Kim Stanger, writing for Holland & Hart, offers a brief summary of some terms or issues that should be considered in provider agreements.

The article discusses such topics as regulatory compliance, written agreements, parties, the nature of relationships, services, schedules, location, independence, intellectual property, use of information, outside activities, qualifications, representations and warranties, performance standards, medical records, employer obligations, compensation, bonuses, benefits, exempt status, referrals, assignment of fees, liability insurance, and more.

Read the article.

A recent ruling in an Alabama federal court illustrates how having a valid independent contractor agreement is not necessarily an impenetrable magic shield automatically rendering misclassification claims null and void, according to Fisher Phillips’ Gig Employer Blog.

Partner Richard Meneghello describes the case in which a company’s former worker claimed that he faced discrimination on account of his race, gender, and age during his three months on the job. The company, however, countered that the plaintiff had been an independent contractor and did not have legal standing to bring employment discrimination claims under Title VII or the ADEA.

The company also citied an independent contractor agreement, confirming that the worker was a contractor and had no employment rights. The plaintiff cited work requirements that would have been appropriate for an employee.

“When the two were compared—the world contained in the contractor agreement against the reality as alleged by Nemo’s complaint and evidence—the court found inconsistencies that led it to rule in [the plaintiff’s] favor,” Meneghello writes.

Read the article.

General counsels and chief legal officers at more than 170 companies have signed an open letter telling law firms they expect their lawyers to “reflect the diversity of the legal community and the companies and the customers we serve,” reports the ABA Journal.

“The letter was drafted after an online photo of 12 new partners at Paul, Weiss, Rifkind, Wharton & Garrison drew attention because it appeared to show 11 white men and just one woman,” writes the Journal‘s Debra Cassens Weiss. “The firm later said the partnership class also includes one Latino and one LGBTQ partner.”

A New York Times article on the subject said that more than 20 women and people of color described obstacles to achieving diversity at Paul, Weiss, with many saying that opportunities to be groomed for partner are harder to come by for women and minorities.

Read the Journal article.

Bloomberg Law reports that average signing bonuses for law firm associates have dropped by $10,000 since 2017 partly because salaries have gone up and women are getting less, according to client data compiled by a legal staffing and recruiting company.

The company, Special Counsel, found that the average signing bonus this year so far is about $17,000. One Special Counsel client topped the list with $60,000, compared to a record $90,000 last year, report Bloomberg reporters Sam Skolnik and Madi Alexander.

The vast majority of those receiving signing bonuses were law firm associates. The others were in-house attorneys or law firm counsel or partners, the report adds.

Read the Bloomberg Law article.

A new survey aims to move forward the conversation about equality in Biglaw by examining which firms are taking key steps to close persistent gender gaps.

Bloomberg Law reports on the survey, which was conducted by Diversity Lab, an incubator for diversity and inclusion in the law, and ChIPs, a nonprofit organization focused on advancing and connecting women in technology, law and policy.

Top scoring firms were Brooks Kushman and Sheppard Mullin.

Read the Bloomberg Law article.

James L. Heskett, a Harvard Business School professor emeritus, reports on some of the responses to a recent column about how best to foster a climate of inclusion in an organization.

In his original column, the author discussed how diversity and inclusion are universal topics among executives. One typical study looking at the issue found “a strong correlation between gender diversity and a company’s bottom line.”

Companies in the top quartile of gender diversity worldwide had a high likelihood of outperforming bottom-quartile industry peers in both earnings before interest and taxes as well as longer-term value creation, according to the study.

Read the article.

Above the Law reports that women in the Jones Day Business and Tort Litigation group have been “encouraged” to tell management if they were pregnant or planning on becoming pregnant within the next year.

ATL executive editor Elie Mystal writes:

We’re told that partner Stephen Sozio, who is co-leader of the firm’s health care practice and chair of the firm’s litigation department in Cleveland, added that he understood if women who were in their first trimester were uncomfortable talking to him. He encouraged those women to contact his administrative assistant and tell her about their plans.

The women were told that the information would help the group plan its budget.

Read the Above the Law article.

Fish & Richardson has “reassessed” its earlier decision not to give raises to associates and now has reversed course and will set starting salaries for associates at $190,000, reports Above the Law.

“According to the firm-wide email, the powers that be at Fish ‘continued to monitor market conditions’ and ‘listened to the reactions of associates throughout the Firm’ and whaddaya know, and they’ve ‘reassessed’ their position. Turns out hitting the $190,000 mark for starting associate salaries is good business,” writes editor Kathryn Rubino.

Seventh-year associates can look forward to salaries of $325,000 on the new scale.

Read the Above the Law article.

Carothers DiSante & Freudenberger LLP will present a webinar discussing new developments in California wage and hour laws that provoke class action litigation and will offer ways to avoid, manage and resolve these issues to help minimize the risk of a costly wage and hour class action lawsuit.

The complimentary event will be Sept. 26, 2018, at 10 a.m. PDT.

Employing people in California means dealing with California’s unique and complex wage and hour regulations, the firm points out on its website. California employers are increasingly finding themselves having to defend against costly wage and hour class actions and PAGA lawsuits. These lawsuits frequently cost large sums of money to resolve, either through litigation or settlement.

This webinar will review:

• New developments in California wage and hour laws that have been driving class action litigation
• What you should know about the class action process if you are facing a putative wage and hour class action and/or a PAGA claim
• How to avoid potential class action and PAGA claims and strategies to minimize potential damages
• Drafting arbitration agreements with class action waivers post Epic Systems, Inc.

Register for the webinar.

A company’s human resources department has only one criterion for a candidate for an in-house position, but “fit” isn’t the real issue, suggests an Above the Law columnist identified as “a harried in-house counsel at a well-known company that everyone loves to hate.”

Using the pseudonym of “Kay Thrace,” the author recalls her days in Biglaw, when the firm HR team carefully culled thousands of résumés of the ivy elite and organized perfectly balanced recruiting lunches.

“[I]n Biglaw, every single one of us knew that we were only as good as last year’s talent pool, so we had to strive to get the best and brightest. In-house? Not so much.”

It’s different in the business world, however, because “apart from a few basic qualifications (do you have a law degree, are you in good standing, have you killed someone in this state in the last five years, etc.), HR has nothing else to hang their hats on other than fit.”

Forget fit, she writes: “Do you know when you’re being patently misled by the business and are you gracious about rectifying the situation and guiding it to a satisfactory, risk-mitigating conclusion? Yes? You’re freaking hired.”

Read the Above the Law article.

Around half a dozen law firms have stepped up to say they will match the new $190,000 salary level for freshly minted lawyers set by Milbank, Tweed, Hadley & McCloy this week, reports Bloomberg Law, but others have been slower, or may not come forward at all, as firms try to navigate the shifting business conditions.

“Such large salary boosts can be costly, and it’s one that often is borne by the law firm. Corporations are reluctant to underwrite the six-figure salaries for lawyers straight out of law school,” explains reporter Elizabeth Olson.

She talked to James Jones, a senior fellow at Georgetown law’s Center for the Study of the Legal Profession, who agreed that clients would not be happy. Firm billing rates for the largest 100 law firms rose last year, and an across-the-board raise could indicate another hike in billing, he noted.

Read the Bloomberg Law article.

Bloomberg Law reports that salaries of law firm associates got a healthy boost Monday when Milbank, Tweed, Hadley & McCloy LLP announced that it will increase pay by $10,000 for lawyers in their first three years, and $15,000 after that.

That raise will bring starting salaries for associates to $190,000, up from the current $180,000, write Elizabeth Olson and Casey Sullivan.

Competition for legal talent has grown particularly fierce when it comes to the kind of complex, high-end transactions that Milbank specializes in, Scott A. Edelman, Milbank’s chair, told Bloomberg Law.

Read the Bloomberg article.

Bloomberg Tax will present a live event designed to help business owners, tax, finance directors, in-house counsel, bankers and investment professionals including PE & hedge fund managers to learn how employee stock ownership plans (ESOPs) can provide more than just an exit strategy. They may be an opportunity for a growing business and its employees, the company says.

The event will be Thursday, May 3, 2018, 2:30-6 p.m., at Bloomberg L.P., 120 Park Avenue, New York 10165.

“New Era of Material Wealth Creation With ESOPs” will look at all the benefits associated with ESOPs, including top performer retention, growing capital, and future planning.

Presenters will move past theory into the practical implementation of an ESOP. Through a case study, thought leaders will explore all of the stages of the process, including crafting the right design, securing employee buy-in, and more, Bloomberg says on its website.

Register for the event.

In addition to maintaining general policies prohibiting sexual harassment, employers may choose to implement workplace romance policies outlining permissible and prohibited conduct concerning dating among co-workers, points out Ashley Robertson Parr in a web post for Nexsen Pruet, LLC.

“Companies often prohibit relationships between employees in supervisory/subordinate roles, given the inherent issues that arise,” she writes. “Other companies disallow relationships between employees and clients/vendors. Another option is to require employees to inform management of workplace relationships. Regardless of the specifics, such policies should reference the company’s anti-harassment policy and remind employees how to report unwanted conduct.  In addition, employers must be diligent in making sure that the policies are enforced fairly and without a disparate impact.”

Her article covers implementing policies addressing workplace relationships, what love contracts are, and the fact that love contracts are not cure-alls.

Read the article.

The ranks of women general counsel in the Fortune 500 continued to grow in 2017, particularly in the financial services industry, though it remains more male-dominated than other sectors, according to a Bloomberg Law report.

Cynthia Dow, head of the legal officers practice at executive search firm Russell Reynolds Associates, told Bloomberg that, of the 86 financial services companies in the Fortune 500, 11 hired new general counsel in 2017. And six of those were women.

“Despite the significant bump in 2017, women still lag behind in Fortune 500 financial services GC roles, making up only 22 percent, according to Dow,” writes Stephanie Russell-Kraft.

Read the Bloomberg Law article.

Companies like Apple, American Airlines, Bank of America and AT&T have been giving bonuses to their workers in the wake of the new U.S. tax law, but fewer employers are putting their tax savings into a boost in base pay, points out Jena McGregor for The Washington Post.

“A number of companies, including Walmart and many banks, have announced increases to their minimum wage or other adjustments to salaries. But the number of companies offering bonuses — or who say they may do so — are thus far higher,” she writes.

She quotes Ken Abosch, the North American compensation practice leader for Aon: “Salaries represent the single largest percentage of direct labor costs [for employers]. Any time you give someone an increase in their salary, it’s an annuity. It’s not a one-time event like a bonus. It’s additive and it compounds.”

Read the Post article.

American labor laws normally protect workers from retaliation for unionizing, but billionaire CEO Joe Ricketts seems to have used a dramatic exception when he closed his news websites after some workers voted to unionize: A business may always close its operations entirely.

Francie Diep, a reporter for the Pacific Standard, writes that all of the publcations’ offices — including those in San Francisco, Los Angeles, Chicago and Washington, which had not voted to unionize — are now closed.

“If lawyers decide to pursue a case charging that Ricketts acted illegally, they’ll have to prove that some part of the business is still operating — say, if Ricketts were tied to another media company somehow — or that, after the shutdown, Ricketts opened up a similar business elsewhere,” Diep writes.

Read the Pacific Standard article.

In a blog post on nondisclosure agreements, Gregory W. McClune of Foley & Lardner addresses the questions: Does an employer have the legal means to prevent disclosure of information acquired during employment? Likewise, can an employer seek legal redress for such disclosures?

“Drafting and enforcing NDAs requires considerable thought, care, continual maintenance and a skilled legal advisor,” writes McClune. “It is an area rife with risks and traps; and employers who believe they can “gag” their employees, by simply requiring them to sign a broadly worded agreement with heavy penalties, may be in for a rude shock.”

His article discusses difficulties as dealing with the lack of uniformity among states in enforcing NDAs, and the lack of sympathy for employers in the courts.

Read the article.

By Natalie Lynch
Lynch Law Firm

Businesses may hire independent contractors and employees, and it is important that they understand the differences between these two classifications. Independent contractors do not get the same legal protections as employees do, such as being eligible for unemployment benefits or being protected by labor laws. Independent contractors often do not receive benefits of any type. Due to these distinctions, it is important for businesses to clearly classify independent contractors. Without proper classification, an independent contractor may be able to make claims reserved for employees if a court or governmental agency decides that it was actually an employee instead of an independent contractor. The business may even be held responsible for paying payroll taxes on behalf of the newly-classified employee and face significant monetary penalties.

Right of Control Test
The Internal Revenue Service and other government agencies use the right of control test to determine whether an individual is an independent contractor or employee. If the employer has the right to control how the work is performed then the worker is considered an employee. However, if the business can only accept or reject the final product, then the person is considered an independent contractor. The IRS uses about 20 factors to evaluate who controls the work performed. The more control a company exercises over the work that is performed, the more likely that the worker will be classified as an employee. A worker does not have to meet all of the factors in order to be considered an employee or independent contractor. No one specific factor is dispositive. The IRS also gives different weight to different factors depending on the individual circumstances. Every state has additional tests. For example, Texas has an excellent chart to help make the evaluation more clear.

Factors
Some of the factors that are considered include:

Level of Instruction
An employee relationship is more likely to be determined when a worker is directed as to how to perform his or her work, when to perform it and where to perform it. Independent contractors generally have more freedom in these regards.

Training
Company-provided training suggests an employee relationship because the business is directing the methods by which the work should be performed.

On-Site Services
An employment relationship is suggested when the employer requires the worker to be at the company site even when the work can be performed somewhere else because this gives the employer more control over the worker.

Sequence of Work
When the employer determines the sequence of work such as which work should be performed first and last, this suggests greater control and an employment relationship.

Schedule
When a worker is required to work full-time hours, this is indicative of an employment relationship because the company has greater control over a majority of the client’s time. Contractors have more flexible schedules while employees have more set hours.

Payment
An important difference between employees and independent contractors is how they are paid. Employment relationships may be based on hourly, weekly or monthly pay schedules. However, contractors are often paid based on project completion or by commission. Additionally, an employer may pay for business or travel expenses while an independent contractor is usually expected to pay these costs on its own. Likewise, an employer may provide tools and other materials necessary to complete a job for employees while an independent contractor must usually supply his or her own tools and materials.

Business Integration
Workers who perform tasks that are integrated into the business are more likely to be found to be employees rather than independent contractors.

Assignment
Employees are usually expected to perform the work themselves. However, independent contractors are often able to delegate work to another person. Likewise, contractors may be able to hire, pay and supervise people who assist him or her. If the business controls assistants, there is more likely to be an employee relationship than a contractual one.

Termination
Employees can often be terminated for any reason or no reason in at-will states. However, contractors often have a contract that must be followed in order to avoid liability for early termination. The contract terms usually govern termination. Likewise, employees can usually quit their jobs for any reason while independent contractors usually cannot terminate the working relationship without ramification.

Carefully evaluating these factors can help businesses avoid possible liability associated with misclassifying employees.

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Practical Law will present a 75-minute webinar addressing common issues and structures for partnership and LLC equity compensation.

The event will be Wednesday, June 21, 2017, 1-2:15 p.m. EDT.

Partnership and LLC equity compensation programs raise many of the same issues that arise with corporate equity compensation. However, because of the“flow-through” nature of partnership taxation, there are some unique planning opportunities and pitfalls that can arise in the realm of partnership equity compensation.

Topics will include:

• The difference between a “capital interest” and a “profits interest”;
• Profits interests subject to vesting restrictions;
• Tax Treatment of partnership and LLC equity awards upon various liquidity events; and
• Collateral tax and employee benefit consequences of partnership and LLC equity awards.

Presenters:

• Michael P. Spiro, Partner, Finn Dixon & Herling LLP
• Adam S. Mendelowitz, Associate, Finn Dixon & Herling LLP

A short Q&A session will follow.

Register for the webinar.