By Steven Siegler and Madeline Perez
A common problem that small business owners face is whether to classify their staff as employees or independent contractors. This is a critical decision because misclassifying employees can lead to violations of the New York Labor Law (NYLL), the Fair Labor Standards Act (FLSA) and federal and state tax laws, resulting in unwanted litigation and potentially serious penalties. This issue is especially relevant for building owners and property management companies who employ building superintendents. The question becomes: am I classifying my building superintendent properly? How can I determine if my building superintendent is an employee or independent contractor?
New York federal and state courts have created several tests to determine whether a worker is an employee or an independent contractor. These tests primarily hinge on the level of supervision, direction and control exercised by the employer. The factors indicative of an employer-employee relationship include the following: the employer provides the facilities, equipment, tools and supplies for the worker; employer sets the hours of work and directly supervises the work done; employer sets the rate of pay; employer requires exclusive services by the worker; employer evaluates the job performance of the worker; and the employer has the right to hire and fire the worker. Other factors include the existence of an employment agreement, whether the employer provides workers’ compensation insurance and whether the worker is paid on a W-2 or a 1099. If only some or none of these factors are present, it would indicate that an independent contractor relationship exists. It is important to note, however, that New York courts have made clear that there is no single factor that is determinative of whether someone is an employee or independent contractor. Instead, courts look at all the factors and base their decisions on a totality of the circumstances. Given that there is no “bright line” test, reviewing and analyzing the employer-worker relationship carefully is essential in avoiding a misclassification problem.
This is equally true for building superintendents. Building owners and property management companies must ask themselves several important questions. Are you setting the rate of pay and having the superintendent receive a regular paycheck rather than compensating them per job? Are you requiring the super to work certain days and hours or letting them decide when they work? Does the super work exclusively for you or perform building maintenance services for other employers? Do you provide the super with tools and equipment, or do they provide their own? How much independence and freedom does the builder super have in conducting their work? Are you directing them in how to perform their job duties? Do you have the right to hire and fire the super? The factors indicative of an independent contractor relationship also include whether the superintendent is free to refuse work orders, may choose to hire help, assumes the risk for profit and loss, sets their own rate of pay and carries their own insurance.
Two recent cases shed some light on how New York courts have viewed this issue as applied to building superintendents. In Perez v. Gateway Realty, LLC, 144 A.D.3d 571 (1st Dept. 2016), the court found that the plaintiff, a building superintendent for defendant’s building, was an employee because Plaintiff received workers compensation benefits, payroll records showed an employment relationship, Plaintiff received a W-2, and Plaintiff received work instructions from Defendant’s principal. In Athenas v. Simon Property Group, LP, 185 A.D.3d 884 (2nd Dept. 2020), the court determined that the plaintiff, a building janitor for the tenants/defendants, was an independent contractor because she did not have fixed hours or days on which she worked, she had several other clients for whom she performed cleaning services, she was not on tenants’ payroll but was paid in cash without any withholdings, she performed cleaning services without any supervision by tenants, and she was responsible for choosing and supplying cleaning products.
The distinction between employee and independent contractor may be slight but misclassification can lead to unwanted litigation and serious penalties. Having a good working knowledge of the distinctions between employees and independent contractors can help building owners and property management companies shield their businesses from any misclassification liability. If you are unsure if your business is classifying its workers properly, reach out to the knowledgeable employment and property management attorneys at KI Legal to ensure that your business is protected.
Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team, or fill out a new client intake form.
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This information is the most up to date news available as of the date posted. Please be advised that any information posted on the KI Legal Blog or Social Channels is being supplied for informational purposes only and is subject to change at any time. For more information, and clarity surrounding your individual organization or current situation, contact a member of the KI Legal team, or fill out a new client intake form.