Virginia Is for Compliers: State Can Now More Easily Pursue Misclassification, Subcontracting Violators

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Virginia’s penalties for misclassifying workers in order to avoid paying insurance costs got a boost this month thanks to a new law.  The Virginia Workers Compensation Act made it easier for the state to take action against violators, according to Virginia Workplace Law:

The civil penalty is now up to $250 per day for each day of noncompliance, subject to a maximum penalty of $50,000, plus collection costs.”  The VWCA requires every business owner with more than two employees (a part-time worker is counted as one employee) to have coverage for such worker.

Language in the law will curtail unscrupulous employers from rebranding their employees as independent contractors, the Workers Compensation Commission said:

“Employers should also be aware, designating a worker as an ‘independent contractor’ does not necessarily mean they are not an employee.  Workers’ compensation looks to whether the business exerts control over the manner and means of how the work is performed. In the event of a claim, the facts of the work circumstances will determine if the individual is covered for workers’ compensation, regardless of payment on a 1099 designation.”

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Fedex Settles Million-Dollar Misclassification Case, a Dozen Similar Suits Pending Nationwide

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In a settlement of a federal court lawsuit in Maine, FedEx Ground has agreed to pay $5.8 million in back pay and legal fees to 141 drivers it misclassified as independent contractors.  The lawsuit claimed that FedEx denied overtime pay and made improper deductions in addition to requiring drivers to pay for their expenses.  While there were seven named plaintiffs in the case, only two signed the settlement.  The others felt the amount being paid out by FedEx was too low.

 The federal court judge noted that if the case had gone to trial, damages could have topped $10 million. Nonetheless, the court found the settlement fair and adequate:

 In approving the settlement last week, the court acknowledged that “the proposed settlement…is clearly a compromise that discounts to some degree…the drivers’ total claims” but is a “fair trade-off for the uncertainties of trial and appeal and a prolonged delay in receiving any money. In that regard, the court noted that FedEx Ground has won some independent contractor misclassification cases and lost others.

The court also found that the amount (one-third of the $5.8 million settlement) sought by the lawyers for the class for counsels’ legal fees, costs, and expenses was reasonable.

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Lowe’s Settles Independent Contractor Misclassification Case

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Buying something at Lowe’s? Need help putting it where it belongs, hooking it up, making it work? “Get it installed by a Lowe’s professional,” Lowe’s advertises.

Over 4000 such “Lowe’s professionals” in California are members of the plaintiff class in an action alleging that Lowe’s misclassified its installers as independent contractors, rather than employees, thus depriving them of a variety of employee benefits, from workers compensation insurance coverage to 401(k) plan participation.

Without admitting liability, Lowe’s recently settled the case after mediation for a sum that could be as much as $6.5 million, depending on how many of the installers actually file claims and what damages they can prove (and assuming the proposed settlement is approved by the court). Plaintiffs’ attorneys fees may be up to 25% of that amount.

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Nashville Drywall Firm To Pay State’s Largest Worker Misclassification Fine

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A $300,000 fine for misclassifying construction workers may be having a deterrent effect, according to officials with the Tennessee Department of Labor. The penalty was the largest to-date in a statewide crackdown on labeling full-time employees as contract workers.

TJ Drywall of Nashville was doing $2 million a year in business but only paying five percent of what regulators say they should have been in workers comp and unemployment insurance premiums.

The Labor Department’s Scott Yarbrough says the practice remains rampant in the construction industry.

“It upsets me when somebody who is following the rules – paying their insurance, paying their taxes like they’re supposed to. And they’re trying to compete with people who aren’t withholding any of that or paying for any of the benefits for somebody who is in fact an employee.”

California Truck Drivers Go On Indefinite Strike

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More than 120 truck drivers who haul consumer goods from the ports of Los Angeles and Long Beach to retail warehouses launched an indefinite strike on Monday, according to MSNBC, escalating a tumultuous multi-year union organizing effort among the drivers. The consumer brands whose supplies could be affected by the strikes include Skechers shoes, Ralph Lauren, Walmart, and Home Depot, according to a press release from strike organizers.

The core complaint underlying the union drive is that companies like Total Transportation Services, Inc. (TTSI), Green Fleet Systems, and Pacific 9 Transportation deem their drivers “independent contractors” in order to avoid paying overtime and prevent their workers from enjoying various other labor law protections. The drivers say they are misclassified and should be treated as full employees, and have begun to flood the California Labor Commission with wage theft complaints in order to fight the misclassification and seek the pay that the “independent contractor” label has cost them over the years.

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NY Sets Classification Rules

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New York has joined a growing number of states tackling the issue of employment classification for commercial truck drivers. Following through on a mandate in a bill passed in January, the state’s Department of Labor released new standards this week to clarify whether a driver is an employee or an independent contractor.

“The trucking industry is vital to how our state operates, from shipping materials that make our buildings, to parts and systems that keep us safe, to the food and products we use every day,” says New York Commissioner of Labor Peter Rivera. “For too long, truck drivers have sought to have a clear standard. This law provides clarity for employers and truckers.”

California Truckers Will Be Paid $2.2 Million in Misclassification Case

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Pacer Cartage, a California logistics company, is being ordered to pay more than $2.2 million in back pay to short-haul truck drivers it illegally misclassified as independent contractors, Think Progress reports. The California Labor Commissioner’s Division of Labor Standards Enforcement says that the company knew or should have known that the drivers were employees and not contractors and Pacer is required to pay restitution, attorney’s fees and interest.

Misclassification is a tactic corporations engage in to try to exempt themselves from having to comply with the Fair Labor Standards Act, minimum wage laws and other laws protecting workers. If employees are classified as private contractors instead of employees, they are excluded from coverage under many labor laws and can be paid less. The truckers, for instance, were not paid by Pacer for time spent doing things like waiting at a port to pick up a load or for reimbursement of job-related expenses.

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AG Announces Partnership to Combat Misclassification

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NEW YORK – Attorney General Eric T. Schneider­­man has signed a memorandum of understanding that allows his office to cooperate with both the federal and New York Departments of Labor to battle worker misclassification.

The three offices will share information in an effort to catch employers that wrongly classify employees as independent contractors.

The move puts New York on board a federal initiative launched in 2010 as part of the Obama administration’s “Middle Class Task Force.” To date, California, Colo­­rado, Con­­nec­­ti­­cut, Hawaii, Illinois, Iowa, Lou­­isi­­ana, Maryland, Massachusetts, Min­­ne­­sota, Missouri, Montana, Utah and Wash­­ington have signed similar agreements. The initiative claims to have collected $18.2 million in back wages for over 19,000 employees.

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The Department of Labor Has Your Back

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The federal Department of Labor (DOL) budget for fiscal year 2015 is official, and it includes new programs and additional protections for workers and employees. This is exciting news for millions of Americans, including the long-term unemployed, students who want to work when they graduate, and current employees whose employers may not be following the law as they should. Check out the changes that are being put in place to help you.

The Death of an Employer Scam

Posted by National Alliance for Fair Contracting on

One of the most pervasive scams that employers use to lower their workers’ wages is misclassification – that is, turning their workers into independent contractors or temps when they are actually employees. Misclassification shouldn’t be mistaken for the whim of an errant employer. On the contrary, it’s a strategy that has been used to transform entire industries.

From an employer’s perspective, the benefits of misclassification are clear. Turning a worker into a temp or a free agent obviates any need to provide him with benefits. It shields the employer from legal liability for health and safety violations, for industrial accidents, or from wage and hour violations. It invariably lowers such workers wages as well. It makes it impossible for workers to form unions.

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