Who is an Employee

An Employee or Not?

You are the office manager of a small company, that sells refurbished computers to the public and is located in a strip mall. There are three employees: the owner of the company, the receptionisht and yourself.

The company hires individuals to go door to door to sell computers and related products, including software. The sales reps sign contracts with the company stating that they are not employees but rather independent contractors and are responsible for their own withholding taxes.

They are paid a commision on all sales and are to utilize a present script when they meet with potention customers. If there is a sale, they present the customer with a preprinted contract, receive the initial depost and are return the contract and the check to your office once a week. Every week they must attend a sales/staff meeting at the local Starbucks to discuss sales, sales techniques and other mattters related to the sales process and the products.

The owner has gone to the Paciic Coast to go whale and dolphin viewing. You are "in charge" until he returns next week. He has told you that, as he is always under a great deal of pressure from the business, you should not contact him.

However, on the day after he leaves, you receive a Notice from the State Department of Labor that it wants to do an audit of your financial records to see who is an employee and who is an Independent Contractor. In a panic, you call the owner, who tells you to take care of the problem.

How do you handle this situation?

Who is and who is not an employee?

What position should you take with regard to the DOL?

Please use formal academic and professional support to sustain your argument.

To Fire, Retain or Be Sued?

You are the Vice President of a large company in an at will state.

Your company has just had its President replaced. The new President, in reviewing the senior management, focuses upon Larry, a 45 year old white male. He is the Comptroller of the company. He has very great skills in cash management. However, he has a few character flaws. Though married, he has been involved in a sexual relationship with a co-equal. She is now pregnant by him. There are also rumors that they engaged in their activities on company time and company property.

There is an employee handbook, which has typed on its opening pages that it is not an employment contract but rather a statement of company policy. There is also a progressive step policy concerning discipline.

Based upon all of this, the President has decided to terminate Larry. Word has filtered back to Larry that his job may be at risk. You learn that Larry has been advised by his senior manager, the Vice President of Finance, that he should photocopy files that may show the company in a bad light. Larry has done such. Among the records are files that evidence "settlements" by the company towards male and female employees who were sexually harassed by superiors or others in upper management.

When Larry learns that he may be terminated, he has word sent back to you that he is prepared to release the files to the media to show how crooked and corrupt the company is. It would create, in his mind, a public relations nightmare for the company. However, he is prepared to settle for an appropriate severance package.

You tell the President about all of this. She says that Larry must go.

After Larry is fired, he files suit for wrongful termination and is arguing that management failed to adhere to the multi-step discipline policy, as set forth in the handbook.

When you speak about the case with his lawyers, they tell you that Larry is prepared to release the files in court. You tell them that a judge will not allow such. They respond by saying that, even if one item gets out to the public, the company will be seriously harmed.
They note that Larry will agree to settle for $250.000.00. The President says no way.

While all of this is going on, a Board Member, who is friendly with Larry, calls him on the phone. Larry says that he want to settle and not damage the company. But, he has a new baby being born shortly and payments to his soon to be ex-wife. He needs the funds. The Board member says that she will speak with other Board members about all of this.

As you are the point person on all of this, the Board asks for your analysis and reasoning on all of these issues.