Defending Independent Contractors in Vermont

The issue in this case is whether knitters and sewers who make children’s clothing in their homes for sale by Fleece on Earth (“FOE”) in Chittenden, Vermont, are independent contractors or FOE’s employees under Vermont’s unemployment compensation statute. Believing the home workers are independent contractors, FOE has not paid unemployment contributions, which would only be required for employees. After a review triggered when one of the home knitters sought unemployment benefits after losing her full-time job as a respite care provider, the Vermont Department of Labor (“DOL”) assessed FOE for unemployment contributions for all of the home workers on the basis that they are FOE’s employees. FOE appealed the assessment, arguing that the knitters and sewer are independent contractors under the three-part “ABC” test set forth in the Vermont statute. Unemployment contributions do not have to be paid for independent contractors. Part A of the test requires a showing by the employer that the service provider “has been and will continue to be free from control or direction over the performance of such services.” The DOL’s Employment Security Board (“ESB”) ruled that FOE failed Part A because it supplies the home workers with designs and yarn and pays for products that substantially meet its requirements, thereby controlling what the workers make. 

FOE has appealed to the Vermont Supreme Court, where NELF has filed an amicus brief supporting FOE’s position. NELF argues, on behalf of itself and co-amicus National Federal of Independent Business Legal Foundation, that the ESB fatally confused control of results with control over performance. Freedom from the latter is the proper test under the law and, based on the factual record, FOE clearly meets its burden. While FOE tells the home workers what to make, they do the work on their own schedules, with their own tools, and in their own way. NELF also points out in its brief that if, as the ESB has ruled, control over the results of the work performed were the test, there could be no independent contractor status in Vermont. Businesses will always specify the results of the work for which they have hired an independent contractor. When it enacted the ABC test, the Vermont Legislature defined independent contractor status and did not abolish it altogether. Thus, the ESB’s interpretation should also be reversed on the ground that it is contrary to the Legislature’s intent and would have the effect of depriving Vermont of the important services provided by independent contractors in all sectors of Vermont’s economy. This case is currently scheduled for argument in the fall of 2006.

The Statute Of Limitations for State Employment Discrimination Claims in Vermont

Plaintiff Egri had been an employee of US Airways from 1972 to 1993, when she was injured while working as a customer service agent. Egri left work on disability and then requested reinstatement with accommodations the following year. US Airways denied her request for reinstatement because the requested accommodations were inconsistent with her job description. More than five years after the denial of reinstatement, Egri sued, alleging handicapped-based discrimination in violation of the Vermont Fair Employment Practices Act (“VFEPA”) and seeking damages for emotional distress and lost income and benefits. The Vermont statute of limitations for claims of “injuries to the person” or injury to property is three years.  Vermont also has a six year catch-all statute of limitations for all civil actions not otherwise covered.  There is no specific statute of limitations in VFEPA.  

NELF’s amicus brief, filed on behalf of Associated Industries of Vermont and the Vermont Retail Association, supported the employer’s argument that the three year statute of limitations applies.  NELF argued that employment discrimination claims have more in common with common law tort (three year) than contract (six year) claims. Employment discrimination cases often involve disputed factual issues arising from a number of different statements or incidents over a period of time.  Fresh memories are essential in these circumstances, where shades of meaning in statements or interpersonal interactions are key to interpreting intent.  The Vermont Supreme Court held that the plaintiff’s emotional distress claims were “injuries to the person” within the three year statute (and thus were time barred), while the claims for economic loss fell within the general six year statute.