This is a case that could have a huge impact on the economy and labor relations.
In New Prime Inc. v. Oliveira, No. 17-340, the justices heard the case of Dominic Oliveira, a long-haul truck driver who filed a suit against the transportation outfit New Prime three years ago, alleging that the company failed to pay him minimum wage and at times even charged him for working.
The case pits business interests against labor groups in the first major case of the term that could have consequences for hundreds of thousands of American workers and potentially millions of consumers. It could shape an industry that generates more than half a trillion dollars in annual revenue.
The case also raises questions about the use of the “independent contractor” designation to reduce pay and benefits for workers who perform essentially identical work as employees. On that front, the court’s decision could have ramifications for virtually every sector of the economy.
I can see both sides of this. On the one hand, if a contractor is doing essentially the same full time work as an employee, then it’s a distinction without a difference. On the other hand, why should the federal government be inserting itself in the employer/employee/contractor relationship? Some people prefer contract work because of the flexibility and ability to create a business around multiple contracts. Then again, an employer shouldn’t be able to absolve itself from the work of contractors just because they aren’t officially employees.
By the letter of the law that’s involved, I believe that the court should come down in favor of the contractor, but it does open up the larger question of what legal distinctions there are, or should be, between contractors and employees.
I’ve always thought it crucial that 1099s understand their conditions of employment. Not just the compensation aspect, but also how the employer’s expectations of performance affect the compensation. I’ve witnessed folks I’d never considered naive agree to contractual 1099 deals with ridiculous performance expectations that considerably dented their overall compensation. Apparently they didn’t understand their agreements.
I’d never advocate abusing 1099s, but they are independent business people and like all business people they are under no obligation whatsoever to conduct bad business. I’m not sure how legislation or court decisions will help 1099s recognize and avoid bad business.
IIRC, the contractor here drove a shuttle-tractor in a large dockside freightyard in Los Angeles. He’s not a “businessman”; he took the job because he could drive the truck and the job was available. Remember, this was during the Great Recession, so jobs were hard to find. When I first read about the case, I thought that this guy had been screwed by the employer.
The conditions for 1099 work have never really changed; the contractor must exhibit some independence from the ’employer’ in the way he performs the tasks; does not work for only one employer at all times (non-exclusivity); and must maintain books/records sufficient to make the case that he’s truly independent.
Mis-characterization of employee status need not be intentional for the IRS to take an interest and the tax implications can be severe for employers. I wonder if the IRS ever looked at these guys.