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April 2002
Vol. 15, Issue 2
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By James D. Kurek, Esq.
 This
edition of the Employment Law Brief has been authored by members of the Employment
Law Practice Group from Buckingham ClevelandSM.
This issue discusses two issues that can affect almost all employers:
use of independent contractors and avoiding liability for sexual harassment claims.
Gerald Chattman’s article outlines the reasoning behind employers’ growing use
of independent contractors and then highlights some of the dangers involved. Douglas
Paul discusses the challenges that employers experience in striving to eliminate
discrimination and harassment from their workplaces. He also explains the “safe
harbor” provisions available to employers under Title VII. Our
intention in publishing Employment Law Brief is to provide information
that employers can apply to their day-to-day management practices. Please call
us if you would like to discuss how this information would apply to your specific
circumstances. James
D. Kurek is a Shareholder
and the Practice Group Leader of the Employment Law Practice Group. He can be
reached at jkurek@bdblaw.com
or 330.258.6443.
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Hiring
An Independent Contractor Does Not Always Protect An
Employer From Liability
By Gerald B. Chattman
 In
recent years, there has been a movement by many employers to hire independent
contractors rather than employees, or to attempt to convert their existing employees
into independent contractors. The initial impetus for the move to independent
contractors was to save taxes. With an employee, the employer must pay a share
of withholding tax as well as social security. Employing independent contractors
frees the employer from some of these taxes.
The Internal Revenue Service
has taken a dim view of this move away from employer/employee relationships to
employer/independent contractor relationships. The Internal Revenue Service has
adopted a multi-point test with some 20 to 25 factors which its agents are to
analyze in making the determination of whether an individual is truly an employee
or an independent contractor. The key test, however, out of the numerous
factors is the “right of control.” In essence, if the employer merely assigns
a task and the individual carrying out the task can determine the method, mode,
time, tools, etc. for completing the assignment, the individual is most likely
an independent contractor. On the other hand, if the employer dictates the time
and place for the work to be performed, the method, tools, materials and the like,
the IRS will normally find that the individual is an “employee.” If the employer
makes an improper designation, it not only has the obligation to pay the taxes
that it failed to pay, but it must also include interest and penalty. Now,
in a new ruling by the Ohio State Supreme Court, Pusey v. Bator, the Court
has given Ohio employers another
reason to be very cautious about engaging independent contractors. In Pusey,
Greif Brothers, a manufacturer of steel drums in the Youngstown
area, hired a guard service to protect its property. Greif did not specify whether
the guards were to be armed or unarmed, and did not specify the manner or method
for protecting the property. The Court readily found that Youngstown Security
Patrol (“YSP”), the security contractor, was in fact an independent contractor. The
Trial Court had held that even if the trespasser’s death was a result of YSP’s
negligence, Greif Brothers was not liable because YSP was an independent contractor
and, as a general rule, an employer is not liable for the negligent acts of its
independent contractors. The Court of Appeals affirmed the Trial Court’s
decision; however, the Supreme Court rejected the Trial Court’s reasoning, stating
that although the general rule is that an employer is not liable for the negligent
acts of its independent contractors, “there are however, exceptions to this general
rule, several of which stem from the non-delegable duty doctrine.” The Court held
that an employer may not delegate (1) “affirmative duties that are imposed on
the employer by statute, contract, franchise, charter or common law, and (2) duties
imposed on the employer that arise out of the work itself because the performance
creates dangers to others (i.e., inherently dangerous work).” The Court reasoned
that since the duty in such instances cannot be delegated, the liability also
cannot be transferred. Although the facts in the Pusey case involve
the negligent use of a firearm, the Court stated, “work is inherently dangerous
when it creates a particular risk of harm to others unless special precautions
are taken.” Applying this reasoning, one can envision that the Court might find
that the storage or movement of hazardous materials, operation of dangerous equipment,
and a myriad of other work environments could fall into this “exception,” preventing
employers from shifting liability by engaging the services of an independent contractor. The
bottom line of the Pusey decision is that an employer must take special
care when determining to use an independent contractor as opposed to its own employees.
First, of course, there are always the tax consequences of making the wrong election
as to whether an individual is an employee or in fact an independent contractor.
Secondly, there is the danger that even if an individual is in fact an independent
contractor, the employer may not escape liability because of one of the exceptions
to the general rule. Thirdly, since the employer has little or no control over
the independent contractor by the very nature of the relationship, the employer
can do less to protect itself from liability for the negligent acts of an independent
contractor. And, finally, there are issues as to whether the employer can insure
itself against acts of an independent contractor in the same fashion as it can
insure against the negligent acts of its own employees. Thus, decisions to employ
independent contractors or to substitute independent contractors for one’s own
employees should be reviewed carefully with legal counsel to make certain the
type of liability which attached in the Pusey case can be avoided. Gerald
B. Chattman, Esq. is a Shareholder and member of the Employment Law
Practice Group. He can be reached at gchattman@bdblaw.com
or 216.615.7354.
Policies
and Personnel Training to Avoid Sexual Harassment
By Douglas J. Paul
 Sexual
harassment and other forms of harassment and discrimination are a fact of modern
business life. Despite the professed goal of the law to eliminate discrimination
and harassment in the workplace, the fact is that charges are increasing at an
alarming rate. The number of sexual harassment and racial harassment charges filed
with the Equal Employment Opportunity Commission (EEOC) and state fair employment
practices agencies like the Ohio Civil Rights Commission (OCRC) more than doubled
in the decade of the 1990's.
One of the problems facing the business community
today is the fact that the laws relating to discrimination and harassment are
complicated and often counter-intuitive. Nonetheless, for a couple of reasons
it is vitally important for businesses to comply with the law. First, discrimination
or harassment in the workplace takes away from productivity - it interferes with
work performance. Second, in the event that harassment occurs, the defense of
a charge brought before state or federal agencies, or in court, is expensive,
time-consuming, and bad for morale, even in the case of a successful defense. Recent
developments have made it clear that the laws relating to harassment and discrimination
have, as one of their goals, the elimination of discrimination from the workplace.
One of the best ways to accomplish this goal is to promulgate, implement and enforce
policies against harassment. An EEOC Enforcement Guidance specifically counsels
that “. . . employers should establish anti-harassment policies and complaint
procedures covering all forms of unlawful harassment.” Of perhaps
as much importance is the fact that appropriate sexual harassment and discrimination
training is a cost-effective way for businesses to limit their liability for violations
of the law. Recent U.S. Supreme Court cases have made explicit what has always
been good policy. Two cases decided on the same day in 1998, Burlington Industries,
Inc. v. Ellerth, and Faragher v. City of Boca Raton, clarified the
long-standing question of company liability for hostile environment sexual harassment
caused by the actions of supervisory employees. The Court held that a plaintiff
would no longer have to show that the company condoned harassment or even knew
that it was going on. As long as the harasser was a supervisory employee, the
employer was “vicariously liable.” In place of the concept of knowledge
of, or participation in, the harassment, the Court gave employers an “affirmative
defense” for liability if “the employer exercised reasonable care to prevent and
correct promptly any sexually harassing behavior, and . . . the plaintiff employee
unreasonably failed to take advantage of any preventive or corrective opportunities
provided by the employer . . .” Shortly after these decisions were rendered
by the Supreme Court, the EEOC made it clear what an employer had to do to take
advantage of the defense provided in Faragher and Burlington.
The EEOC said that to take advantage of the affirmative defense it was “necessary
for employers to establish, publicize, and enforce anti-harassment policies and
complaint procedures. . . The employer should provide training to all employees
to ensure that they understand their rights and responsibilities.” The very
next year, the Supreme Court recognized the training component of the position
they set out in Faragher and Burlington and even created a “safe
harbor” from punitive damage awards under Title VII for employers who “adopt anti-discrimination
policies and . . . educate their personnel on Title VII’s prohibitions.” Even
the EEOC has taken the position that the rule enunciated in Burlington
and Faragher applies to harassment by supervisors based on race, color,
sex (whether or not of a sexual nature), religion, national origin, protected
activity, age, or disability. It is critically important for every employer
to have a comprehensive, written sexual harassment policy and to implement the
policy in the context of a training program for all employees, but especially
one targeted at all supervisors and managers. Such a training program should inform
management and supervisory personnel of the definition of sexual harassment, discuss
how to handle complaints and most importantly, teach employees how to prevent
harassment in the workplace. An appropriate program should lay out the employer’s
obligations and the steps that should be taken, including adopting a strong anti-harassment
policy, developing appropriate sanctions for offenders, and educating and sensitizing
employees, especially supervisors, to the presence of sexual harassment. The training
should start by defining and discussing the basic legal concepts - sexual harassment
as gender discrimination, practical perceptions and the two (2) distinct types
of sexual harassment (quid pro quo harassment; hostile work environment harassment).
It should also discuss the philosophy, elements, legal consequences and reasons
for the employer’s policy and instruct the participants in the proper handling
of sexual harassment complaints and methods of prevention. Such training
is often done in conjunction with a review and update of the existing sexual harassment
policy, especially if changes are being made. The program can then be conducted
on the revised policy and can provide the perfect vehicle for publishing and disseminating
the new policy to the employees. While it is ideal to implement a new sexual
harassment policy (or to restate an existing policy) through a mandatory session
for all managerial and supervisory personnel, natural turnover in employment and
the normal modification and procession of the law in the area make it important
that such training be repeated on a regular, periodic basis. A recent article
in the New York Law Journal cautions: Companies should train employees in
policies and procedures at the outset of employment and periodically throughout
the employment relationship. In particular, employees must be sensitized to diversity
issues and trained to avoid, and recognize, conduct which may be perceived as
inappropriate in the workplace and which can serve as a basis for claims of sexual
and other forms of harassment and discrimination. A properly crafted sexual
harassment policy, coupled with specific training and education, can go a long
way toward eliminating the problem of sexual harassment in the workplace. They
provide an added benefit of helping an employer properly defend itself if charges
and suits do get filed. Every employer should consider this important, and cost-effective,
method to limit its liability from potentially devastating sexual harassment charges. Douglas
J. Paul, Esq. is a Shareholder and member of the Litigation and Employment
Law Practice Groups. He can be reached at dpaul@bdblaw.com
or 216.615.7340. 
Jason M. Baasten, Associate Attorney
Employment Law Practice Group
Jason was previously an Associate General Counsel
and General Counsel of FirstGroup America, Inc. in Cincinnati,
Ohio. He counseled
managers on employment law issues, negotiated collective
bargaining agreements, and litigated grievance arbitrations.
In addition, he defended against National Labor Relations
Board labor practice charges, EEOC discrimination charges
and Department of Labor Complaints. Also, he managed
and directed outside legal counsel, supervised and instructed
insurance claims investigators, presented labor and
employment law training classes for managers and managed
immigration of expatriate employees. He has also clerked
for Ryder Public Transportation Services, Inc. in Cincinnati
and Green, Haines, Sgambati, Murphy & Macala, LPA
in Canton.
Save
The Date!
On May 2, 2002, Gerald
B. Chattman (Buckingham ClevelandSM) will
be speaking at The Sensitivity Training Seminar sponsored by Old Republic Title.
The Ohio Health Care Association Annual Convention in Columbus,
Ohio will be sponsoring a series of seminars
on employment law related issues. The presenters and dates are as follows:
On May 7, 2002 and June
4, 2002, James
D. Kurek (Buckingham AkronSM)
will be speaking on topics involving How to Respond
to Workplace Threats and Violence.
On May 7, 2002,
Tod T. Morrow
(Buckingham CantonSM) will present “OSHA
Compliance for Nursing Homes.” Please reference
www.ohca.org or contact S. Ligotti
at 614.436.4154 for additional information.
Out
and About - Recent Presentations:
Gerald
B. Chattman and Dale A. Nowak
(Buckingham ClevelandSM) presented at a Risk
Management Training Seminar designed for companies who use temporary employees;
sponsored by The Reserves Network on March 27, 2002. Tod
T. Morrow (Buckingham CantonSM) spoke
on “Avoiding Liability for Employment Discrimination” at the Tuscarawas County
Society for Human Resource Management Chapter on March 20, 2002. 
If you are interested in obtaining information on upcoming seminars or would be
interested in having speakers from Buckingham, Doolittle & Burroughs make
a presentation to your organization, please contact: Cheryl Warren, Director of
Client Relations and Marketing at cwarren@bdblaw.com
or 800.686.2825 ext. 546.
At BDB we are always improving our processes so that we operate
efficiently and effectively. Please let us know how you like our new broadcast
format. E-mail: bdb@bdblaw.com Phone: 330.258.6473
Fax: 330.252.5473.
Thank you.
A Full-Service Law Firm Serving Five
Cities
Akron • Boca
Raton • Canton • Cleveland • Columbus
www.bdblaw.com
Toll-Free Numbers:
1.800.686.2825 - Buckingham Akron SM
1.800.682.2825 - Buckingham Boca Raton SM
1.888.811.2825 - Buckingham Canton SM
1.888.843.2825 - Buckingham Cleveland SM
1.888.686.2825 - Buckingham Columbus SM
In all of our offices, we provide skilled advice
and effective legal counsel to individuals and businesses in virtually every industry
and trade. We focus on practical solutions that meet our clients' goals.
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