-by TS Newshound
October 29, 2010 — In June, 2010, Inside the Gate addressed the issue of Independent Contractor Status vs Employee Status for timeshare sales people in a Hot Cuppa Joe column titled IC vs Employee Status: And the Winner Is… .
The case, WHITEHEAD ET AL VS VACATION CHARTERS LTD., involves a class action lawsuit filed in 2008 contending that Vacation Charters had misclassified its salespersons as independent contractors when in fact they should have had employee status. On June 4, 2010 in Pennsylvania, a Philadelphia County judge issued an unprecedented ruling granting class action status for the lawsuit, with some 275 people included in the class. More information about the case is noted below, or you can click on the link provided above for full information.
As noted in that article, the trial was expected to take place later this year. This is an update on the status of the case, just to keep you current.
The case is WHITEHEAD ET AL VS KALINS, AUGUST TERM 2008, NO 03764. On October 21, 2010 a pre-trial order was issued setting a date for the trial on January 24, 2011, with an 8-person jury to be selected on that date.
However, a mandatory settlement conference on November 30, 2010 has also been scheduled, with a detailed settlement memo due to the court by November 16. And, of course, if a settlement is reached at any time prior to trial, then the trial will be moot.
As a refresher for you, the parent company at the center of the dispute is Split Rock Resorts in the Pocono Mountains of Pennsylvania, owned and operated by W. Jack Kalins DBA Vacation Charters LTD. The lawsuit began when a former salesman, Austin Miller-Orteneau, attempted to collect money he believed was owed to him by the company for services rendered; the company refused, so Miller-Orteneau filed a Form SS-8 with the IRS asking for a ruling as to whether he had been properly classified as a non-statutory employee, as a qualified real estate agent, under IRC Section 3508. Keep in mind that in Pennsylvania a timeshare sales license is required to sell timeshare, but not a real estate license. Miller-Orteneau was working under such a timeshare sales license.
The IRS investigated and in February 2008 ruled that Miller-Orteneau was, without question, an employee and Vacation Charters was wrong to classify him as an independent contractor. The IRS further said that even if contracts had been signed designating him as an IC, those contracts were “immaterial” under the applicable common law.
With this ruling in hand, Miller-Orteneau joined another former salesman, one Albert Whitehead, in a civil class action lawsuit against Vacation Charters, Split Rock Resorts and W. Jack Kalins asking for reimbursement for taxes they contend were overpaid due to their misclassification, along with compensation for benefits they did not receive from June 2005 until December 2008 in the total amount in excess of $2,100,000. Approximately 275 former employees are affected by the suit, and on June 4, 2010, the court agreed to join all the former employees as a single class, thus granting unprecedented class action status for the case.
The significance of this lawsuit is several-fold as it relates to timeshare, and could have far reaching consequences. It addresses the long-standing issue of timeshare salespersons’ rights and protections such as minimum wage, unemployment compensation, workers’ compensation insurance, health care insurance, protections under Title VII of The Civil Rights Act, and more.
For much more information about this case, as well as the controversy over Independent Contractor Status for timeshare sales people, click here.
Inside the Gate will notify you of the results once a decision has been reached either via settlement or jury trial.
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