Companies are making their holiday party guest lists—and in-house lawyers should be checking them twice for independent contractors.
Invitations to the holiday party can bolster misclassification cases from contingent workers seeking employee status, lawyers said. That’s especially true if the holiday is nominally for employees only, without vendors or other third parties invited.
“The most conservative advice in terms of mitigating joint employment or misclassification risk is to just not invite the non-employees to the holiday party,” said Andrew Moriarty, an employment law partner at Perkins Coie and former senior corporate counsel for labor and employment at Amazon.com Inc. “But that can have negative impacts on morale and inclusion and culture.”
The blow to morale, especially for independent contractors working closely with employees, is a reason many companies choose to take on legal risk and invite contingent workers. Other companies just don’t realize that their invite is boosting a possible misclassification suit, said Geoff Mohun, the GC of San Francisco-based workforce management company iWorkGlobal.
Companies that choose to invite contingent workers can take precautions to prevent it becoming a liability. Mohun said independent contractors shouldn’t be reimbursed by the company for hotel rooms and other party-related costs as it may for employees. Independent contractors staffing the company could be invited with separate invitations, noting their status as outside workers.
Moriarty and Mohun both said a holiday party invite alone isn’t likely to cause a misclassification suit. Independent contractors who don’t meet any other misclassification boxes are likely a safe invite.
“The best advice is you don’t want to be in a situation where you’re so close to the line that you are scared to even talk to your contingent workers,” Moriarty said.
If companies decide that morale risks outweigh legal concerns and put precautions in place, complications can still arise. Independent contractors sexually harassing employees at the holiday party, getting too drunk or fighting could all be traced back to the company.
Mohun said plaintiffs lawyers likely won’t accept independent contractor status as an excuse to prevent company liability. Company representatives should step in and stop any inappropriate situations, Moriarty said, despite the “misconception that it’s never appropriate for a company employee to tell a contingent worker what to and what not to do.”
It’s appropriate for an employee to step in, he said. But the next steps for discipline will be different for a contractor than for an employee.
“If you’re dealing with somebody else’s employee, you always want to involve that employee’s employer. What that means in the moment at the party is nothing, it doesn’t mean anything, as the company you should step in and say what you’re doing is not appropriate and you need to stop right now,” he said. “What happens next is the employer will partner with the vendor.”