McNair RSS Feed Oct 2017 00:00:00 -0800firmwise is My Employee?16 Oct 2017 00:00:00 -0800 <p>Join McNair attorneys as they present, <em>Who is My Employee?&nbsp;</em>The event will focus on the employer-employee relationship, independent contractors, joint employment, and employee leasing.&nbsp;Topics will include:</p> <ul type="disc"> <li>Employer/employee analysis tests</li> <li>Core employer/employee definitions</li> <li>Independent contractor standards</li> <li>Joint employment</li> <li>Leased employees</li> <li>Subcontractors</li> <li>Employees who might be covered under an insurance policy</li> </ul> The schedule is as follows:<br /> <br /> <div>October 16 - Charleston (Presenter: Rick Morgan)</div> <div>Time: 8:00 - 9:30 am</div> <div>Location: McNair Law Firm, P.A. - 100 Calhoun Street, Suite 400, Charleston, SC</div> <div>To register, click <a href=";llr=jbjxsnoab&amp;utm_campaign=E%26LOctEventSeriesChas&amp;utm_medium=email&amp;utm_source=invitation" target="_blank">here</a>.<br /> <br /> <div>October 17 - Columbia (Presenter: Rick Morgan)</div> <div>Time: 8:00 - 9:30 am</div> <div>Location: McNair Law Firm, P.A. - 1221 Main Street, Suite 1800, Columbia, SC</div> <div>To register, click <a href=";llr=jbjxsnoab&amp;utm_campaign=E%26LOctEventSeriesCola&amp;utm_medium=email&amp;utm_source=invitation" target="_blank">here</a>.<br /> <br /> October 17 - Hilton Head Island (Presenters: Melissa Azallion and Jon Eggert)</div> <div>Time: 8:00 - 9:30 am</div> <div>Location: Hilton Head Island/Bluffton Chamber of Commerce - 1 Chamber Commerce Drive, Hilton Head Island, SC</div> <div>To register, click <a href=";llr=jbjxsnoab&amp;utm_campaign=E%26LOctEventSeriesHHI&amp;utm_medium=email&amp;utm_source=invitation" target="_blank">here</a>.<br /> <br /> <div>October 19 - Charlotte (Presenter: Jeremy Stephenson)</div> <div>Time: 11:45 am - 1:00 pm</div> <div>Location: McNair Law Firm, P.A. - Bank of America Plaza, 101 S. Tryon Street, 25th Floor Conference Center, Charlotte, NC</div> <div>To register, click <a href=";llr=jbjxsnoab&amp;utm_campaign=E%26LOctEventSeriesCLT&amp;utm_medium=email&amp;utm_source=invitation" target="_blank">here</a>.<br /> <br /> <div>October 24 - Greenville (Presenters: Reggie Gay and Rita McKinney)</div> <div>Time: 8:30 - 10:00 am</div> <div>Location: McNair Law Firm, P.A. - 104 S. Main Street, Suite 700, Greenville, SC</div> <div>To register, click <a href=";llr=jbjxsnoab&amp;utm_campaign=E%26LOctEventSeriesGVILLE&amp;utm_medium=email&amp;utm_source=invitation" target="_blank">here</a>.<br /> <br /> <div>October 25 - Anderson (Presenters: Reggie Gay and Rita McKinney)</div> <div>Time: 8:30 - 10:00 am</div> <div>Location: Hospice of the Upstate - 1835 Rogers Road, Anderson, SC</div> <div>To register, click <a href=";llr=jbjxsnoab&amp;utm_campaign=E%26LOctEventSeriesAND&amp;utm_medium=email&amp;utm_source=invitation" target="_blank">here</a>.</div> <br /> <div>October 27 - Myrtle Beach (Presenter: Jim Gilliam)</div> <div>Time: 11:45 am - 1:00 pm</div> <div>Location: Myrtle Beach Area Chamber of Commerce, 1200 N. Oak Street, Myrtle Beach, SC</div> <div>To register, click <a href="" target="_blank">here</a>.<br /> <br /> This seminar has been approved for 1.0 PDCs for SHRM-CP or SHRM-SCP and 1.0 General HRCI credit. Complimentary breakfast and refreshments will be provided. Lunch will be provided for the Myrtle Beach and Charlotte sessions.</div> </div> </div> </div> </div> <br type="_moz" /> Liz Crum Appointed to Seat in South Carolina Bar’s House of Delegates11 Oct 2017 00:00:00 -0800 McNair is pleased to announce shareholder Liz Crum has been appointed by the South Carolina Bar&rsquo;s Board of Governors to a seat in the 5th Circuit of the House of Delegates. She will remain in that position until June 2018.<br /> <br /> The House of Delegates includes representatives from each judicial circuit and establishes policy for the Bar, a legal organization of more than 15,000 members. <br /> <br /> Crum practices extensively in the areas of health care and government procurement. She has experience in the federal and state regulatory areas of health care, Certificate of Need and related matters, and licensure matters. Crum also represents private and public clients in matters dealing with the state Consolidated Procurement Code and assists local government in conducting procurements, including drafting local procurement policies.<br /> <br /> In addition to her newest role with the South Carolina Bar, Crum previously served as Chair of the SC Bar Convention and of the Health Law Committee. She is currently a member of the Bar&rsquo;s Administrative and Regulatory Committee.<br /> Two End-of-Year Federal Government Deadlines Approaching11 Oct 2017 00:00:00 -0800 <h2 style="text-align: center;"><strong>Significant Changes to Online Copyright (DMCA) Safe Harbor and DoD Contractor Cybersecurity (NIST 800-171) Requirements Take Effect at the End of This Year.</strong></h2> <strong><br /> Important Change Affecting Digital Millennium Copyright Act (DMCA) Safe Harbor Becomes Effective December 31, 2017</strong><br /> If your business operates a website that displays or allows posting of third-party content, you should be aware of the Digital Millennium Copyright Act and possible safe harbor protections from copyright infringement liability.<br /> <br /> <strong><u>What is the Digital Millennium Copyright Act?</u></strong><br /> The Digital Millennium Copyright Act (&ldquo;DMCA&rdquo;) provides some safe harbors from copyright infringement liability for online service providers. To qualify for safe harbor protection, certain kinds of service providers&mdash;for example, those that allow users to post or store material on their systems, search engines, directories, and other information location tools&mdash;must designate an agent to receive notifications of claimed copyright infringement. To select an agent, a service provider must do two things: (1) make sure contact information for the agent is available to the public on its website; and (2) provide the same information to the U.S. Copyright Office, which maintains a centralized online directory of designated agent contact information for public use. The service provider must also ensure that this information is up to date.<br /> <br /> <u><strong>What has Changed?</strong></u><br /> As we indicated in a <a href=";an=61215&amp;format=xml&amp;p=5355"><strong>prior</strong></a>&nbsp;Client Advisory, in December 2016 the Copyright Office introduced an online registration system and implemented an electronically generated directory to replace the Copyright Office&rsquo;s old paper-based system and directory. Accordingly, the Copyright Office no longer accepts paper designations. To designate an agent, a service provider must register with and use the Copyright Office&rsquo;s online system.<br /> <br /> <u><strong>What Action is Immediately Necessary?</strong></u><br /> Any service provider that has designated an agent with the Copyright Office before December 1, 2016, to maintain an active designation with the Copyright Office, must submit a new designation electronically using the online registration system by December 31, 2017. Any designation not made through the online registration system will expire and become invalid after December 31, 2017. Service providers will be required to renew their electronic designations every three years. Failure to comply with the registration requirements may result in loss of safe harbor protections and expose the service provider to statutory and other liability.<br /> <br /> Under the new electronic system, the fee to designate a DMCA agent with the Copyright Office will drop from $105 to $6.<br /> <br /> <u><strong>McNair Attorneys are Available to Provide Assistance</strong></u><br /> McNair Attorneys are available to discuss: the requirements of DMCA, safe harbors, other copyright issues, the particulars of the new electronic agent designation, how to properly notify users of your DMCA policy, and how to respond if a notice (a &ldquo;take-down&rdquo;) is received from a third party alleging website-related copyright violations.<br /> ------<br /> <strong>December 31, 2017, Deadline Approaches For Defense Contractors And Suppliers To Comply With DFARS Implementation Of NIST 800-171 Security Requirements</strong><br /> No later than December 31, 2017, prime contractors, and their subcontractors and suppliers of all tiers, doing work under contract with the U.S. Department of Defense (DoD) are required by the DFARS to comply with National Institute of Standards and Technology (NIST) Special Publication 800-171, dealing with information security. If you directly or indirectly do business with DoD, McNair strongly urges you to immediately assess your exposure and take steps toward full compliance with this critical and extensive requirement &ndash; including more than 100 controls in 14 categories. The full text of NIST 800-171 can be accessed <a href=""><strong>here</strong></a><strong>.&nbsp;</strong><br /> <br /> <u><strong>What is NIST 800-171?</strong></u><br /> NIST 800-171 provides minimum security and durability standards to ensure all systems that process, store, or transmit <a href=""><strong>Controlled Unclassified Information</strong></a>(CUI) are protected (e.g., secured and hardened) in accordance and consistent with the established standards. Generally, CUI is information other than classified information that is required by law, regulation, or government policy to be safeguarded. The security policies address many aspects of physical, digital, and cybersecurity, including breach reporting and mitigation. <br /> <br /> <u><strong>Who is Affected by NIST 800-171?</strong></u><br /> Anyone (individual or business/contractor) who processes, stores, or transmits information (that falls into one of many CUI categories) for or with DoD is potentially impacted. As a result of mandatory incorporation and flow down provisions of DFARS 252.204.7012, this includes all government contractual relationships, including all tiers of subcontractors and subsuppliers. The contracting officer for the specific contract is to determine and indicate in the solicitation/contract when triggering information will be provided. A mechanism is provided for the DoD CIO through the contracting officer to provide an exclusion from the requirements (on a case-by-case basis) for specific lower tier subcontractors or suppliers (the request must be made through each higher tier), but this possibility should not be relied upon as an excuse for failing to comply with the deadline. Absent such specific written exclusion, the flow down / incorporation will apply to require compliance by the lower tier party.<br /> <br /> <u><strong>What are the Risks Of Non-Compliance?</strong></u><br /> Any contractor or supplier of any tier that fails to comply with the applicable DFARS could be subject to liability under existing laws and regulations. It is reasonable to expect DoD will terminate prime contractors over failure to comply with NIST 800-171 requirements and that DoD will hold the prime responsible for non-compliance by its subcontractors, regardless of tier. Civil breach of contract and negligence actions could also arise between contracting parties. A False Claims Act violation &ndash; a criminal act &ndash; might be alleged where a contractor states that it is compliant when it knows it is not.<br /> <br /> As with many federal regulations and guides, the issues raised by and implementation of NIST 800-171 in accordance with DFARS 252.204 are complex. McNair Attorneys recommend you seek knowledgeable legal counsel if you have questions about these topics.<br /> <br /> <br /> McNair Assists Prysmian Group with its $15 Million Lexington County Expansion09 Oct 2017 00:00:00 -0800 Prysmian Group North America, an electrical cable manufacturer, recently announced it is expanding its operations in Lexington County by investing $15 million and creating 30 jobs.<br /> <br /> The expansion will support Prysmian&rsquo;s $300 million agreement with Verizon Communications, supplying nearly 11 million miles of ribbon and loose tube cables. The facility is part of the company&rsquo;s North American investment strategy which, once completed, will make it Prysmian&rsquo;s top producer of fiber cable in the world. <br /> <br /> In addition to the Lexington County expansion, Prysmian announced two other South Carolina expansions earlier this year.<br /> <br /> McNair Law Firm, P.A. acted as legal counsel to Prysmian Group for this expansion. For more information on Prysmian Group, visit&nbsp;<a href=""></a>.<br /> <br /> <br type="_moz" /> Social Media in the Workplace05 Oct 2017 00:00:00 -0800 Attorney Named to 2018 Leadership South Carolina Class02 Oct 2017 00:00:00 -0800 McNair is pleased to announce Jim Gilliam has been selected to the 2018 class of Leadership South Carolina, the state&rsquo;s oldest and most recognized leadership development program.<br /> <br /> Dedicated to educating and enlightening highly motivated people, Leadership South Carolina chooses participants who have demonstrated commitment and service to their community and strive to reach a higher level of service for the benefit of the state.<br /> <br /> &ldquo;Leadership South Carolina is a great opportunity to join other professionals from around the state to learn about some of the issues we face and how we can make a difference. I look forward to participating,&rdquo; said Gilliam.<br /> <br /> Gilliam is a Shareholder in the Firm&rsquo;s Myrtle Beach office, where he practices employment law, business law, and appellate practice. He provides advice to employers regarding compliance with federal and state employment laws, and he also prepares operating agreements for clients and drafts business agreements. Gilliam represents clients in appeals before all courts and has filed numerous briefs before the South Carolina Court of Appeals and the South Carolina Supreme Court.<br /> <br /> Who is My Employee? October Employment & Labor Event Series30 Sep 2017 00:00:00 -0800 Government Contractors Workshop Preview with Doug Lineberry29 Sep 2017 00:00:00 -0800 of Cover Page Provisional Applications29 Sep 2017 00:00:00 -0800 Since June 8, 1995, the United States Patent and Trademark Office (USPTO) has offered inventors the option of filing a provisional patent application. These applications are typically used as a faster and lower-cost first patent filing in the United States intended to help preserve domestic and international patent filing rights, while also providing an earlier effective filing date for a later filed non-provisional patent application. Provisional applications require a description of the invention and drawings (if any) but do not require a set of patent claims. Additionally, the status &quot;Patent Pending&quot; may be used in connection with the description of the invention once a provisional application if filed.<br /> <br /> The USPTO has issued its 2016 Performance and Accountability (2016 PAR). The number of issued patents that claim priority from the U.S. provisional application is on the rise from about 15% to 20% in 2005 to between 27% to 32% in 2016[1].<br /> <br /> Since the United States has moved to a &ldquo;first to file&rdquo; country, filing a provisional patent application that adequately describes the invention can establish priority and satisfy the need to file as soon as reasonably possible under the &ldquo;first to file&rdquo; rules. However, there are risks with improperly prepared provisional applications.<br /> <br /> To actually be useful (and valid), the provisional patent application needs to satisfy the legal requirements of &ldquo;Section 112,&rdquo; which currently states:<br /> <br /> <div style="margin-left: 40px;"><em>The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention. 35 U.S.C. &sect; 112.</em></div> <p>&nbsp;</p> <div>Thus, Section 112 requires a provisional patent application to include a written description that is complete and sufficiently clear to allow for a person of ordinary skill in the art to practice the invention. To test if a written description is sufficient under Section 112, the courts will look at whether the written description objectively demonstrates to a person of ordinary skill in the art that the patent applicant actually invented, or &ldquo;possessed,&rdquo; the claimed subject matter at the time of filing.[2] The level of detail needed to satisfy the Section 112 requirements varies depending on the nature and scope of the claimed subject matter, as well as the complexity and predictability of the technology.[3]<br /> &nbsp;</div> Many provisional applications being filed may not meet the Section 112 legal requirements. With the increased reliance on provisional applications, the risks of negative consequences caused by poorly drafted applications could increase. <br /> <br /> These legally deficient provisional applications may have been prepared by the inventors themselves without the guidance of legal counsel, prepared by discount third party legal services or even prepared by patent attorneys offering discount services and preparing &ldquo;thin&rdquo; applications intended to save their clients&rsquo; money. One technique to &ldquo;save money&rdquo; is to take a description provided by the inventor, make few, if any, changes, add the provisional application filing cover sheet, and file the provisional patent application with the USPTO. However, these &ldquo;cover sheet provisional applications&rdquo; may omit the necessary communications and discussions between the patent attorney and the inventor, leading to a lack of sufficient technical detail in describing the invention needed to satisfy Section 112.<br /> <br /> This risk is fully illustrated in the case where Leader Technology (&ldquo;Leader&rdquo;) sued Facebook over United States Patent 7,139,761[4]. The following summarizes principal events considered by the jury:<br /> <br /> - <strong>January through December 2002</strong> &ndash; Leader offered the invention for sale and used the invention in public.<br /> - <strong>December 11, 2002</strong> &ndash; Leader filed a provisional patent application 60/432,255.<br /> - <strong>December 10, 2003</strong> &ndash; Leader filed a non-provisional application, 10/732,744, claiming priority on the above provisional application.<br /> - <strong>November 21, 2006</strong> &ndash; Leader received United States Patent 7,139,761 (&rsquo;761 patent) from its non-provisional application.<br /> - Leader sued Facebook for patent infringement based on the &rsquo;761 patent.<br /> <br /> Under United States Patent Law, a patent is invalid if &quot;the invention was . . . in public use or on sale in this country&quot; more than one year prior to the date the patent application is filed.[5] &quot;Whether a patent is invalid for public use or sale is a question of law, reviewed de novo, based on underlying facts, reviewed for substantial evidence following a jury verdict.&quot;[6] At trial, the jury found that Facebook had literally infringed each and every element of at least one claim of the &rsquo;761 patent. Further, the jury found that the &rsquo;761 patent was not invalid in light of the prior art asserted by Facebook. <br /> <br /> However, Leader did not win the case. The jury went on to find that the &rsquo;761 patent was invalid because it was offered for sale and in public use more than one year prior to the filing of the application underlying the &rsquo;761 patent.<br /> <br /> At this point, it is fair to wonder how the jury reached such a conclusion because the earliest public use or offer for sale was January 2002 and the provisional application, used as a priority document for the non-provisional application, was filed December 11, 2002. The time span between the earliest public use or offer for sale and the provisional filing date is not more than a year. The reason for this apparent contradiction is that the jury found that the provisional patent application did not fully disclose each and every element of the infringed claims of the &rsquo;761 patent. Therefore, Leader could not rely on the provisional filing date for priority and the actual filing date became December 10, 2003. The time between January 2002 and December 10, 2003, is more than a year resulting in the &rsquo;761 patent being held invalid.<br /> <br /> What is unfortunate for Leader is that if the invention was offered for sale and in public use between January and December of 2002, there should have been sufficient technical details available so the provisional application would have had sufficient technical disclosure to operate as a priority document. It should be obvious from the Leader v. Facebook case that provisional applications should not be taken lightly and should be prepared by an experienced patent attorney or patent agent. Meeting the requirements of Section 112 can prove critical to future efforts to enforce an issued patent. As experienced by Leader, &ldquo;saving money&rdquo; on a provisional application can, in fact, have a very high price.<br /> <br /> [1]<br /> [2] Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180, 1190 (Fed. Cir. 2014)<br /> [3] Ariad Pharm., Inc. v. Eli Lilly &amp; Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010)<br /> [4] Leader Technologies, Inc. v. Facebook, Inc. 678 F.3d 1300 (Fed. Cir. 2012).<br /> [5] 35 U.S.C. &sect;102(b).<br /> [6] Id. citing Adenta GmbH v. OrthoArm, Inc., 501 F.3d 1364, 1369 (Fed.Cir.2007).<br /> 1411453v2<br /> Employee or independent contractor? Right to control is key28 Sep 2017 00:00:00 -0800 <div><em>A continuing point of contention in employment law revolves around who is an employee versus who is an independent contractor. The issue seems to come up often in wage and hour cases and workers&rsquo; compensation or unemployment claims. The South Carolina Court of Appeals recently addressed the employee/independent contractor question in a workers&rsquo; comp case. Read on to see how the court analyzed the issue.</em></div> <div>&nbsp;</div> <div><strong>Factual background</strong></div> <div>&nbsp;</div> <div>On November 8, 2013, Stacey Sellers sustained injuries while he was performing heating, ventilation, and air conditioning (HVAC) work at a single-family home being constructed in the Market Commons subdivision in Myrtle Beach. He fell from a 30-foot extension ladder while he was &ldquo;trimming out&rdquo; a house and sustained injuries to his legs, back, and neck. He was subsequently hospitalized.</div> <div>&nbsp;</div> <div>On November 9, Sellers notified Riverport Insurance Company of his accident. On November 20, Riverport&rsquo;s third-party claims administrator denied the claim because Sellers had &ldquo;knowingly and voluntarily&rdquo; excluded himself from its workers&rsquo; comp insurance policy. That same day, Sellers filed a Form 50 naming Tech Service of Myrtle Beach, LLC (TSMB), as a party to his case and requesting a hearing.</div> <div>&nbsp;</div> <div>On December 13, Sellers filed an amended Form 50 naming Tech Service as a party. Tech Service has six to eight employees, which it shares with TSMB. Before an employee is sent to a particular jobsite, the employee is informed whether the job is for Tech Service or TSMB so he can record the time accordingly.</div> <div>&nbsp;</div> <div>At a March 25, 2014, hearing before a single workers&rsquo; comp commissioner, Sellers testified that he was a longtime employee of both Tech Service and TSMB and that he was in the course and scope of this employment at the time of his accident. He explained that his first cousin, Tracy Davis, is the owner of Tech Service and a co-owner of TSMB.</div> <div>&nbsp;</div> <div>Sellers claimed that in early 2013, he complained to Davis about not receiving overtime pay or having proper deductions taken from his paycheck. According to Sellers, Davis occasionally avoided paying him overtime by spreading the hours he worked between Tech Service and TSMB. He testified that Davis offered to make him a &ldquo;1099 employee&rdquo; (a 1099 is used to report payments made in the course of a trade or business to someone who is not an employee or to an unincorporated business) and help him with his taxes when he filed them.</div> <div>&nbsp;</div> <div>Sellers stated that Davis gave him $1,250 in cash and instructed him to purchase his own workers&rsquo; comp insurance policy for &ldquo;tax purposes only.&rdquo; On February 21, he purchased the Riverport policy but excluded himself from it because he believed he was covered by Tech Service&rsquo;s policy.</div> <div>&nbsp;</div> <div>In March, Davis began paying Sellers without deducting income taxes and started reporting his wages using a Form 1099 rather than a Form W-2. Although Sellers performed &ldquo;side work&rdquo; to make extra money both before and after the March 2013 changes, he denied signing an independent contractor agreement or otherwise changing his employment relationship with Tech Service. Beginning March 4, however, he submitted weekly &ldquo;Sellers Heating and Cooling&rdquo; invoices to Tech Service for payment according to Davis&rsquo; instructions.</div> <div>&nbsp;</div> <div>By contrast, Davis testified that Sellers first approached him in January 2013 about his desire to work for himself as a subcontractor because he wanted to make more money. Davis denied that Sellers ever complained about not receiving overtime pay or deductions from his paycheck. However, he had no documentation reflecting the purpose and the nature of his deductions from Sellers&rsquo; pay.</div> <div>&nbsp;</div> <div> <div>Davis told Sellers that he could begin working as a subcontractor after he obtained a workers&rsquo; comp insurance policy and adamantly denied giving his cousin cash to purchase the policy. Davis explained that if he was going to give Sellers such funds, he would have given him a check to document the expenditure for his own business records.</div> <div>&nbsp;</div> <div>Davis learned about Sellers&rsquo; accident from Tech Service supervisor Jacob Hamilton. Both Hamilton and Davis told Sellers that he couldn&rsquo;t file a claim under Tech Service&rsquo;s policy because recently audited documents reflected that he was a subcontractor.</div> <div>&nbsp;</div> <div>Based on all of that information, the workers&rsquo; comp commissioner issued an order on August 29, 2014, determining that Sellers was an employee of Tech Service at the time of his injury pursuant to Section 42-1-130 of the South Carolina Code (2015). The commissioner dismissed TSMB from the claim. On July 17, 2015, the Workers&rsquo; Compensation Commission (WCC) affirmed and adopted the commissioner&rsquo;s order in its entirety. Tech Services appealed the commission&rsquo;s decision.</div> <div>&nbsp;</div> <div><strong>Court&rsquo;s analysis</strong></div> <div>&nbsp;</div> <div>The South Carolina Court of Appeals set the stage for its analysis by noting that it was presented with the question of whether Sellers was, at the time of his injury, an employee of Tech Service rather than an independent contractor. The court observed that an independent contractor is someone who independently contracts to do a piece of work according to his own methods, without being subject to the control of an employer except with respect to the result of his work. The court further observed that no benefits are authorized under the Workers&rsquo; Compensation Act unless the employer-employee or master-servant relationship existed at the time of the alleged injury for which a claim was made.</div> <div>&nbsp;</div> <div>The court also noted that the burden of proving the employment relationship is on the claimant&mdash;here, Sellers&mdash;and the relationship must be established by the greater weight of the evidence. According to the court, South Carolina&rsquo;s policy is to resolve doubts in favor of coverage under the Workers&rsquo; Compensation Act.</div> <div>&nbsp;</div> <div>The primary consideration in determining whether an employment relationship exists is whether the alleged employer has the right to control the employee in the performance of the work. Four equally important factors are integral to determining the right of control:</div> <ol> <li>Direct evidence of the right or exercise of control;</li> <li>Furnishing of equipment;</li> <li>Method of payment; and</li> <li>Right to fire.</li> </ol> </div> <div> <div>Courts will look at things like whether the worker entered into a contract to alter his status from employee to independent contractor, carried his own workers&rsquo; comp insurance policy, and assumed responsibility for all costs associated with the work he was doing. The court of appeals examined the extent to which Sellers satisfied each of the four factors.</div> <div>&nbsp;</div> <div><strong>Direct evidence of the right or exercise of control.</strong> Tech Service argued that it didn&rsquo;t control the details of Sellers&rsquo; work at the time of his injury. The court observed that regardless of whether the company exercised actual control over the details of his work, there was evidence that it had the right to exercise control. The court noted the WCC had found that:</div> <ol> <li>The company instructed Sellers on the work he was to perform, and his work was supervised.</li> <li>Sellers reported to work as he was instructed by Tech Service.</li> <li>He didn&rsquo;t bid for work on any projects he performed for Tech Service, including the project on which he was working when he was injured.</li> <li>Tech Service didn&rsquo;t inform the general contractor of the project on which Sellers was injured that he was working as a subcontractor or an independent contractor.</li> <li>Tech Service directed Sellers to wear a Tech Service uniform, which he wore each workday, including the day of his injury.</li> <li>Sellers carried Tech Service business cards and service contracts, which he executed with customers as an agent of Tech Service.</li> <li>Sellers had the authority to order, purchase, and pick up supplies at Gateway Supply using Tech Service&rsquo;s account.&nbsp;</li> </ol> <div>The court noted that Sellers worked alongside other Tech Service employees under supervisor Jacob Hamilton, who inspected and monitored the quality of his work product. Either Davis or Hamilton would follow up with the customer to ensure its satisfaction with the quality of his work. If an issue arose on a project, Hamilton sent either Sellers or an hourly employee to fix it.</div> <div>&nbsp;</div> <div>In addition to HVAC work, Sellers performed service calls and sold service contracts to customers, signing them as an employee and agent of Tech Service. He carried Tech Service invoices to jobs and executed between 20 and 100 invoices for the company after March 2013. Although there were some gaps in Sellers&rsquo; work for Tech Service from March through November 2013, Davis&rsquo; right to control the time, place, and amount of his work weighed heavily in favor of an employment relationship.</div> <div>&nbsp;</div> <div><strong>Furnishing of equipment. </strong>Tech Service contended that Sellers furnished his own equipment at the time of his injury, but the court noted that the evidence indicated:</div> <ol> <li>Sellers wasn&rsquo;t financially capable of purchasing all the tools necessary to perform the jobs he worked on.</li> <li>Most of the tools were purchased by Tech Service and provided to Sellers, including the ladder from which he fell on the date of his accident.</li> <li>Sellers was able to charge any supplies he needed on a Tech Service account.</li> <li>He didn&rsquo;t pay for any supplies out of pocket and didn&rsquo;t have his own supply account.</li> </ol> <div>Moreover, before March 2013, Sellers drove a Tech Service van. He wasn&rsquo;t responsible for the gasoline, maintenance, insurance, or registration of the van. In March 2013, he &ldquo;purchased&rdquo; a used Tech Service van from Davis; however, there was some dispute over whether he ever paid any money for it. LeGrande Todd, another cousin of Sellers, testified that he loaned Sellers $500 to buy the van. Alternatively, Sellers explained that Tech Service deducted $500 from his paychecks. Davis was unable to recall whether Sellers paid with cash or a check, and he didn&rsquo;t have a record of the sale. Nevertheless, Tech Service was no longer responsible for the gas, maintenance, insurance, or registration on the van.</div> <div>&nbsp;</div> <div>Sellers testified that Tech Service supplied his ladder several years earlier and he moved it from his company van to his personal van in March 2013. Although he maintained that Tech Service supplied him with other tools as well, Davis claimed that Sellers accumulated the tools over the years and transferred them from his company van to his personal van when he began working as an independent contractor. Davis said that after Sellers switched vans, he &ldquo;didn&rsquo;t check behind him that strongly because he was family and [Davis] was trying to help him.&rdquo;</div> <div>&nbsp;</div> <div>Davis admitted that Sellers always wore a Tech Service uniform, including on the day of his accident. Additionally, Sellers carried Tech Service business cards. Although he also had &ldquo;Sellers Heating and Cooling&rdquo; business cards, he claimed he primarily gave them to other Tech Service employees as an ongoing joke. However, the court was unmoved by the fact that Sellers handwrote &ldquo;Tech Service&rdquo; on his tools, including the ladder from which he fell. In the end, it found that Tech Service&rsquo;s furnishing of equipment for Sellers to use on the job favored a finding of employment.</div> <div>&nbsp;</div> <div><strong>Method of payment.</strong> For this factor, a court generally looks at whether the claimant was paid by the job or by the hour and how he filed his taxes. The court of appeals noted that payment on an hourly basis is a strong indication of an employment relationship, while payment on a completed-project basis is generally indicative of independent contractor status.</div> <div>&nbsp;</div> <div>The WCC had found that Tech Service determined both the amount and the way Sellers was paid. Specifically, the commission found his income from Tech Service after March 2013 was largely consistent with his income from past years. The most significant change was that the company planned to report his earnings using a Form 1099.</div> <div>&nbsp;</div> <div>Tech Service paid Sellers on a weekly basis both before and after March 2013. Prior to that date, he was paid $14 an hour, and his wages were reported on a W-2. However, there was a dispute over how his wages were calculated. Sellers testified that his hours were based on a preset amount for completion of a specified job based on the flat-rate pricing book, in which hours worked bear a relationship to the type of job performed. He claimed Davis told him, &ldquo;I can do this by making you a 1099 employee, but if you do it faster [than the predetermined amount of time], it&rsquo;s actually like you are making [20] bucks an hour instead of [14] bucks an hour.&rdquo; Davis maintained that Sellers&rsquo; hours were based on the actual time he worked, and he never paid his employees using the flat-rate pricing book. Likewise, Hamilton testified that Tech Service employees were paid on an hourly basis.</div> <div>&nbsp;</div> <div>After March 2013, Sellers was paid on &ldquo;Sellers Heating and Cooling&rdquo; invoices he submitted to Davis, and his wages were reported on a 1099. Davis told Sellers the invoices were necessary for tax purposes and they needed to &ldquo;look like an invoice.&rdquo; Sellers explained the invoices were for amounts set by Davis based on how much time he determined it should take to complete a job. He testified that several weeks before his accident, Davis told him, &ldquo;We&rsquo;re probably going to have to go back to paying you by the hour like we were originally paying you.&rdquo;</div> <div>&nbsp;</div> <div>There was no employment contract between Sellers and Tech Service. However, it was clear that Sellers received the majority of his income from Tech Service both before and after March 2013. The only other entities from which he received minimal compensation were TSMB and his cousin Todd&rsquo;s plumbing company.</div> <div>&nbsp;</div> <div>The court found that although it wasn&rsquo;t as strong as the other factors, the method of payment evidence weighed in favor of affirming the WCC&rsquo;s finding of an employment relationship between Sellers and Tech Service.</div> <div>&nbsp;</div> <div><strong>Right to fire.</strong> Tech Service argued that it didn&rsquo;t have the right to terminate Sellers without liability at the time of his injury. In analyzing this factor, the court found the evidence that Davis and Hamilton supervised, inspected, and monitored the quality of Sellers&rsquo; work product supported the finding that Tech Service had the right to terminate its working relationship with him without liability.</div> <div>&nbsp;</div> <div>In conjunction with the direct evidence of Tech Service&rsquo;s right to exercise control over Sellers&rsquo; work, the &ldquo;right to fire&rdquo; factor further favored a finding of an employment relationship. Accordingly, the court affirmed the WCC&rsquo;s conclusion that the greater weight of the evidence supported the finding that Sellers and Tech Service had an employment relationship at the time of his accident.</div> <div>&nbsp;</div> <div><strong>Lessons for employers</strong></div> <div>&nbsp;</div> <div>Many employment statutes include language suggesting that coverage should weigh in favor of the employee (or in favor of an employment relationship) so employees can benefit from statutory protection. But different statutes use different standards to assess whether an employment relationship exists. While one argument may work under one statute, the same argument may be insufficient to meet the criteria of another statute. That can be confusing, but until a single standard for determining employment status is established, employers must assess each case under the relevant statute on an individualized basis.</div> <div>&nbsp;</div> <div>Likewise, don&rsquo;t fall into the trap of latching onto the method of payment as the determining factor in the independent-contractor-versus-employee analysis. A court will look at all the factors rather than singling out one factor as more important than the others. Make sure you have ample evidence to support your argument.<br /> <br /> For more information on the BLR, click <a href="" target="_blank">here</a>. For more information on the South Carolina Employment Law Letter, click <a href="" target="_blank">here</a>. &nbsp;</div> </div>