Independent Contractor Misclassification – The Cases and Settlements Continue
Whether the economy and jobs market is good or bad, whether working from home or from an office, some things never change. While the types of jobs and workers involved may vary from gig-workers, to phone sex operators, to oil, gas and industrial construction or inspectors…and everything in between, the wage theft scheme never changes – label the workers as “1099s” or “independent contractors” and attempt to avoid paying time and one-half (or even double time in California) for overtime hours worked.
The Trump administration has been actively working to undo the Obama administration’s crack down on misclassification and undermine its position that most workers are employees, not independent contractors. Now, fearing a Trump loss in November, the Department of Labor is trying to rush a pro-business redefinition of who is an independent contractor that would tip the scales in favor of companies seeking to avoid overtime pay and other benefits due employees.
In the meantime, lawsuits to recover back overtime pay for misclassified independent contractors continue to be filed…and successfully settled. If you have been misclassified as an independent contractor, do not miss out on your opportunity to recoup the wages you have been denied.
Examples of Recent Cases and Settlements
$400,000 for Direct Care Workers
A $400,000 judgment was agreed to by a company that provides adult community residential rehabilitation homes for individuals with disabilities in Pittsburgh, Pennsylvania. This payment resolved a lawsuit in the Western District of Pennsylvania containing claims related to violations of the overtime and recordkeeping requirements of the Fair Labor Standards Act (FLSA) on behalf of almost 100 employees.
The settlement follows WHD findings that the employer failed to maintain records of the number of hours employees worked and misclassified as independent contractors all workers performing direct care. As a result of the improper classification, the employer failed to pay overtime to employees when they worked more than 40 hours in a workweek, as required by the labor laws.
The judgment orders the company and its owner to pay $182,624 in back wages, plus an equal amount in liquidated (double) damages as well as $34,752 in civil money penalties due to the willful nature of the violations.
$411,010 for Restaurant Workers
The operator of an Atlanta-area multi-location restaurant agreed to pay $411,010 in back wages to over 150 employees at locations across Georgia, for violating minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).
The restaurants had incorrectly classified employees as independent contractors, leading to numerous violations of the labor laws. The restaurant operator violated federal overtime requirements by paying straight-time rates for all the hours employees worked, failing to pay workers time and one-half for overtime when they worked more than 40 hours in a workweek. The employer also failed to combine hours employees worked between multiple locations owned by the business in a single workweek when determining whether overtime was due. For example, if an employee worked 35 hours at one location and 15 hours at another location, all in the same workweek, they were paid for 50 hours at straight time. Because all locations were essentially run as a single enterprise, all hours over 40 should have been considered overtime and paid at time and one-half the regular hourly rate.
Additional violations resulted from the employer’s practice of requiring tipped employees to perform cleaning tasks while off the clock and failing to record or pay for that time. The employer also made illegal deductions from tipped employees’ pay to account for incorrect orders and customer walkouts, resulting in wage violations when the deductions caused the employees’ hourly pay to fall below the federal minimum wage of $7.25. In addition, the employer violated recordkeeping requirements when it failed to record all the hours employees worked, deductions it made from employees’ pay, and the amounts of cash tips claimed by tipped employees.
$1.5 Million for Drivers
A lawsuit filed in the U.S. District Court, Eastern District of Michigan against a transport company and its owner and operations manager seeks an injunction and more than $1.5 million in overtime back wages and liquidated damages for approximately 700 drivers employed by the company.
The company is alleged to have violated the Fair Labor Standards Act by misclassifying drivers, who move new vehicles among different yards throughout the metro-Detroit area, as independent contractors. This misclassification led the employer to pay straight time for all the hours the employees worked, failing to pay overtime when they worked more than 40 hours in a workweek.
$44,000 for Clean-Up Workers
A cleaning and restoration company in Austin, Texas agreed to pay $44,400 in back wages to a small group of employees to resolve overtime violations of the Fair Labor Standards Act (FLSA) arising out of the improper classification of workers as independent contractors when they were, in fact, employees. As a result of the misclassification, the employer failed to pay those employees time and one-half for overtime when they worked more than 40 hours in a work week.
What to Do If You Need Help Determining Who is an Employee and Who is an Independent Contractor
Although compliance with the wage and labor laws is technically the sole obligation of the employer, these cases highlight how important it is for not just employers, but also for workers, to familiarize themselves with federal and state wage laws to determine who is an employee and who is an independent contractor (1099). Both have a lot of money at stake on this issue and should seek guidance from an overtime pay lawyer if they have any doubts as to compliance.
If you have questions or believe that you have been the victim of wage theft due to an improper independent contractor classification scheme, contact us for a free and confidential review of your situation.