce costs related to unemployment insurance and workers’ compensation, and even avoid obligations to pay overtime. Or so some would assume. In fact, the protections of the FLSA are not dependent on the company’s discretion in picking job titles. Persons designated as “independent contractors” and other workers wrongly deprived of overtime pay have a legal right to recover the wages stolen through illegal misclassifications by their employers.
Most federal courts confronting these new employment models have analyzed a worker’s “employee” status under the FLSA using the “economic realities test.” The test has become the accepted standard for determining whether an independent contractor is entitled to overtime pay or other protections of the FLSA.
In recent administrative guidance, the Department of Labor has embraced the broadest possible application of the economic realities test to protect workers under the FLSA. As the Department guidance under AI 2015-1 notes, the “‘suffer or permit’ standard was specifically designed to ensure as broad of a scope of statutory coverage as possible.” Under the AI, an entity “‘suffers or permits’ an individual to work if, as a matter of economic reality, the individual is dependent on the entity.” Although the intricacies of the test have varied among the circuits, the Department describes the test as involving six primary questions:
1) Is the Work an Integral Part of the Employer’s Business?
2) Does the Worker’s Managerial Skill Affect the Workers Opportunity for Profit or Loss?
3) How Does the Worker’s Relative Investment Compare to the Employer’s Investment?
4) Does the Work performed Require Special Skill and Initiative?
5) Is the Relationship between the Worker and the Employer Permanent or Indefinite?
6) What is the Nature and Degree of the Employer’s Control?
The Department reminds us in AI 2015-1 that “the goal is not to tally which factors are met, but to determine whether the worker is economically dependent on the employer (and thus its employee) or is really in business for him or herself (and thus its independent contractor).” Where courts have misapplied the test, workers who are not truly in business for themselves – from drivers and laborers to cable installers and even exotic dancers – are deprived of their rightful wages under the FLSA.
AI 2015-1 affirms that the economic realities inquiry is not governed by the label put on the relationship by the parties or even the contract language controlling that relationship. Rather, the inquiry focuses on whether, as one court has explained it, “the work done, in its essence, follows the usual path of an employee.” Following this thread, other courts have noted that, the employer’s label is not even relevant as a “tie breaker” since the FLSA is “intended to defeat rather than to implement contractual arrangements.” Likewise, the designations workers use on their tax forms with the IRS are irrelevant to the analysis.
Under the direction adopted by the Department of Labor’s new interpretation, the FLSA protects all people whom a company “suffer[s] or permit[s] to work” in the broadest possible terms. “Independent contractor” classifications and contractual disclaimers are irrelevant. If you work like an employee, the FLSA requires you get paid like an employee. Obtaining workplace protections and the overtime wages typically owed to the misclassified independent contractor will depend on careful advocacy and guidance from an experienced FLSA litigator. Lawyers familiar with the new guidance may discover it to be an effective tool to guide the courts through proper application of the economic realities test – and ultimately in the fight against wage theft for misclassified independent contractors.
If you have been working as an “independent contractor” a “1099 employee” or other classification used to justify denial of overtime pay and would like answers about your individual legal rights, you should contact an employment lawyer without delay.
 Brock v. Superior Care, Inc., 840 F.2d 1054, 1058 (2d Cir. 1988); Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376, 1383 (3d Cir. 1985); Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006); Hopkins v. Cornerstone Am., 545 F.3d 338, 343 (5th Cir. 2008); Ellington v. City of E. Cleveland, 689 F.3d 549, 555 (6th Cir. 2012); Sec’y of Labor, U.S. Dep’t of Labor v. Lauritzen, 835 F.2d 1529, 1534 (7th Cir. 1987); Donovan v. Sureway Cleaners, 656 F.2d 1368, 1370 (9th Cir. 1981); Baker v. Flint Eng’g & Const. Co., 137 F.3d 1436, 1440 (10th Cir. 1998); Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1311 (11th Cir. 2013).
 Administrator’s Interpretation No. 2015-1 (Dep’t of Labor July 15, 2015).
 See, e.g., Donovan v. Brandel, 736 F.2d 1114, 1117 (6th Cir. 1984); Brock, 840 F.2d at 1058-1059.
 Scantland, 721 F.3d at 1311 (quoting Rutherford Food Corp. v McComb, 331 U.S. 722, 729 (1947)).
 Imars v. Contractors Mfg. Servs., 165 F.3d 27, at *5 (6th Cir. 1998) (unpublished) (quoting Lauritzen, 835 F.2d at 1544-45 (Easterbrook, J., concurring)).
 See, e.g., Clincy v. Galardi S. Enters., Inc., 808 F. Supp. 2d 1326, 1349 (N.D. Ga. 2011) (finding that the plaintiffs’ holding themselves out to the IRS as independent contractors does not make them independent contractors for FLSA purposes); Harrell v. Diamond A Entm’t, Inc., 992 F. Supp. 1343 (M.D. Fla. 1997) (“[Plaintiffs’] characterization for tax purposes and the provision of employee benefits are not relevant.”); see also Robicheaux v. Radcliff Material, Inc., 697 F.2d 662 (5th Cir. 1983) (welders were “employees” under FLSA even though they signed contract stating they were independent contractors, furnished their own equipment and insurance coverage, were self-employed on their tax returns and had their own business cards); Gordilis v. Ocean Drive Limousines, Inc., No-12-cv-24358, 2014 WL 2214289, at *4 (S.D. Fla. May 28, 2014) (“The factors governing “economically dependent” do not ponder personal tax returns. Moreover, it is entirely possible Plaintiffs were simply wrong in their preparation of their tax returns.”).
The dreaded salary question. How to skillfully handle this tricky question and get the salary you deserve.Read More »
Economists are still arguing over whether moving our jobs out of the country affects what the people still here get paid.Read More »
"Asking what I considered an impossible salary when I didn't want to work for someone has boosted my pay again and again."
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