Contingent Workforce: Users of Contingent Workers

Overview

Most companies retain the services of independent contractors, staffing agencies or other contingent labor. We advise companies on the full range of compliance issues arising from the use of a nontraditional workforce, including independent contractors, temporary and staffing agency workers, gig workers, consultants, outsourced services, managed service providers, and other contingent and nonemployee workers. Our team understands the nuances and legal risks associated with these relationships.

We coach our clients on how to recognize and reduce the legal risks, including:
  • Evaluating relationships.
  • Adjusting the facts to better protect those relationships.
  • Drafting and revising contracts.
  • Creating customized programs for how to use contingent labor.
  • Conducting training on best practices.
  • Optimizing tax and employee benefit strategies.
  • Planning strategically.
  • Conducting due diligence and risk assessment as part of business transactions.

We aim to help our clients preserve the benefits of nontraditional labor and outsourced service providers while minimizing the risks.

We also fight to protect our clients in all types of disputes, including individual litigation, class and collective actions, government investigations, tax audits, National Labor Relations Board proceedings and other agency disputes, Private Attorneys General Act claims, arbitrations, mediations, and all other types of disputes.

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Our team takes a multifaceted approach and has deep experience in contingent labor issues. For example, our attorneys:

  • Evaluate: We evaluate the risks in existing independent contractor relationships, taking into account the multiple legal standards that are applied under tax, employment and benefits laws, as well as the varying tests applied by states in their unemployment, workers’ compensation, wage and hour, employment, and tax laws. Industry-specific tests in several states must be considered as well.
  • Advise: We provide advice on Affordable Care Act (ACA) compliance, including evaluating whether nonemployee workers may be subject to coverage, reporting or counting requirements.
  • Guide: We guide companies on best practices for using independent contractors, as well as advise on changes that can be made in the facts of the relationship to enhance the likelihood that independent contractor status would be upheld as valid, while aiming to preserve the business reason for using nonemployee workers.
  • Draft and revise: We draft and revise agreements with independent contractors, staffing agencies, vendors, consultants, virtual marketplace providers, managed service providers, professional employer organizations (PEOs), and other suppliers and facilitators of nonemployee labor. The inclusion of certain terms can help support the validity of an independent contractor or nonemployee relationship, but these contracts must be drafted carefully so that they accurately reflect the facts of the relationship.
  • Protect: We help protect against the risks of joint employment and the unexpected liability that may arise when a supplier of contingent labor fails to perform its legal obligations. We draft and review contracts with staffing agencies, PEOs and other providers of nonemployee workers. The inclusion of specific recitals, representations, obligations, and indemnity and insurance clauses can reduce the risks to companies that use workers who are nominally employed by another entity.
  • Create controls: We design processes for companies to impose internal controls on when and how independent contractors and other nonemployee workers can be retained. Too often, nonemployee workers are retained without proper oversight or consideration of the risks, and because these retentions often flow through procurement or operational managers, a company’s legal and human resources teams are often unaware of the retention and accompanying risks.
  • Defend and litigate: We defend companies in class action lawsuits, government audits and other proceedings in which independent contractor misclassification or joint employment is alleged.

Select Experience

Representative experience: Advice and counsel
  • We develop customized independent contractor agreements and programs for a broad range of companies, from Fortune 500, multistate public employers to smaller regional and single-state businesses. Our Contingent Workforce team clients include household names across many industries.
  • Regularly advise and represent business and civic organizations that use non-employee workers, to both (1) maintain their benefit plans in compliance with all relevant Affordable Care Act, Internal Revenue Code and employee benefit (ERISA) requirements, and (2) enable such non-employee workers to make their own retirement savings, health insurance and similar arrangements. 
Representative experience: Litigation and other disputes
  • Defended a market-leading consumer products company in an enforcement action brought by the California Attorney General, Los Angeles District Attorney and Los Angeles County Counsel, alleging false and misleading advertising, public nuisance and unfair competition.
  • Defended a rideshare company in an enforcement action brought by the California Attorney General and the San Francisco, Los Angeles and San Diego City Attorneys, alleging the company has misclassified workers as independent contractors.
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Professionals

Name Title Office Email
Partner Houston
Partner Cleveland
Partner Orlando
Partner Los Angeles
Counsel New York
Partner Washington, D.C.
Partner Cleveland
Counsel Orlando
Partner Cleveland
Partner Atlanta
Partner Cleveland
Partner Cleveland
Partner Los Angeles
Partner Los Angeles

Experience

Representative experience: Advice and counsel
  • We regularly develop customized independent contractor agreements and programs for a broad range of companies, from Fortune 500 and other large multistate employers to smaller regional and single-state businesses. Our Contingent Workforce team clients include household names across many industries.
  • We regularly develop customized staffing agency agreements to be used for staff augmentation, outsourcing, and other purposes, with customized solutions designed to minimize joint employment risks.
  • We have built a unique arbitration setup with independent contractor vendors that has caused plaintiffs in at least four separate misclassification cases to dismiss all claims against our clients with no dollars paid, rather than proceeding after receiving arbitration demand.
  • We proactively redesign independent contractor relationships and install preventive steps to limit potential exposure to independent contractor misclassification claims before they arise.
  • Regularly advise business and civic organizations that use non-employee workers on employee benefit compliance issues, including Affordable Care Act, Internal Revenue Code and employee benefit (ERISA) requirements, and we develop alternative structures to enable such non-employee workers to make their own retirement savings, health insurance and similar arrangements. We draft clauses and agreements with suppliers of nonemployee labor to minimize risks related to misclassification and joint employment.
  • We have created programs to allow independent operator entrepreneurs to have access to a free-standing, tax-qualified plan program and a free-standing, fully insured group health insurance plan program.
  • We advise business organizations in transactional due diligence, including evaluating independent contractor and joint employment compliance risks, and we help guide our clients in redesigning those programs to minimize post-transaction exposure.
Representative experience: Litigation and other disputes
  • Defended a market-leading consumer products company in an enforcement action brought by the California Attorney General, Los Angeles District Attorney and Los Angeles County Counsel, alleging false and misleading advertising, public nuisance and unfair competition.
  • Defended a rideshare company in an enforcement action brought by the California Attorney General and the San Francisco, Los Angeles and San Diego City Attorneys, alleging the company has misclassified workers as independent contractors.
  • Defended a delivery network company in an enforcement action brought by the San Francisco District Attorney, alleging the company has misclassified workers as independent contractors.
  • Defended dozens of California wage and hour and PAGA claims, both individual and class/collective, including claims related to meal and rest breaks; pay practices; overtime; wage statements; reimbursement of business expenses; and unfair competition.
  • Won dismissal of a class action filed by floor covering installers against a nationwide retailer, alleging independent contractor misclassification and failure to comply with federal background check laws. A federal judge adopted our position in a published opinion, despite contrary guidance from the Federal Trade Commission.
  • Negotiated a settlement resulting in our client paying zero dollars in a California class action filed by a class of property inspectors, leveraging contractual clauses drafted by our Contingent Workforce team.
  • Avoided class certification and obtained an extremely favorable settlement in a series of Fair Labor Standards Act putative collective action cases in which cable installers alleged they were misclassified as independent contractors instead of employees.
  • Obtained a defense verdict for a transportation client sued for misclassification by security consultants seeking years of back pay and benefits.
  • Prevailed in a federal court of appeals, reversing the lower court’s finding of independent contractor misclassification for a class of insurance agents.
  • Obtained reversal of an independent contractor misclassification finding by a state department of labor, erasing hundreds of thousands of dollars in assessments. Our team took over the case just three weeks before the hearing, after previous counsel had told the client that the case was unwinnable.
  • Obtained a favorable settlement for a staffing agency against class action claims that workers were misclassified as independent contractors and were paid incorrectly.
  • Protected and represented clients in misclassification audits brought by the U.S. Department of Labor and various state agencies, obtaining favorable results including reversal of preliminary adverse findings.
  • Defended clients in tax dispute proceedings before the Internal Revenue Service on alleged independent contractor misclassification.
  • Represent and defend business and civic organizations, and the benefit plans they sponsor, fund, or administer, from enforcement actions brought by regulators and from claims brought by workers in civil litigation, involving the alleged wrongful inclusion, or wrongful exclusion, of such workers from such benefit plans.   

Publications

Key Contacts

Blog

In The Blogs

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Employment Law Spotlight
Breaking News? DOL Rescinds Independent Contractor Rule That Never Took Effect
By Todd H. Lebowitz
May 6, 2021
Remember when TV news was on at 6 p.m. and 11 p.m. and that was it? Every once in a while, there would be a Breaking News! alert, and it was always something really important. They wouldn’t interrupt Diff’rent Strokes for just anything...
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Employment Law Spotlight
Schrödinger's Cat? Ninth Circuit Disrupts Trucking Industry with Contractor Misclassification Ruling
By Todd H. Lebowitz
May 3, 2021
Have you heard of Schrödinger’s cat? It’s not a real cat, like Felix or Brian Setzer. It’s a hypothetical, seemingly impossible cat that exists only in the world of quantum physics. Schrödinger’s cat refers to a thought experiment in which...
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Employment Law Spotlight
California Supreme Court Applies Dynamex Independent Contractor Test Retroactively
January 14, 2021
The California Supreme Court has concluded that the ABC Test it developed for determining whether a worker is an independent contractor or employee applies retroactively. Therefore, the ABC Test, first developed in the Court’s Dynamex...
Read More ->
Employment Law Spotlight
Snapshot or Long Exposure? Dep't Of Labor Approves New IC Test … For Now
By Todd H. Lebowitz
January 6, 2021
This octopus in New Zealand has been trained to take photos of visitors to the Sea Life Aquarium. That’s a pretty neat trick. I’m sure the visitors love it and will pay whatever exorbitant fee the aquarium charges to profit on the back of...
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Employment Law Spotlight
Whaddaya Call It? DOL Proposes New Independent Contractor Test
By Todd H. Lebowitz
September 23, 2020
Soda or pop? Pill bug or roly poly? What you call things depends on where you live. In 2014, the New York Times published this 25-question dialect quiz that will tell you, with startling accuracy, where you or your parents are from. The...
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