Publications

Last month, we told you about a bill, SB 459, that was awaiting the Governor’s signature. SB 459 would penalize employers who willfully misclassify employees as independent contractors. See alert at http://www.thelelawblog.com/2011/09/articles/new-legislation-and-regulation/legislative-alert-employee-misclassification-bill-sent-to-governor/.

On Sunday, October 9, 2011, Governor Brown signed SB 459 into law. As we advised last month, employers are encouraged to review their classifications of employee/independent contractors and consult legal counsel, if necessary, to avoid incurring civil penalties and/or costly litigation as a result of the enactment of SB 459.

Given the state of the economy and the desperation felt by many employees regarding the security of their job (and the anger felt by disgruntled former employees regarding the loss of their job), violence remains a real and serious threat in the workplace. Recognizing this fact, on September 8, 2011, the Department of Labor – OSHA Division – issued a new Directive aimed at providing compliance officers guidance for investigating and responding to allegations and incidents of workplace violence. OSHA has also launched a new webpage focused on preventing workplace violence.

In the Directive, OSHA points out the alarming statistics from the Bureau of Labor Statistics’ (BLS) Census of Fatal Occupational Injuries (CFOI) show that an average of 590 homicides occurred each year during the years 2000 through 2009. In fact, homicides remain one of the four most frequent work-related fatal injuries, and remained the number one cause of workplace death for women in 2009. Several studies have shown that prevention programs can reduce incidents of workplace violence. According to OSHA, by assessing their worksites, employers can identify methods for reducing the likelihood of incidents occurring. OSHA believes that a well written and implemented Workplace Violence Prevention Program, combined with engineering controls, administrative controls and training can reduce the incidence of workplace violence in both the private sector and in governmental workplaces.

What is Violence in the Workplace?

Federal law defines workplace violence as “violent acts (including physical assaults and threats of assaults) directed toward persons at work or on duty.” (Center for Disease Control and Prevention, National Institute for Occupational Health (2002).) “Occupational Hazards in Hospitals.” (DHHS (NIOSH) Pub. No. 2002-101.) OSHA has grouped workplace violence into the following four classifications which describe the relationship between the perpetrator and the target of workplace violence.[1]

Type 1 – Criminal Intent.

Violent acts by people who enter the workplace to commit a robbery or other crime – or current or former employees who enter the workplace with the intent to commit a crime.

Type 2 – Customer/Client/Patients.

Violence directed at employees by customers, clients, patients, students, inmates or any others to whom the employer provides a service.

Type 3 – Co-worker.

Violence against co-workers, supervisors, or managers by a current or former employee, supervisor, or manager.

Type 4 – Personal.

Violence in the workplace by someone who does not work in the workplace, but who is known to, or has a personal relationship with, an employee.

Assessing the Risks of Violence in the Workplace.

Many workplaces are at risk for workplace violence, but certain workplaces are recognized to be at significantly greater risk than others. OSHA identifies certain industries like healthcare, social service settings, and late-night retail, as “high-risk industries.” However, every employer should perform an initial assessment to identify workplace security factors which have been shown to contribute to the risk of violence in the workplace.

According to OSHA and Cal/OSHA, if an employer has one or more of the following factors present in its workplace, it should consider its workplace to be at potential risk of violence:

1. Exchange of money;
2. Working alone at night and during early morning hours;
3. Availability of valued items, e.g., money and jewelry;
4. Guarding money or valuable property or possessions;
5. Performing public safety functions in the community;
6. Working with patients, clients, passengers, customers or students known or suspected to have a history of violence; or
7. Employees with a history of assaults or who have exhibited belligerent, intimidating or threatening behavior to others.

Implementing a Program to Prevent Workplace Violence.

The cornerstone of an effective workplace security plan is appropriate training of all employees, supervisors and managers. According to OSHA and Cal/OSHA, employers with employees at risk for workplace violence must educate them about the risk factors associated with the various types of workplace violence and provide appropriate training in crime awareness, assault and rape prevention and defusing hostile situations. Also, employers must instruct their employees about what steps to take during an emergency incident.

Since Type 3 and 4 events are more closely tied to employer-employee relations than are Type 1 or 2 events, an employer’s considerate and respectful management of his or her employees represents an effective strategy for preventing Type 3 and 4 events. According to OSHA, some workplace violence researchers have pointed out that certain actions which are perceived by an employee as a threat to their job status and security, (e.g., layoffs or reductions-in-force, disciplinary actions including demotions or suspensions, and/or termination) can be a triggering event for workplace violence. Thus, where such adverse employment actions are contemplated, employers should conduct due diligence prior to carrying out the action to ensure it has addressed the potential for a violent reaction, and then carry out the action in a respectful manner designed to minimize the potential violence.

One important fact for employers to be mindful of is that domestic violence is a prevalent form of workplace violence. Because domestic violence spills over into the workplace, employers need to take appropriate precautions to protect at-risk employees. For instance, when an employee reports threats from an individual with whom he or she has (or had) a personal relationship, employers should take appropriate precautions to ensure the safety of the threatened employee, as well as other employees who are in the zone of danger and who may be harmed if a violent incident occurs in the workplace. One option in California is to seek a temporary restraining order (TRO) and an injunction on behalf of the affected employee. Any employer may seek a TRO/injunction on behalf of an employee when he or she has suffered actual violence (assault, battery or stalking as prohibited in the California Penal Code) or a credible threat of violence reasonably likely to be carried out in the workplace.

Reporting Workplace Violence.

Under the California Labor Code and Cal/OSHA regulations, employers have a duty to record and report certain injuries in the workplace, including those resulting from workplace violence. Labor Code section 6409.1(b) states expressly that “[i]n every case involving a serious injury or illness, or death, in addition to the report required by subdivision (a), a report shall be made immediately by the employer to the Division of Occupational Safety and Health by telephone or telegraph.” Failure to do so can result in a civil penalty of no less than $5,000. Cal/OSHA actively encourages employers to report all deaths, and/or serious injuries or illnesses that result from a workplace assault or other type of violent act so that it can acquire a fuller understanding of the scope and nature of workplace violence by conducting an investigation of the circumstances surrounding the event.

Conclusion.

By issuing this new Directive, it is clear that OSHA is focused on enforcing workplace security laws to prevent violence. Therefore, employers should take the opportunity to: 1) audit their Injury and Illness Prevention Plan (IIPP) and/or other workplace security plans to ensure they identify workplace security factors which have been shown to contribute to the risk of violence in their particular workplace; and 2) train their employees.

[1]Cal/OSHA has a similar classification system grouped into three classifications:

In Type I, the violent actor has no legitimate business relationship to the workplace and usually enters the affected workplace to commit a robbery or other criminal act.

In Type II, the violent actor is either the recipient, or the object, of a service provided by the affected workplace or the victim (e.g., the assailant is a current or former client, patient, customer, passenger, criminal suspect, inmate or prisoner.)

In Type III, the violent actor has some employment-related involvement with the affected workplace. Usually this involves an assault by a current or former employee, supervisor or manager; by a current/former spouse or lover; a relative or friend; or some other person who has a dispute with an employee of the affected workplace.

Just this week, the Department of Labor (DOL) and the Internal Revenue Service (IRS) announced they are joining together to prevent employers from misclassifying employees as independent contractors. On September 19, 2011, Secretary of Labor Hilda L. Solis hosted a ceremony at the DOL headquarters in Washington to sign a memorandum of understanding with the IRS, which allows the agencies to share information and coordinate enforcement of employers thought to be misclassifying independent contractors. Seven states also signed similar agreements, including Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah, and Washington. Hawaii, Illinois, Montana, and New York are expected to follow shortly. California is likely to sign on at some point in the not too distant future.

The reasons behind the increased scrutiny are two-fold. For one, independent contractors are ineligible for minimum wage and overtime pay, unemployment insurance, workers’ compensation and social security benefits. Second, the government does not collect employment taxes on compensation paid to independent contractors. Therefore, where misclassification occurs, federal and state governments lose out on much needed tax revenues.

What does this mean for you? It is becoming increasingly apparent that both federal and state government agencies are cracking down on the misclassification of independent contractors. Employers who contract with independent contractors should carefully examine those classifications to ensure misclassifications are not occurring. Doing so will allow employers to avoid costly consequences due to increased federal and state scrutiny.

On September 14, 2011, the California Legislature enrolled Senate Bill 459 and presented it to Governor Jerry Brown for signature. (As of the time of this post, the Governor has still not acted on SB 459.)

SB 459 was introduced by Senator Ellen Corbett to address the issue of misclassification of employees as independent contractors. Under California law, there is extensive statutory provisions that address the employee/employer relationship and provide numerous protections to employees in areas such as minimum wage, overtime and working conditions. SB 459 was introduced to prevent the misclassification of employees as independent contractors so that “true” employees could receive the protections of these statutes. SB 459 would subject employers to civil penalties of up to $25,000 per violation in the event that an employer willfully misclassifies an employee as an independent contractor. SB 459 also provides employees with a private cause of action if they suffer actual harm.

Supporters of SB 459 argue that it is necessary given the increase in the number of reported cases of misclassified employees to the California Employment Development Department. Supporters claim that employers misclassify employees in an effort to save on labor costs. Misclassification also costs the State and Federal Governments in lower revenue with regard to social security, unemployment and income taxes.

Opponents of SB 459 argue that it is poorly drafted, unfairly includes retroactive provisions, and could subject employers to lengthy and costly lawsuits arising from alleged misclassifications.

It remains to be seen whether Governor Brown will sign SB 459 into law. A similar bill was presented to then Governor Arnold Schwarzenegger in 2007 but he vetoed the legislation.

If SB 459 becomes law, employers are encouraged to review their classification of employees/independent contractors to avoid costly lawsuits and potential civil penalties.