Shannon Chung - Still Struggling With Wage and Hour Laws (Bigly)

Not all that long ago, an AtL columnist going by the pseudonym Shannon Achimalbe write an article about the effect of a proposed increase to the minimum salary necessary to qualify for exempt status under Federal wage and hour laws on crappy entry-level lawyer jobs.  Those of us who've had the misfortune of litigating these issues quickly noted that the proposed increases did not apply to the "professional" exemption from FLSA, which is why lawyers don't get overtime.  Rather than delete the article and admit she fucked up, the author formerly known as Shannon just doubled down and added an "Update" to the front of the article reading:

Please note that this post proceeds on the assumption that lawyers would be included in the new overtime rules — which knowledgeable readers informed us, after this post’s original publication, is not the case under the current proposed regulations. So please read the post with this in mind; we have not revised it to reflect this major change, except for the update at the end from the author.

You can revisit the fiasco here, if you're into that type of thing.

In the following thirty months, Shannon's come out of the closet as Steven Chung, a solo tax attorney operating in southeast Los Angeles County, but hasn't taken any time to brush up on overtime laws, as painfully evidenced by his newest work over at AtL.  Let's be clear, I hate overtime laws.  They're needlessly complicated and turn on very malleable standards that even those with the best intentions can easily mess up.  I avoid wage and hour work as much as I can.  I don't expect a tax attorney to know a lot about wage and hour laws - but I do expect someone who doesn't know jack squat about overtime laws to refrain from writing about them.

In his latest work, entitled In the Gig Economy, Who Is An Employee And Who Is An independent Contractor?, Mr. Chung dives back into a topic he's already publicly bungled and, to nobody's surprise, bungles it up again.

To the extent it has a premise or point, the article's aim is to discuss classification of workers as either employees or independent contractors and how the uncertainty has been amplified by the "gig economy" (basically Uber and Lyft drivers), leading to new legislation in California (which is likely to be struck down as an equal protection violation, but that's another story).  In discussing the difference between an independent contractor and an employee, Chung ... er ... just read it for yourself:

From the employer’s perspective, there are many advantages to treating workers like independent contractors as opposed to employees. Independent contractors can be paid with one simple payment. Employees must have taxes withheld and quarterly employment tax returns must be filed by the employer. Employers must also pay employment taxes for every employee they hire — including one half of their social security and Medicare taxes along with state unemployment taxes. Independent contractors are not subject to labor laws that regulate things like indemnity, expense reimbursement, mandatory break times, overtime, and sick pay. And independent contractors generally do not have legal remedies for discrimination and harassment.

                                                                                    ***

So how does a person qualify for independent contractor treatment? Most states follow the common law test with some variations. The common law test looks at many factors including the level of control the employer has over the person, whether the employer provides tools, and whether the person can work for other businesses. Many states allow certain professions such as lawyers, doctors, accountants, and architects to be automatically treated like independent contractors.

(Emphasis added)

Chung is focusing on California law in his article. I'll do the same.  The assertion that an independent contractor doesn't have protection against harassment (in freaking CALIFORNIA) should just seem nonsensical without any research.  Had Chung spent five minutes researching the issue, he would have stumbled upon California's Fair Employment and Housing Act (our version of Title VII) and it's broad protection against harassment:

It is an unlawful employment practice, unless based upon a bona fide occupational qualification, or, except where based upon applicable security regulations established by the United States or the State of California:....For an employer, labor organization, employment agency, apprenticeship training program or any training program leading to employment, or any other person, because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status, to harass  an employee, an applicant, an unpaid intern or volunteer, or a person providing services pursuant to a contract....

(Cal. Gov't. Code section 12940(j)(1)) (emphasis added).

So, no, Steven, independent contractors have a clear protection from harassment.  And while it is true that the Fair Employment and Housing Act doesn't protect an independent contractor from discrimination in the decision to enter into the contract in the first instance, independent contractors do have that protection under California's Unruh Civil Rights Act:

No business establishment of any kind whatsoever shall discriminate against, boycott or blacklist, or refuse to buy from, contract with, sell to, or trade with any person in this state on account of any characteristic listed or defined in subdivision (b) or (e) of Section 51 ....

(Cal. Civil Code section 51.5(a)) (emphasis added). The referenced characteristics are exactly what you'd expect: sex, race, color, religion, ancestry, national origin, disability, and so on.

Next, lawyers, doctors, and other professionals don't get paid overtime.  That's because they're considered exempt under overtime laws, not because they're considered independent contractors.  There's a HUGE difference.  Most non-equity attorneys in law firms are employees, same as the receptionist.  The firm will pay certain taxes, make appropriate withholdings, etc.  The difference is that the receptionist is entitled to two paid ten-minute rest breaks and one unpaid thirty-minute lunch break per 8 hour shift and is entitled to overtime pay and the lawyer is not.  This is because lawyers are, by law (well, by administrative regulation if you want to be specific) "exempt" employees, meaning that overtime, meal, and rest break laws don't apply to them.  Otherwise, they are subject to all the same benefits and protections as the receptionist.  They are NOT independent contractors.

The benefit of hiring an independent contractor is that you agree on the service to be provided, a few other specifics, and the price for that service.  That's it.  No payroll taxes, no withholdings, no obligation to indemnify the independent contractor against losses incurred in the course of his or her job.  Try telling an associate you're not going to reimburse him for the ex parte filing fee he just paid out of pocket for the firm's client and see how well that works. (Hint: you'll get sued, lose, and have to pay attorney's fees).

If Chung's actually given any real world clients advice along these lines, it would be a good idea to put his malpractice carrier on notice now.