Case developments last month involved independent contractor misclassification lawsuits in the Southwest, Southeast, and Mid-Atlantic states. While more IC misclassification lawsuits have been brought in California than any other state, a quick search of our 250-plus posts published since we began this blog includes reports on several thousands of cases, legislative developments, and administrative initiatives in all 50 states and the District of Columbia. In terms of lawsuits, class action lawyers have taken the lead in filing IC misclassification class and collective actions across the county. But many cases have also been brought by federal and state enforcement agencies, such as the first of four cases reported below, which was commenced by the U.S. Department of Labor and resulted in a mid-seven figure judgment against two related companies. In the face of these types of litigation risks, many companies have taken steps to minimize IC misclassification exposure by using a process such as IC Diagnostics (TM) to restructure, re-document, and/or re-implement their IC relationships in a sustainable and customizable manner, consistent with their business models. Had the two companies targeted by the Labor Department in the first case we discuss below used a process such as IC Diagnostics, they likely would have avoided the lawsuit altogether or, even if sued, would have maximized their chances of success.
In the Courts (4 cases)
DEPARTMENT OF LABOR EXACTS $5.6 MILLION FROM ARIZONA AUTO PARTS DISTRIBUTOR IN IC MISCLASSIFICATION CASE BROUGHT BY LABOR DEPARTMENT. Last month, the U.S. Department of Labor obtained a consent judgment ordering an Arizona auto parts distributor and logistics firm to pay $5.6 million in back wages and liquidated damages to hundreds of delivery drivers misclassified as independent contractors and not employees. According to a News Release issued on January 12, 2023 by the DOL’s Wage and Hour Division, the U.S. District Court for the District of Arizona ordered joint employers Parts Authority Arizona LLC and Arizona Logistics Inc., operating as Diligent Delivery Systems, to pay $2.8 million in back wages and an equal amount in liquidated damages to 1,398 misclassified drivers under the federal Fair Labor Standards Act (FLSA). The consent judgment also requires Parts Authority to treat the drivers as employees and not ICs. Principal Deputy Wage and Hour Administrator Jessica Looman remarked: “Parts Authority, Diligent Delivery Systems and [the owner] misclassified nearly 1,400 delivery drivers as independent contractors, denying them of their rights to minimum wage, overtime pay and other benefits and protections [under the FLSA]. We will continue to identify and address misclassification that not only hurts the workers who are deprived of their wages, but also puts responsible employers at a competitive disadvantage.” Secretary of Labor v. Arizona Logistics Inc., No. 16-cv-04499 (D. Ariz. Jan. 9, 2023).
DELIVERY DRIVERS SUE GIG COMPANY IN PROPOSED NATIONWIDE COLLECTIVE ACTION IN FLORIDA FOR IC MISCLASSIFICATION. Delivery drivers in Florida have filed a proposed nationwide collective action against DoorDash alleging violations of the minimum wage and overtime provisions of the FLSA due to their alleged misclassification as ICs. The collective action complaint asserts that the drivers are required to follow certain policies and rules to avoid termination; that the company retained the right to supervise and control the terms and conditions of the drivers’ relationship; and that the company determines the rate and method of payment of drivers’ compensation. We anticipate that the company will make a motion to compel arbitration and will assert that its classification of the drivers fully meets the test for IC status under the FLSA. Silva v. DoorDash Inc., No. 6:23-cv-00104 (M.D. Fla. Jan. 20, 2023).
PENNSYLVANIA LAST MILE LOGISTICS FIRM SUED BY DRIVERS IN IC MISCLASSIFICATION CLASS ACTION. Last mile delivery company, LaserShip Inc., was sued last month in a class and collective action filed in Pennsylvania federal court. The lawsuit, brought by a driver on behalf of himself and other drivers, allege wage and hour violations under the FLSA and various Pennsylvania state laws. The plaintiff claims, among other things, that, as employees, the drivers were not paid overtime compensation for hours worked in excess of forty per workweek and were subjected to unlawful deductions from their pay in violation of the Pennsylvania Wage Payment and Collection Law. In support of the driver’s misclassification claims, he asserts that the company exercised “near total control” over how the drivers perform their duties, including determining their routes, setting their schedules, and determining the number of packages each one needs to deliver. Owusu v. LaserShip Inc., No. 1:23-cv-00074 (M.D. Pa. Jan. 13, 2023).
ANOTHER GOLF CADDIE IC MISCLASSIFICATION LAWSUIT IS FILED IN NEW YORK; THIS TIME IN A CLASS AND COLLECTIVE ACTION CASE. Adding to the recent round of golf caddie IC misclassification lawsuits is a proposed class and collective action filed in a New York federal court against the Hudson National Golf Club for minimum wage and overtime compensation violations under the FLSA and New York Labor Law. We reported in a blog post last month on the sports industry being targeted for IC misclassification lawsuits including a lawsuit by a caddie in Westchester County, New York. This new lawsuit targets another notable golf course there. The plaintiff, who seeks to represent other caddies at the Hudson National Golf Club, alleges that he worked between 70 to 80 hours per week yet did not receive the overtime compensation to which he claims to be entitled as an employee. The complaint claims that the Club and its caddie masters maintained formal and functional control over the caddies; had the power to hire and fire caddies; supervised the caddies and threatened them with “punishments” for perceived infractions; controlled the caddies’ work schedules; assigned caddies to specific golfers without the caddies’ ability to reject the assignments; directed the caddies to provide services other than caddying; punished caddies by assigning them to undesirable golfers; required the caddies to wear uniforms; and controlled the caddies’ rates and method of payment. The complaint also alleged that the caddies used the Club’s equipment such as golf carts and rakes; were not required to make large up-front investments to provide their services; did not bear a significant risk of loss; did not have to possess special skills; performed a “discrete line job that was integral” to the Club’s business as a golf course; had no independent caddie businesses; and worked exclusively for the Club. Anderson v. Hudson National Golf Club Inc., No. 7:23-cv-00522 (S.D.N.Y. Jan. 20, 2023).
The post Independent Contractor Misclassification Cases Proliferate: January 2023 IC Legal News Update appeared first on Independent Contractor Compliance.
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