Assignment 1: Independent Contractor or Employee?

This assignment allows you to demonstrate mastery of the following course outcomes:

1. Analyze employment related laws, and ethical considerations their application, and implications in the workplace
2. Evaluate rights, obligations, and liabilities in the employment process and relationship.
3. Evaluate compliance with current laws and regulations related to safety and fairness in the workplace.
4. Effectively communicate to internal and external audiences the principles and application of employment laws and ethical considerations in the business environment.

Schultz v. Capital International Security, Inc.

460 F.3d 595 (4th Cir. 2006)

Facts:The plaintiff-agents provided security services for Schultz and his family at his Virginia residence in twelve-hour shifts. The agents were paid a daily rate for each shift; they received no extra pay for overtime. The agents had a command post at the residence, from which they observed security camera monitors, answered the telephone, and kept a daily log of all arrivals and departures. They also made hourly walks of the property, ensured that members of his family were safe when departing and arriving, sorted mail, and performed various tasks upon request of his family. In addition to their security duties, the agents were responsible for having the household's vehicles washed and fueled, making wake-up calls, moving furniture, and doing research on the Internet.

Schultz's long-time driver and travel agent, Sammy Hebri, formed a company called Capital International Security, Inc. (CIS). Hebri started CIS for the purpose of becoming Schultz's security contractor.

Hebri sent a memo (dated July 24, 2002) to the agents directing them to obtain their own private security business licenses from the VDCJS and individual liability insurance so they could be classified as independent contractors.

Issue:The issue is whether the bodyguards were considered to be employees or independent contractors for the purpose of theFair Labor Standards Act.

Action:You must respond to all questions below. You must use at least three sources from the class materials for each question and do independent research. Do not combine the five discussion questions and please use the outline below for your paper. Use of the outline will help you organize your research and comments and ensure you do not miss any questions that must be addressed. Your responses to each question must be in narrative format not bullets. Use the headings below to organize your paper.

Question 1 - Summary:

1. Summarize the relevant facts of the "scenario" described in this case.
2. What are the important employment laws that are relevant to this case and describe the laws and relevant citations? Be sure to identify the employment laws specifically with in-line citations.
3. What was the actual case outcome? Describe in details what was the outcome by reviewing the case at:SCHULTZ v. CAPITAL INTERNATIONAL SECURITY INCORPORATED

Question 2 - Classification Test:

1. In the above case, what kind of classification test could have been used and why?
2. What would be the results if using this classification test? (Worker Classification)

Question 3 - Virginia State Law:

a. Under Virginia state law would the result be the same, why or why not? Be specific.

b. Discuss in detail the Virginia exemptions for employee classification that apply in this scenario? Be specific and cite the Virginia laws that apply.

Question 4 - Classifying Workers:

1. Under Virginia law, are independent contractors eligible for worker's compensation? Why or why not? Be specific and cite evidence to support your analysis.
2. What are the consequences for a Virginia employer misclassifying an employee as an independent contractor? Be specific and cite the employment laws.
3. What specific benefits would an employer gain by such misclassification?

Question 5 - Three Preventive Steps:

1. As an HR professional, what advice would your provide to prevent this kind of situation in the future? Identify and discuss in narrative detail at least three (3) steps that could have prevented the type of situation discussed in the scenario from happening again. These steps should be feasible, clear and legal. Cite evidence/references as part of your response.

Reference Materials

1. Wages and the Fair Labor Standards Act
2. SCHULTZ v. CAPITAL INTERNATIONAL SECURITY INCORPORATED
3. Worker Classification

FindLaw's United States Fourth Circuit case and opinions.
Classification Tests
Wages and the Fair Labor Standards Act | U.S. Department of Labor