Procurement, HR, compliance and legal staff are by now very familiar with the issues surrounding independent contractor classification. In an interesting case decided August 16, 2012 by the United States District Court for the Eastern District of Missouri, Don Ascare, a Senior Vice President of Human Resources for Mastercard, sued Mastercard, allegedly in a dispute over IC classification. Ascare’s employment was terminated by Mastercard, allegedly because management had “lost confidence” in him. Ascare alleged in court, however, that he was terminated for repeated internal complaints regarding how Mastercard treated contingent workers, and more specifically, regarding how Mastercard classified putative independent contractors. While the court did not find that Ascare’s allegations were true (or not), it ruled in Ascare’s favor, and permitted his claim to go forward to trial. The court ruled that if Ascare were, in fact, terminated (at least in part) because of his internal complaints regarding Mastercard’s IC compliance program, he would state a claim sufficient to go to trial. It would be up to a jury, then, to determine whether Mastercard, in fact, terminated Ascare because of his internal complaints regarding IC classification and alleged misclassification.
As an interesting aside in this case, Ascare (like all plaintiffs) had a legal duty to make reasonable efforts to mitigate his damages. In other words, if Ascare ultimately prevails in this case, he cannot simply sit back and collect damages from Mastercard. Instead, he has a legal duty to make reasonable efforts to go out and earn replacement income. If he prevails, Mastercard may be liable for some or all of the deficit between what Ascare earned (or at least should have earned) and what he would have earned had he remained with Mastercard. One of the “headlines” from the Ascare case is that Ascare chose to meet his mitigation duty largely through professional poker playing and shooting. In 2011, Ascare reported to the IRS that he had over $23,000.00 in negative income as a poker player/shooter, and in 2010 Ascare reported to the IRS that he had over $50,000.00 in negative income as a professional poker player/shooter. While professionals in the contingent worker/independent contractor classification area will undoubtedly follow the Ascare case for other reasons, attention will be focused on this case at least in part due to the novel “poker mitigation” strategy employed by Mr. Ascare.
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The growth and innovation of the American workplace has outpaced the evolution of laws and rules. A modern solution is very necessary to (re)stimulate this innovation. With this in mind, this week, we released a proposal, the Certified Self-Employed (CSE) solution, to modify how the U.S. government classifies and regulates independent workers.