Employment Law 101

by Sam Cannon on October 14, 2015

At some point, every law firm faces the question of whether to hire an employee. Before you do that, you need to make sure you understand the basics of employment law so you don’t end up sitting in the wrong chair in a courtroom. This article should serve as a short primer on two of the most common employment law issues and how they apply to solo practitioners and small firms.

Discrimination, Harassment, and Retaliation

Before January 1, 2015, small employers in Colorado were unlikely to face sanctions for discrimination. Title VII of the Civil Rights Act of 1964 only covers employers with 15 or more employees, and compensatory damages and attorney fees were not available under the Colorado Anti Discrimination Act (CADA), which applies to all employers regardless of size. The lack of a remedy under CADA made pursuing a discrimination complaint against a small employer financially unrewarding for plaintiffs and their attorneys.

As of January 1, 2015, that all changed. Compensatory and punitive damages are now allowed under CADA, as are attorney fees. Accordingly, it is much easier to take cases of discrimination against small employers in Colorado. Attorneys should be aware of this for two reasons: (1) these are potentially good cases to accept and (2) small law firms are now potential defendants.

So what’s illegal under CADA and Title VII? First, discrimination or harassment based on an employee’s race, color, national origin, religion, gender, disability, age, pregnancy, sexual orientation, or gender identity. Second, retaliation against an employee for opposing unlawful discrimination or harassment or for participating in a proceeding related to a complaint of harassment or discrimination. There isn’t space to detail all the nuances of discrimination law here (that’s what treatises are for). But here are three general rules:

  1. Don’t make an employment decision based in any way on the above characteristics.
  2. Don’t make or allow your employees to make sexist, racist, or offensive jokes at the expense of another employee, and
  3. Don’t take any adverse action against an employee because he or she reported harassment or discrimination to you or to the government.

Independent Contractors vs. Employees

Given the regulations governing employees, it might be tempting to try to hire an independent contractor instead. But if you do this, be careful. Companies who wrongly classify employees as independent contractors can get themselves in a lot of trouble.

Whether someone is an independent contractor or an employee is based on two factors: whether the person is free from the control and direction of the supervising company and whether he or she is engaged in an independent business. The potential employer must prove both of these before a court will recognize an independent contractor relationship. Industrial Claim Appeals Office v. Softrock Geological Services, Inc.. (Colo. 2014).

Whether the worker is free from control of the supervising company is a question of fact. Courts tend to look at the extent of supervision by the putative employer, who set the hours the putative contractor was supposed to work, and whether the work arrangement could be terminated at any time without liability. Western Logistics, Inc., 328 P.3d 247 (Colo. App. 2012).

For the second prong of the test, the Softrock court set out some of the factors to consider: whether the person maintained an independent business card, listing, address, or telephone; had a financial investment such that there was a risk of suffering a loss on the project; used his or her own equipment on the project; set the price for performing the project; employed others to complete the project; and carried liability insurance. Softrock. This list isn’t exhaustive, but it’s a good place to start when you’re thinking of hiring someone.

So it’s not as simple as making someone sign an independent contractor agreement. You must give a contractor a project and let her complete it on her own terms. She should be using her own tools (laptop), making her own hours, and have a separate business. If you’re hiring a contract attorney, she should probably carry her own malpractice insurance too.

These are just two of the issues that can come up when a small firm hires someone. There are many more to watch out for. I didn’t touch on payroll taxes, unemployment, workers’ compensation, or record keeping. Whatever you do, educate yourself so you don’t need to hire one of your colleagues.

Sam CannonSam Cannon practices employment and personal injury law. He’s been running his own practice in Fort Collins since September 2014. He can be reached through his website at www.cannonlaw.com.

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