For over a decade, Foreclosurepedia has waged war against the National Association of Mortgage Field Services (NAMFS) and their unconstitutional misclassification of employees as independent contractors. In not one, not two, but to date ELEVEN federal court bench and jury verdicts, the federal judiciary has awarded millions of dollars in damages against NAMFS members, agreeing with Foreclosurepedia. Add to that the latest onslaught of the State of California’s Employment Development Department’s (EDD) unilateral regulatory actions over the past several months handing down millions more in fines against yet more NAMFS members. None of this, though, holds a candle in the wind when compared to a ruling by the California State Supreme Court today.
The California Supreme Court, ruling in Dynamex Operations West v. Superior Court, made the Bowerman Decision look like a freshman law school ruling as it laid out an extremely rigid test compared to the previous Swiss Cheese standard for determining whether someone is a misclassified employee rather than an independent contractor. In fact, so serious was the outcome waited upon that cases in state courts were on hold pending the ruling issued today.
Altshuler Berzon attorney Michael Rubin, who represented the workers, said the opinion “provides needed clarity to worker and employers alike, slicing through decades of confusing and inconsistent case law to focus on the key practical inquiry: where the worker ‘would ordinarily be viewed as working in the hiring business.’”
He added, “The result will be sweeping reclassification of workers throughout the state, including in the gig economy where much of the litigation has recently focused.”
Everyone in the Mortgage Field Services Industry is well aware of the fact that NAMFS members have done everything in their collective power to skirt the law over the past several years. In 2012, Brad Hurst sued Buczek Enterprises, claiming to be an employee as opposed to being an independent contractor. Buczek Enterprises paid six figures to make the case go away; however, not before the federal court issued a scaything Opinion. Then came Fred Bowerman whom sued then Field Asset Services now Assurant Field Asset Services in federal court. The 51 page ruling which the Court handed down not only reaffirmed the Hurst Decision, it chastised Assurant in not to friendly terms. In only seven of 154 cases — the rest are still pending as Assurant forced singular cases hoping to forestall damages — the jury handed down $2.2 million in verdicts. Happening nearly simultaneously, Bennett Vinson sued then Asset Management Specialists (AMS), now owned by Mortgage Contracting Services (MCS). Seeing the writing on the wall, MCS paid millions in settlements and took a different tactic. MCS rewrote their Master Services Agreement (MSA) with language so draconian in its forbidding of any future class action litigation that many within the California legal community have questioned the constitutionality of the MSA itself.
While Eric Miller, NAMFS Executive Director, continues to refuse to address the nearly decades long dire warnings which Foreclosurepedia has written about, the reality is government sponsored enterprises (GSE) such as Fannie Mae are already reaching out directly to their Prime Vendors to assess the potential fallout.
In discussing the Class Certification, the Court describes precisely what is occurring in the Industry, on a daily basis. Simply replace Dynamex with any NAMFS member name,
As a general matter, Dynamex obtains the customers for its deliveries, sets the rate that the customers will be charged, notifies the drivers where to pick up and deliver the packages, tracks the packages, and requires the drivers to utilize its tracking and recordkeeping system. As such, there is a sufficient commonality of interest regarding whether the work performed by the certified class of drivers who pick up and deliver packages and documents from and to Dynamex customers on an ongoing basis [… .]
NAMFS members obtain Contracts from a wide array of customers such as Financial Institutions, GSE’s such as Fannie Mae, and the US Department of Housing and Urban Development (HUD). They set the rates for all misclassified employees — Field Service Technicians. NAMFS members notify the Field Service Technicians when the work must be done; where the work must be done; track the progress and occurance of the work vis-a-vis sophisticated GPS software; control the work order at every level of issuance and reception of results; and finally NAMFS members control all data to and from the Field Service Technician.
California, as Foreclosurepedia predicted, is simply the first of many states moving forward and taking over where the federal government abandoned its citizenry. The California Supreme Court adopted the ABC Standard from New Jersey.
The “ABC” test, as formulated by the Supreme Court of New Jersey in Hargrove v. Sleepy’s LLC, presumes an individual in question is an employee unless the employer can satisfy three very specific criteria:
The New Jersey “ABC” test presumes the worker is an employee. To rebut this presumption, the employer must prove the worker (A) is free from the employer’s control and direction; (B) performs a service that is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and (C) customarily engages in an independently established trade, occupation, profession, or business.
Companies like Dynamex, as well as Uber and Lyft, have classified their drivers as contractors and argued that they have enough control over their working lives — setting their own hours, with the freedom to drive for other companies — to be called independent.
But the court said the company, to justify contractor status, must prove, first, that the worker is free, in everyday tasks, from the company’s “control and direction”; second, that the work is “outside the usual course of the hiring entity’s business”; and third, that the worker is regularly engaged in an independent occupation or business of the same type he or she is performing for the company.
If you want a quote which truly spells out how Miller and his fellow cronies are caught directly in the crosshairs of this ruling, go no further than this,
“Individual workers generally possess less bargaining power than a hiring business” and may face pressure to accept work for substandard pay and working conditions,” Chief Justice Tani Cantil-Sakauye said in the 7-0 decision. She said the state’s “industry-wide wage orders” were also “intended for the benefit of those law-abiding businesses that comply with the obligations” and meant to avoid a “race to the bottom.”
Substandard pay and working conditions. Look, Miller has every possible reason to attempt to keep quiet where this is heading. Miller is paid ONE HUNDRED AND TWENTY THOUSAND TWO HUNDRED AND FORTY DOLLARS PER YEAR to ensure that Minority Females and Labor are never allowed the same rights as other similarly situated Industry professionals. In fact, Miller’s salary consumes over EIGHTY SIX PERCENT of all NAMFS member dues and that is based on their July, 2017, Membership roster. NAMFS has been incapable of producing a more current version in nearly a year. And to say that NAMFS is borderline financially insolvent is calling the kettle black. Here
- NAMFS posted a NEGATIVE $47,283 as revenue for Fiscal Year 2015
- NAMFS earned $493,036 and spent $540,319 — That is $47,283 more than they earned
- NAMFS provided $84,000 in compensation to “…disqualified persons as defined under section 4958(f)(1) and persons described in section 4958(c)(3)(B) by the Internal Revenue Service (IRS).”
- NAMFS Membership Revenue declined by $41,340
- NAMFS Program Service Revenue, their lifeblood, dropped by $71,365
- NAMFS Total Assets dropped another $56,661 — NAMFS Cash On Hand is now $27,403
Their latest, 2016 IRS 990 Income Tax filing which must be turned over to Foreclosurepedia annually showed only a four thousand dollar profit.
The elephant in the room is going nowhere. In fact Massachusetts is joined by New Jersey in nearly identical ABC theoretical testing of the misclassified employee test. And you may as well go ahead and add virtually each and every blue state to the list of those whom are going to begin to implement this new interpretation. The reason? It is due, in no small part, to President Trump’s latest tax plan which disallows the claiming of state taxation upon federal taxes. The statistics are substantially clear that there has been a massive exodus of both individuals and businesses from the tax heavy commonwealth’s to red states. And at the end of the day, the state governments must be able to replenish their coffers.
So, where are people to go? How will it be possible to deal with what appears to be insurmountable legal issues other than converting to an entirely W2 workforce? Glad you asked that question. Foreclosurepedia sat down with the International Association of Field Service Technicians (IAFST) whom have both been working with California as well as creating the Industry’s first and only digitally accredited training platform the IAFST University. IAFST University digital accreditation is provided by and through Accredible whom digitally accredits firms such as Rosetta Stone, Google, Udacity, and Kaplan University amongst others.
In a candid, no holes barred, interview spanning several weeks, the IAFST rolled out their white papers and hundreds of emails between they, the federal government, and a plethora of state governments. To say that I was impressed was an understatement. And it was quite obvious that the IAFST Board of Directors were on top of the situation and had been for quite some time!
Foreclosurepedia will publish the Interview as part of the Foreclosurepedia Transparency Project Series in May, 2018. If you and your firm are needing to obtain either Contracts within the Industry; with Hedge Funds; and work directly with the US government feel free to reach out to us directly by selecting from the below.
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