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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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.   

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In The Blogs

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Employment Law Spotlight
New York Releases Latest Model Anti-Sexual Harassment Policy and Training
By Fanny A. Ferdman, Amanda Van Hoose Garofalo
April 18, 2023
On April 11, 2023, the New York State Department of Labor, in collaboration with the New York State Division of Human Rights, released an updated model anti-sexual harassment policy and an updated model training. Among other things, the...
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Employment Class Action Blog
Coinbase Inc. v. Bielski – Supreme Court Holds Oral Argument on the Issue of Whether an Interlocutory Appeal of the Denial of a Motion To Compel Arbitration Stays the Case
By John B. Lewis
March 24, 2023
The Coinbase case involves a joint petition for writ of certiorari that could have a major impact on motions to compel arbitration under the Federal Arbitration Act (FAA). Coinbase, Inc. v. Bielski, Case No. 22-105 (oral argument Mar. 21...
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Employment Law Spotlight
Ten Things That Should Be in Your Staffing Agency Agreements But Probably Aren't
By Todd H. Lebowitz
March 13, 2023
Retaining temporary labor can be convenient for your business, but the retention introduces new legal risks. Under a joint employment theory, your company can be 100% legally liable for errors made by a staffing agency. You could be sued...
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Employment Class Action Blog
Supreme Court Adopts Strict Construction of Salaried Test, Even for Highly Paid Exempt Employees
By Gregory V. Mersol
February 22, 2023
One relatively common misapprehension by employers is that generous wages or popular methods of payment will satisfy the Fair Labor Standards Act (FLSA). On February 22, 2023, the Supreme Court reiterated the need not simply for “fair”...
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Employment Class Action Blog
Illinois Supreme Court: Sections 15(b) and 15(d) BIPA Claims Accrue with Each Scan or Transmission
February 17, 2023
Today the Illinois Supreme Court issued a decision in Cothron v. White Castle System, Inc. 2023 IL 128004, in which the court held that the statute of limitations accrues with each scan or transmission of biometric identifiers or biometric...
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