What’s Next for the EB-5 Program?

Congress recently passed and President Trump signed a comprehensive two-year defense spending budget agreement for fiscal years 2018 and 2019 to prevent an extended federal government shutdown. The legislation also contained a shortterm continuing resolution (“Continuing Resolution”) to fund federal programs further, including the EB-5 Program, through March 23, 2018. The Continuing Resolution contained a framework of a long-term budget accord, and thus, an omnibus spending bill is expected ahead of the March 23 deadline. In fact, a group of Republican senators on Sunday night released a version of President Trump’s immigration proposal ahead of a floor debate on immigration this week.

With regard to the EB-5 Program, the continuing resolution marks another “kicking of the can down the road” by a short-term resolution without change, something we have seen continually since September 2015. Indeed, the last longterm extension occurred in September 30, 2012, when President Obama signed S.3245, which extended the EB-5 Program for three years through September 30, 2015.

What will happen to the EB-5 Program during these ensuing six weeks and thereafter? The short answer is: it is not entirely clear. Numerous reform bills to the EB-5 Program in the House and Senate have circulated between 2015 and 2017; most of these have grown stale. Several Congressional proposals on the topic of immigration have emerged in 2018, but none of them have addressed the EB-5 Program.

Still Relevant Pending EB-5 Legislation

Participation in the EB-5 Program by direct investment in a job-creating enterprise has not required renewal since created by Congress in 1990 as a permanent program. What has been a greater debate in recent years is the Immigrant Investor Pilot Program (“Pilot Program”) that Congress created in 1992 to stimulate additional interest in the EB-5 Program, which involves investing through “regional centers” rather than directly in a job-creating enterprise. The appeal of the Pilot Program is the ability to include indirect and induced jobs as well as direct jobs, which allows a greater number of worthy projects to utilize funding from the EB-5 Program, such as the construction of residential housing, solar and wind farms, infrastructure construction and improvements and other beneficial projects that do not command many on-site direct jobs.

With the Pilot Program’s profound growth, especially in the years following the Great Recession, concern grew in Congress of inadequate governance. With the approaching sunset of the Pilot Program’s three-year renewal in September 2015, numerous House and Senate bills proposed either major overhaul or minor reform measures, certain of which caused quite a commotion in the EB-5 community though ultimately none were enacted. Since then, many more proposed bills have surfaced to reform the Pilot Program and many of these have faded away as well, though a few bills proposed in 2017 remain relevant in terms of what happens next to the EB-5 Program:

  • The American Job Creation and Investment Into Public 4 Works Reform Act of 2017 (H.R.3471) introduced by Representatives Brian Fitzpatrick (R-Pennsylvania) and Dwight Evans (D-Pennsylvania) on July 27, 2017, would extend the Pilot Program until September 30, 2022, increase the minimum investment amounts from $500,000 and $1 million to $800,000 and $1.2 million. The new minimum amount of $800,000 would apply to projects in a targeted employment area (“TEA”) and investments in an infrastructure project or a manufacturing project.
  • The American Job Creation and Investment Promotion Reform Act of 2017 introduced by Senator Grassley (R-Iowa) and Senator Leahy (D-Vermont), circulated as draft legislation in April 2017, would increase the minimum investment amounts from $500,000 and $1 million to $800,000 and $1 million and would extend the Pilot Program to September 30, 2022, create EB-5 visa set asides for rural and priority urban projects and redefine TEAs to cover rural and priority urban areas and closed military bases.
  • The EB-5 Immigrant Investor Visa and Regional Center Program Comprehensive Reform Act of 2017 introduced in April 2017 by Senator Cornyn (R-Texas) would extend the Pilot Program to September 30, 2023, would increase the minimum investment amounts from $500,000 and $1 million to $800,000 and $925,000, create EB-5 visa set asides for rural projects and redefine TEAs to create three categories (i) distressed rural; (ii) distressed urban; and (c) closed military bases.

The foregoing represents only a handful of the bills pending but are germane because they were more recent and may influence the outcome.

What Happens Next for EB-5?

While most eyes are following the activity of the omnibus immigration bills circulating in Congress, including Mitch McConnell’s (R-KY) initiating of the Broader Options for Americans Act (H.R. 2579) to proceed to the Senate, a more compelling prospect to the EB-5 community that could lead to assorted changes to the Pilot Program arises from meetings Senator Grassley (R-Iowa) and Representative Bob Goodlatte (R-Virginia), Chairs of the Senate and House Judiciary Committees had last fall with United States Citizenship and Immigration Services (“USCIS”). Senator Grassley explained his impatience with the delays in enacting reform to the EB-5 Program and the urgency to pass a rule by February 2018, which would become effective within 30 to 90 days later. USCIS has likewise announced that if Congress does not enact reform by April 2018, USCIS will enact its own changes.

Among the changes sought by Senators Grassley and Representative Goodlatte include modification of the TEA concept to include rural and urban distressed/high employment areas utilizing a single-census tract analysis. The proposal would increase the minimum investment amount to $925,000 for projects in the new definition of TEAs and increase all other projects by $25,000 to more than $1 million. Other rumored proposals include visa set-asides for rural projects, minimum direct job requirements, and permission for EB-5 petitioners to retain their original priority date in the event of a petition amendment, among other sundry amendments to the EB-5 Program’s filing and interview procedures.

Further discussions have been limited to a tight circle thus it is unclear what the final rules will contain but they are expected not to be sweeping and to be released sometime between the coming two weeks and April with a transition time of 30 to 90 days thereafter. The inner circle of EB-5 stakeholders have been advocating intensely behind the scenes with lawmakers with the hope that the reform measures result in increased visa set asides and modest minimum investment amount increases or a gradual phase-in to avoid impairing this vital program. We will keep on top of developments and provide additional alerts as news develops.

© Polsinelli PC, Polsinelli LLP in California
This article was written by Debbie A. Klis of Polsinelli PC
For more immigration news, follow our Immigration Law twitter @NatLawImmigrate

EPA Sees New Challenges Ahead for Superfund

EPA released a four-year “strategic plan” on February 12 that continues to emphasize the EPA Superfund environmental clean-up program as one of Administrator Scott Pruitt’s top priorities.  While it has been clear since last summer’s Superfund Task Force report that the agency’s new leadership wants to accelerate Superfund site cleanups, the agency’s new strategic plan reveals for the first time that EPA also sees emerging challenges ahead for Superfund.

“A number of factors may delay cleanup timelines,” the agency wrote in its strategy document.  These factors include the “discovery of new pathways and emerging contaminants” such as vapor intrusion and per- and polyfluoroalkyl substances (PFAS), and new science such as “new toxicity information or a new analytical method.”

According to the strategic plan, the emergence of this kind of new information can reopen previously settled remedy determinations – and the Superfund sites that still remain on the National Priorities List (NPL) already tend to be the harder cases, with more difficult patterns of contamination and more complex remedies.  EPA flagged in particular its waste management and chemical facility risk programs, where “rapidly changing technology, emerging new waste streams, and aging infrastructure present challenges[.]”

It remains to be seen whether the agency’s cautions in the Superfund section of its strategy document represent a meaningful shift in the agency’s frequently-stated intention to reinvigorate the Superfund program.  Early in his tenure, Mr. Pruitt charged his Superfund Task Force with generating a series of recommendations centered around Mr. Pruitt’s goals for Superfund: faster cleanups, the encouragement of cleanup and remediation investments by PRPs and private investors, and a process centered on stakeholder engagement and community revitalization.  In December, in response to one of the Task Force’s recommendations, the agency released a list of 21 high-priority NPL sites that Mr. Pruitt targeted for “immediate and intense attention,” according to an EPA press release.  The cautionary notes in this week’s strategic plan are a subtle shift in tone for EPA.

At the same time, the document also sets forth a plan for improving the consistency and certainty of EPA’s enforcement activities in the regulated community.  It remains to be seen how EPA intends to achieve consistency while being responsive to state and tribal interests.

These goals, of course, will depend on the details of implementation, which are not set forth in the strategic plan.  And such details will depend on the agency’s budget, which remains in flux for 2019 and beyond.  For example, EPA’s proposed budget for fiscal year 2019 sought a roughly $327 million cut in the Superfund program, but the funds were added back into the budget proposal as part of last-minute budget agreement reached in Congress last week, securing the program’s funding in the short-term.   Last year, the administration proposed a 30% cut in the agency’s funding  but Congress balked and eventually approved a budget that cut roughly 1%.


© 2018 Beveridge & Diamond PC
This post was written by Loren Dunn of Beveridge & Diamond PC.

Mueller Indictment: Russians Manipulated Social Media, Advertising and Political Rallies to Impact 2016 Election

Robert Mueller’s office released 37 page  indictment of 13 Russian individuals and three Russian organizations for interference in the 2016 Presidential election.  According to Mueller’s office, a Russian organization based in St. Petersburg known as the Internet Research Agency used fake American social media profiles sometimes posing as political activists to wage “information warfare,” interfering with and manipulating the US election process.

According to today’s indictment, these activities began as early as 2014, with certain defendants traveling to the United States and obtaining VPN infrastructure, to obscure the origins of their activities so various accounts would appear to be based within the United States.  Alleged activities included purchasing online advertisements–and stealing identities to do so.  Moving offline the defendants and their co-conspirators solicited individuals to disparage or promote candidates, including hiring a woman to wear a costume portraying Hillary Clinton in a prison uniform at various political events, all while hiding their Russian identities.

These activities were done without proper regulatory disclosure and without registering as foreign entities.  Deputy Attorney General, Rod Rosenstein, who announced the indictment stated: “The defendants allegedly conducted what they called information warfare against the United States with the stated goal of spreading distrust towards the candidates and the political system in general.”

DNC Chair Tom Perez released a statement, saying, “This indictment gives us a chilling look at just how sophisticated, well-funded and wide-ranging this attack on our democracy really was. It should send chills up the spine of every American.”   Perez points to the indictment as proof that the 2016 election was marred by Russian interference; including hacking into the DNC by Russian operatives as well as hacking into voter registration systems across the country, along with the now ubiquitous understanding of the Russian presence on social media and their attempts to foster disagreement and manufacture intense contention among already disagreeing Americans online.

Additionally, Perez points to Trump’s failure to act on the information presented by Mueller, referencing Trump’s attempts to diminish and discredit the Mueller investigation and his failure to direct intelligence officials to take action to prevent future attacks.   Perez:

“President Trump continues to deny these facts.  And Republican in Congress continues to spread falsehoods to tarnish the very investigation that is beginning to hold Russia accountable for its actions in 2016. If the president won’t uphold the oath he took to protect our nation’s security, he has no place in the Oval Office. And if Republican leaders in Congress can’t put the interests of our democracy before politics, they have no place in Congress.”

On the other side of the aisle, Kayleigh McEnany, an RNC spokesperson read the indictment to indicate that Russian interference was two-sided, with President-elect Trump also in the Russian cross-hairs.  She points specifically to rallies funded by Russian Roubles on November 12th and 19th of 2016, in the days following the election.   In an appearance on Fox News, she indicated that it was the Democrats who had deceived the country by emphasizing the Russian election interference.  She said, “Democrats deceived this country…and they were caught today.”

In a tweet today, president Trump stated that there was a lack of allegations in today’s indictment of any impact on the 2016 presidential election and highlighted his campaign’s lack of involvement.

Trump Tweet  Russian Election Indictment

However, a holistic reading of the indictment supports claims that Russian interference did appear to impact the 2016 election. The indictment offers a timeline of the defendant’s conspiracy that had a clear purpose: “impairing, obstructing and defeating the lawful governmental functions of the United States by dishonest means in order to enable the Defendants to interfere with U.S. political and electoral processes, including the 2016 U.S. Presidential election.”

You can read the indictment here.

For more on Election Legal issues, check out our Legislative, Election, Lobbying, Campaign Finance and Voting Law News.

This post was written by Eilene Spear of The National Law Review/The National Law Forum LLC.

10 Trailblazing Female Lawyers Who Shaped American History

In a world where less than 36% of working attorneys are women, it can be tempting to dwell on the long road ahead in achieving equal footing for women in the legal profession. While continuing along this road to equity in representation not only between women and men in law, we must remember that the foundations for this path are already in place. This road, although by no means complete, was paved by many trailblazing women who fought and endured to show the world just how preposterous it was to think only men could be lawyers. Listed chronologically, here are ten female lawyers who refused to remain silent about their passion for the law, and who in turn set up a foundation for the countless brilliant rising women lawyers to come.

  1. Margaret Brent

In 1638, Margaret Brent became the first woman to practice law in colonial America when she was named the executor of the estate of Lord Calvert, who was the governor of the Maryland Colony.  Records indicate Brent’s practice included more than 100 court cases in Maryland and Virginia. Amazingly, there is virtually no record of another female attorney in America until the mid-1800’s; covering a span of over two hundred years.

  1. Myra Bradwell

After founding the “Chicago Legal News” a widely circulated and regarded legal newspaper in 1868, Myra Bradwell was an early pioneer for women practicing law. She wrote a well-received column on “Law Relating to Women,” highlighting hot-button topics such as suffrage, but her most significant contribution came in 1873 when Bradwell appealed to the United States Supreme Court in what many believe to be the first sexual discrimination case in American jurisprudence.

In Bradwell v. Illinois, Myra Bradwell argued she was qualified to practice law in her home state of Illinois because she was a United States Citizen. At issue was the question of whether the right to receive a license to practice law is guaranteed by the Fourteenth Amendment to the United States Constitution to all American citizens. Not surprisingly, the answer was no; the Supreme Court held that states could statutorily deny women the right to practice law.

  1. Lemma Barkaloo

Lemma Barkaloo was the first woman to apply for admission to Columbia University Law School when her application was rejected in 1868. Two other women applied and were also immediately denied entry.  George Templeton Strong of Columbia wrote at the time: “Application from three infatuated young women to the law school.  No woman shall degrade herself by practicing law in New York especially if I can save her ‘Women’s Rights Women’ are uncommonly loud and offensive of late. I loathe the lot.”

The following year, Barkaloo was accepted to Washington University in St. Louis, Missouri and begins as a first-year law student. Unfortunately, she didn’t last long; after enduring a year of non-stop harassment from male classmates, she left the school. Barkaloo passed the Missouri bar exam but died soon after during a typhoid epidemic in 1870 and was unable to fulfill her dream of practicing law.

  1. Lettie Burlingame

In 1886, Lettie Burlingame, a stanch suffragette, started an organization at the University of Michigan called The Equity Club. Originally intended solely for female law students and law alumnae, the organization grew, making it the first professional organization for women lawyers. Burlingame eventually went into private practice and was regarded as a highly skilled lawyer until her death in 1890.

  1. Lyda Burton Conley

In 1910, Lyda Burton Conley became the first Native American female lawyer in America. Her motivations were pure; she taught herself the law to protect her tribe’s cemetery burial land located in Huron Park Indian Cemetery from being sold. Unfortunately, she lost her case, and the U.S. Supreme Court refused to rehear it; however, Conley had raised enough public support through her efforts that the House of Representatives Indian Affairs committee finally banned desecration of the cemetery in 1912.

  1. Genevieve Rose Cline

Genevieve Rose Cline was the first woman federal judge in America, nominated in 1928 by President Calvin Coolidge to the U.S. Customs Court, where she served for twenty-five years. Cline earned her Bachelor of Laws degree from Baldwin-Wallace College in 1921 and then entered private practice with her brother. In addition to her legal prowess, Cline was an early advocate for consumer protection, women’s rights, and the suffrage movement.

  1. Sarah Tilghman Hughes

Appointed to the U.S. District Court for the Northern District of Texas in 1961 via a recess appointment by John F. Kennedy, Sarah Tilghman Hughes was confirmed the following year by the United State Senate. Her roots in public service ran deep, beginning her career as a police officer helping prostitutes and runaway girls get their lives back on track. While living in a tent by the Potomac River, Hughes attended George Washington University Law School at night. Upon graduation, Hughes entered private practice in Dallas, Texas, and also served as an elected state representative before opting to sit as a state judge from 1935-1961 on the Texas District Court. In the frenetic aftermath of President Kennedy’s assassination, Sarah Tilghman Hughes was called upon to administer the oath of office to Vice-President Lyndon B. Johnson, making her the only woman in U.S. history to swear in a United States President.

  1. Sarah Weddington

Few lawyers can match the professional debut made by Sarah Weddington. The late 1960’s were not necessarily an inclusive environment for women lawyers, so she had her work cut out for her. Luckily, she became interested in a case that caught her eye and agreed to take it pro bono. Sarah Weddington was only 26 years old when she became the youngest person ever to argue and win a Supreme Court case. You may have heard of the case; the caption was Roe v. Wade.

  1. Sandra Day O’Connor

After earning her law degree from Stanford in 1952 and serving two terms in the Arizona state senate, Sandra Day O’Connor worked her way through the legal system as an attorney and ultimately a judge. Two years after winning election to the Arizona Court of Appeals, President Reagan appointed her to the United States Supreme Court in 1981, making her the first woman justice to serve on the Supreme Court in its 191-year history. She served for twenty-four years, during which she established herself as one of the most influential voices on the Court until her retirement in 2006.

  1. Janet Reno

In 1993, Janet Reno became the first female Attorney General of the United States. She went on to serve for both terms of Bill Clinton’s presidency, making her the longest-serving Attorney General in U.S. history. Reno’s tenure was not without controversy; she took full responsibility for the 1993 botched raid of the Branch Davidian complex in Waco, Texas.

Another high-profile case involved the deportation of a 6-year-old Cuban boy named Elian Gonzalez, who was the only survivor of an escape attempt by twelve Cubans on a small boat. Despite intense pressure from Cuban exiles in South Florida, Reno was personally involved in the case, which culminated in Immigration and Naturalization Service agents storming the home of the boy’s relatives and taking him at gunpoint. A photo of the young child hiding in a closet being discovered by heavily armed agents made the front page of every newspaper in America, but Reno stood her ground based on her belief that she was upholding the rule of law. Janet Reno died in 2016 after a long battle with Parkinson’s Disease.

Final Thoughts

These comprise just the tip of the iceberg of the countless women whose contributions to the field of law were invaluable. While history has done them the disservice of forgetting too many of these sacrifices, the spirit of these gifts is kept alive by the women who choose to pursue the legal profession every day. The road has been tremendously difficult and excessively long. However, the spirit, resilience, and brilliance of these determined legal giants have shown countless young women that it is one they are entirely capable of traveling along.


© Copyright 2018 PracticePanther.
This post was written by Jaliz Maldonado of PracticePanther.

The Fight Over EEO-1 Pay Data Collection Continues

As previously reported here, in November 2017, following the Office’s of Management and Budget (“OMB’s”) “immediate stay” of the EEO-1 pay data reporting requirement, the National Women’s Law Center (“NWLC”) and the Labor Council for Latin American Advancement (“LCLAA”) filed a lawsuit to reinstate the EEO-1 pay data reporting requirement, asserting OMB lacked the legal basis to stay the pay data reporting requirement.

This week, the OMB struck back with a motion asking the court to dismiss the NWLC/LCLAA lawsuit.  OMB argued it has continuing authority to review the pay data collection requirement.  Moreover, OMB contended the NWLC and LCLAA do not have standing to sue because neither have been impacted by the OMB’s decision to stay the requirement pending further review. OMB further argued that, in any event, the lawsuit was premature because it has not yet made a final decision on EEO-1 pay data collection.

Regardless of the ultimate fate of EEO-1 pay data collection, gender and race pay gap issues continue to be an area of focus.

Jackson Lewis P.C. © 2018
This article was written by F. Christopher Chrisbens of Jackson Lewis P.C.
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DOJ Employs Money Laundering Statute to Prosecute Venezuelan Oilmen for Foreign Bribery

As forecasted in a blog post last summer, the United States Department of Justice (“DOJ”) has again used the money laundering statute to accomplish the otherwise elusive goal of prosecuting foreign officials who allegedly receive bribes. On Monday, DOJ unsealed its Indictment against five Venezuelans employed by or closely connected to Petroleos de Venezuela S.A. (“PDVSA”), the Venezuelan state-owned and state-controlled oil company.

The unsealing of the charges against these five Venezuelan individuals marks the latest development in a multi-year effort by DOJ to investigate and prosecute bribery at PDVSA. As DOJ’s press release notes, ten individuals have already pleaded guilty in the investigation thus far.  Key among these individuals are Roberto Enrique Rincon Fernandez and Abraham Jose Shiera Bastidas, two American businessmen who pleaded guilty in 2016 to violating the Foreign Corrupt Practices Act of 1977 (the “FCPA”) for paying bribes to PDVSA.  In connection with their pleas, the two admitted to paying PDVSA bribes in order to win lucrative energy contracts and to be given payment priority over other PDVSA vendors during a time when PDVSA faced a liquidity crisis.

Last October, more than one year after these guilty pleas, Spanish police announced the arrests of four of the five individuals named in Monday’s Indictment.  The arrests were described as “part of a months-long sting ordered by the U.S. Department of Homeland Security.”  Currently, three of the defendants remain in Spain pending extradition, the fourth was extradited to the United States and made his initial appearance last Friday, and the fifth remains at large.

As noted above, the Indictment is notable for using the money laundering statute to accomplish what the FCPA statute cannot—bringing charges against a foreign official. Last summer, we blogged about the conviction and sentencing of Guinea’s former Minister of Mines and Geology.  There, we noted the FCPA generally prohibits individuals and businesses from paying bribes to foreign officials to assist in obtaining or retaining business.  However, “foreign officials” cannot be charged under the FCPA or with conspiracy to violate it.  Therefore, a foreign official could not be prosecuted for his conduct in soliciting or receiving bribes under the FCPA.

Here, Monday’s Indictment begins by stating that three of the five Venezuelan defendants were “foreign officials” as that term is used in the FCPA. The Indictment then alleges, in detail, how the defendants laundered the proceeds of the aforementioned PDVSA bribery scheme through numerous financial transactions in the names of various companies.  They are alleged to have worked together to provide banks with false justifications for the bribe payments and, in one instance, used the bribe proceeds to purchase a condominium in Miami in the name of a company controlled by a relative.  All five defendants are alleged to have engaged in at least one conspiracy to commit money laundering, and each is charged with one or more counts of money laundering.  The Specified Unlawful Activity, or SUA, underlying the money laundering counts is the FCPA.  Thus, the FCPA supports money laundering counts in instances in which the FCPA itself could not be charged directly.

The paradox of the latest development in this investigation is intriguing. The investigation was and remains, in its essence, a prototypical FCPA case, in which DOJ is seeking to combat the bribery of foreign officials.  Yet, without the money laundering statute, the U.S. would be unable to prosecute some of the individuals central to the alleged activities.  This paradox is highlighted in the Indictment’s lone count that does not allege a violation of the money laundering statute, Count Two.  There, the Indictment alleges a conspiracy to violate the FCPA, but only names the two defendants who were not “foreign officials.”  In other words, the Indictment implicitly acknowledges that a majority of the defendants are outside the reach of the FCPA statute.  Thus, the money laundering statute acts not simply as a supplement to the FCPA, but as an instrumental component of DOJ’s strategy to prosecute wrongdoing at the highest levels.

The unsealing of the Indictment comes at a tumultuous time in the U.S.-Venezuela relationship and amidst what is described as a time of economic crisis in that country.

Last year, we blogged about the U.S. Department of Treasury’s designation of Venezuela’s Executive Vice President, Tareck Zaidan El Aissami Maddah (“El Aissami”), as a Specially Designated Narcotics Trafficker under the Foreign Narcotics Kingpin Designation Act.  Through this designation, U.S. individuals and entities are prohibited from dealing with El Aissami and certain named entities to which he is allegedly connected, and any assets held by him or those entities in the U.S. are frozen.

More recently, U.S. Secretary of State Rex Tillerson announced earlier this month that the U.S. is considering banning sales of Venezuelan oil in the United States and halting the refining of Venezuelan crude by U.S. companies.  Venezuela, for its part, recently announced its President’s plan to float a new cryptocurrency backed with the country’s oil reserves in an attempt to fend off economic distress.  That plan was met with resistance from Venezuela’s parliament, the U.S. Treasury Department and investors worldwide.  Notably, the article linked above quotes one commentator as predicting this new crytocurrency would “become a money laundering tool for well-connected people” within the President’s regime.

While some commentators believe Venezuela’s frayed relationship with the U.S. may have played some role in the decision to pursue the five Venezuelan executives named in Monday’s Indictment, the message here is universal. An unwary foreign official receiving bribes can easily fall within the ambit of the U.S. money laundering statute.  And the effort to find and arrest any such foreign official is not confined to the U.S. borders.  Perhaps this was best stated by a commentator referencing the October 2017 arrests in Spain:  “There are lots of people that are not sleeping well tonight.

Copyright © by Ballard Spahr LLP
This article was written by Evan W. Krick of Ballard Spahr LLP
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Louisiana Court Upholds Ruling That House Painters Are Independent Contractors

The Louisiana Fifth Circuit Court of Appeal has held that painters may be treated as independent contractors if they bring some of their own tools, control their own schedules, and make decisions on how to complete the work for which they have been hired.


In Ocampo v. Maronge, No. 17-CA-403 (December 27, 2017), plaintiffs Javier Ocampo and Dennis Ordonez asserted claims for unpaid wages following discharge pursuant to the Louisiana Wage Payment Act (LWPA)A claim under the LWPA requires that the claimant be an “employee.”

Ocampo and Ordonez were hired by Nicole Maronge to perform painting on a residential property in Napoleonville, Louisiana. Maronge claimed that Ocampo and Ordonez were hired to work from Tuesday February 25, 2014, through Friday February 28, 2014. Ocampo and Ordonez testified that they were not informed of an initial deadline to complete the job.

Maronge supplied Ocampo and Ordonez with a ladder, as well as other materials to complete the job, including “sheetrock, paint, primer, caulk, tape, spackling and other similar items.” Ocampo and Ordonez supplied some of their own tools, including brushes, rollers, buckets, and drop cloths.

After arriving at the Napoleonville property, Ocampo and Ordonez learned the job would entail more work than painting, including floor and garage demolition. By the end of February 28, 2014, they informed Maronge that they were not finished with the job, but that they could complete the job by March 2, 2014, with the assistance of an additional laborer. Maronge agreed. Ocampo and Ordonez thereafter worked through March 2, 2014, and completed the job except for the trim painting. They did not return to the jobsite on March 3, 2014, and Maronge hired other laborers to finish the job.

Ocampo and Ordonez claimed in their lawsuit that Maronge never paid them for the hours they worked for her. Specifically, they claimed they were each owed $17 an hour for 62 hours worked on the Napoleonville property, as well as penalties and attorneys’ fees resulting from Maronge’s failure to timely pay their wages.

Maronge did not dispute that Ocampo and Ordonez were owed money for the work they performed. Instead, Maronge disputed the hourly rate and number of hours they worked. Maronge claimed that they were each owed $15 per hour for only 45 hours worked. Maronge also disputed that plaintiffs were her “employees” under Louisiana law.

After discovery, Ocampo and Ordonez filed a motion for partial summary judgment urging the court to find that they were Maronge’s “employees” as a matter of law. The district court denied their motion. Thereafter, the matter proceeded to trial, where the district court found Ocampo and Ordonez to be independent contractors. They subsequently appealed the court’s denial of their motion for partial summary judgment, as well as the court’s judgment finding them to be independent contractors, amongst other issues.

The Louisiana Fifth Circuit’s Analysis

On appeal, the Louisiana Fifth Circuit Court of Appeal affirmed both rulings, emphasizing the independent nature of the plaintiffs’ jobs. The court explained that the essence of the employer-employee relationship is the “employer’s right to control the employee.” As a result, the court declared that to prevail on their motion for partial summary judgment, Ocampo and Ordonez were required to prove that the degree of control Maronge exerted over them rose to the necessary level to create the employer-employee relationship.

The court applied the five factor employee-employer test first enumerated by the Louisiana Supreme Court in the seminal Hickman v. South Pacific Transport Company case from 1972. The court asked: (1) whether there was a valid contract between the parties, (2) whether the plaintiffs used nonexclusive means in accomplishing the work, (3) whether the defendant controlled how the work would be performed, (4) whether there was a specific price for the project, and (5) whether the work was for a certain time or subject to termination by either party at their will.

In affirming the denial of the plaintiffs’ motion for partial summary judgment and the district court’s conclusion that the plaintiffs were independent contractors, the court enumerated the following facts to support its conclusion: the plaintiffs set their own schedules, Maronge did not direct the plaintiffs in how to perform their work, the plaintiffs supplied some of their own tools and techniques, and Maronge was not present on the jobsite. At the same time, the court deemphasized or ignored the ways in which Maronge directed the work to be performed, the tools Maronge provided for the job, the complexity of the actual work performed, and the March 2 deadline for completion of the work that the plaintiffs acknowledged but ignored.

As a result, the Louisiana Fifth Circuit declared that the district court was not “manifestly erroneous or clearly wrong” in classifying the plaintiffs as independent contractors.

Key Takeaways

Ocampo indicates that the sophistication of work performed may not control the existence of an employer-employee relationship. In this instance, the plaintiffs were only painting and demolishing property and the majority of their “tools” were provided by the defendant. Nonetheless, the court found the plaintiffs to be independent contractors. As a result, the LWPA did not apply and thus penalties and attorneys’ fees for late payment of earned wages were not recoverable.

© 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.