Lawsuit Investigation: Employees Who are Misclassified as Independent Contractors
Berger Montague is investigating potential class action lawsuits on behalf of employees who were misclassified as independent contractors by their employers.
Why would my employer misclassify me as an independent contractor?
There are two possibilities. The company could be trying to save money-businesses that hire independent contractors instead of employees don’t have to pay unemployment taxes, the minimum wage, overtime pay, or workers’ compensation insurance. The other possibility is that the company is confused by the federal and state labor laws that govern the distinction between employees and independent contractors.
How do I know if I should be classified as an independent contractor or employee?
According to the Department of Labor (“DOL”), if you’re in business for yourself, you’re an independent contractor. If you’re economically dependent on the company, you’re an employee. The DOL identifies six factors that determine whether a worker is economically dependent on the company they’re working for:
- The extent to which the work performed is an integral part of the employer’s business: If the work performed by a worker is integral to the employer’s business, it is more likely that the worker is economically dependent on the employer and is therefore an employee.
- Whether the worker’s managerial skills affect their opportunity for profit and loss: If the worker’s managerial skills do affect their opportunity for profit and loss, it is less likely that the worker is economically dependent on the employer and is therefore an independent contractor.
- The relative investments in facilities and equipment by the worker and the employer: The worker must make some investment compared to the employer’s investment in order for there to be an indication that they are an independent contractor.
- The worker’s skill and initiative: The worker’s skills should demonstrate that they exercise independent business judgement in order to suggest they are an independent contractor.
- The permanency of the worker’s relationship with the employer: Permanency or indefiniteness in the worker’s relationship with the employer suggests that the worker is an employee, as opposed to an independent contractor.
- The nature and degree of control by the employer: An independent contractor generally works free from control by the employer. Analysis of this factor includes who sets pay amounts and work hours, who determines how the work is performed, and whether the worker is free to work for others and hire helpers.
Which industries are at risk for employee misclassification?
Below is a list of industries that were either targeted by government investigations or faced with class action lawsuits over the classification of their workers. Keep in mind that this list is not exhaustive.
- Home products installation
- Banking, insurance, and financial services
- Pharmaceuticals and health care
- Computer programming
- Adult entertainment
- Cosmetics, fashion, and beauty
- Staffing services
- Cleaning and janitorial services
- Courier, delivery, and logistics
- Taxi, limo, and car rental services
- Amateur sports
- Publishing and editing
- Marketing and communications
- Environmental services
- Food and beverage services
Have independent contractor lawsuits been successful in the past?
Yes. In November 2015, a New York appeals court upheld a decision that a Utah-based trucking company called C.R. England’s independent contractors were effectively employees, ruling that the company must pay additional unemployment insurance contributions on the truckers’ earnings.
In January 2016, Coldwell Banker paid $4.5 million to thousands of California real estate agents and associates who worked under the company’s brokers to settle claims that they were wrongly classified as independent contractors and denied business-expense reimbursement.
In June 2016, FedEx paid $240 million to settle class actions by delivery drivers in 20 states who said they were misclassified as independent contractors and shorted on wages.
If you’re unsure whether you’re an employee or independent contractor under the law, contact Berger Montague. We’ll help you determine whether you’ve been misclassified. If you’re really an employee working as an independent contractor, you could be owed money through a class action lawsuit.
Do I have to pay to consult with an attorney?
We are happy to talk with you about your potential claims free of charge. If we decide to represent you in a lawsuit, we will enter into a written contingent fee agreement with you. A contingent fee agreement means we only get paid if we win, and that we will receive our fees from the amount paid by the Defendant in the case.
Please contact us to discuss the details of your case. You may:
Related Information About Employment Law
- Wage & Hour Class Actions
- Discrimination Class Actions
- Worker Adjustment and Retraining Notification Act (“WARN Act”) Class Actions