June 2016 Hawaii Bar Journal

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H AWAII S TATE BAR A SSOCIATION J UNE , 2016 $5.00

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EDITOR IN CHIEF Carol K. Muranaka BOARD OF EDITORS Christine Daleiden David Farmer Susan Gochros Ryan Hamaguchi Cynthia Johiro Edward Kemper Laurel Loo Melvin M.M. Masuda Melissa Miyashiro Eaton O'Neill Lennes Omuro Brett Tobin Jodi Kimura Yi

ARTICLES 44

Managing the Workforce in the Gig Economy

by Scott Prange

16 19

Chief Disciplinary Counsel’s Report

24 24

Becoming a Judge: A Talk with Chief Justice Mark E. Recktenwald

by Carol K. Muranaka

OF NOTE

HSBA OFFICERS President Jodi Kimura Yi President-Elect Nadine Ando Vice President Howard Luke Secretary Russ Awakuni Treasurer Mark M. Murakami YLD OFFICERS President Ryan Hew Vice President/President-Elect Trejur Bordenave Secretary Catherine Taschner Treasurer Ryan Loeffers

20

HSBA Happenings

22

Court Briefs

23 20

American Judicature Society’s Annual Sidebar Program

25 22

Notice of Discipline

28 28 31 30

Case Notes Classifieds

31

EXECUTIVE DIRECTOR Patricia Mau-Shimizu GRASS SHACK PRODUCTIONS Publisher Brett Pruitt Art Direction Debra Castro Production Beryl Bloom

Hawaii Bar Journal is published monthly with an additional issue in the fourth quarter of each year for the Hawaii State Bar Association by Grass Shack Productions, 1111 Nuuanu Ave., Suite 212, Honolulu, Hawaii 96817. Annual subscription rate is $50. Periodical postage paid at Honolulu, Hawaii and additional mailing offices. POSTMASTER: Send address changes to the Hawaii Bar Journal (ISSN 1063-1585), 1100 Alakea St., Ste. 1000, Honolulu, Hawaii 96813.

On the cover: Young and Alive by Joseph Ruesing. Ruesing is a digital artist, printmaker, painter, and photographer who lives in Hilo, Hawaii. To view more of his work visit josephruesing.com

Advertising inquiries should be directed to: Grass Shack Productions (808)521-1929 FAX: (808)521-6931 brett@grassshack.net

Notices and articles should be sent to Edward C. Kemper at edracers@aol.com, Cynthia M. Johiro at cynthia.m.johiro@hawaii.gov, or Carol K. Muranaka at carol.k.muranaka@gmail.com. All submitted articles should be of significance to and of interest or concern to members of the Hawaii legal community. The Hawaii Bar Journal reserves the right to edit or not publish submitted material. Statements or expressions of opinion appearing herein are those of the authors and not necessarily the views of the publisher, editorial staff, or officials of the Hawaii State Bar Association. Publication of advertising herein does not imply endorsement of any product, service, or opinion advertised. The HSBA and the publisher disclaim any liability arising from reliance upon information contained herein. This publication is designed to provide general information only, with regard to the subject matter covered. It is not a substitute for legal, accounting, or other professional services or advice. This publication is intended for educational and informational purposes only. Nothing contained in this publication is to be considered as the rendering of legal advice.

Gig Economy

Managing the Workforce in the

by Scott M. Prange

A concerted national campaign is being waged within the federal government, in state governments, and in the courts, to regulate the emergent “gig economy,” wherein companies fissure jobs into discrete tasks, or “gigs,” to be performed by contracted workers on a temporary basis.1 In the latest salvo, a stunning announcement came from the United States Circuit Court of Appeals for the Ninth Circuit in a case brought against one of the gig economy’s chief architects by its workers.

Following an interlocutory appeal, Uber, a ride-hailing service, agreed to a $100 million settlement of what it had called a “runaway class action,”2 brought by some 160,000 drivers who claimed they were improperly classified as independent contractors instead of employees, and therefore were denied rightful compensation.3 But, as Uber capitulated, it became clear that its drivers had made major concessions for it to do so; they will not be reclassified as employees, and will remain classified as independent contractors.

Just eight months earlier, all eyes 4 June 2016

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were on the United States District Court for Northern California which had stunned Uber by certifying the class.4 When it did, the Court did not equivocate; it gave full force and effect to an earlier California Labor Commission Decision which found that Uber had exerted nearly complete control over the drivers, but yet failed to classify them as employees, denying them fair wages and full protection of benefits.5 The gig economy is not new. Since at least the 1970s, in the United States, companies have been using non-technological platforms to outsource discrete job functions abroad, such as manufacturing.6 After the Great Recession in 2009, the gig economy accelerated as companies such as Uber, Lyft, and SideCar (ride-sharing); Work Genius (staffing agency); Care (companion care, and elderly, child, and pet care); Handy (home cleaning services); Task Rabbit (home maintenance); Q (office cleaning); and Door Dash (food delivery) gave rise to technological platforms which enabled companies to more easily fissure jobs into directly contracted gigs.

Today, companies, across industries and of all sizes, are shedding their roles as direct employers by fragmenting existing jobs into smaller tasks for bidding fiercely competed over by specialized, smaller companies willing to perform the tasks, staffing agencies who enlist contingent workers to perform the tasks, and even individuals willing to complete the tasks on their own.7 Not only are companies able to focus on their core operations and bolster efficiency, they are able to evade workplace laws typically applicable to employers by outsourcing these jobs. This saves money by avoiding compliance and not having to pay a working wage, or pay into Social Security, Medicare, unemployment insurance, or workers’ compensation.

While these companies benefit, they shift the burdens of being an employer onto other smaller companies with fewer resources or onto the workers themselves.

Gig workers may have greater self-sufficiency but they have no guarantee of a stable job, and they are unable to obtain the benefits of a fair wage or the protections that statutory benefits afford.

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the Aspen Institute’s Future of Work Initiative and Burson-Marsteller, a global public relations firm, these practices by companies have become so widespread that 44% of United States adults, or roughly 90 million workers, have at some time performed gigs.8 In Hawaii, this includes nearly 100,000 workers.9 The gig economy has become entrenched, and is now so expansive, that nearly all companies must develop effective strategies to manage their workforces. Especially given national and state efforts to regulate the gig economy, companies may face enormous liabilities should they be found to be an employer or joint employer or to have misclassified workers performing gigs not as employees but as independent contractors. As Uber discovered, the costs can be huge.

Meanwhile, in the gig economy, many workers are forced to grapple with making a living with no guarantee of work hours and without the aid of a fair wage and statutory benefits.

So, what is the gig economy? What is its scope? How does a company effectively manage the workforce in the gig economy? What are the web of federal and state laws companies must contend with to (1) avoid becoming designated as an employer or joint employer, and (2) properly classify workers as either employees or independent contractors to avoid incurring liability for any misclassification? And, what is the best strategy for companies to comply with these laws?

The following discussion addresses each of these questions in turn.

The Gig Economy The Gig Economy’s Rise Our national economy has begun a rapid transition into a gig economy. The reason is two-fold—because the transition provides greater efficiency both for companies and for workers.

As noted by David Weil, the Administrator of the U.S. Department of Labor Wage and Hour Division, the gig economy has risen because companies have long sought to maximize efficiency by splitting off functions to streamline and drive down costs.10 According to 6 June 2016

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Weil, “fissuring,” or the splitting off of the company/employer-worker relationship, naturally followed for these reasons.

Researchers at Oxford University’s Martin Programme on Technology and Employment predict that companies will fissure nearly 30% of all U.S jobs in the next 20 years.11 Precisely because companies have fissured the workplace, workers have increasingly had to pursue these new gigs, in a concerted effort to maintain some semblance of self-sufficiency in the face of job volatility and disrupted wages.12 According to the JPMorgan Chase Institute, post-recession, with companies fissuring, workers across all income groups have experienced greater work instability, wage volatility, and a loss of real income.13 Peter Drucker, generally considered the father of modern corporate management, once suggested that the goal of any company is for a worker to see “himself as a ‘manager’ and accept for himself the full burden of what is basically managerial responsibility.”14 The gig economy has allowed workers to do just that, by engaging a patchwork of gigs over which they have greater control of what they do and what they earn, and ultimately for which they have the full burden of managerial responsibility.

Today, the gig economy is highly expansive as a result.15 Since 2009, the gig economy has been propelled by technology companies such as Uber, Work Genius, and others, who use technological platforms to engage gig workers as independent contractors. However, the gig economy includes both technology and non-technology companies who use gig workers. This includes companies that outsource to other companies specialized gigs, to be completed by such other companies’ workers (e.g., staffing agencies, who provide temporary workers to complete the gigs), and companies that utilize technological and non-technological platforms to directly engage contracted gig workers.

In the past, companies mostly fissured gig jobs for non-professional services, but increasingly are doing so for professional services, including medicine, law, finance, accounting, business, engi-

and even education. neering, Technology companies, including Medicast, Axiom and Eden McCallum, are now working with healthcare facilities, law firms, and businesses, targeting doctors, legal workers and business consultants for gigs. A new technology company called Hourly Nerd is now working with business clients to target MBAs for gigs, consulting on various business projects.16 A client posts a project on the site, describes what they are trying to get done, a start date, and an estimate of what they are willing to pay. MBAs review the project, ask for more details, and submit a bid. However, non-technology companies are also taking it upon themselves to directly engage gig workers for professional services as well. The University of Hawaii is one of many universities increasingly using gigs for its teaching staff, engaging many adjunct course instructors in short-term working arrangements.

The Gig Economy’s Scope Although the gig economy is expansive, getting a grasp on how expansive is difficult. Federal and state government agencies do not currently track how many companies and workers are engaged in gigs, and those that track comparable working arrangements frequently underestimate their participation by asking the wrong types of questions of companies and workers.17 The United States Bureau of Labor Statistics does not monitor the gig economy and last counted comparable “contingent working arrangements” in its 2005 “Current Population Survey,” well before the Great Recession.18 However, this is about to change. Recently, U.S. Labor Secretary Thomas Perez announced that starting in May 2017 the Bureau of Labor Statistics, in conjunction with the Census Bureau, will once again track contingent working arrangements,19 to include all workers provided by contract firms, and all workers who may or may not have an implicit or explicit contract for ongoing employment, including alternative employment arrangements and independent contractors.20 However, when companies and

workers are asked about gig work, or temporary, contingent work arrangements, survey respondents may not view their activities within these specific frameworks. Therefore, the participation of companies and workers alike is often underestimated.

One way to estimate the gig economy’s expanse is to extrapolate alternative federal and state government data. In 2015, the Bay Area Research Economic Institute reconciled two sets of federal government data: IRS-reported totals of W-2 forms, the tax form companies file for traditional employment, and IRSreported totals for 1099-MISC forms, the tax form companies file for each independent contractor they use.21 The Institute recorded a relative decline in the use by companies of employees and an incline in the use of independent contractors. The Institute also looked at IRSreported data on the number of companies reporting no employees, as an indicator of the self-employed. Since 2004, they found that, in the United States, companies with no employees have increased by nearly 18%; in Hawaii, they have increased by 28% to about 100,000.

A patchwork of data by non-governmental entities also roughly speaks to the gig economy’s breadth.

The Freelancers Union issued a study of the nation’s workforce to attempt to identify the total number of contingent workers. The study concluded that almost 54 million Americans, or roughly one in three of the total workforce, is a contingent worker–either a gig worker, a part-time worker, or an independent contractor.22 Moreover, in 2015 alone, nearly 5 million people had entered the gig economy, an increase of 700,000 from the year before.

Furthermore, the study showed that while the vast majority of gig economy workers have other sources of income, about 15 million say working these gigs makes up more than 40% of their pay.23 Managing the Workforce in the Gig Economy Applicable Laws As the Uber case illustrates, in the gig

economy, to comply with federal and state labor and employment laws, companies’ best strategy for effectively managing the workforce is twofold.24 First, companies must ensure that, when they contract with other companies to manage gigs by workers, they are not considered employers or joint employers.

Second, companies who are employers or joint employers should be sure they properly classify workers as either employees or as independent contractors.

In the gig economy, numerous laws apply to employers/joint employers when workers are classified as employees, but not when they are classified as independent contractors, including, without limitation, the laws described in general terms below: • Federal Fair Labor Standards Act (“FLSA”).

FLSA requires companies who are employers or joint employers to provide any worker classified as an employee a minimum wage and overtime pay.25 • Hawaii Wage and Hour Law. Like FLSA, the Hawaii Wage and Hour Law requires companies who are employers or joint employers to provide any worker classified as an employee a minimum wage and overtime pay.26 • Federal Family and Medical Leave Act (“FMLA”). FMLA requires companies who are employers or joint employers to provide any worker classified as an employee unpaid, job-protected leave for specified family and medical reasons, with the continuation of group health coverage.27 • Hawaii Family Leave Law (“HFLL”).

HFLL requires companies who are employers or joint employers to provide any worker classified as an employee unpaid, job-protected leave for specified family reasons, with the continuation of group health coverage.28 • Federal National Labor Relations Act (“NLRA”). NLRA requires companies who are employers or joint employers, regardless of whether they are unionized, to not obstruct any worker who is classi-

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fied as an employee from engaging in any protected, concerted activity, including forming a union for collective bargaining purposes.29 • Hawaii Employment Practices Act (“HEPA”). Like NLRA, HEPA requires companies who are employers or joint employers, regardless of whether they are unionized, to not obstruct any worker who is classified as an employee from engaging in any protected, concerted activity, including forming a union for collective bargaining purposes.30 • Federal/State Tax Laws. The IRS and the Hawaii Department of Taxation require companies who are employers or joint employers to pay taxes on the payroll of all workers classified as employees.

• Employee Retirement Income Security Act (“ERISA”). ERISA requires companies who are employers or joint employers to provide any worker classified as an employee minimum standards for their pension plans.31

• Hawaii Employment Security Law. The Hawaii Employment Security Law requires companies who are employers or joint employers to maintain for any worker classified as an employee all the costs of unemployment insurance through payroll taxes.32 • Hawaii Workers’ Compensation Law. The Hawaii Workers’ Compensation Law requires companies who are employers or joint employers to maintain for any worker classified as an employee workers’ compensation insurance.33 • Hawaii Temporary Disability Insurance Law. The Hawaii Temporary Disability Insurance Law requires companies who are employers or joint employers to maintain for any worker classified as an employee partial wage replacement insurance for non-work related injury or sickness.34 A Strategy for Compliance With respect to the numerous laws

that apply to employers/joint employers when workers are classified as employees, it makes sense to look first at how companies can avoid being designated as employers/joint employers, and second at how companies can properly classify workers as either employees or independent contractors.

Although not inclusive of all possible federal and state labor and employment laws, tests under the main federal laws–FLSA, FMLA, and NLRA–for employers/joint employers are explored.

1. Avoiding Employer Employer Designations

and

a. FLSA and FMLA In January 2016, the Department of Labor (“DOL”) released an “Administrator’s Interpretation” of FLSA with respect to joint employment.35 A week later, the DOL followed up with a “Fact Sheet” on FMLA on the same.36 Applying both FLSA and FMLA, the DOL put all companies who use other companies to secure gig work-

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ers on notice—they may be liable as a joint employer for workers that they may have assumed were not even their employees. As the DOL noted, “protecting workers in fissured workplaces— where there is the possibility that more than one employer is benefiting from their work—has been a major focus . . . in recent years.”

FLSA and FMLA specifically contemplate joint employers, stating that a single worker can be “an employee to two or more workers at the same time.”37 38 This is because FLSA has a broad definition of “employment” with wide application, which is also adopted

by FMLA,39 effectively “to suffer or permit to work.”40 Therefore, it is possible for two or more companies to jointly employ a worker by benefit of his or her work, and therefore both be responsible, simultaneously, for compliance with wage and hour provisions.

Under FLSA and FMLA, the DOL specifically rejects the more liberal common law control test used by many courts, and which analyzes whether a worker is an employee based on the company’s control over the worker,41 in favor of a broader economic realities test.42 This is because the DOL notes that FLSA’s and FMLA’s definitions are “comprehensive enough to require its application” to many working relationships which, under the common law control standard, may not be employeremployee relationships.

In the gig economy, the two most likely scenarios in which a company may be found to be a joint employer are “horizontal joint employment” and “vertical joint employment”: • Horizontal Joint Employment: A company may be found to be a horizontal joint employer when two (or more) technically separate but related or associated companies employ an employee and benefit from his or her work, including when:43 • The companies have an arrangement to share the worker’s services (e.g. interchange the worker); • One company acts in the interest of the other in relation to the worker; or

• The companies share control of the worker, directly or indirectly, because one company controls, is controlled by, or is under common control with the other company.

A company may be liable as a horizontal joint employer if any of the following apply: • Both companies have common owners or both companies are partially owned by common owners; • One company supervises the work of the other company; • Both companies share clients; • Both companies have common management; • Both companies share control over operations (e.g. managing overhead, advertising, managing employees); • Both companies’ operations are intermingled (e.g. for both companies, the same person supervises, schedules and pays employees, regardless of where they are working); • Both companies have a shared pool of employees they both can draw from; or • Both companies share supervision of the employee.44 • Vertical Joint Employment: A company may be found to be a vertical joint employer when one company provides labor to another company and the workers are economically dependent on both. 45 A company may be liable as a joint employer if any of the following apply:46 • The company directs, controls, or supervises (even indirectly) the employee’s work; • The company has the power (even indirectly) to hire or fire the employee, change employment conditions, or determine the rate and method of pay; • The company has a permanent, long-term, or full-time relationship with the employee; • The company has an employee who performs repetitive work or work requiring little skill; • The employee’s work is integral to the company’s business; • The employee is working on the company’s premises; or

• The company performs functions for the employee typically performed by employers, such as handling payroll or providing tools, equipment, or workers’ compensation insurance, or, in agriculture, providing housing or transportation.

Under FLSA, joint employers (whether horizontal or vertical) are responsible, both jointly and individually, for compliance with wage and hour provisions. As such, each of the joint employers must ensure: (1) employees receive all employment-related rights (including payment of at least the federal minimum wage for all hours worked and overtime pay at not less than one and one-half the regular rate of pay for hours worked over 40 in a workweek, unless an exception or exemption applies); and (2) employee hours in a workweek are combined to determine if the employee worked more than 40 hours and is due overtime pay.

Under FMLA, where a joint employer relationship exits, in most cases one employer will be the primary employer while the other will be the secondary employer. Determining which of the joint employers is a primary or secondary employer depends upon the particular facts of the situation. The DOL will consider the following factors: (1) who has authority to hire and fire, and to place or assign work to the employee; (2) who decides how, when, and the amount that the employee is paid; and (3) who provides the employee’s leave or other employment benefits.

The primary employer is responsible for giving required FMLA notices to its employees, providing FMLA leave, maintaining group health insurance benefits during the leave, and restoring the employee to the same job or an equivalent job upon return from leave. The primary employer is prohibited from interfering with a jointly-employed employee’s exercise of or attempt to exercise his or her FMLA rights, or from firing or discriminating against an employee for opposing a practice that is unlawful under the FMLA. Primary employers must keep all records required by the June 2016

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FMLA with respect to primary employees. A primary employer must meet all of its obligations under the FMLA even when a secondary employer is not in compliance with the law or does not provide support to the primary employer in meeting these responsibilities.

The secondary employer, whether an FMLA-covered employer or not, is prohibited from interfering with a jointlyemployed employee’s exercise of, or attempt to exercise, his or her FMLA rights, or from firing or discriminating against an employee for opposing a practice that is unlawful under FMLA. The secondary employer is responsible in certain circumstances for restoring the employee to the same or equivalent job upon return from FMLA leave, such as when the secondary employer is a client of a placement agency and continues to use the services of the agency and the agency places the employee with that client employer. Secondary employers must keep basic payroll and identifying employee data with respect to any jointly-employed employees. A covered secondary employer is also responsible for compliance with all the provisions of FMLA for its regular, permanent workforce. b. NLRA On August 27, 2015, in BrowningFerris, the National Labor Relations Board (“NLRB”) announced a new, broader standard for the gig economy to determine a company’s joint employer status under the NLRA.47 The NLRB re-affirmed the core of its joint employer analysis, that an entity will be deemed a joint employer where it “shares or codetermines those matters governing the essential terms and conditions of employment.” However, the NLRB abandoned the historic requirement that a putative joint employer exercise “direct and immediate” control over workers’ terms of employment. Under the NLRB’s new joint employer standard, a putative joint employer is no longer required to exercise “direct and immediate” control over workers’ terms and conditions of employment. Instead, exercise of “indirect” or even “reserved” 10 June 2016

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control is now potentially sufficient to establish a joint employment relationship. The NLRB will now also consider “indirect” control exercised through an intermediary employer (e.g. a staffing agency), as well as a party’s reserved contractual rights that may affect workers’ terms and conditions of employment, even if that control is not actually exercised.

Applying this new test, the NLRB concluded that Browning Ferris Industries (“BFI”) was a joint employer of the Leadpoint employees. Among other factors, BFI specified minimum hiring qualifications, retained the right to reject any Leadpoint worker, exercised control “over the processes that shape the day-today work” of the workers, set productivity standards, communicated work directives through Leadpoint, set a maximum wage “ceiling” by specifying that Leadpoint could not pay its employees more than BFI employees performing similar work, and required that Leadpoint employees comply with BFI’s safety policies.

2. Properly Classifying Workers as Employees & Independent Contractors In the gig economy, once it is established that a company is an employer or joint employer, the threshold question becomes whether they have classified workers correctly as either employees or independent contractors.48 This dichotomy yields a limited, binary system for labeling workers which is all or none— either the workers are employees, with all the legal protections that imbues, or they are not.49 Under federal and state labor and employment laws, there is no single definition to determine which workers are employees, and which are independent contractors. However, nearly all of the varying statutory tests ask a common question: who controls the worker’s performance? The more control a company asserts over a worker, the more likely he or she will be considered an employee rather than an independent contractor.

Although not inclusive of all possible federal and state labor and employment laws, tests under the main federal

laws–FLSA, FMLA, and NLRA–and under Hawaii law are explored below.50 a. FLSA and FMLA In July 2015, the DOL released an “Administrator’s Interpretation” of FLSA, which presumably applies to FMLA for all of the aforementioned reasons, with respect to how companies should classify workers as either employees or independent contractors.51 Under FLSA and FMLA, the DOL again rejected the more liberal common law control test52 in favor of a broader, economic realities test.53 Under FLSA and FMLA, the DOL noted that, to assess whether a company’s workers are likely to be employees or independent contractors, the following factors of economic dependence will be weighed: • the extent to which the work performed is an integral part of the company’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 company 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 company.

In undertaking this analysis, each factor is examined and analyzed in relation to one another, and no single factor is determinative.54 Courts have described a company’s workers who are economically dependent, regardless of skill level, as employees.55 On the other hand, courts have described independent contractors as those of the company’s workers with economic independence who are operating a business of their own.

Moreover, the economic realities of the relationship, and not the label a company gives it, are determinative. Thus, an agreement between a company and a worker designating or labeling the worker as an independent contractor is not necessarily indicative of the economic realities of the working relationship and is therefore not relevant to the analysis of

the worker’s status.56 A company should carefully assess whether workers engaged in gigs are in fact employees or independent contractors, by weighing the economic realities using the following guideposts: • Is the Work an Integral Part of the Employer’s Business?

An employee performs work that is integral to the company’s business, even if just one component of the business.57 An independent contractor does not. 58 • Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss?

An employee’s sole concern is doing the job well and/or working more hours.59 An independent contractor does the job well or works more hours to extract profit and reduce loss.

• How Does the Worker’s Relative Investment Compare to the Employer’s Investment?

An employee is not on similar footing with the company in terms of investment.60 An independent contractor makes investments (e.g., hiring others, purchasing materials and equipment, advertising, and renting space) that support his or her business beyond a particular job, and such investments are not relatively minor compared with that of the company.

• Does the Work Performed Require Special Skill and Initiative?

An employee, although skilled, does not make independent judgments beyond the work that he or she is doing, and is told what work to perform and where to perform it.61 An independent contractor exercises discretion by marketing his or her services, demonstrating managerial acumen, and determining materials to order.

• Is the Relationship between the Worker and the Employer Permanent or Indefinite?

An employee is engaged at-will, but semi-permanently.62 An independent contractor lacks a semi-permanent relationship.63 • What is the Nature and Degree of the June 2016

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Company’s Control?

A company assigns an employee work, provides training, and directs the time, place, and manner of work. A company who lacks physical supervision or does not set the employee’s hours may still exercise control.64 An independent contractor controls meaningful aspects of the work performed such that it is possible to view the worker as a person conducting his or her own business. b. NLRA With respect to NLRA, in FedEx Home Delivery, a divided NLRB adopted a new standard to assess whether companies should classify their workers as employees or independent contractors.

This new standard consists of eleven factors intended to be an overall evaluation of whether the worker is, in fact, rendering services for the company or as part of an independent business.65 The NLRB did not provide interpretive guidance on how to contextually apply the factors, noting that the weight it will choose to

assign to each factor “will depend upon the factual circumstances of the particular case.”

The eleven factors are: 1. Extent of control by the company; 2. Whether or not the individual is engaged in a distinct occupation or business; 3. Whether the work is usually done under the direction of the company or by a specialist without supervision; 4. Skill required in the occupation; 5. Whether the company or worker supplies instrumentalities, tools, and place of work; 6. Length of time for which individual is employed; 7. Method of payment; 8. Whether or not work is part of the regular business of the company; 9. Whether or not the parties believe they are creating an independent contractor relationship; 10. Whether the principal is or is not in the business; and 11. Whether the evidence tends to show

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that the worker is, in fact, rendering services as an independent business.

In the NLRB’s decision, the NLRB held that, under NLRA, FedEx Ground’s Home Delivery drivers in Connecticut were “employees” and, therefore, could be represented by a Teamsters Union local that had petitioned to represent the drivers. In doing so, the NLRB made multiple references to provisions in the parties’ independent contractor agreement, which the NLRB said “weigh heavily in favor of employee status.” For example, the NLRB found the parties’ contract provided opportunities for drivers, such as route sales. However, in the NLRB’s view, a typical driver was unable to take advantage of such opportunities.

According to various reports, drivers under contract were committed from 6 a.m. to 8 p.m., Tuesday through Saturday. Drivers were not allowed to work for any other company, and they were not allowed to use company vehicles for any purpose other than the delivery of packages.

In a subsequent decision, the NLRB

further illuminated how the FedEx Test should be applied in Sisters’ Camelot.66 The NLRB found against Sister’s Camelot, weighing just three factors to find that its workers, who were nonprofit canvassers, were, in fact, employees, not independent contractors. c. Hawaii • Hawaii Employment Security Act In Hawaii, under the Hawaii Employment Security Act, workers who perform services for compensation are presumed to be employees for purposes of unemployment insurance contributions, unless the alleged employer can meet all three factors of what is commonly referred to as the “ABC” test. The Department of Labor and Industrial Relations (DLIR) must consider the following: • Part A: Is The Individual Free from Control or Direction Under Contract and in Fact? The basic question under this part of the “ABC” test is whether the company exercises general control over the worker. The areas of general control include: scope of work, equipment, and pricing; scheduling; recordkeeping and reports; meetings; and supervision; and billing. Although no one factor is dispositive, any scintilla of control in these areas may be used to show employee status.

• Part B: Are All Services Performed by the Individual Outside the Usual Course of Business or Outside the Place of Business? The focus under this part is on the company’s business. This part of the test is divided into two subparts, either of which may be satisfied by the company.

The first subpart focuses on whether the services performed by the worker are outside of the company’s usual course of business. If the worker provides the same type of services that the company offers to customers, or the independent contractor is doing the same type of work as the company’s employees, the worker will fail Part B of the test.

The second subpart focuses on whether the services performed by the worker are outside of the company’s place of business. Even if the worker

performs the same type of services that the company offers to customers, but the services are performed outside of the company’s places of business, the worker still may be able to pass Part B of the test.

• Part C: Is The Individual Customarily and Independently Engaged in the Same Trade, Occupation, or Profession as that Involved in the Contract of Service? The basic question under this part is whether the worker is in business for himself or herself. Under this part, the focus is on the worker’s activities. The worker must be customarily engaged in the business in which he/she provides services to the alleged employer. The questions that may be asked include whether the worker: (1) has a current general excise tax license; (2) holds himself or herself out to the public as an independent business person; and (3) provides services to other companies in the same field or area in which he or she provides services to the alleged employer.

The fact that a written agreement between the company and the worker labels the worker as an “independent contractor” is not enough. The worker must be an “independent contractor” in fact, and the burden is on the company to prove all three parts of the “ABC” test.

Failure on any one part of the “ABC” test will result in the worker being classified an “employee.”67 It should be noted that the Hawaii State legislature is now considering a sweeping bill, which would displace the Hawaii Employment Security Act’s “ABC” test, requiring the DLIR to instead weigh a series of twenty factors in determining if a worker is an employee or independent contractor.68 • Hawaii Workers’ Compensation Law Hawaii’s Workers’ Compensation Law defines “employment” as “any service performed by an individual for another person under any contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully entered into.”69 In Locations, Inc. v.

Hawaii Dep’t of Labor and Indus. Relations, the Hawaii Supreme Court ruled that the

“control test” must be used in determining whether an employment relationship exists for purposes of workers’ compensation laws. Under this test, the question is whether “the person in whose behalf the work is done has the power, express or implied, to dictate the means and methods by which the work is to be accomplished.”70 Conclusion As the gig economy continues to accelerate and federal and state governments closely scrutinize gig arrangements, companies should develop a strategy to manage their workforces to avoid being designated as an employer or joint employer and to avoid misclassifying gig workers as employees rather than as independent contractors. The warnings of Uber should be heeded before companies are brought to heel. Likewise, workers should have a strategy to protect themselves, to ensure they are not being taken advantage of.

———————————— Scott M. Prange is an associate attorney at Alston Hunt Floyd & Ing, a Law Corporation, who primarily provides strategic counsel and representation for all types of employers.

1 See Alexandra Petri, The Sharing Economy Gets Its Day Before a U.S. House Subcommittee, SKIFT (2015), https://skift.com/2015/09 /30/the-sharing-economy-gets-its-daybefore-a-u-s-house-subcommittee/ (On September 29, 2015, the U.S. House Subcommittee on Commerce, Manufacturing, and Trade held a hearing to look at the influence the gig economy and its emerging technologies have on consumers, job creation, and policy.); see also Lydia DePillis, Seattle Might Try Something Crazy to Let Uber Drivers Unionize, WASHINGTON POST (2015), www.washingtonpost.com/news/wonk/wp/2015/08/3 1/seattle-might-try-something-crazy-to-letuber-drivers-unionize/ (The city of Seattle has passed legislation which would allowpseudo collective bargaining for gig workers, allowing “for-hire vehicle drivers” to be represented by an “exclusive driver representative.” The exclusive driver representative would negotiate with the driver coordiJune 2016

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13

nator over various subjects, including minimum hours of work, vehicle equipment standards, and conditions of work.).

2 Mike Isaac, Noam Scheiber, Uber Settles Cases with Concessions, but Drivers Stay Freelancers, NEW YORK TIMES (2016), h t t p : / / w w w. n y t i m e s . c o m / 2016/04/22/technology/uber-settlescases-with-concessions-but-drivers-stayfreelancers.html?_r=0.

3 O’Connor v. Uber Techs., No. 15-80220, order granting permission to appeal, (9th Cir. Apr. 5, 2016).

4 O’Connor v. Uber Techs., 2015 U.S. Dist.

LEXIS 116482, 80 Cal. Comp. Cases 852 (N.D. Cal. 2015).

5 Uber Techs. v. Berwick, 2015 Cal. App. Unpub. LEXIS 9488 (Cal. Super. Ct. June 16, 2015).

6 Bernard Resche, We Have the Gig Economy All Wrong: Here’s How We Reinvent the Organization Man in the Uber-Age, SALON (2015), http://www.salon.com/2015/09/ 08/we_have_the_gig_economy_all_wrong _heres_how_we_reinvent_the_organization_man_in_the_uber_age/.

7 Mary Gray, Your Job Is About To Get “Taskified,” LOS ANGELES TIMES (2016), http://www. latimes.com/opinion/oped/la-oe-0110-digital-turk-work20160110-story.html.

8 Kathy Steinmetz, How Big the Gig Economy Really Is, TIME (2016), http://time.com/ 4169532/sharing-economy-poll/; The Future of Work Initiative, THE ASPEN INSTITUTE, http://www.aspeninstitute.org /policy-work/future-of-work; The On Demand Economic Survey, BURSON MARSTELLER, http://www.bursonmarsteller.com/what-we-do/our-thinking/on-demand/ondemand/.

9 Lavonne Leong, All Work and No Gig, HAWAII BUSINESS (2016), http://www. hawaiibusiness.com/all-work-and-no-job/.

10

Weil, THE FISSURED WORKPLACE: WHY WORK BECAME SO BAD

FOR

SO MANY

WHAT CAN BE DONE (Harvard University Press

AND

TO IMPROVE IT

2014).

11 Carl Frey, Michael Osbourne, THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION (University of Oxford (2013), http://www.oxfordmartin.ox.ac. uk/ publications/view/1314.

12 Nick Hanauer & David Rolf, Shared Security, Shared Growth, DEMOCRACY JOURNAL (2015), http://democracyjournal.org/magazine/37/shared-securityshared-growth/.

13 PAYCHECKS, PAYDAYS, AND THE ONLINE PLATFORM ECONOMY (JP Morgan Chase Institute 2016), https://www.jpmorganchase. com/corporate/institute/reportpaychecks-paydays-and-the-online-platform-economy.htm.

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20 Ilyse Schuman, DOL to Revive Survey to Assess Member of “Gig” Economy, MONDAQ BUSINESS BRIEFING (2016).

21 Tracey Grose & Patrick Kallerman, The 1099 Economy: Elusive but Diverse and Growing, BAY AREA RESEARCH ECONOMIC INSTITUTE (2015), https://medium.com/ @BayAreaEconomy/the-1099-economyelusive-but-diverse-and-g rowingbcc6f65694fe#.ohn8a1zhw.

22 FREELANCING IN AMERICA: 2015 (The Freelancers Union 2015), http://www. slideshare.net/upwork/2015-us-freelancersurvey-53166722/1.

14 Peter Drucker, MANAGEMENT: TRICKS, RESPONSIBILITIES, PRACTICES 284 (Transaction Publishers 2007).

23 Erin Barry, Uber, Lyft Effect on Economy Show Work “Innovation,” CNBC (2017), http://www.cnbc.com/2016/04/15/ uber-lyft-effect-on-economy-show-workinnovation-case.html.

15 Sara Donovan, David Bradley & Jon Shimabukuro, What Does the Gig Economy Mean for Workers?, CONGRESSIONAL RESEARCH SERVICE (2016), http://digital. library.unt.edu/ark:/67531/metadc 824431/.

24 Gillian B. White, When Will Labor Laws Catch Up with the Gig Economy?, THE ATLANTIC (Dec. 9, 2015) http://www. theatlantic.com/business/archive/2015/1 2 / n e w - l a w s - f o r- t h e - g i g - e c o n o my / 419745/.

16 Scott Kirsner, Uber for MBA’s Is a Worrying Sign, BOSTON GLOBE (2016), http://www.bostonglobe.com/business/ technology/2016/04/15/uber-for-mbasworrying-sign-for-knowledge-workerseverywhere/BJqxdFyeoM4f4giMzmSZSO /story.html.

25 Fair Labor Standards Act of 1938, 29 U.S.C. § 201(as amended).

17 Laura Gardiner, Does the Gig Economy Revolutionise the World of Work, or Is It a Storm in a Teacup?, THE ECONOMIST (2015), http://www. economist.com/blogs/freeexchange/2015/ 10/gig-economy.

18 Joseph DiStefano, The Gig Economy: Flexible, Benefitless Jobs Are Changing Work, but How Much?, PHILADELPHIA INQUIRER (2016).

David

14 June 2016

WORKFORCE (United States Department of Labor 2016), http://blog.dol.gov/2016 /01/25/innovation-and-the-contingentworkforce/.

19 INNOVATION

AND THE

CONTINGENT

26 Hawaii Wage and Hour Law, H.R.S., Chapter 387.

27 Family and Medical Leave Act of 1993, 29 U.S.C. § 2601.

28 Hawaii Family Leave Law, H.R.S., Chapter 398.

29 National Labor Relations Act of 1935, 29 U.S.C. §§ 151-169 (as amended).

30 Hawaii Employment Practices Act, H.R.S., Chapter 377.

31 Employment Retirement Income Security Act of 1974, 29 U.S.C § 1001.

32 Hawaii Employment Security Law, H.R.S., Chapter 383.

33 Hawaii Workers’ Compensation Law, H.R.S., Chapter 386.

34 Hawaii Temporary Disability Insurance Law, H.R.S., Chapter 392.

35 ADMINISTRATOR’S INTERPRETATION NO. 2016-1 (Dep’t of Labor Jan. 20, 2016), http://www.dol.gov/whd/flsa/Joint_Empl oyment_AI.htm.

36 FACT SHEET #28N: JOINT EMPLOYMENT AND PRIMARY AND SECONDARY EMPLOYER RESPONSIBILITIES UNDER THE FAMILY AND MEDICAL LEAVE ACT (FMLA), (Dep’t of Labor Jan. 2016), http://www.dol.gov/whd/regs/ compliance/whdfs28n.htm.

37 29 C.F.R. § 791.2(a); see also Baystate Alt. Staffing, Inc. v. Herman, 163 F.3d 668, 675 (1st Cir. 1998) (“The FLSA contemplates several simultaneous employers, each responsible for compliance with the Act.”); Antenor v. D & S Farms, 88 F.3d 925, 929 (11th Cir. 1996) (MSPA makes clear that a worker can be jointly employed by more than one entity at the same time).

38 29 U.S.C. § 203(e)(1).

39 U.S. v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945) (quoting statement of Sen. Hugo Black, 81 Cong. Rec. 7657 (1938)). MSPA defines “employ” in exactly the same way as the FLSA, and the scope of employment relationships under MSPA is thus the same as it is under the FLSA. See 29 U.S.C. § 1802(5) (“The term ‘employ’ has the meaning given such term under [the FLSA, 29 U.S.C. § 203(g)].”); 29 C.F.R. § 500.20(h)(1); see also 29 C.F.R. § 500.20(h)(2)-(3) (the terms “employer” and “employee” under MSPA are also given their meaning as found in the FLSA).

40 29 U.S.C. § 203(g).

41 See Walling v. Portland Terminal Co., 330 U.S. 148, 150-51 (1947) (FLSA’s definitions are “comprehensive enough to require its application” to many working relationships

which, under the common law control standard, may not be employer-employee relationships); Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (FLSA’s “suffer or permit” standard for employment “stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”)

42 Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 301 (1985) (the test of employment under the FLSA is economic reality); Goldberg v. Whitaker House Co-op, Inc., 366 U.S. 28, 33 (1961) (the economic realities of the worker’s relationship with the employer are the test of employment); 29 C.F.R. § 500.20(h)(5)(iii).

43 See, e.g., Chao v. A-One Med. Servs., Inc., 346 F.3d 908, 917-18 (9th Cir. 2003) (citing FLSA regulation, finding home health care providers that share staff and have common management and are horizontal joint employers).

44 Chao v. Barbeque Ventures, LLC, 2007 WL 5971772, at *6 (D. Neb. Dec. 12, 2007), at *1, 5-6 (separate legal entities who employed employees at five different restaurants were joint employers given common ownership, management and control; the same manager owned one legal entity, was the majority owner and manager of the other entity, and supervised the Area Director for all five restaurants).

45 See 29 C.F.R. § 500.20(h)(5); A-One Med. Servs., 346 F.3d at 917 (describing vertical joint employment as possible in circumstances where “a company has contracted for workers who are directly employed by an intermediary company”).

46 See Zheng v. Liberty Apparel Co., 355 F.3d 61, 71-72 (2d Cir. 2003) (nurses placed at a hospital by staffing agencies); see Barfield v.

N.Y. City Health & Hosps. Corp., 537 F.3d 132, 143-49 (2d Cir. 2008) (warehouse workers whose labor is arranged and overseen by layers of intermediaries between the workers and the owner or operator of the warehouse facility); see Carrillo v.

Schneider Logistics Trans-Loading & Distrib., Inc., 2014 WL 183956, at *9-15 (C.D. Cal.

Jan. 14, 2014); see also A-One Med. Servs., 346 F.3d at 917; Perez v. Lantern Light, 2015 U.S. Dist. LEXIS 69933, *3 (W.D. Wash.

May 29, 2015) (where company has contracted for workers who are directly employed by an intermediary, court applies vertical joint employment analysis to relationship between company and workers); Berrocal v. Moody Petrol., Inc., 2010 WL 1372410, at *11 n.16 (S.D. Fla. Mar. 31, 2010) (vertical joint employment may exist when “an employer hires laborers through a third party labor contractor”).

47 Browning-Ferris Industries of California, Inc., 363 NLRB No. 95 (Jan. 12, 2016).

48 See, e.g., Sec’y of Labor v. Lauritzen, 835 F.2d 1529 (7th Cir. 1987), cert. denied, 488 U.S. 898 (1988).

49 Seth Harris & Alan Krueger, A Proposal for Modernizing Labor Laws for Twenty-First Century Work: The “Independent Worker” (The Hamilton Project, 2015), http://www. hamiltonproject. org/papers/modernizing_labor_laws_for_twenty_first_century_work_independent_work.er/ (suggesting a new middle classification, which would allow workers and employers to retain some of the freedoms associated with independent work while enjoying some of the protections from being mistreated).

50 See Internal Revenue Manual §§ 4.23.5.4, 4.23.5.6.1 and 4.23.5.6.2. The Internal Revenue Service (“IRS”) looks at a wide variety of factors to determine “independent contractor status” as a matter of common law. The agency groups these factors into three categories: behavioral control; financial control; and the relationship of the parties. No one category or factor is controlling. IRS examiners are directed to look at all the evidence of autonomy and right to control, and then based on the weight of the evidence determine if the individual is an employee as a matter of “common law.”

• “Behavioral control” focuses on whether the supposed independent contractor receives extensive instructions on how work is to be done (i.e. how, when or where to do the work; what tools or equip-

(Continued on page 26) June 2016

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Chief Disciplinary Counsel’s Report

by Richard A. Platel The Office of Disciplinary Counsel (“ODC”) is pleased to present its 2015 annual statistical summary.

Introduction In Hawaii’s attorney discipline system, all communications and information concerning the conduct of Hawaii lawyers are first received by ODC. ODC investigates those complaints involving allegations of professional misconduct and may initiate and prosecute disciplinary proceedings before the Disciplinary Board of the Hawaii Supreme Court (“Disciplinary Board”).

Discipline System Terminology Abatement refers to the procedure and grounds of the Disciplinary Board to stay a disciplinary proceeding.

Complaint refers to a written communication received by ODC alleging misconduct by a Hawaii lawyer. When an inquiry determines that a complaint has sufficient allegations or information to show misconduct, which, if proved, could result in discipline, an investigation may be opened. Each complaint against a lawyer is counted as one complaint.

The terms “case” and “complaint” are used interchangeably. Complaint has also included an ODC-initiated complaint, which is a matter opened by ODC based on information about possible attorney misconduct received from anonymous sources or media reports.

Complainant refers to the person who makes a written complaint against a lawyer.

Docketing a Complaint signifies ODC has determined that a finding of an ethical violation and the imposition of discipline are likely to occur assuming the facts to be true and no other credible information contradict those facts.

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Formal Disciplinary Proceeding means a proceeding before the Disciplinary Board for the purpose of seeking the imposition of discipline against a respondent.

Hawaii Attorneys and Judges Assistance Program (AAP) refers to a professional organization that provides confidential services for a broad range of problems and personal concerns to attorneys and judges.

Investigation is the process during which ODC gathers, evaluates, and reviews evidence and information about a complaint against a lawyer.

Minor Misconduct signifies a violation of the Hawaii Rules of Professional Conduct of a minor nature, resolved by way of non-disciplinary proceedings pursuant to the Rules of the Supreme Court.

Petition means the papers or “initial pleadings” filed to begin the formal disciplinary proceedings before the Disciplinary Board against a respondent.

The petition provides notice of the rules the lawyer is alleged to have violated.

Each filing of a petition may consolidate and include multiple complaints against a lawyer. For ODC’s process and handling of complaints, each complaint against a lawyer continues to be counted as one complaint throughout the discipline process.

Private Informal Admonition refers to the least serious discipline that may be imposed.

Private Reprimand signifies that misconduct has been found, and that while the matter does not warrant the filing of a report with the Supreme Court, the misconduct is too serious to be addressed by a Private Informal Admonition.

Public Reprimand signifies that misconduct has been found, and that while the matter does not warrant the filing of a report with the Supreme Court, the misconduct is too serious to be addressed by a Private Informal Admonition or a Private Reprimand, and requires public notice.

Respondent is a Hawaii lawyer who is the subject of an inquiry, investigation, or disciplinary proceeding before the Disciplinary Board.

Stipulation to Discipline refers to settlement by stipulation to facts, conclusions of law, and disposition reached between ODC and the respondent. The stipulation is filed with the Disciplinary Board for review and any additional proceeding as ordered.

Overview In 2015, the ODC received 292 new complaints, 48 of which were docketed for investigation.

Of the 48 complaints docketed in 2015, 19% involved alleged neglect of client matters, still the largest complaint area each year. The next largest complaint categories were disobedience of court order (17%), conversion (15%), and commingling (6%).

Clients continued to be the largest souce of complaints (58%) followed by complaints filed from an opposing party (19%).

Also in 2015, 58 docketed complaints were closed, 40% of which were concluded in conjunction with the imposition of public discipline. Of the 23 cases closed by public discipline, five were completed through the assistance of Voluntary Settlement Officers. The Voluntary Settlement Conference process was initiated in 2012 as a pilot project to resolve appropriate cases through a stipulation of facts, rule violations, and final resolution regarding discipline and costs.

ODC participated in (1) the Disciplinary Board’s Hearings Officer Training program, (2) Hawaii Discipline System Overview at the Richardson School of Law, (3) the Mandatory Professionalism Course, Taking a Leap: Selling Your Law Practice at the HSBA Convention, and (4) Legal Ethics for Support Staff for the HSBA’s Paralegal Certification Program.

ODC also responded to 339 telephone opinion requests.

The annual statistical summary is presented here.

ODC STATISTICAL SUMMARY FOR 2015

C. FUNDS AND PROPERTY

I. COMPLAINTS DOCKETED BY SUBJECT CATEGORY

1. Commingling ......................................................................3 2. Conversion ..........................................................................7 3. Failure to account ...............................................................1 4. Failure to deposit in trust account ......................................1 5. Failure to maintain records .................................................0 6. Failure to promptly pay out ................................................0 7. Withdrawal--funds in dispute ..............................................0 8. Improper payment to client ................................................0 9. Improper assertion of lien on client's property ..................0 10. Failure to promptly deliver property .................................1 11. Other .................................................................................0 Total: 13

A. PERFORMANCE No. Of Complaints

1. Abandonment .....................................................................1 2. Abusiveness ..........................................................................1 3. Neglect (phone calls, letters, etc.) .........................................9 4. Incompetence ......................................................................1 5. Misrepresentations to client .................................................1 6. Misrepresentations to others ................................................0 7. Improper withdrawal from employment ..............................0 8. Improper disclosure of confidential.information .................0 9. Conflict of Interest ..............................................................0 10. Improper contact with opposing party .............................1 11. Other .................................................................................1 Total: 15 B. FEES 1. Excessive fees .......................................................................2 2. Failure to return unearned portion .....................................1 3. Improper referral fees .........................................................0 4. Fee dispute, no unethical conduct .......................................0 5. Other ...................................................................................1 Total: 4

D. SOLICITATION 1. In-Person Solicitation ..........................................................0 2. Direct Mail Solicitation .......................................................1 3. Other ...................................................................................0 Total: 1 E. ADVERTISING 1. False, fraudulent, deceptive, or misleading ........................0 2. Specialization .....................................................................0 3. Other ...................................................................................0 Total: 0

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F. INTERFERENCE WITH JUSTICE 1. Advising violation of law ....................................................0 2. Appeal in bad faith .............................................................0 3. Advising witness to hide, suppression of evidence evidence, bribing witness...........................................0 4. Aiding unlawful practice of law ..........................................1 5. Disobedience of court order ...............................................8 6. Disrespect of court ..............................................................0 7. Gifts to officials ...................................................................0 8. Harassment, claim not warranted ......................................0 9. Misrepresentations to court ................................................1 10. Threaten criminal prosecution .........................................0 11. Abuse of process (sham or groundless.lawsuits, etc.) ........0 12. Prosecutorial misconduct ..................................................2 13. Improper contact with tribunal ........................................0 14. Use of perjured testimony or false.evidence .....................0 15. Improper trial publicity .....................................................0 16. Other .................................................................................0 Total: 12 G. FRAUD

III. NUMBER OF ATTORNEYS COMPLAINED AGAINST BY NUMBER OF YEARS IN PRACTICE Number of Years in Practice

Number of Attorneys

Less than 1 - 5 years.................................................................4 6 - 10 years .............................................................................3 11 - 15 years ............................................................................5 16 - 20 years ............................................................................4 21 - 25 years ............................................................................6 26 - 31+ years........................................................................19 Pro Hac Vice Admittees ..........................................................0 TOTAL 41 IV. NUMBER OF ATTORNEYS COMPLAINED AGAINST BY NUMBER OF COMPLAINTS PER ATTORNEY No. of Attorneys with 1 complaint: No. of Attorneys with 2 complaints: No. of Attorneys with 3 complaints: No. of Attorneys with 4 complaints: No. of Attorneys with 5+ complaints:

1. Scheme to defraud ..............................................................0 2. Other ...................................................................................0 Total: 0

V. COMPLAINT DISPOSITION

H.PERSONAL BEHAVIOR AND CRIMES

Disbarment Resignation in Lieu of Discipline Suspension Public Reprimand Private Reprimand Informal Admonition Other Dismissed or Dismissed with Caution

1. Commission of crime ..........................................................3 2. Failure to honor agreement or stipulation ..........................0 3. Offensive language or actions .............................................0 4. Extortion or intimidation ....................................................0 5. Coercion to obtain payment/fee ........................................0 6. Abusive collection practices ................................................0 7. Failure to pay bills (court reporters, expert witnesses, etc.)..0 8. Other ...................................................................................0 Total: 3 TOTAL COMPLAINTS DOCKETED IN 2015................48 II. COMPLAINT SOURCES 1. Clients ...............................................................................28 2. Attorneys .............................................................................2 3. Judges ..................................................................................1 4. Court Reporters ..................................................................0 5. Bar Association ...................................................................0 6. Office of Disciplinary Counsel ...........................................8 7. Attorney General ................................................................0 8. Other Governmental Agencies ...........................................0 9. Opposing Party ...................................................................9 10. Anonymous .......................................................................0 11. Member of the Public .......................................................0 12. Other .................................................................................0 TOTAL COMPLAINTS 48 18 June 2016

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No. of Attorneys

35 5 1 0 0

No. of Complaints Involved

2

2

2 4 4 3 11 1

6 10 4 3 12 1

20

20

COMPLAINTS CLOSED IN 2015:

58

COMPLAINTS PENDING AS OF 12/31/15:

174

____________________________ Richard A. Platel is the Chief Disciplinary Counsel in the Office of Disciplinary Counsel.

NOTICE TO ATTORNEYS INTERESTED IN PROVIDING LEGAL SERVICES TO THE CITY AND COUNTY OF HONOLULU Under the Hawaii Public Procurement Code, Haw. Rev. Stat. Chapter 103D, and the Revised Charter of the City and County of Honolulu, the Corporation Counsel of the City and County of Honolulu is responsible for securing legal services from licensed private attorneys to provide legal advice and representation for City agencies, officers, employees, boards, commissions and semi-autonomous agencies. Corporation Counsel invites licensed attorneys to submit Statements of Qualifications and Expressions of Interest for evaluation. Those private attorneys who are deemed qualified will be included on a list from which special deputies corporation counsel, special counsel, and legal consultants will be selected by the Corporation Counsel to provide necessary legal services.

Following are the areas of law in which such services may be required by the Corporation Counsel during the period of July 1, 2016, to June 30, 2017: Administrative Law Appellate Practice Antitrust Bankruptcy/Receiverships Business Law, including Contract Law, Corporate Law and Business Transactions Civil Rights Collections Litigation, including Complex Civil Litigation and Class Actions Constitutional Law Condemnation Construction Law, including Construction Litigation Criminal Law Election Law Employment Law, including Employee Benefits Energy Law Environmental Law, including Clean Water Act, Clean Air Act, HEPA/NEPA, Regulatory Compliance & Enforcement, Solid Waste Management, Environmental Attributes, and Storm Water Management Probate, Estates & Trusts, including Guardianships Government Contracts & Procurement, including Bid Protests, and State and Federal Procurement

Government Ethics Health Law Information and Computer Technology Insurance Intellectual Property Labor Law Enforcement Maritime Law Plaintiffs Qui Tam Project Labor Agreements Public Benefits Law, including ADA Public Financing, including Bond Counsel, Investment Banking, and Financing Leases Public Utilities Law Real Property, including Financing, Development, Land Use Entitlements and Transactions Securities Law Tax Telecommunications Tort Law, including Personal Injury, Products Liability, Design Defects and Professional Malpractice Transportation Law, including Mass Transit, Transit Financing, and Land Use Entitlements Water Law Workers’ Compensation

Licensed attorneys interested in providing legal services in one or more of these areas are invited to submit a Statement of Qualifications and Expression of Interest. Attorneys from the same law firm wishing to be considered must submit separate statements. Attorney statements may include areas not listed above.

Forms are available for download at http://www.honolulu.gov/cor. Forms may also be requested by telephone ((808) 7685100) or facsimile ((808) 768-5104). Corporation Counsel’s General Policy Regarding Waiver of Conflicts is also available at that website or upon request; however, the decision as to whether to waive a conflict of interest will depend on the facts of that particular situation and is in the sole discretion of the Corporation Counsel.

ALL MATERIALS shall be emailed to: professionalservices@honolulu.gov. NO HARD COPIES, CDs, OR FACSIMILES SHALL BE ACCEPTED. All forms should be post-marked or delivered no later than 4:30 p.m., June 30, 2015, to receive full consideration for the above-stated period. Late submittals that meet all applicable criteria will be accepted, but will only be available for consultant selections conducted after the submittals have been reviewed and the service category qualification(s) determined.

HSBA HAPPENINGS April Board Action Summary

The HSBA Board took the following actions at its meeting in April: • Adopted the Executive Committee’s recommendation to approve and authorize the Executive Director to sign the Memorandums of Understanding between the HSBA, the Judiciary, county bar associations, and the Legal Aid Society of Hawaii regarding the operation and management of the Honolulu District Court Access to Justice Room and neighbor island Self Help Centers/Desk; • Adopted the Executive Committee’s recommendation to ratify the Friendship Agreement with the Dai-Ichi Tokyo Bar Association for another fiveyear term through October 2020.

Free Bar Directory Photos

Free photos for the next Bar Directory will be taken at Grass Shack Productions, 1111 Nuuanu Avenue, #212 on Tuesday, June 14, 2016, from 9:00 a.m. to 12:00 p.m. or 1:00 p.m. to 4:30 p.m. No appointment necessary.

For more information, please call 5211929.

HSBA Annual Dinner

Calendar Saturday, August 20, 2016, for the Annual Dinner at the Hawaii Convention Center. Join us for an evening of “Motions, Mirth, and Madness” as retired Chief Justice Ronald T.Y. Moon is honored. Renew friendships and make new friends. For information contact HSBA President, Jodi Yi Kimura at JodiYi@yahoo.com.

HSBA Bar Convention

Reserve Friday, October 14, 2016, for the 2016 Bar Convention at the Hawaii Convention Center. CLE credits will be offered, and there will be 20 June 2016

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exhibitors and networking opportunities. The business luncheon keynote speaker will be Linda Klein, 2016-2017 ABA President.

Call for Nominations for HSBA Awards

Know an exceptional attorney or volunteer, or an unsung hero who is deserving of recognition? Nominate a colleague or community leader for one of these HSBA Awards:

For a full description of these awards, please refer to the HSBA website at www.hsba.org under the “About Us” tab.

Please submit nominations to the Awards Committee, c/o HSBA, by mail or email (nominations@hsba.org), no later than July 6, 2016.

Contact Debbie Blanton at 792-7348 or Dblanton@hsba. org at the HSBA office for additional information.

Member Benefits Spotlight

• Golden Gavel Award recognizes an attorney or non-attorney for outstanding service to the state or federal judiciary in Hawaii.

• C. Frederick Schutte Award recognizes an attorney for outstanding service to the legal community and the profession.

• Ikena Award recognizes an attorney or non-attorney for exceptional service in legal education to the public or the profession.

• Kie Kie Award recognizes an attorney for outstanding provision of professional legal services at no charge to the recipient.

• Greeley Key Award for Innovation recognizes an attorney or non-attorney for promoting new and creative uses of, or approaches to, the law.

• Champion for Social Justice Award recognizes an attorney for courageous legal work in the face of public controversy.

• Malama Hawaii Award recognizes an attorney for effective non-legal community service activities that make a difference and improve the quality of life in Hawaii.

Cartridge Word (New Member Benefit) - Cartridge World Honolulu will manage your entire printer fleet including your toner for less than what many companies pay for just their cartridges. “Protection” and having a “peace of mind is the benefit!” For information contact: Cathy Haga at 358-0851 or 593-4465 or via email at cathy@honolulucw.com. For more information, see http://bit.ly/1SbBxnv.

GEICO - GEICO offers insurance products and potential savings opportunities on GEICO auto insurance. As an HSBA member, you could qualify for an exclusive discount. Simply go online to www.geico.com/bar/hsba or call 1-800368-2734, to complete a simple, no-obligation rate quote.

AAA Hawaii - Save $20 on their Classic Plan. To enroll, call AAA Hawaii at 593-2221 or neighbor islands can call toll free 1 (800) 736-2886.

HSBA campaign code is 47357.

AVIS Car Rental: Call 1 (800) 9621434 (24 hours, 7 days a week) or visit their website for reservations. Discount number is A679100.

Budget Rent A Car: Call 1 (800) 5270700 or visit http://www.budget.com/.

Coupon Code is Y011501 Enterprise Rental Car: Call 1 (800) 261-7331; CID number is 36A7933 and PIN is “HAW.” View the website with the HSBA discount.

M e d i a t i o n National Car Rental: Call 1 (877) 2229058; CID number is 5027285.

2016 Leadership Institute Fellows

Congratulations to the individuals selected for the 2016 Leadership Institute: Lynda Arakawa, Goodsill Anderson Quinn & Stifel LLP Sara Jo Buehler, Law Offices of Sara Jo Buehler Jessica Domingo, Office of the Public Defender Noah Gibson, Coates & Frey

&

A r b i t r a t i o n

“e fire you kindle for your enemy oen burns yourself more than him’’ ~Chinese Proverb Dan Bent

Mediator & Arbitrator Former civil litigator & U.S. Attorney B.S. Mechanical Engineering & Georgetown Law 548-0080 | www.FairMediation.com

Dispute Prevention and Resolution, Inc. 1003 Bishop St., Suite 1155 | Honolulu, HI 96813

Gregory Gimenez, Office of the Prosecuting Attorney (Kauai) Christopher Goodin, Cades Schutte LLP Justine Herrera, Volunteer Legal Services Hawaii Na Lan, Motooka & Rosenberg Marissa Machida, Yee & Kawashima Yukari Murakami, Legal Aid Society of Hawaii (Maui) Jill Otake, United States Attorney’s Office E. Kumau Pineda-Akiona, Damon Key Leong Kupchak Hastert Christopher Rothfus, Office of the Prosecuting Attorney (Hilo) Scott Shishido, Goodsill Anderson Quinn & Stifel LLP Catherine Taschner, McCorriston Miller Mukai MacKinnon Claire Wong Black, Alston Hunt Floyd & Ing

June 2016

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21

COURT BRIEFS Chief Justice Appoints Darien W.L. Ching Nagata as Hawaii Island District Court Judge

Chief Justice Mark E. Recktenwald has appointed Darien W.L. Ching Nagata to the District Court of Third Circuit (Island of Hawaii). She will fill the vacancy created by the retirement of Judge Barbara T. Takase.

Since 1998, Nagata has been a deputy prosecuting attorney for the County of Hawaii Office of the Prosecuting Attorney. She currently supervises the District and Family Court Domestic Units and has previously supervised the Circuit Court Unit that handles child and adult sexual assaults, homicides and violent crime cases.

From 2008 to 2014, Nagata was crossdeputized to serve as the Special Assistant United States Attorney for the District of Hawaii, where she assisted with Project Safe Neighborhood.

Nagata has been a two-time President of the Hawaii County Bar Association and served as the Association’s representative to co-chair the committee to establish Hilo’s SelfHelp Center. She is currently an active member of the HSBA Committee on the Delivery of Legal Services to the Public, where she assists in the ongoing effort to promote and provide legal services to the public, and the Diversity, Equality, and the Law Committee, developing programs to eliminate gender, ethnic, and other bias and discrimination in the legal profession and judicial system.

In 2013, the HSBA appointed Nagata as Commissioner of the Hawaii Access to Justice Commission. She has worked as a neighbor island representative, furthering the Commission’s goal of substantially increasing access to justice in civil legal matters for low- and moderate-income residents.

Nagata has served the Hawaii Island community for nine years as a Volunteer Arbitrator for the Court Annexed Arbitration Program, and as a Volunteer Mediator with the Hawaii 22 June 2016

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County Foreclosure Mediation Program.

Nagata is a graduate of the University of Hawaii William S. Richardson School of Law and was admitted to the Hawaii State Bar in 1997.

from the University of Minnesota. In addition to his years of public service, Dr. Dubanoski brings an extensive background in research on a broad cross section of social issues affecting a variety of community interests.

Dubanoski Appointed to Judicial Selection Commission

Janice M.T. Luke Loo Reappointed to the Commission on Judicial Conduct On April 19, 2016, the Supreme Court of the State of Hawaii reappointed Janice M.T. Luke Loo to the Commission on Judicial Conduct, for a three-year term, effective nunc pro tunc April 17, 2016, and expiring on April 16, 2019.

Chief Justice Mark Recktenwald and members of Hawaii’s Judicial Selection Commission welcome Richard A. Dubanoski, Ph.D., to the commission.

From left to right: Jackie Young, Vice Chair; Chief Justice Mark Recktenwald; Richard A. Dubanoski, Ph.D.; James A. Kawachika, Chair; Patricia Kim Park.

Dr. Richard A. Dubanoski was sworn in on April 1, 2016 as a member of the state Judicial Selection Commission by Hawaii Supreme Court Chief Justice Mark Recktenwald. Chief Justice Recktenwald appointed Dr. Dubanoski to the Commission, replacing Dr. Phyllis C. Horner, for the remainder of her term, effective April 2, 2016, and expiring on April 1, 2019.

Chief Justice Recktenwald thanked Dr. Horner for her service on the Commission and expressed his gratitude to Dr. Dubanoski for his willingness to serve.

Dr. Dubanoski is Dean Emeritus and Professor Emeritus of Psychology at the University of Hawaii at Manoa.

From 1989-2011, he served as the Dean of the University’s College of Social Sciences.

Dubanoski was named University of Hawaii Manager of the Year in 2006 and in 2011, he received the Willard Wilson Award for Distinguished Service to the University.

Dr. Dubanoski earned his masters and doctorate in Child Development

The Power of Choice – DWI Court

On April 21, 2016, the Honolulu DWI (“Driving While Impaired”) Court held a ceremony to acknowledge the accomplishments of its two new graduates. In addressing the audience, one graduate shared that the program helped him stop blaming people and circumstances. He went on to speak about how empowering it is to realize the influence of every choice you make.

DWI Court provides participants with support, treatment services, and court monitoring to aid in addiction recovery, and lead to a healthier, safer community. Since its founding in 2013, 27 individuals have successfully completed the program.

For more information, visit: http://bit.ly/1S6eJax.

DUI defense attorneys Daniel Kawamoto (left), Paul Cunney (back), and DWI Court Committee Member R. Patrick McPherson (back center) join Judge William M. Domingo (center) in congratulating the latest DWI Court graduates.

American Judicature Society’s Annual Sidebar Program The American Judicature Society (“AJS”) invites summer associates and young lawyers to participate in their Annual Sidebar Program.

The program offers a unique opportunity to observe a moderated panel discussion with some of Hawaii’s distinguished judges, engage in small group discussions with these jurists, and socialize with them and each other during the reception that follows.

The date, time, and location of the Annual Sidebar Program is noted below:

Orion Medical is offering new service from Jan 2016

Forensic analysis of Medical Records and Medical Expert witness, for personal injury cases and others.

More than 35 years of experience of surgical practice in Hawaii- Plus large numbers of consultants in different subspecialties to resolve most complex problems.

We comply with the Ethic Regulations of an American Surgical Society Organization Reasonable fee schedule

Contact Orion Medical at 533-2900

Thursday, July 7, 2016, 4:00 - 6:00 p.m.

Supreme Court of Hawai‘i Aliiolani Hale (second floor courtroom) 417 South King Street Originally founded in 1913, the AJS is an independent, non-partisan, membership organization that has worked to protect the integrity of the American justice system. AJS continues in Hawaii as a diverse and broadly based group – including judges, lawyers, and members of the public – aiming to promote fair and impartial courts through research, publications, education, and advocacy for judicial reform. The work of AJS focuses primarily on judicial ethics, judicial selection, access to justice, criminal justice reform, and the jury system.

For more information, contact Billie Hairston at 521-9279.

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23

BECOMING A JUDGE:

A talk with Chief Justice Mark E.

Recktenwald gives me a list of potential nominees,” said Chief Justice Recktenwald. There are a minimum of six names on the list.

He explained that the JSC looks at the following qualities: (1) (2) (3) (4) (5) (6) (7)

integrity and moral courage; legal ability and experience; intelligence and wisdom; compassion and fairness; diligence and decisiveness; judicial temperament; and such other qualities that the JSC deems appropriate.

(See Rule 10, Evaluation of Applicants and Petitioners, of the Judicial Selection Commission Rules.)

by Carol K. Muranaka On January 15, 2016, Hawaii Supreme Court Chief Justice Mark E. Recktenwald addressed a large group of attorneys on the judicial application process, and district court and family court judicial appointments. “The opportunity to share what I do and to explain the process is important,” said Chief Justice Recktenwald, who thanked Hawaii Women Lawyers for sponsoring the event. The event was hosted by Ashford & Wriston.

The Process “The clock starts running when the Judicial Selection Commission (“JSC”) 24 June 2016

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“The first action that my office takes is to issue a press release,” said Chief Justice Recktenwald. “This was started by my predecessor, Chief Justice Moon. It is a good idea, and I continued it.” He normally provides ten days for public comments and will typically receive about 20 to 30 comments.

After reviewing the JSC application and public comments, Chief Justice Recktenwald interviews each nominee.

Qualities of a Judge Chief Justice Recktenwald looks for certain attributes in a judge. He mentioned the following, in no particular order: Legal Ability: Does the nominee have the skill and experience to perform at a high level? In district court, can the nominee handle the heavy court calendar and give each person his/her day in court and still get through the calendar

in a timely manner? In family court, there may be complex and emotional issues involved. Can the nominee maintain control over the courtroom?

Integrity: The highest ethical standards are required.

Judicial Temperament: Does the nominee have a reputation for listening carefully and showing respect to all he/she interacts with, including staff, opposing counsel, and those with a different point of view? Are parties and counsel likely to feel that they have had a fair hearing of their dispute, regardless of the judge’s ultimate decision?

Good judgment: Is the nominee able to make good decisions under pressure? Is the nominee a good listener and decisive? Does the nominee have the background and experience to draw upon to make good decisions under difficult circumstances?

Compassion: Does the nominee have an understanding of people and the ability to sympathize and still be able to fairly apply the law. “District court is often described as the people’s court because this is where many people come in contact with the justice system,” said Chief Justice Recktenwald. “We need judges who can relate to people of all backgrounds and are able to communicate effectively with them so they understand what the court is doing and why.”

Passion for public service: Is the nominee passionate about making a difference in the community?

Have they done pro bono work or contributed in other ways to their community? Will the nominee make contributions outside the courtroom, such as by serving on the numerous committees within the Judiciary that improve the administration of justice or participating in activities such as mock trial?

Work ethic: Has the nominee demonstrated the ability to take on challenging situations? Chief Justice Recktenwald cautioned that before an individual applies for a judicial position, the individual should familiarize himself/herself with the job and what it entails, including the need to work after hours, on holidays, and weekends.

Leadership and management: Judges are part of a team that includes court clerks and bailiffs and everyone needs to work effectively together. Can the nominee be an effective leader? closing, Chief Justice In Recktenwald said, “My goal is simple, to pick outstanding judges who are passionate about serving the community.”

Chief Justice Recktenwald suggested visiting the JSC site for helpful hints on the selection process. “Think about the questions that are asked on the application form and be prepared on how you would answer a question and how you present yourself,” said Chief Justice Recktenwald.

Notice of Discipline Robin R. Horner, suspension: On March 30, 2016, the Hawaii Supreme Court suspended this Honolulu attorney for 180 days effective April 29, 2016, and ordered him to have a professional audit of his practice and pass the Multistate Professional Responsibility Exam. The suspension was for numerous acts of misconduct including charging non-refundable retainers, failing to properly maintain trust account records, failing to comply with court filing rules, failing to timely pay court sanctions, and failing to cooperate in the investigation of his conduct. In 2013, Horner was publicly reprimanded for failing to file general excise tax returns.

Thomas Alfred Landry, suspension: On April 8, 2016, the Hawaii Supreme Court suspended Landry for nine months effective May 9, 2016.

Landry practices on the mainland and was disciplined there for charging and collecting an excessive fee and misinforming his clients about the contingent fee he charged. The Hawaii Supreme Court’s suspension was based on a reciprocal action after Landry’s suspension in Massachusetts.

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25

(Continued from page 15) ment to use; what assistants to hire or help with work; where to purchase supplies and services) or training on the procedures and methods to be used in performing the work.

• “Financial control” focuses on whether the supposed independent contractor has made a significant investment in his/her business, obtains reimbursement for some or all of his/her business expenses, and whether he/she has an opportunity for profit or loss.

• “Relationship of the parties” focuses on whether the supposed independent contractor receives employee benefits and whether the parties have entered into a written contract specifying the terms of the relationship.

51 ADMINISTRATOR’S INTERPRETATION NO. 2015-1 (Dep’t of Labor July 15, 2015), http://www.dol.gov/whd/workers/Miscla ssification/AI-2015_1.htm.

52 See Portland Terminal Co., 330 U.S. at 15051 (FLSA’s definitions are “comprehensive enough to require its application” to many working relationships which, under the common law control standard, may not be employer-employee relationships); Darden, 503 U.S. at 326 (FLSA’s “suffer or permit” standard for employment “stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”).

53 Tony & Susan Alamo Found, 471 U.S. at 301 (the test of employment under the FLSA is economic reality); Whitaker House Co-op, Inc., 366 U.S. at 33 (the economic realities of the worker’s relationship with the employer are the test of employment); 29 C.F.R. § 500.20(h)(5)(iii).

54 Solis v. Cascom, Inc., 2011 WL 10501391, at *4 (S.D. Ohio Sept. 21, 2011); see also Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1312 (the economic realities factors “serve as guides, [and] the overarching focus of the inquiry is economic dependence”); Usery v. Pilgrim Equip. Co., Inc., 527 F.2d 1308, 1311 (5th Cir. 1976) (The economic realities factors “are aids—tools to be used to gauge the degree of depend26 June 2016

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ence of alleged employees on the business with which they are connected. It is dependence that indicates employee status.

Each test must be applied with that ultimate notion in mind.”).

55 See, e.g., Hopkins v. Cornerstone Am., 545 F.3d 338, 343 (5th Cir. 2008) (“To determine if a worker qualifies as an employee, we focus on whether, as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for himself.”); Baker v.

Flint Eng’g & Constr. Co., 137 F.3d 1436, 1440 (10th Cir. 1998) (the economic realities of the relationship govern, and the focal point is whether the individual is economically dependent on the business to which he renders service or is, as a matter of economic fact, in business for himself); Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988) (“The ultimate concern is whether, as a matter of economic reality, the workers depend on someone else’s business . . . or are in business for themselves.”); Scantland, 721 F.3d at 1312 (quoting Mednick v. Albert Enters., Inc., 508 F.2d 297, 301-02 (5th Cir. 1975)) (“Ultimately, in considering economic dependence, the court focuses on whether an individual is ‘in business for himself ’ or is ‘dependent upon finding employment in the business of others.’”).

56 See, e.g., Scantland, 721 F.3d at 1311 (“This inquiry is not governed by the ‘label’ put on the relationship by the parties or the contract controlling that relationship, but rather focuses on whether ‘the work done, in its essence, follows the usual path of an employee.’”) (quoting Rutherford Food Corp. v.

McComb, 331 U.S. 722, 729 (1947)); Superior Care, 840 F.2d at 1059 (“[E]mployer’s selfserving label of workers as independent contractors is not controlling.”); Robicheaux v. Radcliff Material, Inc., 697 F.2d 662, 667 (5th Cir. 1983) (explaining that “[a]n employee is not permitted to waive employee status,” and affirming that welders were employees despite having signed independent contractor agreements); see Olson v. Star Lift Inc., 709 F. Supp. 2d 1351, 1356 (S.D. Fla. 2010) (worker’s receipt of Form 1099MISC from employer does not weigh in favor of independent contractor status); Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 755 (9th Cir. 1979) (“Economic

realities, not contractual labels, determine employment status for the remedial purposes of the FLSA.”).

57 See Rutherford, 331 U.S. at 729 (workers were employees in part because work was “part of the integrated unit of production”); Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376, 1385 (3d Cir. 1985) (“workers are more likely to be ‘employees’ under the FLSA if they perform the primary work of the alleged employer”).

58 See, e.g., Dole v. Snell, 875 F.2d 802, 811 (10th Cir. 1989) (holding that work performed by cake decorators “is obviously integral” to the business of selling cakes which are custom decorated); Lauritzen, 835 F.2d at 1537-38 (“It does not take much of a record to demonstrate that picking the pickles is a necessary and integral part of the pickle business . . . .”).

59 See Scantland, 721 F.3d at 1316-17 (“Plaintiffs’ opportunity for profit was largely limited to their ability to complete more jobs than assigned, which is analogous to an employee’s ability to take on overtime work or an efficient piece-rate worker’s ability to produce more pieces.”); Cascom, 2011 WL 10501391, at *6; see also Scantland, 721 F.3d at 1317 (“An individual’s ability to earn more by being more technically proficient is unrelated to an individual’s ability to earn or lose profit via his managerial skill, and it does not indicate that he operates his own business.”); Martin v. Selker Bros., Inc., 949 F.2d 1286, 1294 (3d Cir. 1991) (opportunity for profit or loss must depend on managerial skills to indicate independent contractor status); Snell, 875 F.2d at 810 (cake decorators’ “earnings did not depend upon their judgment or initiative, but on the [employer’s] need for their work”); See, e.g., Snell, 875 F.2d at 810 (possibility of loss is a risk usually associated with independent contractor status, but there was no way for cake decorators to experience a loss, and possible reduction in earnings was not the same as a loss); Lauritzen, 835 F.2d at 1536 (migrant farm workers had no possibility for loss of investment, only loss of wages, indicating that they were employees).

60 See Baker, 137 F.3d at 1442 (comparing rig welders’ investment to employer’s “hundreds of thousands of dollars of equipment at each work site”); see also Snell, 875 F.2d at 810-11 (comparing cake decorators’ $400 investment in their tools to employers’ business investments, including paying for rent, advertising, operating expenses, and labor, in addition to supplies and decorating equipment); Lauritzen, 835 F.2d at 1537 (reasoning that where workers provided their own gloves, and the employer provided the farm equipment, land, seed, fertilizers, and living quarters, their work was not independent of the employer); Hopkins, 545 F.3d at 344 (comparing each worker’s individual investment to employer’s overall investment in the business); Driscoll Strawberry Assocs., Inc., 603 F.2d at 755 (strawberry growers’ investment in light equipment, including hoes, shovels, and picking carts was “minimal in comparison” with employer’s total investment in land and heavy machinery).

61 See Selker Bros., 949 F.2d at 1295 (“the use of special skills is not itself indicative of independent contractor status, especially if the workers do not use those skills in any independent way”); Superior Care, 840 F.2d at 1060 (for skills to be indicative of independent contractor status, they should be used in some independent way, such as demonstrating business-like initiative); Herman v. Express Sixty-Minutes Delivery Serv., 161 F.3d 299, 305 (efficiency in performing work is not initiative indicative of independent contractor status); Lauritzen, 835 F.2d at 1537 (“Skills are not the monopoly of independent contractors.”).

62 See, e.g., DialAmerica Mktg., 757 F.2d at 1384-85 (correcting district court for ignoring fact that workers worked continuously for the employer and that such evidence indicates that workers were employees); Cascom, 2011 WL 10501391, at *6 (workers who “worked until they quit or were terminated” had relationship “similar to an at-will employment arrangement”); See Superior Care, 840 F.2d at 1060 (The key is whether the lack of permanence or indefiniteness is due to “operational characteristics intrinsic to the industry”; for example, employers who hire

part-time workers or use staffing agencies or the worker’s “own business initiative.”); see also Brock v. Mr. W Fireworks, 814 F.2d 1042, 1054 (“We thus hold that when an industry is seasonal, the proper test for determining permanency of the relationship is not whether the alleged employees returned from season to season, but whether the alleged employees worked for the entire operative period of a particular season.”).

63 Cascom, 2011 WL 10501391, at *6; see also Scantland, 721 F.3d at 1317 (“An individual’s ability to earn more by being more technically proficient is unrelated to an individual’s ability to earn or lose profit via his managerial skill, and it does not indicate that he operates his own business.”); Selker Bros., 949 F.2d at 1294 (3d Cir. 1991) (opportunity for profit or loss must depend on managerial skills to indicate independent contractor status); Snell, 875 F.2d at 810 (cake decorators’ “earnings did not depend upon their judgment or initiative, but on the [employer’s] need for their work”).

other means of monitoring the canvassers’ performance; and (3) that although the canvassers were free to solicit on behalf of other organizations, “the ability to work for multiple employers does not make an individual an independent contractor . . . employees in certain industries typically have intermittent working patterns.”).

67 See e.g., Homes Consultant Co., Inc. v.

Agsalud, 2 Haw. App. 421, 633 P.2d 564 (Haw. App. 1981).

68

HB1213,https://legiscan.com/HI /bill/HB1213/2015; SB1219, https:// legiscan.com/ HI/bill/SB1219/2016.

69 H.R.S. § 386-1.

70 Locations, Inc. v. Hawaii Dep’t of Labor and Indus. Relations, 79 Haw. 208, 900 P.2d 784 (1995).

64 See Scantland, 721 F.3d at 1313 (“‘Control is only significant when it shows an individual exerts such a control over a meaningful part of the business that she stands as a separate economic entity.’”); see, e.g., Snell, 875 F.2d at 808; Mr. W Fireworks, 814 F.2d at 1047 (“it is not what the operators could have done that counts, but as a matter of economic reality what they actually do that is dispositive”).

65 FedEx Home Delivery, 361 NLRB No. 55 (Sept. 30, 2014).

66 Sisters’ Camelot, 363 NLRB No. 13 (Sept.

25, 2015) (finding that (1) the first FedEx factor, the “extent of control by employer”, supported a finding that the workers were employees. Although Sisters Camelot did not require the canvassers to report for work on any given day, the relevant questions was how much control the Sisters’ Camelot exercised when the canvassers did work.; (2) that while the Sisters’ Camelot did not actively supervise canvassers while working, the nature of the canvassing work made such supervision highly impractical and that the charity had June 2016

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27

CASE NOTES Supreme Court Contract

Wong v. Hawaiian Airlines, No. SCWC-000073, March 31, 2016, (Pollack, J.; Nakayama, J., concurring and dissenting). This case involves claims brought by a retired employee against his former employer for allegedly providing inaccurate information regarding the late enrollment penalty that applies to Medicare Part B. The circuit court granted summary judgment in favor of the employer, concluding that the retiree’s negligence and negligent misrepresentation claims were preempted by federal law, and the Intermediate Court of Appeals affirmed the summary judgment on appeal. The Hawaii Supreme Court, however, concluded that the record in this case did not support federal preemption of the negli-

28 June 2016

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Appeal Pointers

When moving to supplement the record pursuant to HRAP Rule 10(e)(2) with transcripts that had been accidentally omitted, the motion or the declaration of counsel appended to the motion should indicate the estimated completion date for the transcripts. gence and negligent misrepresentation claims.

Justice Nakayama concurred with the Majority’s conclusion that the retiree’s claim of unfair or deceptive acts and/or practices failed.

However, Justice Nakayama dissented from the Majority’s conclusion that the retiree’s negligence or negligent misrepresenta-

tion claim was not preempted by the Railroad Labor Act (RLA). Although Justice Nakayama agreed that the RLA does not preempt state law claims that are independent of the collective bargaining agreement entered into by the employer and the Airline Pilots Association (the CBA or Pilots Agreement), the retiree failed to raise any independent state law claims. There is no statute or case law that imposes a legal duty on the former employer to provide the retiree with reasonably accurate Medicare retirement information.

Therefore, because the only other possible source of such a legal duty would be the CBA, the retiree’s claim was preempted.

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base rent is $0.70 psf).

Current monthly

Yamamoto Caliboso LLLC seeks a lateral

operating expense is $1.20 psf; includes full

associate attorney preferably with real

service janitorial, security, air conditioning and

estate, finance or corporate law experience.

We offer a competitive salary, bonus and benefits.

Candidates may submit their

resume to Yamamoto Caliboso LLLC, Attention: Executive Director, 1099 Alakea Street, Suite 2100, Honolulu, Hi 96813 or info@ychawaii.com

LEGAL WRITING SPECIALIST EXPERIENCED ATTORNEY will provide legal writing services. Motions, memos, complaints, appellate briefs, and other writing assignments.

Reasonable rates. Writing samples,

and references provided on request. Call

electricity. Conference room available for building tenants. Storage space available at reasonable rates. Easy walking distance to courts, adjacent to US Bankruptcy court. Check our website at www.waiponoinvestment.com or call Lee Miller (S) at (808) 548-3358.

(808) 735-8701 or (808) 227-2141.

PARALEGAL SERVICES

AUTO DETAILING

OFFICE SPACE AVAILABLE

IS BILLABLE HOURS coming between you

DAVIES PACIFIC CENTER at 841 Bishop Street.

and keeping your car looking nice? Drive into

Share an office with two established attorneys

Court Record Review, Legal Research, Filing,,

work and park, and by the time you go to

with diverse and specialized practices. We are

Document Preparation, Service of Process,

lunch your car will be in it’s parking

seeking to sublease one office and secretarial

Courier Service, 1188 Bishop St., Suite 604

space looking showroom spotless.

space. Conference room included. Call Lorrin

(808)265-9741 rmatthew664@gmail.com

Bo’s Auto Detailing, 1142 Bethel St. 782.1526

Kau at 531- 4276 or Jerel Fonseca at

APEX PARALEGAL SERVICES Hourly or Flat

521-1141 or email at lkauaal@hawaii.rr.com.

EXPERT WITNESS

rates. Claims Investigations, Client Interviews

RECRUITING / TEMP STAFFING HiEmployment is Hawaii's best choice for

AQUATIC SAFETY EXPERT 28 years aquatic

EXECUTIVE CENTER Newly renovated office

Experience. Qualified as an expert in state and

space with dedicated parking. Available now.

and temp staffing services available.

federal courts. See our ad on page 56 of the

183sf Office with private entrance. Shared

695-3974. email: info@hi-employment.com

finding top legal talent. Professional recruiting

June 2016

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