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Agency, Employment or Labor Law IRAC Case Brief
Top of Form
The week’s assignment concerns briefing a case from the readings. You can pick any case from the readings. You must pick an actual court case and give the citation. The brief should concern a legal case that is relevant to the following Week 5 Agency, Employment or Labor Law, objectives.
Brief the case. Use the IRAC methodology. Discuss the:
The brief is followed by discussion of whether you agrees or disagree with the court opinion and why.
Please put this in a separate paragraph.
When the brief is completed and in paragraph or two discuss how the legal concepts in the selected case can be applied within a business managerial setting. In other words, explain how the rule discussed in the case have impacted the industry in past and what you see for the future. In your answer discuss the positive and negative effect the case law has made on the industry.
The paper is a minimum 1,250 words in length.
CHAPTER 20 Employment Law and Worker Protection
Federal and state laws provide workers’ compensation and occupational safety laws to protect workers in the United States.
After studying this chapter, you should be able to:
1. Explain how state workers’ compensation programs work and describe the benefits available.
2. Describe employers’ duty to provide safe working conditions under the Occupational Safety and Health Act.
3. Describe the minimum wage and overtime pay rules of the Fair Labor Standards Act.
4. Describe the protections afforded by the Family and Medical Leave Act.
5. Describe unemployment insurance and Social Security.
“ It is difficult to imagine any grounds, other than our own personal economic predilections, for saying that the contract of employment is any the less an appropriate subject of legislation than are scores of others, in dealing with which this Court has held that legislatures may curtail individual freedom in the public interest.”
—Stone, Justice Dissenting opinion, Morehead v. New York (1936)
Introduction to Employment Law and Worker Protection
Generally, the employer–employee relationship is subject to the common law of contracts and agency law. This relationship is also highly regulated by federal and state governments that have enacted myriad laws that protect workers from unsafe working conditions, require employers to provide workers’ compensation to employers injured on the job, prohibit child labor, require minimum wages and overtime pay to be paid to workers, require employers to provide time off to employees with certain family and medical emergencies, and provide other employee protections and rights.
Poorly paid labor is inefficient labor, the world over.
This chapter discusses employment law, workers’ compensation, occupational safety, pay and hour rules, and other laws affecting employment.
Many types of employment are dangerous, and many workers are injured on the job each year. Under common law, employees who were injured on the job could sue their employers for negligence. This time-consuming process placed the employee at odds with his or her employer. In addition, there was no guarantee that the employee would win the case. Ultimately, many injured workers—or the heirs of deceased workers—were left uncompensated.
Workers’ compensation acts were enacted by states in response to the unfairness of that result. These acts create an administrative procedure for workers to receive workers’ compensation for injuries that occur on the job.
Compensation paid to workers and their families when workers are injured in connection with their jobs.
Under workers’ compensation, an injured worker files a claim with the appropriate state government agency (often called the workers’ compensation board or workers’ compensation commission). Next, that entity determines the legitimacy of the claim. If the worker disagrees with the agency’s findings, he or she may appeal the decision through the state court system. Workers’ compensation benefits are usually paid according to preset limits established by statute or regulation. The amounts that are recoverable vary from state to state.
Workers’ Compensation Insurance
States usually require employers to purchase workers’ compensation insurance from private insurance companies or state funds to cover workers’ compensation claims. Some states permit employers to self-insure if they demonstrate that they have the ability to pay workers’ compensation claims. Many large companies self-insure.
workers’ compensation insurance
Insurance that employers obtain and purchase from private insurance companies or from government-sponsored programs. Some states permit employers to self-insure.
For an injury to be compensable under workers’ compensation, the claimant must prove that he or she was harmed by an employment-related injury . Thus, injuries that arise out of and in the course of employment are compensable.
An injury to an employee that arises out of and in the course of employment.
If an employee is injured in an automobile accident when she is driving to a business lunch for her employer, the injury is covered by workers’ compensation. However, if an employee is injured in an automobile accident while she is driving to an off-premises restaurant during her personal lunch hour, the injury is not covered by workers’ compensation.
In addition to covering physical injuries, workers’ compensation insurance covers stress and mental illness that are employment-related.
Workers’ compensation is an exclusive remedy . Thus, workers cannot both receive workers’ compensation and sue their employers in court for damages. Workers’ compensation laws make a trade-off: An injured worker qualifies for workers’ compensation benefits and does not have to spend time and money to sue his employer, which comes with a possible risk of not winning. The employer has to pay for workers’ compensation insurance but does not have to incur the expense and risk of a lawsuit.
Go to www.dir.ca.gov/dwc/WCFaqIW.html#1 to learn more about workers’ compensation. Read the first four questions and answers.
A professor is covered by her university’s workers’ compensation insurance. While teaching her class, the professor is injured when she trips over a power cord that was lying on the floor in the classroom. In this case, the professor’s sole remedy is to recover workers’ compensation. The worker cannot sue the university to recover damages.
Workers’ compensation acts do not bar injured workers from suing responsible third parties to recover damages.
A worker who is covered by workers’ compensation insurance is operating a machine while performing his job. The worker is injured when the machine breaks. The worker can recover workers’ compensation benefits but cannot sue his employer. If it is proven that a defect in the machine has caused the injury, the worker can sue the manufacturer to recover damages caused by the defective machine.
Workers can sue an employer in court to recover damages for employment-related injuries if the employer does not carry workers’ compensation insurance or does not self-insure if permitted to do so. If an employer intentionally injures a worker, the worker can collect workers’ compensation benefits and can also sue the employer.
The following case involves a workers’ compensation claim.
CASE 20.1 STATE COURT CASE Workers’ Compensation Kelley v. Coca-Cola Enterprises, Inc.
2010 Ohio App. Lexis 1269 (2010) Court of Appeals of Ohio
“Despite Coca-Cola’s assertion, an exception to the general rule prohibiting one from participating in workers’ compensation benefits applies where the employee is injured by horseplay commonly carried on by the employees with the knowledge and consent or acquiescence of the employer.”
Chad Kelley, an account manager with Coca-Cola Enterprises, Inc., attended a mandatory corporate kickoff event celebrating the release of a new Coca-Cola product. As part of a team-building event, all the employees in attendance, including Kelley, were encouraged to canoe down a three-mile stretch of a river. Kelley and a coworker paddled on the river without incident. Thereafter, Kelley walked up an embankment to the parking lot and waited for a bus to arrive to take him back to his vehicle. While Kelley waited for the bus, a number of employees, including Whitaker, who was in charge of the entire event, were seen splashing, tipping canoes, and getting everyone wet. A short time later, Whitaker, who was soaking wet, and Hall, a Coca-Cola distribution manager, grabbed Kelley and tried to pull him down the embankment and into the river. When their efforts failed, Hall grabbed Kelley and slammed him to the ground, causing Kelley to injure his neck. As a result of the incident, Kelley was treated for a herniated disc and a cervical dorsal strain.
Kelley filed a claim for workers’ compensation. Coca-Cola opposed the claim, asserting that because Kelley was involved in employee horseplay, he was not entitled to workers’ compensation benefits. The trial court returned a verdict in favor of Kelley, entitling him to participate in workers’ compensation benefits. Coca-Cola appealed.
Is Kelley entitled to workers’ compensation benefits?
Language of the Court
Coca-Cola argues that the trial court erred by instructing the jury that even if it found Kelley instigated or participated in horseplay that proximately caused his injury, he was, nonetheless, still entitled to participate in workers’ compensation benefits so long as Coca-Cola acquiesced or consented to that horseplay.
The court of appeals affirmed the trial court’s judgment, holding that Kelley was entitled to participate in workers’ compensation benefits because he was injured while engaging in conduct with the knowledge and consent of the employer Coca-Cola.
1. Did Coca-Cola act ethically in denying Kelley’s workers’ compensation claim? What is the public policy that underlies workers’ compensation laws?
In 1970, Congress enacted the Occupational Safety and Health Act 1 to promote safety in the workplace. Almost all private employers are within the scope of the act, but federal, state, and local governments are exempt. Industries regulated by other federal safety legislation are also exempt. 2 The act also established the Occupational Safety and Health Administration (OSHA) , a federal administrative agency within the Department of Labor that is empowered to enforce the act. The act imposes record-keeping and reporting requirements on employers and requires them to post notices in the workplace to inform employees of their rights under the act.
Occupational Safety and Health Act
A federal act enacted in 1970 that promotes safety in the workplace.
Occupational Safety and Health Administration (OSHA)
A federal administrative agency that is empowered to enforce the Occupational Safety and Health Act.
OSHA is empowered to adopt rules and regulations to interpret and enforce the Occupational Safety and Health Act. OSHA has adopted thousands of regulations to enforce the safety standards established by the act.
Specific Duty Standards
Many of the OSHA standards are specific duty standards . That is, these rules are developed for and apply to specific equipment, procedures, types of work, individual industries, unique work conditions, and so on.
specific duty standards
OSHA standards that set safety rules for specific equipment, procedures, types of work, unique work conditions, and so on.
OSHA standards establish safety requirements for safety guards on saws, set maximum exposure levels for hazardous chemicals, and regulate the location of machinery in the workplace.
General Duty Standard
The Occupational Safety and Health Act contains a general duty standard that imposes on an employer a duty to provide employment and a work environment that is free from recognized hazards that are causing or are likely to cause death or serious physical harm to its employees. This general duty standard is a catchall provision that applies even if no specific workplace safety regulation addresses the situation.
general duty standard
An OSHA standard that requires an employer to provide a work environment free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees.
A worker in a factory reports for work and is walking toward his workstation when he trips over some boxes stored on the floor. This would be a violation of the OSHA general duty requirement to provide safe working conditions.
OSHA is empowered to inspect places of employment for health hazards and safety violations. If a violation is found, OSHA can issue a written citation that requires the employer to abate or correct the situation. Contested citations are reviewed by the Occupational Safety and Health Review Commission. Its decision is appealable to the Court of Appeals for the Federal Circuit. Employers who violate the act, OSHA rules and regulations, or OSHA citations are subject to both civil and criminal penalties.
In the following case, the court had to determine if an employer had violated occupational safety rules.
CASE 20.2 FEDERAL COURT CASE Occupational Safety R. Williams Construction Company v. Occupational Safety and Health Review Commission
464 F.3d 1060, 2006 U.S. App. Lexis 24646 (2006) United States Court of Appeals for the Ninth Circuit
“The Company violated 29 C.F.R. Section 1926 for failing to protect employees from cave-ins.”
—Fletcher, Circuit Judge
R. Williams Construction Company (Williams) was constructing a sewer project at a building site. Williams had constructed a trench that was 10 to 12 feet deep, 13 feet wide at the top, and 45 feet long. An earthen slope at one end of the trench provided the only access to and egress from the bottom of the trench. Groundwater seeped into the soil continuously. Williams used a number of submersible pumps to remove the groundwater that seeped into the trench. Two Williams employees, Jose Aguiniga and Adam Palomar, were responsible for cleaning the pumps and did so throughout each working day, as needed.
On the day before the accident, a shoring system that supported the walls of the trench had been removed. On the day of the accident, Aguiniga and Palomar entered the unshored trench to clean the pumps and remained there for about 15 minutes. As the two men were exiting the trench the north end wall collapsed, burying Aguiniga completely and Palomar almost completely. Aguiniga died and Palomar was severely injured. The Occupational Safety and Health Administration (OSHA) conducted an investigation and cited Williams for violating the following OSHA trench safety standards established by 29 C.F.R. Section 1926:
· Failing to instruct its employees in the recognition and avoidance of unsafe conditions and in the regulations applicable to their work environment.
· Failing to ensure that no worker would have to travel more than 25 feet to reach a safe point of egress.
· Failing to ensure that a “competent person” (i.e., one with specific training in soil analysis and protective systems and capable of identifying dangerous conditions) performed daily inspections of excavations for evidence of hazardous conditions.
· Failing to ensure that the walls of the excavation were either sloped or supported.
The administrative law judge (ALJ) conducted a hearing and heard testimony from Palomar, other employees at the jobsite, and the supervisor at the jobsite. The ALJ found that Williams had violated the four OSHA trench safety standards, issued citations against Williams, and imposed penalties of $22,000 on Williams. Williams appealed.
Has Williams violated the OSHA trench safety standards?
Language of the Court
The ALJ’s findings, based upon the witnesses’ testimony regarding Williams’ lack of attention to safety standards, is supported by substantial evidence. Williams had reason to know that its employees would enter the trench on the day of the cave-in and had actual knowledge that two of its employees entered the trench prior to the cave-in. The Company violated 29 C.F.R. Section 1926 for failing to protect employees from cave-ins.
The U.S. court of appeals held that Williams had violated the OSHA trench safety standards and upheld the citations issued against Williams and the imposition of the $22,000 penalty.
1. Did Williams act unethically in this case? Do you think that businesses would take substantial safety precautions without the imposition of OSHA safety standards?
Fair Labor Standards Act
In 1938, Congress enacted the Fair Labor Standards Act (FLSA) to protect workers. 3 The FLSA applies to private employers and employees engaged in the production of goods for interstate commerce. The U.S. Department of Labor is empowered to enforce the FLSA. Private civil actions are also permitted under the FLSA.
Fair Labor Standards Act (FLSA)
A federal act enacted in 1938 to protect workers. It prohibits child labor and spells out minimum wage and overtime pay requirements.
The FLSA forbids the use of oppressive child labor and makes it unlawful to ship goods produced by businesses that use oppressive child labor. The Department of Labor has adopted the following regulations that define lawful child labor: (1) Children under the age of 14 cannot work except as newspaper deliverers, (2) children ages 14 and 15 may work limited hours in nonhazardous jobs approved by the Department of Labor (e.g., restaurants), and (3) children ages 16 and 17 may work unlimited hours in nonhazardous jobs. The Department of Labor determines which occupations are hazardous (e.g., mining, roofing, working with explosives). Children who work in agricultural employment and child actors and performers are exempt from these restrictions. Persons age 18 and older may work at any job, whether it is hazardous or not.
Critical Legal Thinking
1. Should the minimum wage be increased? What are the economic consequences of raising the minimum wage?
The FLSA establishes minimum wage and overtime pay requirements for workers. Managerial, administrative, and professional employees are exempt from the act’s wage and hour provisions. The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked. The federal minimum wage is set by Congress and can be changed. As of 2014, it was set at $7.25 per hour. The Department of Labor permits employers to pay less than the minimum wage to students and apprentices. An employer may reduce the minimum wage by an amount equal to the reasonable cost of food and lodging provided to employees.
There is a special minimum wage rule for tipped employees. An employee who earns tips can be paid $2.13 an hour by an employer if that amount plus the tips received equals at least the minimum wage. If an employee’s tips and direct employer payment does not equal the minimum wage, the employer must make up the difference.
Over half of the states have enacted minimum wage laws that set minimum wages at a rate higher than the federal rate. Some cities have enacted minimum wage requirements, usually called living wage laws , which also set higher minimum wage rates than the federal level.
Go to www.dol.gov/esa/minwage/america.htm . What is the minimum wage for your state?
Under the FLSA, an employer cannot require nonexempt employees to work more than 40 hours per week unless they are paid overtime pay of one-and-a-half times their regular pay for each hour worked in excess of 40 hours that week. Each week is treated separately.
If an employee works 50 hours one week and 30 hours the next, the employer owes the employee 10 hours of overtime pay for the first week.
In the following U.S. Supreme Court case, the Court was called on to interpret the FLSA.
CASE 20.3 U.S. SUPREME COURT CASE Fair Labor Standards Act IBP, Inc. v. Alvarez
546 U.S. 21, 126 S.Ct. 514, 2005 U.S. Lexis 8373 (2005) Supreme Court of the United States
“The relevant text describes the workday as roughly the period from ‘whistle to whistle.’ ”
IBP, Inc., produces fresh beef, pork, and related meat products. At its plant in Pasco, Washington, it employed approximately 178 workers in its slaughter division and 800 line workers. All workers must wear gear such as outer garments, hardhats, earplugs, gloves, aprons, leggings, and boots. IBP requires employees to store their equipment and tools in company locker rooms, where the workers don and doff their equipment and protective gear.
The pay of production workers is based on time spent cutting and bagging meat. Pay begins with the first piece of meat and ends with the last piece of meat. IBP employees filed a class action lawsuit against IBP to recover compensation for the time spent walking between the locker room and the production floor before and after their assigned shifts. The employees alleged that IBP was in violation of the Fair Labor Standards Act (FLSA).
The U.S. district court held that the walking time between the locker room and the production floor was compensable time and awarded damages. The U.S. court of appeals affirmed the district court’s decision. IBP appealed. The U.S. Supreme Court granted a writ of certiorari to hear the appeal.
Is the time spent by employees walking between the locker room and production area compensable under the Fair Labor Standards Act?
Language of the U.S. Supreme Court
The Department of Labor has adopted the continuous workday rule, which means that the “workday” is generally defined as the period between the commencement and completion on the same workday of an employee’s principal activity or activities. The relevant text describes the workday as roughly the period from “whistle to whistle.” Moreover, during a continuous workday, any walking time that occurs after the beginning of the employee’s first principal activity and before the end of the employee’s last principal activity is covered by the FLSA.
The U.S. Supreme Court held that the time spent by employees walking between the locker room and the production areas of the plant was compensable under the Fair Labor Standards Act.
1. Was this the type of situation that the FLSA was meant to address? Was it ethical for IBP not to pay its employees for the time challenged in this case?
Exemptions from Minimum Wage and Overtime Pay Requirements
The FLSA establishes the following categories of exemptions from federal minimum wage and overtime pay requirements:
You need to know that a member of Congress who refuses to allow the minimum wage to come up for a vote made more money during last year’s one month government shutdown than a minimum wage worker makes in an entire year.
William Jefferson “Bill” Clinton,
former president of the United States
· Executive exemption. The executive exemption applies to executives who are compensated on a salary basis, who engage in management, who have authority to hire employees, and who regularly direct two or more employees.
· Administrative employee exemption. The administrative employee exemption applies to employees who are compensated on a salary or fee basis, whose primary duty is the performance of office or nonmanual work, and whose work includes the exercise of discretion and independent judgment with respect to matters of significance.
· Learned professional exemption. The learned professional exemption applies to employees compensated on a salary or fee basis that perform work that is predominantly intellectual in character, who possess advanced knowledge in a field of science or learning, and whose advanced knowledge was acquired through a prolonged course of specialized intellectual instruction.
· Highly compensated employee exemption. The highly compensated employee exemption applies to employees who are paid total annual compensation of $100,000 or more; perform office or nonmanual work; and regularly perform at least one of the duties of an exempt executive, administrative, or professional employee.
· Computer employee exemption. The computer employee exemption applies to employees who are compensated either on a salary or fee basis; who are employed as computer systems analysts, computer programmers, software engineers, or other similarly skilled workers in the computer field; and who are engaged in the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs.
· Outside sales representative exemption. The outside sales representative exemption applies to employees who are paid by the client or customer, whose primary duty is making sales or obtaining orders or contracts for services, and who are customarily and regularly engaged away from the employer’s place of business.
Sometimes employers give employees the title of manager to avoid the minimum wage and overtime pay requirements of the FLSA.
A big-box store labels lower-level workers who actually stock shelves with goods as managers in order to avoid paying them overtime pay.
Family and Medical Leave Act
In February 1993, Congress enacted the Family and Medical Leave Act (FMLA) . 4 This act guarantees workers unpaid time off from work for family and medical emergencies and other specified situations. The act, which applies to companies with 50 or more workers as well as federal, state, and local governments, covers about half of the nation’s workforce. To be covered by the act, an employee must have worked for the employer for at least one year and must have performed more than 1,250 hours of service during the previous 12-month period.
Family and Medical Leave Act (FMLA)
A federal act that guarantees workers up to 12 weeks of unpaid leave in a 12-month period to attend to family and medical emergencies and other specified situations.
Covered employers are required to provide up to 12 weeks of unpaid leave during any 12-month period due to the following:
1. The birth of and care for a child.
2. The placement of a child with an employee for adoption or foster care.
3. A serious health condition that makes the employee unable to perform his or her duties.
4. Care for a spouse, child, or parent with a serious health problem.
Critical Legal Thinking
1. What are the provisions of the Family and Medical Leave Act? What are the public policies that are promoted by the FMLA?
Leave because of the birth of a child or the placement of a child for adoption or foster care cannot be taken intermittently unless the employer agrees to such an arrangement. Other leaves may be taken on an intermittent basis. The employer may require medical proof of claimed serious health conditions.
An eligible employee who takes leave must, on returning to work, be restored to either the same or an equivalent position with equivalent employment benefits and pay. The restored employee is not entitled to the accrual of seniority during the leave period, however. A covered employer may deny restoration to a salaried employee who is among the highest-paid 10 percent of that employer’s employees if the denial is necessary to prevent “substantial and grievous economic injury” to the employer’s operations.
Consolidated Omnibus Budget Reconciliation Act and Employee Retirement Income Security Act
In addition to the statutes already discussed in this chapter, the federal government has enacted many other statutes that regulate employment relationships. Two important federal statutes are the Consolidated Omnibus Budget Reconciliation Act and the Employee Retirement Income Security Act. Both are discussed in the following paragraphs.
Consolidated Omnibus Budget Reconciliation Act
The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 5 provides that an employee of a private employer or the employee’s beneficiaries must be offered the opportunity to continue his or her group health insurance after the voluntary or involuntary termination of a worker’s employment or the loss of coverage due to certain qualifying events defined in the law. The employer must notify covered employees and their beneficiaries of their rights under COBRA. To continue coverage, a person must pay the required group rate premium. Under most circumstances, COBRA coverage is available for 18 months after employment has ended. Government employees are subject to parallel provisions found in the Public Health Service Act.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
A federal law that permits employees and their beneficiaries to continue their group health insurance after an employee’s employment has ended.
Employee Retirement Income Security Act
Employers are not required to establish pension plans for their employees. If they do, however, they are subject to the record-keeping, disclosure, fiduciary duty, and other requirements of the Employee Retirement Income Security Act (ERISA) . 6 ERISA is a complex act designed to prevent fraud and other abuses associated with private pension funds. Federal, state, and local government pension funds are exempt from its coverage. ERISA is administered by the Department of Labor.
Employee Retirement Income Security Act (ERISA)
A federal act designed to prevent fraud and other abuses associated with private pension funds.
Among other things, ERISA requires pension plans to be in writing and to name a pension fund manager. The pension fund manager owes a fiduciary duty to act as a “prudent person” in managing the fund and investing its assets. No more than 10 percent of a pension fund’s assets can be invested in the securities of the sponsoring employer.
Vesting occurs when an employee has a nonforfeitable right to receive pension benefits. First, ERISA provides for immediate vesting of each employee’s own contributions to the plan. Second, it requires employers’ contributions to be either (1) totally vested after five years (cliff vesting) or (2) gradually vested over a seven-year period and completely vested after that time.
The U.S. government has established several programs that provide benefits to workers and their dependents. Two of these programs, unemployment compensation and Social Security, are discussed in the following paragraphs.
In 1935, Congress established an unemployment compensation program to assist workers who are temporarily unemployed. Under the Federal Unemployment Tax Act (FUTA) 7 and state laws enacted to implement the program, employers are required to pay unemployment contributions (taxes). The tax rate and unemployment wage level are subject to change. Employees do not pay unemployment taxes.
Compensation that is paid to workers who are temporarily unemployed.
State governments administer unemployment compensation programs under general guidelines set by the federal government. Each state establishes its own eligibility requirements and the amount and duration of the benefits. To collect benefits, applicants must be able to work and be available for work and seeking employment. Workers who have been let go because of bad conduct (e.g., illegal activity, drug use on the job) or who voluntarily quit work without just cause are not eligible to receive unemployment benefits.
In 1935, Congress established the federal Social Security system to provide limited retirement and death benefits to certain employees and their dependents. The Social Security system is administered by the Social Security Administration . Today, Social Security benefits include (1) retirement benefits, (2) survivors’ benefits to family members of deceased workers, (3) disability benefits, and (4) medical and hospitalization benefits (Medicare).
A federal system that provides limited retirement and death benefits to covered employees and their dependents.
Under the Federal Insurance Contributions Act (FICA) , 8 employees must make contributions (i.e., pay taxes) into the Social Security fund. An employee’s employer must pay a matching amount. Social Security does not operate like a savings account. Instead, current contributions are used to fund current claims. The employer is responsible for deducting employees’ portions from their wages and remitting the entire payment to the federal government.
Under the Self-Employment Contributions Act , 9 self-employed individuals must pay Social Security contributions, too. The amount of tax self-employed individuals must pay is equal to the combined employer–employee amount.
Failure to submit Social Security taxes subjects the violator to interest payments, penalties, and possible criminal liability. Social Security taxes may be changed by act of Congress.