Margrave Celmins, P.C. Scottsdale, AZ
September 2016 Bimonthly Newsletter
(The 13th Annual Arizona Dragon Boat Festival will be held on October 1-2 at Tempe Town Lake. Due to the construction of the new west-end dam and the draining of the lake, the annual Dragon Boat Races were delayed, but will resume their normal schedule in March, 2017)

We had a lot of fun with our new Who Am I? feature last time. There were several correct answers, but the winner was Judy Forkner who guessed correctly that the mystery person was her attorney, Michael Margrave. Thanks for playing and stay tuned for future mysteries.

Michael Margrave was traveling again, this time to Zimbabwe and supplied some photos. Be sure to read Michael's thoughtful article "A Different Perspective." There's also a photo of some of our clients with Rick DePonte at a recent Mercury game. And check out Chris Lonn's article on construction law in this issue.

Hang in there! Summer is almost over.

Patty Copeland
Attorney Spotlight
Construction Law as it Relates to Classifying Employees as Owners.

In an effort to reduce employee-related costs (e.g., payroll taxes, unemployment insurance and workers' compensation), some companies in the construction industry have devised a new classification of worker as an alternative to employee and independent contractor. The new "other than" employee classification: owner.

While the notion of misclassifying workers as owners – who would receive distributions rather than wages – might sound like a clever idea that is worth implementing, an analysis of the potential risks might lead you to a different conclusion. Under federal law, to avoid being considered an employee (and to forfeit employment protections), a worker must truly be an owner.

Beginning in 2011, the U.S. Department of Labor (DOL) has been scrutinizing companies that classify workers as “other than” employees, particularly in the construction industry. Most frequently, but not always, "misclassification" occurs when companies treat as independent contractors workers who should really be employees. DOL's expressed concerns in this area arise because "misclassified employees are often denied access to critical benefits and protections – such as family and medical leave, overtime, minimum wage and unemployment insurance – to which they are entitled." Misclassified employees may also lose out on workers' compensation or other employer-sponsored benefits. Also, in most cases, employers do not pay Social Security and Medicare taxes for those individuals.

To determine whether someone called an "owner," "shareholder" or similar title should actually be treated as an employee, the U.S. Supreme Court has identified six key factors to evaluate:

1.The employer can hire or fire the individual or set his rules of employment.
2.The employer supervises the individual's work and, if so, to what extent.
3.The individual reports to someone else at the employer.
4.The individual can influence the employer and, if so, to what extent.
5. Any written agreements or contracts show that the parties intended the individual to be an employee.
6.The individual shares in the employer's profits, losses and liabilities.

Applying these factors, even if there is some kind of ownership agreement between the company and worker, if a worker can be hired and fired by the company, is supervised by the company and has little influence over how the company operates or how the job is to be performed, the worker will likely be treated as an employee by the courts and federal and state agencies.

For an employer that misclassifies workers as owners, the potential consequences are significant: lawsuits for back wages, overtime, and benefits and liability for fines, penalties, liquidated damages and interest. Moreover, the liabilities are not limited only to the employing company or organization. Owners, managers and financial staff can be, and frequently are, held personally responsible. Personal liability cannot be avoided through business or personal bankruptcy or creating a successor entity.

In the final analysis, the expense of properly treating workers as employees pales in comparison to the cost of playing games with federal classification requirements.

Christopher D. Lonn
Sunrise in Omay Concession
There are many subjects in life that engender a wide variety of viewpoints. And there is nothing wrong with that. One such subject seems to be the hunting of wild life in Africa. It was only last August in northern Zimbabwe when Cecil the Lion was taken by a hunter from Minnesota, much to the outrage of people outside of Africa. I happened to be in the southern part of Zimbabwe at that time and had the opportunity to learn much about the process of government allocation of permits in line with conservation goals each year to land owners, the issuance of permits and the economic importance of regulated hunting in these African countries. I also learned much about poaching and the various types of poaching, which is a very real and serious cause for decline in wildlife.

Contrast the reaction to the “Cecil” occurrence in Africa and outside of Africa. Here in the US there was a great deal of outrage over Cecil’s taking. In Africa, the reaction was totally different. In fact, a villager near the area where Cecil was taken was asked by the press what he thought about the taking. His response was simple and to the point. His village’s main concern was having enough food to eat and not the wild animals. That was a pretty powerful statement that has been rolling around in the back of my mind for over a year.

So when I returned to Zimbabwe recently, it struck me one evening sitting around the campfire and listening to some local folks what all of this is about. And the lightbulb was turned on in my head. Unless the local indigenous people and landowners see and understand that wildlife is an asset to them that should be preserved, then the decline of wildlife populations will continue as those people will have no incentive to help stop the poaching. And that process will continue as human populations increase there, and there will be greater demand for more land for farming and domestic cattle raising. As that occurs, the land available for wild life will decrease. In my opinion, the result is self-evident.

So one might legitimately ask: “How does the taking of these wild animals, even on a strictly regulated basis, help preserve the population of wildlife rather than decimate it?” Here are several quick examples: (1) the local indigenous people receive a donation of meat from the taken animal, which is probably their main source of protein; (2) a hefty fee is paid for each animal taken to the Concession managing the property for the indigenous people in that area to be used for schools, water wells, solar power and health clinics; (3) employment is provided to indigenous people working for the outfitters, who most likely would be facing unemployment but for this opportunity; and (4) a portion of funds paid to the outfitter goes for anti-poaching efforts undertaken by the outfitter. I can tell you first hand that when you see local villagers come for a share of the meat and when, on departure, I handed to the various people in the camp numbering about twelve indigenous people envelopes with cash, you can see there is genuine appreciation and a realization that this is a real direct economic benefit for them and a reason for them to help preserve the magnificent wildlife.

In eastern Omay Concession where villagers are receiving meat from the hunt

While in Zimbabwe, I learned there are multiple types of poaching, which is the illegal taking of wildlife without a permit. The most notorious type is the taking of elephants and rhinos by large syndicates for their tusks and horns. A second type, but much lesser known, is the killing of wildlife by villagers due to the destruction of crops or village property. There are known instances of villagers putting cyanide in watering holes, resulting in the killing of hundreds of elephants at a time. The latter is an example of the importance of letting villagers know that there is economic value for them for preserving the elephants and not killing them in mass.

One final thought. Kenya is a country in east Africa. In 1977, it banned all hunting, even as consumptive food for the indigenous people. If hunting is the cause for the reduction in wildlife populations, one would think that the population of wildlife in Kenya would have increased over the last forty-plus years. But in fact, by some estimates the wildlife population in Kenya has decreased in that time by well over forty percent. There are no doubt several reasons for this decline, including the scourge of poaching. But one cannot say that prohibition of regulated hunting as part of an overall game management and conservation program is one of them. In Namibia and South Africa where game conservation programs have been implemented while still permitting regulated hunting, the number of wild game has substantially increased.

So when people ask me what I do on these trips, I get the occasional disapproving look or comment. And that’s fine. But I often think, like dealing with so many issues in life, a little more listening would be better for everyone.

Michael W. Margrave

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