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Aug
2015
24

Driving Miss Classification: Drivers Win More Multi-Million Dollar Independent Contractor Suits

taxi misclassification

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A bevy of recent misclassification cases in California show how widespread the epidemic has become in an array of industries over the past half a decade.  But last week the U.S. Department of Labor (DOL) announced that it had settled with National Consolidated Couriers Inc. for a whopping $5 million in unpaid wages and penalties after it misclassified more than 600 workers as independent contractors.  Court records show that the company began misclassifying drivers in 2010. 

Despite being labeled independent contractors, drivers were forced to wear badges and subjected discipline. The company refused to negotiate their pay.  The DOL also accused the company of destroying records during the federal investigation.

Another case involves Stanford Yellow Taxi Cab of Mountain View, from whom the DOL is seeking $3 million in wages and penalties on behalf of dozens of drivers.  The DOL is accusing the company of misclassifying its drivers and forcing them to work 12-hour shifts, six days a week.  While labeling the taxi drivers as independent contractors, Stanford did not allow the drivers to change their schedules, reach out directly to passengers, or dress how they wanted.  The legal test that is used to determine if a contractor has been misclassified is based on the amount of control a company has over its contractors.  

In a statement, Regional Solicitor Janet Herold of the Labor Department’s Western Region, who litigated both cases, said:

“As these court rulings indicate, the tide is turning against those employers who misuse independent contractor status to take advantage of workers.  The courts recognize the nature of this problem and stand ready to ensure that justice is served.”

In a statement DOL secretary Tom Perez said of misclassification:

“Misclassification is workplace fraud, plain and simple.  It hurts workers by denying them a fair day’s pay for a fair day’s work, and it also undermines the competitiveness of businesses that are playing by the rules. At the Labor Department, through vigilant and vigorous enforcement, we are cracking down on irresponsible employers who game the system and cheat their employees — and that’s what they are: not contractors, but employees.”

StaffingIndustry.com provides the following summary of other misclassification cases currently in the news:

• A case claiming the Yelp Inc. online review site should treat reviewers as employees was dismissed, according to court records. The case, Lily Jeung et al. v. Yelp Inc. has sought class-action status. Contributing reviews to Yelp would at most be characterized as an act of volunteerism, according to the court. And if plaintiffs are at most volunteers, no claim is possible under the Fair Labor Standards Act.

• Fitzhugh Contracting LLC, a logging and trucking contractor based in Alabama, agreed to pay nearly $113,000 in back wages and damages to settle a misclassification case, the US Department of Labor’s wage and hour division announced. A US Labor Department investigation found Fitzhugh Contracting paid 63 workers straight time for all hours worked, in violation of the Fair Labor Standards Act which requires overtime payment of time and a half the employee’s rate of pay for all hours worked beyond 40 in a workweek. The employer also misclassified 46 employees as independent contractors.

• Right-to-control proved a major factor in a recent California Court of Appeals decision that found four Southern California truck drivers were employees, not independent contractors. Logistics provider Seacon Logix used the drivers to haul items from the ports of Los Angeles and Long Beach to warehouses. But drivers took issue with paycheck deductions for use of trucks, and the state Labor Commissioner’s Office and trial court ruled the drivers should be reimbursed because they were employees and not independent contractors. The Court of Appeals agreed saying Seacon exerted “tremendous control,” and independent contractor wording in contracts was not dispositive. The four drivers were awarded a total of $107,803.06.

• Another driver in California filed a lawsuit against Uber claiming the ride-sharing firm misclassified him as an independent contractor, joining other suits already filed, PCWorld reports.

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