Monthly Archives: July 2015

Are Your “Independent Contractors” Entitled to Overtime?

By James W. Boyan III, Esq.

The United States Department of Labor recently proclaimed that “most workers are employees under the FLSA.”  On July 15, 2015, the DOL issued new guidance concerning the standard for determining whether an employee has been misclassified as independent contractor under the Fair Labor Standards Act’s (“FLSA”).   The FLSA, which was originally enacted 1938, is a federal law that requires employers to pay all covered employees overtime for all hours worked in excess of 40 hours per week.   Under the law, an individual is considered to be an “employee” of a person or entity that “suffer[s] or permit[s]” him or her to work.  Although the FLSA’s broad definition of the term “employ” has been around for over 75 years, courts have interpreted the standard in a variety of ways.

The DOL’s new guidance, entitled “Administrator’s Interpretation No. 2015-1,” makes it clear that the agency intends to interpret that definition in the broadest way possible.  To that end, the agency has concluded that the liberal “economic realities test” should be used to determine whether a worker is an employee or an independent contractor under the FLSA.  This test focuses on whether the worker is economically dependent on an employer or in business for him or herself.  If the worker is economically dependent on the employer, then he or she is deemed to be an employee who is potentially eligible for the protections of the FLSA.  Based on this expansive interpretation, the DOL has boldly asserted that “most workers are employees under the FLSA.”

The DOL’s economic realities test contains six factors:

  • the extent to which the work performed is an integral part of the employer’s business;
  • the worker’s opportunity for profit or loss depending on his or her managerial skill;
  • the extent of the relative investments of the employer and the worker;
  • whether the work performed requires special skills and initiative;
  • the permanency of the relationship; and
  • the degree of control exercised or retained by the employer.

The DOL has explained that each factor in the test must be “examined and analyzed in relation to one another, and no single factor is determinative.”  The agency has also emphasized that the “control” factor should not be given undue weight.  Finally, the DOL has stated that: “[t]he application of the economic realities factors is guided by the overarching principle that the FLSA should be liberally construed to provide broad coverage for workers.”

Companies that engage workers on a contract basis should carefully review the DOL’s recent guidance.  Employers who fail do so could be liable for back overtime wages, liquidated damages and attorneys’ fees under the FLSA.

Bergen County Clerk Goes Electronic for Land Use Records

By Scott R. Lippert, Esq.

Digital technology is having profound effects upon all areas of the law.  Real estate practice is no exception.

As of this past May, the Bergen County Clerk’s office permits individuals, attorneys and title companies to file and record land transaction records electronically. The electronic recording system functions through the website:  Land transaction records were required to be mailed or hand delivered to the Bergen County Clerk’s office prior to the implementation of the electronic recording system. While the Bergen County Clerk’s office will still accept hard copies of land transaction records, there is now an alternative method. Electronic recording, or e-recording, will be conducted through the use of Corporation Service Company, a third party vendor.

In addition to the ability to file and record land transaction records electronically, Bergen County now offers users the ability to search land transaction records online.  Users can go to the website, and access an online database that contains images of deeds dating back to 2004 and images of mortgages dating back to 2007. The Bergen County Clerk’s office is in the process of uploading more images from earlier years to enhance the depth of the database.

These new electronic functions will enable documents to be processed faster than the Bergen County Clerk’s office was previously capable of, and will hopefully provide for fewer errors in documentation filed with the land transaction department. Additionally, it will now be easier to locate land transaction records, and will save time and money typically associated with attempting to locate such documents in the actual books in which they were originally recorded.

This new practice is in the process of being adopted throughout New Jersey.  Eventually, all recording and searching will be done electronically, which will be a great convenience for all real property transactions.


Protecting Your Business from a Data Breach

By Ryan J. Cooper, Esq.

Previously printed in the Meadowlands USA Blog

A three-step process to prevent your business from a data breach

On an almost daily basis, news reports announce another breach of corporate websites and point-of-sale systems. Data breaches at some of the country’s largest retailers attract national press attention, but numerous studies confirm that the majority of data breaches are occurring at small to mid-sized business. Many are unaware that they have been compromised. These businesses are at significant risk for costly, and potentially catastrophic, losses including liability to customers and payment card issuers, and a loss of reputation and good will.

Your business’s exposure to losses due to a data breach can be mitigated by taking relatively simple steps to identify and address your security vulnerabilities. Every business should, at least annually, conduct a risk assessment of their information systems, including retail point-of-sale systems, update those systems and address any identified vulnerabilities and review their insurance program to increase the likelihood that they will have coverage when the inevitable happens.

Most businesses believe their information systems are up-to-date and compliant with the necessary security standards—and at one time they likely were. But security standards are changing regularly, and many businesses are not regularly reviewing and updating their information and point-of-sale systems.

The first step is to assess your risk with an evaluation of your information management. Namely, what information is your business collecting? How is it being used? How is it being stored?

Any business with a website or e-commerce system should identify any digital information they are processing, including whether payments are processed directly on your website or through a third-party service such as PayPal or Google Wallet.

This kind of assessment should be done regularly. As technology and business methods evolve, the answers to these questions change. Many businesses now have the ability to collect, use and store new forms of information that they previously could not collect or use effectively. Now is a good time to reevaluate what customer information your business has and how it is handling that information.

Once you have assessed your information management processes, evaluate and mitigate your exposure if something goes wrong. For most retail businesses, a significant source of exposure is the point-of-sale system, whether in-person, at the cash register or online. The payment card industry has promulgated the Payment Card Industry–Data Security Standard (or PCI-DSS). Compliance generally requires every merchant, regardless of size, to meet 12 requirements in six separate categories. If a breach occurs and your business is not PCI-DSS compliant, your business may be liable not only to your customers but also to the banks and financial institutions that issued the credit and debit cards your customers use. Today, liability to card issuers may be much greater than the liability to consumers directly.

Some businesses have outsourced payment card processing to a vendor. Even then, businesses should evaluate their exposure in the event their vendor is breached, including the vendor’s obligation to notify and indemnify them in the event of a breach.

For other types of information, evaluate whether the information constitutes “personal information” under the applicable state laws. Notably, many states have extended their laws to any business with personal information about a resident of that state. So, New Jersey businesses with personal information of California and Massachusetts residents, for example, may be subject to the data breach notification laws of California and Massachusetts.

Finally, every business should review their insurance policies for adequate coverage for when the unexpected happens. This requires more than confirming that your comprehensive general liability or CGL policy is up to date. Today, most policies, particularly CGL policies, will contain terms that limit or exclude coverage for cyber, privacy and other information related losses. Every business should carefully review the terms of their policies against the specific exposures that their business may be facing.

Today, the information economy presents numerous opportunities for businesses to gain a competitive edge through the use of technology and information processing. But these new opportunities carry new risks. Taking a few steps now to review and evaluate your exposure can go a long way in preparing and mitigating these risks—and protecting your business from future losses.