FAPEO EMERGING LEGAL ISSUES SUMMIT

IF YOU REMEMBER, LAST YEAR AFTER EIGHT YEARS OF PRESIDENT

OBAMA AND WHAT I VIEWED AS THE IMPENDING VICTORY OF HILLARY

CLINTON IN THE PRESIDENTIAL ELECTION, I TOLD YOU THAT WINTER IS

COMING. NOW THAT ALL OF THE PUNDITS HAVE BEEN PROVEN WRONG AND

PRESIDENT TRUMP IS SIX MONTHS INTO HIS ADMINISTRATION, WINTER MAY

BE COMING IN WESTEROS BASED ON LAST SUNDAYS GAME OF THRONES

EPISODE, HOWEVER, WINTER HAS BEEN POSTPONED IN THIS COUNTRY.

UNFORTUNATELY, I CANT SAY THAT WINTER HAS BEEN ELIMINATED BECAUSE

YOU CANT PUT THE OBAMA ADMINISTRATION JOINT EMPLOYMENT GENIE

FULLY BACK INTO THE BOTTLE. BUT WEVE PUSHED THAT GENIE BACK INTO

THE BOTTLE PART WAY.

TO ME JOINT EMPLOYMENT IS STILL THE CONCEPT THAT I FEEL IS THE

GREATEST THREAT TO THE VERY SURVIVAL OF OUR INDUSTRY.

THE STRANGE THING IS, AS I STATED AT THE PACE CONFERENCE HELD

IN MAY, THE PEO INDUSTRY IS SOMEWHAT AKIN TO WHAT FISHERMAN WOULD

CALL TRASH FISH OR BY CATCH. OUR INDUSTRY IS NOT WHAT THE UNIONS

AND BUREAUCRATS ARE TRYING TO CATCH WHEN THEY TRY TO EXPAND THE

CONCEPT OF JOINT EMPLOYMENT, BUT WE HAVE BEEN CAUGHT UP IN THEIR

ATTEMPT TO CATCH MORE SIGNIFICANT ENTITIES SUCH AS FRANCHISORS

AND STAFFING COMPANIES. UNFORTUNATELY, WE HAVE BEEN CAUGHT IN

THE SAME NET THAT THEY HAVE CAST. THEY LOOK AT US AND SAY OOOH

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WHATS THIS? WE WERE GOING AFTER FRANCHISORS AND STAFFING

COMPANIES AND LOOK WHAT WE CAUGHT, WHAT THE HECK IS THIS?

AS MANY OF YOU KNOW, THIS WHOLE JOINT EMPLOYER ARGUMENT

REALLY TOOK OFF WITH THE NLRBS DECISION IN THE BROWNING-FERRIS

CASE THAT WAS DECIDED IN THE SUMMER OF 2015. BROWNING-FERRIS

INVOLVED A STAFFING SITUATION WHERE A STAFFING COMPANY WORKED ON

BROWNING-FERRIS PROPERTY SORTING RECYCLABLE MATERIALS. THE

RELATIONSHIP BETWEEN BROWNING-FERRIS AND THE STAFFING COMPANY

WAS GOVERNED BY A TEMPORARY LABOR SERVICES AGREEMENT WHICH

HAD BEEN IN EFFECT FOR MANY YEARS. THE TEMPORARY LABOR

AGREEMENT SPECIFICALLY STATED THAT THE STAFFING COMPANY WAS THE

SOLE EMPLOYER OF ITS EMPLOYEES AND THAT NOTHING IN THE AGREEMENT

SHOULD BE CONSTRUED AS CREATING AN EMPLOYMENT RELATIONSHIP

BETWEEN BROWNING-FERRIS AND ANY OF THE PERSONNEL SUPPLIED BY

THE STAFFING COMPANY.

THIS AGREEMENT ALSO SPECIFIED THAT THE STAFFING COMPANY

WOULD RECRUIT, INTERVIEW, TEST, SELECT AND HIRE THE EMPLOYEES

PERFORMING WORK AT THE BROWNING-FERRIS PLANT AND INDEED THE

TESTIMONY WAS THAT BROWNING-FERRIS PERSONNEL WERE NOT INVOLVED

IN THE STAFFING COMPANYS HIRING PROCEDURES AND HAD NO INPUT INTO

HIRING DECISIONS.

THE AGREEMENT ALSO PROVIDED THAT THE STAFFING COMPANY HAD

SOLE RESPONSIBILITY TO COUNSEL, DISCIPLINE, REVIEW, EVALUATE AND

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TERMINATE PERSONNEL, BUT BROWNING-FERRIS COULD REJECT ANY

PERSONNEL AND COULD DISCONTINUE THE USE OF ANY PERSONNEL FOR

ANY OR NO REASON.

THIS PROVISION IS SOMEWHAT AKIN TO LANGUAGE FROM FLORIDAS

PEO LICENSING LAW THAT STATES:

THE CLIENT COMPANY MAY HAVE THE RIGHT TO

ACCEPT OR CANCEL THE ASSIGNMENT OF ANY
LEASED EMPLOYEE.

THE NLRB, IN ITS DECISION MADE BY ITS 3 DEMOCRAT MEMBERS,

SEARCHED FOR ANYTHING THAT COULD ESTABLISH JOINT EMPLOYER

STATUS AND POINTED OUT THAT THERE WERE AT LEAST TWO SITUATIONS

WHERE THEY FELT DISCIPLINE OF THE STAFFING COMPANY EMPLOYEES

WAS, AS THEY PUT IT, PROMPTED BY BROWNING-FERRISS SUPERVISORS.

THE FIRST WAS A SITUATION WHERE A BROWNING-FERRIS SUPERVISOR

CONTACTED THE STAFFING COMPANY TO TELL THEM THAT HE HAD

OBSERVED TWO STAFFING COMPANY EMPLOYEES WITH A PINT OF WHISKEY

AND HE REQUESTED THE EMPLOYEES IMMEDIATE DISMISSAL. IN THAT

SITUATION, THE STAFFING COMPANY INVESTIGATED THE COMPLAINT AND

TERMINATED ONLY ONE OF THE EMPLOYEES. THE OTHER EMPLOYEE WAS

REASSIGNED.

THE OTHER SITUATION INVOLVED A BROWNING-FERRIS SUPERVISOR

INFORMING THE STAFFING COMPANY THAT A SURVEILLANCE CAMERA HAD

RECORDED A STAFFING COMPANY EMPLOYEE DAMAGING PROPERTY. THE

BROWNING-FERRIS SUPERVISOR TOLD THE STAFFING COMPANY THAT HE

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HOPED THE STAFFING COMPANY WOULD AGREE THAT THIS EMPLOYEE

SHOULD BE IMMEDIATELY DISMISSED. THE EMPLOYEE WAS IN FACT

DISMISSED AFTER THE STAFFING COMPANY INVESTIGATED.

SIGNIFICANTLY, EVERYONE AGREED THAT BROWNING-FERRIS WAS NOT

IN ANY WAY INVOLVED IN THE INVESTIGATION NOR WAS IT CONSULTED

REGARDING THE DECISION TO TERMINATE THE EMPLOYEE AND YET THE

NLRB CONCLUDED THE DISCHARGE WAS PROMPTED BY BROWNING-FERRIS.

WHILE THERE WERE OTHER LITTLE PIDDLY THINGS THAT BROWNING-

FERRIS MAY HAVE HAD INPUT INTO, THERE WAS NOTHING OF ANY

SIGNIFICANCE.

UP UNTIL THIS CASE WAS DECIDED BY THE NLRB, THE NLRB HAD HELD

FOR 30 YEARS, IN ORDER TO FIND JOINT EMPLOYMENT, THE LABOR BOARD

HAD TO FIND DIRECT AND IMMEDIATE CONTROL OVER EMPLOYMENT

CONDITIONS BY THE SECOND ENTITY. KEEP THIS DIRECT AND IMMEDIATE

CONTROL CONCEPT IN MIND BECAUSE THE NEW SECRETARY OF LABOR,

ALEXANDER ACOSTA, SPOKE ON THIS SUBJECT DURING HIS CONFIRMATION

HEARING BEFORE THE SENATE A FEW MONTHS AGO.

FOR 30 YEARS, THE NLRB HAD HISTORICALLY IGNORED FORMS OF

SUPERVISION THAT THE LABOR BOARD DEEMED LIMITED AND ROUTINE OR

AS I CALL IT PIDDLY.

THE LABOR BOARD IN BROWNING-FERRIS, HOWEVER, IN ITS EXPANSIVE

VIEW OF THE NLRBS AUTHORITY AND OBLIGATIONS, STATED THAT THE NLRB

HAS A RESPONSIBILITY TO ADAPT THE NATIONAL LABOR RELATIONS ACT TO

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THE CHANGING PATTERNS OF INDUSTRIAL LIFE. THE LABOR BOARD STATED

THAT THE PROCUREMENT OF STAFFING EMPLOYEES THROUGH STAFFING

AND SUBCONTRACTING ARRANGEMENTS IS NOW PART OF THE CURRENT

DIVERSITY OF WORKPLACE ARRANGEMENTS THAT HAVE SIGNIFICANTLY

EXPANDED AND, THEREFORE, THE LAW NEEDS TO CHANGE.

FROM MY PERSPECTIVE, IF THE LAW NEEDS TO CHANGE, THEN

CONGRESS NEEDS TO ACT. AN ADMINISTRATIVE AGENCY SUCH AS THE

NATIONAL LABOR RELATIONS BOARD DOES NOT HAVE THE POWER TO MAKE

LAW, ONLY TO ENFORCE EXISTING LAW AS IT IS WRITTEN.

UNTIL THIS DECISION, IN ORDER TO BE A JOINT EMPLOYER, AN ENTITY

NEEDED TO SHARE OR CO-DETERMINE ESSENTIAL TERMS AND CONDITIONS

OF EMPLOYMENT. ADDITIONALLY, AND THIS IS CRITICAL, UNTIL THIS

DECISION, THE PURPORTED EMPLOYER HAD TO ACTUALLY EXERCISE

AUTHORITY, AND DO SO DIRECTLY, IMMEDIATELY, AND NOT IN A LIMITED AND

ROUTINE MANNER. MERE WORDS IN A CONTRACT OR IN A STATE LICENSING

LAW WERE NOT SUFFICIENT TO ESTABLISH JOINT EMPLOYER STATUS.

WORDS SUCH AS A RIGHT OF DIRECTION AND CONTROL AND AUTHORITY

TO HIRE AND FIRE WHICH ARE FOUND IN OUR FLORIDA LICENSING LAW AS

WELL AS MANY OTHER PEO LICENSING AND REGISTRATION LAWS AROUND

THE COUNTRY, WERE IN NO WAY CONTROLLING WHERE THESE RIGHTS AND

AUTHORITY WERE NOT EXERCISED. UNFORTUNATELY, IN THIS CASE, THE

NLRB HELD:

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 [W]E WILL NO LONGER REQUIRE THAT A JOINT

EMPLOYER NOT ONLY POSSESS THE AUTHORITY TO

CONTROL EMPLOYEES TERMS AND CONDITIONS OF

EMPLOYMENT, [AND THAT THEY]MUST ALSO

EXERCISE THAT AUTHORITY, AND DO SO DIRECTLY,

IMMEDIATELY, AND NOT IN A LIMITED AND ROUTINE

MANNER.

FROM NOW ON RESERVED AUTHORITY TO CONTROL TERMS AND

CONDITIONS OF EMPLOYMENT, EVEN IF NOT EXERCISED, IS CLEARLY

RELEVANT TO THE JOINT-EMPLOYMENT INQUIRY.

IN MARCH OF THIS YEAR, THE BROWNING-FERRIS CASE FINALLY MADE

IT TO THE UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT IN

WASHINGTON. ORAL ARGUMENT WAS FASCINATING. IT WAS HELD IN FRONT

OF TWO OBAMA ADMINISTRATION APPOINTEES AND ONE GEORGE H. W. BUSH

APPOINTEE. THE JUDGES SEEMED PUZZLED BY THIS NEW RESERVED AND

INDIRECT CONTROL STANDARD. WHAT ROLE WOULD BROWNING-FERRIS

HAVE IN THE COLLECTIVE BARGAINING PROCESS, WOULD BROWNING-FERRIS

HAVE TO BARGAIN WITH THE UNION WITH REGARD TO TERMINATING ITS

CONTRACT WITH THE STAFFING COMPANY? WOULD BROWNING-FERRIS HAVE

TO BARGAIN WITH REGARD TO ALL TERMS AND CONDITIONS OF

EMPLOYMENT? THE UNION, AT ORAL ARGUMENT, ARGUED A REASONABLE

EMPLOYER COULD FIGURE ALL THIS OUT WHILE THE NLRB ATTORNEY SAID

THIS DECISION WAS THE START OF AN EVOLUTIONARY APPROACH IN WHICH

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THE PARTIES WOULD RECEIVE FURTHER GUIDANCE IN THE FUTURE. PUT ON

YOUR ALUMINUM HATS, LIFT YOUR ANTENNA, GUIDANCE IS COMING.

INTERESTINGLY, THE EEOC CHOSE TO FILE AN AMICUS BRIEF WITH THE

COURT OF APPEALS SUPPORTING THE NLRBS INTERPRETATION OF JOINT

EMPLOYMENT. THE EEOC ARGUED TO THE COURT OF APPEALS THAT THE

NEW NLRB TEST IS IN LINE WITH EEOCS OWN TEST AND EEOC CONTENDED

THAT THE NLRBS TEST IS NEITHER VAGUE NOR UNWORKABLE. THE EEOC

CONTENDED THAT THE JOINT EMPLOYER TEST SHOULD BE THE SAME UNDER

BOTH THE NATIONAL LABOR RELATIONS ACT AND UNDER TITLE VII. BOTH

EEOC AND THE NLRB WANT TO ABANDON THE DIRECT AND IMMEDIATE

CONTROL TEST AND GO TO AN INDIRECT CONTROL OR THE ABILITY TO EXERT

SUCH CONTROL TEST.

NOW LET ME JUMP AROUND A BIT. YOU MAY REMEMBER THAT I TOLD

YOU LAST YEAR THE DEPARTMENT OF LABOR HAD EARLIER IN THAT YEAR

PUT FORTH THEIR OWN SIMILAR INDIRECT CONTROL TEST THAT THEY

THOUGHT WAS APPROPRIATE IN WAGE AND HOUR MATTERS AND OTHER

MATTERS UNDER THEIR JURISDICTION. IN JANUARY, 2016 THE DEPARTMENT

OF LABOR IN ITS ADMINISTRATORS INTERPRETATION OF JOINT EMPLOYMENT

UNDER THE FAIR LABOR STANDARDS ACT IN A SIMILAR FASHION TO THE

NLRB STATED:

A POTENTIAL JOINT EMPLOYER MAY EXERCISE

CONTROL INDIRECTLY AND NEED NOT EXCLUSIVELY
EXERCISE SUCH CONTROL FOR THERE TO BE AN
INDICATION OF JOINT EMPLOYMENT

THE ADMINISTRATOR WENT ON TO STATE:

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 TO THE EXTENT THAT THE POTENTIAL JOINT
EMPLOYER PERFORMS ADMINISTRATIVE FUNCTIONS
FOR THE EMPLOYEE, SUCH AS HANDLING PAYROLL,
PROVIDING WORKERS COMPENSATION
INSURANCE[ARE] FACTS [WHICH] INDICATE
ECONOMIC DEPENDENCE BY THE EMPLOYEE ON THE
POTENTIAL JOINT EMPLOYER

HE CONCLUDED WITH THE OMINOUS STATEMENT:

[E]ACH JOINT EMPLOYER IS INDIVIDUALLY

RESPONSIBLE, FOR EXAMPLE, FOR THE ENTIRE
AMOUNT OF WAGES DUE. IF ONE EMPLOYER CANNOT
PAY THE WAGES BECAUSE OF BANKRUPTCY OR
OTHER REASONS, THEN THE OTHER EMPLOYER MUST
PAY THE ENTIRE AMOUNT OF WAGES; THE LAW DOES
NOT ASSIGN A PROPORTIONAL AMOUNT TO EACH
EMPLOYER.

NOW, FORGET WHAT I JUST SAID BECAUSE ON JUNE 7TH U.S.

SECRETARY OF LABOR ALEXANDER ACOSTA WITHDREW THE DEPARTMENT

OF LABORS GUIDANCE ON JOINT EMPLOYMENT. IN A SHORT AND CRYPTIC

STATEMENT, LET ME READ YOU THE THREE SENTENCE ANNOUNCEMENT:

WASHINGTON U.S. Secretary of Labor Alexander Acosta

today announced the withdrawal of the U.S. Department of
Labors 2015 and 2016 informal guidance on joint
employment and independent contractors. Removal of the
administrator interpretations does not change the legal
responsibilities of employers under the Fair Labor Standards
Act and the Migrant and Seasonal Agricultural Worker
Protection Act, as reflected in the departments long-
standing regulations and case law. The department will
continue to fully and fairly enforce all laws within its
jurisdiction, including the Fair Labor Standards Act and the
Migrant and Seasonal Agricultural Worker Protection Act.

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 WHILE THIS IS A WELCOMED POSITION CHANGE, IT IS NOT SURPRISING.

DURING SECRETARYS ACOSTAS CONFIRMATION HEARING HE WAS ASKED

WHAT STANDARD SHOULD BE USED TO DETERMINE WHEN AN ENTITY SHOULD

BE VIEWED AS AN EMPLOYER AND SECRETARY ACOSTA RESPONDED THAT

HE PREFERRED THE TRADITIONAL DIRECT AND IMMEDIATE CONTROL TEST

VERSUS THE UNTRADITIONAL INDIRECT AND UNEXERCISED CONTROL TEST.

WHILE, THIS IS EXTREMELY GOOD NEWS, IT IS NOT GOING TO SOLVE THIS

ISSUE ONCE AND FOR ALL BECAUSE THERE ARE JUDGES AND COURTS THAT

HAVE ALREADY GOTTEN A TASTE OF THIS INDIRECT AND UNEXERCISED

CONTROL TEST AND THEY LIKE IT. AS I SAID AT THE BEGINNING OF THIS

PRESENTATION, THE JOINT EMPLOYMENT GENIE IS OUT OF THE BOTTLE.

FOR EXAMPLE, IN MARCH OF THIS YEAR, THE UNITED STATES COURT

OF APPEALS FOR THE 4TH CIRCUIT (MARYLAND, NORTH CAROLINA, SOUTH

CAROLINA, VIRGINIA, AND WEST VIRGINIA) EXPANDED THE CONCEPT OF JOINT

EMPLOYMENT IN WAGE & HOUR CASES WITHIN THAT COURTS JURISDICTION.

IN DETERMINING WHETHER JOINT EMPLOYMENT EXISTS, THE COURT IN

SALINAS V. COMMERCIAL INTERIORS STATED THAT THEY WILL USE THE

SHARE OR CO-DETERMINE ESSENTIAL TERMS AND CONDITIONS TEST, BUT

JOINT EMPLOYMENT UNDER THIS TEST WILL BE DETERMINED BY SIX

FACTORS.

LET ME MENTION 3 OF THEM:

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 [(1)] WHETHER, FORMALLY OR AS A MATTER OF
PRACTICE, THE PUTATIVE JOINT EMPLOYERS JOINTLY
DETERMINE, SHARE, OR ALLOCATE THE POWER TO
DIRECT, CONTROL, OR SUPERVISE THE WORKER,
WHETHER BY DIRECT OR INDIRECT MEANS;

[(2)] WHETHER, FORMALLY OR AS A MATTER OF

PRACTICE, THE PUTATIVE JOINT EMPLOYERS JOINTLY
DETERMINE, SHARE, OR ALLOCATE THE POWER TO
DIRECTLY OR INDIRECTLYHIRE OR FIRE THE
WORKER OR MODIFY THE TERMS OR CONDITIONS OF
THE WORKER'S EMPLOYMENT;

[(6)] WHETHER, FORMALLY OR AS A MATTER OF

PRACTICE, THE PUTATIVE JOINT EMPLOYERS JOINTLY
DETERMINE, SHARE, OR ALLOCATE RESPONSIBILITY
OVER FUNCTIONS ORDINARILY CARRIED OUT BY AN
EMPLOYER, SUCH AS HANDLING PAYROLL;
PROVIDING WORKERS' COMPENSATION INSURANCE;
PAYING PAYROLL TAXES.

THE COURT STATED:

WE EMPHASIZE THAT THESE SIX FACTORS DO NOT

CONSTITUTE AN EXHAUSTIVE LIST OF ALL
POTENTIALLY RELEVANT CONSIDERATIONS. TO THE
EXTENT THAT FACTS NOT CAPTURED BY THESE
FACTORS SPEAK TO THE FUNDAMENTAL THRESHOLD
QUESTION THAT MUST BE RESOLVED IN EVERY JOINT
EMPLOYMENT CASEWHETHER A PURPORTED JOINT
EMPLOYER SHARES OR CODETERMINES THE
ESSENTIAL TERMS AND CONDITIONS OF A WORKER'S
EMPLOYMENTCOURTS MUST CONSIDER THOSE
FACTS AS WELL.

AND THE COURT CONCLUDED ITS OPINION WITH THE FOLLOWING

SUMMATION:

JOINT EMPLOYMENT EXISTS WHEN (1) TWO OR MORE

PERSONS OR ENTITIES SHARE, AGREE TO ALLOCATE
RESPONSIBILITY FOR, OR OTHERWISE CODETERMINE
- FORMALLY OR INFORMALLY, DIRECTLY OR
INDIRECTLY THE ESSENTIAL TERMS AND
CONDITIONS OF A WORKERS EMPLOYMENT AND (2)
THE TWO OR MORE PERSONS OR ENTITIES
COMBINED INFLUENCE OVER THE TERMS AND

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 CONDITIONS OF THE WORKERS EMPLOYMENT
RENDER THE WORKER AN EMPLOYEE AS OPPOSED
TO AN INDEPENDENT CONTRACTOR.

KEEP IN MIND, IN FLORIDA OUR DBPR RULES THAT WE SO CAREFULLY

DRAFTED, SPECIFICALLY USES THE WORD ALLOCATE.

(9) RESERVES A RIGHT OF DIRECTION AND CONTROL OVER

LEASED EMPLOYEES ASSIGNED TO THE CLIENTS LOCATION
DOES NOT REQUIRE THE ACTUAL EXERCISE OF SUCH
DIRECTION AND CONTROL BY THE EMPLOYEE LEASING
COMPANY AT THE JOB SITE AT WHICH OR FROM WHICH LEASED
EMPLOYEES WORK. THE CLIENT SHALL BE ALLOWED TO
EXERCISE SUCH DIRECTION AND CONTROL AS MAY BE
ALLOCATED TO THE CLIENT, IN WRITING, AND IN CONFORMITY
WITH FLORIDA LAW.

(10) RETAINS AUTHORITY TO HIRE, TERMINATE, DISCIPLINE, AND

REASSIGN THE LEASED EMPLOYEES DOES NOT REQUIRE THE
ACTUAL EXERCISE OF SUCH AUTHORITY BY THE EMPLOYEE
LEASING COMPANY AT THE JOB SITE AT WHICH OR FROM WHICH
THE LEASED EMPLOYEES WORK. THE CLIENT SHALL BE
ALLOWED TO EXERCISE SUCH AUTHORITY AS MAY BE
ALLOCATED TO THE CLIENT, IN WRITING, AND IN CONFORMITY
WITH FLORIDA LAW.

(11) RETAINS A RIGHT OF DIRECTION AND CONTROL OVER

MANAGEMENT OF SAFETY, RISK, AND HAZARD CONTROL AT THE
WORKSITE OR SITES AFFECTING ITS LEASED EMPLOYEES,
INCLUDING:

(A) RESPONSIBILITY FOR PERFORMING SAFETY INSPECTIONS OF

CLIENT EQUIPMENT AND PREMISES.

(B) RESPONSIBILITY FOR THE PROMULGATION AND

ADMINISTRATION OF EMPLOYMENT AND SAFETY POLICIES.
(C) RESPONSIBILITY FOR THE MANAGEMENT OF WORKERS
COMPENSATION CLAIMS, CLAIMS FILINGS, AND RELATED
PROCEDURES.

DOES NOT REQUIRE THE ACTUAL EXERCISE OF SUCH

DIRECTION AND CONTROL BY THE EMPLOYEE LEASING
COMPANY AT THE WORK SITE AT WHICH OR FROM WHICH THE

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 LEASED EMPLOYEES WORK. THE CLIENT SHALL BE ALLOWED TO
EXERCISE SUCH DIRECTION AND CONTROL AS MAY BE
ALLOCATED TO THE CLIENT, IN WRITING, AND IN CONFORMITY
WITH FLORIDA LAW.

AS A RESULT OF THIS OPINION AND ANTICIPATING THAT IN 4 YEARS THE

DEMOCRATS COULD BE BACK IN POWER, I HAVE CHANGED THE WORDING IN

MY SERVICE AGREEMENTS FROM CLIENT IS ALLOCATED TO CLIENT

ACCEPTS THE ASSIGNMENT OF DIRECTION AND CONTROL, HIRING,

TERMINATING AND DISCIPLINING ETC. I EXPLAINED MY PARANOIA TO AN

INDUSTRY LEADER A FEW WEEKS AGO WHO SAID JUST BECAUSE YOU ARE

PARANOID DOESNT MEAN YOU ARE NOT RIGHT IN YOUR ASSESSMENT. EACH

OF YOU WILL NEED TO DECIDE FOR YOURSELVES WHETHER MY PARANOIA

OVER THE WORD ALLOCATE IS WARRANTED.

ALRIGHT LET ME JUMP BACK TO THE PRESENT. WE HAVE NOT YET HAD

THE OPPORTUNITY TO SEE THE FULL EFFECT OF PRESIDENT TRUMPS LABOR

APPOINTMENTS AND NLRB NOMINATIONS. AT THE NLRB, THE PRESIDENT HAS

NOMINATED WILLIAM EMMANUEL FROM THE MANAGEMENT LABOR LAW FIRM

OF LITTLER MENDELSON AND MARVIN KAPLAN, WHO IS CURRENTLY A

REPUBLICAN ATTORNEY SERVING ON THE OSHA REVIEW COMMISSION, TO

BOTH SERVE AS MEMBERS OF THE NATIONAL LABOR RELATIONS BOARD.

THESE TWO REPUBLICAN MEMBERS, WHO SHOULD BE APPROVED BY THE

SENATE, WILL JOIN NLRB CHAIRMAN PHILLIP MISCIMARRA AND WILL GIVE THE

REPUBLICANS THEIR FIRST MAJORITY ON THE BOARD SINCE THE GEORGE W.

BUSH ADMINISTRATION. POLITICS, HOWEVER, BEING THE WAY IT IS TODAY,

HAS RESULTED IN CERTAIN DEMOCRATS AND LABOR ORGANIZATIONS

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ATTACKING THE NOMINEES AND CERTAIN EMPLOYER ORGANIZATIONS

PRAISING THEM. LET ME GIVE YOU SAMPLING OF WHAT SOMEONE FACES IF

THEY WANT TO ENGAGE IN PUBLIC SERVICE BY SERVING IN WASHINGTON.

THE NATIONAL RESTAURANT ASSOCIATION HAS SAID THAT THESE TWO

NOMINEES WOULD RESTORE BALANCE AND FAIRNESS AT THE NLRB WHEN

CRITICAL ISSUES ARE BEING REVIEWED, SUCH AS JOINT EMPLOYMENT.

AT THE SAME TIME, THE AFL-CIO HAS STATED THAT THE NOMINEES

TRACK RECORDS RAISE SERIOUS CONCERNS ABOUT THEIR COMMITMENT TO

THE RIGHTS AND PROTECTIONS GUARANTEED BY OUR LABOR LAWS AND

ENFORCED BY THE NLRB.

WHILE ELIZABETH WARREN CALLED THE LAW FIRM THAT MR.

EMMANUEL WORKS AT, LITTLER MENDELSON, WHICH FROM MY PERSPECTIVE

IS TRULY A FINE FIRM, AND YET SHE CALLED LITTLER MENDELSON ONE OF

THE MOST RUTHLESS UNION BUSTING LAW FIRMS IN THE COUNTRY.

WHY WOULD ANYONE WANT TO ACCEPT A NOMINATION AND GO

THROUGH THIS PROCESS?

THERE CERTAINLY ARE NUMEROUS SIGNIFICANT ISSUES THAT THE

NEW REPUBLICAN MAJORITY WILL NEED TO ADDRESS AT THE NLRB. A PRO-

BUSINESS COALITION HAS STATED THAT DURING PRESIDENT OBAMAS

ADMINISTRATION, MORE THAN 90 NLRB PRECEDENTS WERE OVERTURNED.

UNFORTUNATELY, THE NLRB DOESNT JUST WAIVE A MAGIC WAND, SAY

ABRACADABRA AND THE DECISION ARE OVERTURNED. INSTEAD, THE NLRB

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HAS TO WAIT FOR A SIMILAR CASE TO REACH THE BOARD IN ORDER FOR THIS

NEW MAJORITY TO ISSUE A NEW DETERMINATION ON THE MATTER.

LET ME BRIEFLY MENTION SOME OF THE RECENTLY DECIDED CASES

THAT ARE PARTICULARLY GALLING TO ME AND WHICH I THINK WILL CHANGE

WITH THE NEW REPUBLICAN MAJORITY.

FIRST AND FOREMOST, I HOPE AND BELIEVE THE NLRB WILL GO BACK

TO ITS OLD STANDARD OF DIRECT AND IMMEDIATE CONTROL IN JOINT

EMPLOYMENT MATTERS. TO OUR INDUSTRY THIS IS BY FAR THE MOST

SIGNIFICANT ISSUE FOR THE NLRB.

NEXT, WHAT THE OBAMA NLRB MAJORITY CALLED STREAMLINING

UNION ELECTIONS WHERE ELECTIONS WERE SPEEDED UP TO THE POINT

THAT EMPLOYERS HAVE HAD VERY LITTLE TIME TO CAMPAIGN (10 TO 12

DAYS) MAY WELL RETURN TO THE OLD STANDARD OF APPROXIMATELY 25 TO

30 DAYS IN MOST SITUATIONS BETWEEN THE UNIONS FILING OF ITS PETITION

AND THE DATE OF THE ELECTION.

THE NEW BOARD MAJORITY IS ALSO LIKELY TO RETHINK THE LINE OF

CASES THAT HAVE EVOLVED OUT OF THE LUTHERAN HERITAGE CASE WHICH

OPENED THE DOOR TO FINDING VIRTUALLY ANY EMPLOYER HANDBOOK

PROVISION TO BE UNLAWFUL IF EMPLOYEES WOULD REASONABLY

CONSTRUE THE HANDBOOK RULE TO PROHIBIT PROTECTED ACTIVITIES. IN

MY VIEW OF THE WORLD OF LABOR AND EMPLOYMENT LAW, I BELIEVE THE

NLRB NEEDS TO CONCERN ITSELF WITH BIG TICKET ITEMS SUCH AS ILLEGAL

14
DISCHARGES, STRIKES AND PICKETING AND NOT GET INO DEALING WITH

ISSUES SUCH AS WHETHER AN EMPLOYEE COULD POSSIBLY MISCONSTRUE A

HANDBOOK PROVISION.

LET ME GO ON. CASES LIKE PURPLE COMMUNICATIONS WHERE THE

NLRB MAJORITY GAVE EMPLOYEES GREATER ACCESS TO THEIR EMPLOYERS

EMAIL SYSTEMS DURING NON-WORKING TIME WILL LIKELY BE REVISITED. IN

PURPLE COMMUNICATIONS THE BOARD MAJORITY HELD IN 2014:

CONSISTENT WITH THE PURPOSES AND POLICIES OF

THE ACT AND OUR OBLIGATION TO ACCOMMODATE

THE COMPETING RIGHTS OF EMPLOYERS AND

EMPLOYEES, WE DECIDE TODAY THAT THE

EMPLOYEE USE OF EMAIL FOR STATUTORILY

PROTECTED COMMUNICATIONS ON NONWORKING

TIME MUST PRESUMPTIVELY BE PERMITTED BY

EMPLOYERS WHO HAVE CHOSEN TO GIVE

EMPLOYEES ACCESS TO THEIR EMAIL SYSTEMS.

IN OTHER WORDS, EMPLOYERS HAVE TO ALLOW PRO-UNION

EMPLOYEES TO HAVE ACCESS TO THE EMPLOYERS EMAIL SYSTEM TO

CAMPAIGN FOR A UNION. GIVING A UNION EMPLOYEE NAMES AND

ADDRESSES ISNT ENOUGH. GIVING THEM ACCESS TO EMPLOYEES EMAIL

ADDRESSES AND TO THEIR TELEPHONE NUMBERS AS WAS DONE IN 2014

ISNT ENOUGH. NOW EMPLOYERS HAVE TO GIVE PRO-UNION EMPLOYEES

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ACCESS TO THE EMPLOYERS OWN INTERNAL EMPLOYER OWNED EMAIL

SYSTEMS.

ANOTHER PARTICULAR GALLING DECISION TO EMPLOYERS WAS THE

NLRBS DECISION IN 2015 IN BANNER HEALTH SYSTEM, A CASE THAT IMPACTS

THE WAY YOUR PEO ASSISTS YOUR CLIENTS. IN BANNER HEALTH SYSTEM,

THE COMPANYS HUMAN RESOURCE CONSULTANT, WHO MIGHT BE AKIN TO A

PEO CONSULTANT, WAS INVESTIGATING A WORKPLACE ALLEGATION.

AS PART OF THE INVESTIGATION, THERE WAS A STANDARD

INTRODUCTORY STATEMENT THAT THE INTERVIEW WAS CONFIDENTIAL AND

THAT THE INTERVIEWER WILL KEEP THE CONVERSATION CONFIDENTIAL AND

AT THE SAME TIME THE EMPLOYEE WAS REQUESTED:

NOT TO DISCUSS THIS WITH YOUR COWORKERS

WHILE THIS INVESTIGATION IS GOING ONWHEN
PEOPLE ARE TALKING IT IS DIFFICULT TO DO A FAIR
INVESTIGATION AND SEPARATE FACTS FROM
RUMORS.
DOES THIS SEEM LIKE A REASONABLE REQUEST?

THE ADMINISTRATIVE LAW JUDGE WHO INITIALLY HEARD THE CASE

THOUGHT SO AND HELD THAT THE COMPANYS MAINTENANCE AND

APPLICATION OF ITS POLICY TO REQUEST CONFIDENTIALITY DID NOT VIOLATE

THE NATIONAL LABOR RELATIONS ACT. THE DEMOCRATIC BOARD MAJORITY

DISAGREED AND STATED:

EMPLOYEES HAVE A SECTION 7 RIGHT TO DISCUSS

DISCIPLINE OR ONGOING DISCIPLINARY
INVESTIGATIONS INVOLVING THEMSELVES OR

16
 COWORKERS. SUCH DISCUSSIONS ARE VITAL TO
EMPLOYEES ABILITY TO AID ONE ANOTHER IN
ADDRESSING EMPLOYMENT TERMS AND CONDITIONS
WITH THEIR EMPLOYER
CONTRARY TO THE JUDGE, HOWEVER, WE FIND THAT
THE RESPONDENTS GENERALIZED CONCERN WAS
INSUFFICIENT TO OUTWEIGH EMPLOYEES SECTION 7
RIGHTS. RATHER, IT WAS THE RESPONDENTS
BURDEN TO DEMONSTRATE THAT, IN CONNECTION
WITH A PARTICULAR INVESTIGATION, THERE WAS AN
OBJECTIVELY REASONABLE BASIS FOR SEEKING
CONFIDENTIALITY, SUCH AS WHERE WITNESSES
NEED PROTECTION, EVIDENCE IS IN DANGER OF
BEING DESTROYED, TESTIMONY IS IN DANGER OF
BEING FABRICATED, OR THERE IS A NEED TO
PREVENT A COVER-UP. ACCORDINGLY, WE FIND
THAT THE RESPONDENT, BY MAINTAINING AND
APPLYING A POLICY OF REQUESTING EMPLOYEES
NOT TO DISCUSS ONGOING INVESTIGATIONS OF
EMPLOYEE MISCONDUCT, VIOLATED SECTION 8(a)(1)
OF THE ACT.
YOUVE GOT TO BE KIDDING ME.

SADLY, THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA HELD:

THE BOARDS INVALIDATION OF THE

CONFIDENTIALITY AGREEMENT WAS REASONABLE

AND SUPPORTED BY SUBSTANTIAL EVIDENCE, AND

WE THEREFORE GRANT THE APPLICATION FOR

ENFORCEMENT ON THAT ISSUE. BUT, BECAUSE THE

RECORD LACKS SUBSTANTIAL EVIDENCE THAT

BANNER ACTUALLY MAINTAINED A CATEGORICAL

INVESTIGATIVE NONDISCLOSURE POLICY, WE GRANT

17
 THE PETITION FOR REVIEW AND DENY ENFORCEMENT

AS TO THAT PORTION OF THE BOARDS ORDER.

JUST SO YOU UNDERSTAND IT, THE BOARD DOESNT CARE WHAT THE

VARIOUS COURTS OF APPEALS HOLD. THE BOARD TAKES THE POSITION

THAT IT ADMINISTERS NATIONAL LAW AND IT CANT DO THIS IF A COURT IN

WASHINGTON RULES ONE WAY AND A COURT IN GEORGIA RULES A

DIFFERENT WAY. FOR THAT REASON, UNTIL THE SUPREME COURT SPEAKS,

THE BOARD CONTINUES TO DO WHAT THE BOARD WANTS TO DO. BUT LISTEN

TO WHAT THE COURT OF APPEALS FOR THE DC CIRCUIT SAID ABOUT THIS

NLRB POLICY:

FACTS MAY BE STUBBORN THINGS, BUT THE BOARDS

LONGSTANDING NONACQUIESCENCE TOWARDS THE
LAW OF ANY CIRCUIT DIVERGING FROM THE BOARDS
PREFERRED NATIONAL LABOR POLICY TAKES
OBDURACY TO A NEW LEVEL. AS THIS CASE SHOWS,
WHAT THE BOARD PROFFERS AS A SOPHISTICATED
TOOL TOWARDS NATIONAL UNIFORMITY CAN JUST AS
EASILY BE AN INSTRUMENT OF OPPRESSION,
ALLOWING THE GOVERNMENT TO TELL ITS CITIZENS:
WE DONT CARE WHAT THE LAW SAYS, IF YOU WANT
TO BEAT US, YOU HAVE TO FIGHT US.

SIGNIFICANTLY, THE SUPREME COURT IS INDEED ABOUT TO RULE ON

THE NLRBS POSITION REGARDING THE ILLEGALITY OF REQUIRING WORKERS

TO WAIVE THEIR RIGHTS TO FILE CLASS ACTION LAWSUITS. THIS IS AN AREA

THAT THE NEW NLRB MAJORITY WILL LIKELY CHANGE. HOWEVER, THE

SUPREME COURT WILL LIKELY RULE ON THIS SUBJECT BEFORE THE NLRB

CHANGES ITS POSITION AND I THINK THEY WILL RULE THAT THE FEDERAL

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ARBITRATION ACT TRUMPS SECTION 7 OF THE NATIONAL LABOR RELATIONS

ACT.

AND THERE ARE VARIOUS OTHER NLRB CASES THAT WILL LIKELY BE

REVERSED RANGING FROM MICROUNITS TO THE ISSUE OF WHETHER

GRADUATE STUDENTS WHO ARE TEACHING ASSISTANTS HAVE THE RIGHT TO

UNIONIZE, AND THE LIST GOES ON AND ON.

LET ME MOVE ON. ANOTHER AGENCY THAT I WANT TO MENTION IS THE

INTERNAL REVENUE SERVICE. IN NOVEMBER OF 2016, THE OFFICE OF THE

CHIEF COUNSEL ISSUED A MEMORANDUM REGARDING SITUATIONS WHERE A

CLIENT WILL BE LIABLE FOR UNPAID PAYROLL TAXES WHEN THE PAYROLL

TAXES ARE NOT PAID BY A PEO. IN THIS MEMO, THE IRS SENIOR COUNSEL

FOR THE NORTHEAST HELD THAT THE CLIENT AND NOT THE PEO WAS THE

COMMON LAW EMPLOYER AND, THEREFORE, EVEN THOUGH THE PEO WAS

RESPONSIBLE, UNDER APPLICABLE STATE LAW, TO MAKE WAGE PAYMENTS

WITHOUT REGARD TO PAYMENTS BY THE CLIENT COMPANY AND WAS

REQUIRED TO ASSUME RESPONSIBILITY FOR THE PAYMENT OF PAYROLL

TAXES AND COLLECTION OF TAXES OF PAYROLL FOR COVERED EMPLOYEES,

THEY STILL HELD THAT THE CLIENT AS THE COMMON LAW EMPLOYER WAS

LIABLE FOR THE UNPAID TAXES.

WELL, WHAT RELEVANCE DOES THIS IRS POSITION HAVE ON YOUR

COMPANY AS A PEO AND POTENTIALLY ON YOUR COMPANY AS A JOINT

EMPLOYER? FOR THOSE OF YOU WHO HAVE EVER HEARD OF THE HALL OF

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FAME BASEBALL PITCHER DIZZY DEAN, DIZZY DEAN, IN AN ALL STAR GAME,

GOT HIT WITH A LINE DRIVE ON HIS FOOT. AS A RESULT OF THE INJURY TO

HIS FOOT, HE ALTERED HIS DELIVERY AND WOUND UP AS A SORE ARMED

PITCHER WHOSE CAREER WAS DESTROYED.

FOR THOSE OF YOU WHO ARE BECOMING SBEA CERTIFIED IN ORDER

TO AVOID EVER HAVING TO DISCUSS WITH A CLIENT THE CIRCUMSTANCES

UNDER WHICH THEIR COMPANY WOULD STILL BE LIABLE FOR TAXES EVEN

THOUGH TAX PAYMENTS WERE MADE TO THE PEO, I WOULD HATE TO SEE

YOU GUYS ALTER YOUR DELIVERY, I.E., ALTER YOUR SERVICE AGREEMENTS

IN SUCH A WAY THAT COULD TRY TO PROTECT YOUR CLIENTS WITH REGARD

TO THE PAYMENT OF TAXES, BUT WHICH COULD CAUSE YOU TO BECOME

JOINT EMPLOYERS AND LIABLE FOR ALL SORTS OF EVILS THAT MAY BEFALL

YOUR CLIENTS.

REMEMBER, TO BE SBEA CERTIFIED, YOUR SERVICE AGREEMENTS

WITH YOUR CLIENTS MUST CONTAIN THE FOLLOWING LANGUAGE:

(2) service contract requirements.a contract meets the requirements of this

paragraph with respect to an individual performing services for a customer if such
contract is in writing and provides that the certified professional employer
organization shall

(a) assume responsibility for payment of wages to such individual, without regard
to the receipt or adequacy of payment from the customer for such services,

(b) assume responsibility for reporting, withholding, and paying any applicable
taxes under subtitle c, with respect to such individuals wages, without regard to
the receipt or adequacy of payment from the customer for such services,

(c) assume responsibility for any employee benefits which the service contract
may require the certified professional employer organization to provide, without

20
 regard to the receipt or adequacy of payment from the customer for such
benefits,

[(d) assume responsibility for recruiting, hiring, and firing workers in addition to
the customers responsibility for recruiting, hiring, and firing workers,]

(e) maintain employee records relating to such individual, and

(f) agree to be treated as a certified professional employer organization for

purposes of section 3511 with respect to such individual.

THIS IS MY BIGGEST CONCERN: WHAT IMPACT WILL THE LANGUAGE

assume responsibility for recruiting, hiring, and firing workers in addition to the
customers responsibility for recruiting, hiring, and firing workers,

HAVE ON YOUR BUSINESS. THIS SENTENCE SURE LOOKS LIKE

RESPONSIBILITY, AUTHORITY OR CONTROL ON THE PART OF YOUR PEO.

WHILE THE SBEA GOES ON TO STATE:

(h) no inference.nothing contained in this section or the amendments made by

this section shall be construed to create any inference with respect to the
determination of who is an employee or employer

(1) for federal tax purposes (other than the purposes set forth in the
amendments made by this section), or

(2) for purposes of any other provision of law.

REST ASSURED THAT WHILE THE FACT THAT YOU ARE A CERTIFIED PEO MAY

NOT BE HELD AGAINST YOU, YOUR CONTRACT LANGUAGE WILL BE

CONSTRUED AGAINST YOU. I HAVE SUGGESTED TO VARIOUS PEOS THAT

WANT TO BECOME SBEA CERTIFIED THAT THEY UTILIZE LANGUAGE SIMILAR

TO THE FOLLOWING:

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 In accordance with the Small Business Efficiency Act, PEO,
to the extent required by this law, assumes responsibility for
recruiting, hiring, and firing utilized individuals, in addition to
Clients responsibility for recruiting, hiring, and firing utilized
individuals. This assumption of responsibility by PEO in
addition to Clients responsibility on the same subject,
including any similar requirements of state law, is not
expansive in nature and PEOs responsibility is limited to
adding and removing utilized individuals from PEOs payroll,
following such utilized individuals recruitment, hiring and/or
firing by Client, which shall be done by PEO solely in
accordance with Clients instructions to PEO. Additionally,
this provision shall in no manner be indicative of any control
on the part of PEO which would cause any liability to affix to
PEO pursuant to Section 768.098, Florida Statutes, as it is
the intent of the parties that such control shall rest entirely
with Client. Accordingly, notwithstanding this provision, to
the fullest extent allowed pursuant to applicable law, Client
will exercise the assignment of performing such rights and
authority in order to allow Client to exercise sole and
exclusive control over the day-to-day job duties of all utilized
individuals and sole and exclusive control over the
worksite(s) at which, or from which, utilized individuals
perform their services. PEO only reserves and retains such
rights and authority as is required by applicable law.

WHILE I HAVE NO IDEA WHETHER THE IRS WILL ACCEPT THIS LANGUAGE UP

TO NOW THE IRS HAS NOT SHOWN ANY REAL INTEREST IN PEO SERVICE

AGREEMENT LANGUAGE AND COMPANIES HAVE BEEN CERTIFIED THAT HAVE

USED MY LANGUAGE. WHILE I CERTAINLY CANT GUARANTEE WHAT IMPACT A

REJECTION OF YOUR LANGUAGE WOULD HAVE, IT ONLY SEEMS LOGICAL

THAT IF THIS LANGUAGE IS DEEMED UNACCEPTABLE, THAT THE IRS WOULD

ALLOW YOU TO MODIFY IT.

EVEN FOR THOSE OF YOU WHO ARE NOT GOING TO BECOME SBEA

CERTIFIED, THE WORDS CONTAINED IN YOUR SERVICE AGREEMENTS ARE OF

22
GREATER IMPORTANCE THAN EVER BEFORE. CERTAINLY, IF INDIRECT OR

UNEXERCISED CONTROL IS SUFFICIENT TO ESTABLISH YOUR COMPANY AS A

JOINT EMPLOYER, HOW DO WE ATTEMPT TO AVOID LIABILITY WHEN SO MANY

STATES REQUIRE YOUR PEO TO HAVE A RIGHT OF DIRECTION AND CONTROL

AND AUTHORITY WITH REGARD TO HIRING AND FIRING? I HAVE ATTEMPTED

TO COME UP WITH SOME LANGUAGE, BUT, ONCE AGAIN, I HAVE NO IDEA

WHETHER STATE REGULATORS WILL ALLOW A PEO TO INCLUDE MY

LANGUAGE IN THEIR SERVICE AGREEMENTS.

To the extent allowed by law regarding Client: Client shall be entitled to exercise
all rights, and shall be obligated to perform all duties and responsibilities,
otherwise applicable to an employer in an employment relationship; Client shall
retain sufficient direction and control over the workplace and over the utilized
individuals as is necessary to supervise all day-to-day work activities of the
utilized individuals. Additionally, Client and not PEO, shall have the right to
control the manner, means, and details of the work performed by the utilized
individuals. In this regard, authority to change utilized individuals employment
and working conditions, the services provided by utilized individuals, and the
ability to determine utilized individuals rate and method of pay are all the
responsibility of Client. Client shall retain such sufficient direction and control
over the utilized individuals and over the workplace as is necessary to conduct
Client's business, discharge any applicable fiduciary duty that it may have, or
comply with any applicable licensure, regulatory, or statutory requirement of
Client or any utilized individual.

Also to the extent allowed by law: Client shall be responsible for directing,
supervising, training, establishing and maintaining safety at its worksite(s), and
controlling the work of the utilized individuals with respect to the business
activities of Client, including, but not limited to, controlling the manner, means,
and details of the work performed by utilized individuals, setting, changing, and
controlling utilized individuals wages, wage rates, method of pay, hours,
employment and working conditions, and terms and conditions of employment;
Client shall make any and all strategic, operational, and all other business-related
decisions regarding Client's business; Such decisions and related outcomes shall
exclusively be the responsibility of Client and PEO shall bear no responsibility or
liability for any actions or inactions by Client or by any utilized individual;

23
 Additionally, Client shall have sole and exclusive control over the day-to-day job
duties of all utilized individuals, including the services to be provided by such
utilized individuals and the tools and equipment to be utilized by such utilized
individuals, and PEO shall have no responsibilities with regard to the utilized
individuals' performance of such day-to-day job duties; Furthermore, PEO shall
have no control over the job site at which, or from which, utilized individuals
perform their services; Control over the day-to-day job duties of utilized
individuals and over the job site at which, or from which, utilized individuals
perform their services is solely and exclusively an assignment of Client; Client
expressly absolves PEO of control over the day-to-day job duties of the utilized
individuals and over the job site at which, or from which, utilized individuals
perform their services; Client shall be solely responsible for the quality,
adequacy, and safety of the goods and services produced or sold in Clients
business and Client and not PEO shall be liable for the acts, errors, or omissions
of Client and those of any utilized individual. Client shall have sole and exclusive
control of all matters within the jurisdiction of the United States Occupational
Safety and Health Administration and any applicable state agency.
Responsibilities not an assignment of PEO in this Client Service Agreement, or
by applicable law, shall remain with Client.

I HAVE DRAFTED SIMILAR PROVISIONS FOR RESPONSIBILITY FOR

PAYMENT OF WAGES AND FOR PAYMENT OF TAXES. AGAIN, WHETHER THE

STATE AGENCIES WILL ACCEPT MY LANGUAGE, WHO KNOWS? BUT I DO KNOW

THAT I HAVE SEEN CLAIMS AGAINST PEOS GO INTO THE MULTI-MILLIONS OF

DOLLARS AND I WOULD GIVE IT A SHOT WITH LANGUAGE THAT ATTEMPTS TO

LIMIT YOUR LIABILITIES IN THIS NEW WORLD OF INDIRECT CONTROL.

OBVIOUSLY, IT IS GREAT NEWS TO HEAR THAT THE INDIRECT CONTROL

TEST IS NOT FAVORED BY SECRETARY ACOSTA AND HOPEFULLY NOT

FAVORED BY A MAJORITY OF THE NEW NLRB MAJORITY. WE HAVE ALREADY

SEEN, HOWEVER, THE UNITED STATES COURT OF APPEALS FOR THE FOURTH

CIRCUIT ISSUE A WORRISOME DECISION AND THERE IS NO WAY OF KNOWING

HOW OTHER UNITED STATES COURTS OF APPEALS AND ULTIMATELY THE

24
SUPREME COURT WILL REACT TO THE ATTEMPT TO BROADEN THE CONCEPT

OF JOINT EMPLOYMENT.

LAST YEAR, I MENTIONED TO YOU THAT I HAD BECOME INVOLVED IN A

CALIFORNIA CASE WHERE A PEO WAS CRIMINALLY INDICTED IN LOS ANGELES

COUNTY BY A DISTRICT ATTORNEY WHO CRIMINALLY CHARGED THE PEO

WITH AN OSHA VIOLATION RESULTING IN DEATH. IN THAT CASE, THE PEO HAD

DONE ABSOLUTELY NOTHING WRONG. ITS CRIME WAS THAT IT MAINTAINED

THE WORKERS COMPENSATION POLICY WHICH MADE IT AN EMPLOYER WHEN

AN EMPLOYEE OF A CLIENT FELL OFF A ROOF WHILE DOING REPAIR

WORK.THE PRELIMINARY HEARING IN THAT MATTER HAS NOW CONCLUDED

AND THE JUDGE HAS CONCLUDED THERE IS ENOUGH PRESENT FOR THE

MATTER TO BE TRIED CRIMINALLY.

CERTAINLY, IN CALIFORNIA, I BELIEVE A PEO NEEDS A TOTALLY

SCRUBBED SERVICE AGREEMENT WHERE ALL VESTIGES OF DIRECT AND

INDIRECT CONTROL ARE CAREFULLY REMOVED.

BEYOND THIS, THE DISTRICT ATTORNEY IN LOS ANGELES COUNTY

BELIEVES IF YOU USE THE WORD LEASED EMPLOYEE OR EMPLOYEE

LEASING IN YOUR SERVICE AGREEMENT IN CALIFORNIA, THAT BRINGS YOU

WITHIN THE AMBIT OF A CASE CALLED SULLY MILLER WHERE THE COURT

HELD THAT AN EMPLOYER THAT LEASES AN EMPLOYEE TO ANOTHER

EMPLOYER REMAINS LIABLE FOR OSHA VIOLATIONS THAT OCCUR AT THE

SECOND EMPLOYERS WORKPLACE.

25
 BASED ON THE CONTENTION OF THE DISTRICT ATTORNEY THAT AN

EMPLOYEE LEASING COMPANY IS CRIMINALLY LIABLE FOR GRIEVOUS

WORKPLACE ACCIDENTS AND DEATHS, WE CERTAINLY DONT WANT TO SAY

THAT WE ARE A LEASING EMPLOYER. WE WANT TO ARGUE THAT WE ARE A

PROFESSIONAL EMPLOYER ORGANIZATION.

WITH THIS BEING SAID, IT MAKES NO SENSE TO ME TO EVEN GET INTO

THIS WHOLE AREA. SUTA SHOULD NOT BE REPORTED UNDER THE PEOS

ACCOUNT IN CALIFORNIA. THERE IS SIMPLY TOO MUCH RISK.

AND IF THE DEATH CASE ISNT BAD ENOUGH, THERE IS A MULTI MILLION

DOLLAR TORT CASE PENDING IN CALIFORNIA AS WELL AS A LARGE CLASS

ACTION STATE OF CALIFORNIA WAGE CLAIM CASE THAT FLORIDA PEOS ARE

INVOLVED IN. CALIFORNIA IS A SCARY PLACE TO DO BUSINESS AND I URGE

ALL OF YOU TO NOT ONLY CONSIDER WHETHER YOU SHOULD BE REPORTING

SUTA UNDER THE PEOS ACCOUNT NUMBER BUT ALSO TO REMOVE THOSE

VESTIGES OF CONTROL FROM YOUR SERVICE AGREEMENTS THAT YOU FEEL

COMFORTABLE REMOVING, INCLUDING ANY REFERENCE TO THE WORDS

EMPLOYEE LEASING. AMEND YOUR SERVICE AGREEMENTS.

THE CALIFORNIA TORT CASE THAT I JUST MENTIONED IS SOMEWHAT

SIMILAR TO THE HORRIFIC FLORIDA MULTIPLE PERSON DEATH CASE THAT

GRIFF TRIED AND CONCERNING WHICH I PRESENTED THE ORAL ARGUMENT

LAST NOVEMBER.

GRIFF WINTHROP, ONE OF OUR OF COUNSEL ATTORNEYS, DID A

MASTERFUL JOB. THE PLAINTIFFS HAD BEEN SEEKING OVER 100 MILLION

26
DOLLARS IN DAMAGES IN A TRAGIC MULTIPLE PERSON DEATH CASE. WHILE I

ARGUED TO THE JUDGE THAT WE WERE NOT A JOINT EMPLOYER, THE JUDGE

RULED THAT PEOS ARE JOINT EMPLOYERS BASED ON HER INTERPRETATION

OF SECTION 768.098 (I BELIEVE SHE INTERPRETED THIS SECTION

INCORRECTLY). HER DECISION WAS A TWO EDGED SWORD. IN 1999, I

DRAFTED THIS TORT REFORM LAW WHICH HOLDS THAT IF A PEO HAS IN ITS

SERVICE AGREEMENT THE LANGUAGE REQUIRED BY THIS STATUTORY

SECTION (768.098), IT HAS TORT IMMUNITY EVEN IF IT SOMEHOW CROSSED

THE LINE AND BECAME A JOINT EMPLOYER. THATS THE GOOD NEWS. THE

BAD NEWS IS IF YOU DONT HAVE THIS LANGUAGE IN YOUR AGREEMENT,

YOUR COMPANY IS LIABLE IF YOUR COMPANY IS DETERMINED TO BE A JOINT

EMPLOYER ACCORDING TO THIS JUDGE.

WITH ALL OF THIS IN MIND I CANT EMPHASIZE ENOUGH THAT LIKE

NEVER BEFORE YOUR SERVICE AGREEMENT LANGUAGE IS ABSOLUTELY

CRUCIAL IN ATTEMPTING TO AVOID LIABILITY FOR EVERYTHING THAT OCCURS

INVOLVING YOUR CLIENTS NUMEROUS BUSINESS OPERATIONS. IN THE LAST

FEW MONTHS I HAVE DISCUSSED PEO LIABILITY ISSUES AND SERVICE

AGREEMENT LANGUAGE WITH ATTORNEYS IN FLORIDA, CALIFORNIA,

MINNESOTA AND NEW YORK. ALL OF THEM ARE TRYING TO PICK THROUGH

THE SERVICE AGREEMENTS IN QUESTION AND FIND LANGUAGE THAT THEY

FEEL ESTABLISHES CONTROL, RESPONSIBILITY OR AUTHORITY ON THE PART

OF THE PEO. IN RESPONSE TO ALL OF THIS YOU NEED TO DO YOUR VERY

BEST TO GO THROUGH YOUR SERVICE AGREEMENTS PARAGRAPH BY

27
PARAGRAPH, SENTENCE BY SENTENCE, WORD BY WORD AND MAYBE EVEN

BY PUNCTUATION MARK BY PUNCTUATION MARK IN ORDER TO HAVE YOUR

SERVICE AGREEMENT SAY WHAT YOU MEAN AND MEAN WHAT YOU SAY.

LET ME CONCLUDE BY MENTIONING A COUPLE OF QUOTES THAT SEEM

APROPOS TO TODAYS CHANGING INTERPRETATION OF THE LAW:

An ancient Greek philosopher, Heraclitus, stated 2500 years

ago All is flux, nothing stays still and nothing endures but
change. Perhaps a more appropriate quote would be Betty
Davis famous quote Fasten your seatbelts, its going to be
a bumpy [ride.]

THE TIME FOR CHANGE HAS COME FIX YOUR SERVICE AGREEMENTS.

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