Since starting this blog in 2010, we’ve reported independent contractor misclassification class action lawsuits filed against hundreds of businesses in dozens of industries. Yet some industries seem to have been targeted in particular. As we indicated in a guest blog Posted in Fortune in June 2015 and entitled “Is your business on the list of independent contractors? » we have provided a short list of industries that have been attacked in this type of case, including janitorial; recruitment; transport, courier and trucking; laying of cables; oil and gas; landscaping; and carpooling. Only a few industries have been immune to these types of legal challenges through lawsuits or labor and tax agency audits and proceedings, as our monthly review of legal developments in this area of law over the past decade. For this reason, companies across a wide panoply of industries used a process such as IC Diagnosis (TM) to improve their compliance with federal, state and local independent contractor laws.
In the courts (4 cases)
PARTIAL SUMMARY JUDGMENT ENTERED AGAINST SOCIÉTÉ NATIONALE DE CONCIERGERIE COMMERCIAL IN THE TRIAL BY FRANCHISEES. A federal district court in California partially granted a motion to certify a class of more than 100 commercial cleaning franchisees, then partially granted their motion for summary judgment on certain wage and hour claims against a international janitorial cleaning company. The franchisees claim that the company incorrectly classified them as independent contractors instead of employees. The court’s interim order finds janitors to be employees and not independent contractors and applies to franchisee claims of non-payment of minimum wage for travel time and mandatory training, non-reimbursement of expenses incurred for purchase of required uniforms and necessary cleaning supplies and equipment, and for deductions of franchise fees and royalties from cleaning revenue. The order denies class certification as to claims for wages and remaining hours, including alleged violations regarding overtime pay and minimum wage payments for cleaning work. Depianti vs. Jan-Pro Franchising Int’l, Inc.no. 3:16-cv-05961 (13 May 2022).
OHIO CABLE INSTALLERS HAVE BEEN MISTAKENLY CLASSIFIED AS INDEPENDENT CONTRACTORS. The Ohio Supreme Court upheld a ruling by the state’s Bureau of Workers’ Compensation that cable installers are not independent contractors under the state’s workers’ compensation laws. Defendant Ugicom performs underground cable installations as a subcontractor to a national cable company, which uses its website to submit work to Ugicom. This company then retrieves the purchase orders via its web-based system and assigns the assignments to the cable installers. Following an audit of workers’ compensation premiums paid by Ugicom, the Bureau found that some workers had been incorrectly classified as independent contractors instead of employees for workers’ compensation purposes , and claimed $346,800 in unpaid premiums by Ugicom. Applying a multi-factor control right test, the state high court found that the work performed by the installers was part of Ugicom’s regular business; the installers did not exercise their own independent activity; the installers’ contracts with Ugicom contained clauses demonstrating Ugicom’s control; and no special skills were required to perform the work of the installers. While two other factors – installers provide their own tools for the job and they are free to accept and reject opportunities – supported independent contractor status, the Ohio Supreme Court found that in the together, the Bureau had not abused its discretion in determining that the installers were employees “because most of the Bureau’s conclusions regarding the factors were based on evidence on the record.” Ugicom Enterprises, Inc. v. MorrisonNo. 2022-Ohio-1689 (Sup. Ct. Ohio May 24, 2022).
HOME ENERGY COMPANY SETTLE IC INCORRECT CLASSIFICATION CLASS ACTION WITH DOOR-TO-DOOR MERCHANTS. Court approval has been sought to settle a class and class action lawsuit between Pennsylvania home sales agents and two related companies selling home energy contracts. The sales agents alleged that the companies violated the Federal Fair Labor Standards Act and state wage and hour laws resulting from the alleged misclassification of the agents as independent contractors. According to the complaint, the sales agents argue that they were paid entirely on commission, regardless of the number of hours worked per week, with no overtime pay, which resulted in pay below minimum wage. Officers also claimed that they were regularly required to work a certain number of hours; had to wear a company uniform; had to follow a scenario provided by the companies; they were told which areas to target sales in each day; received the necessary tools and equipment; did not have any specialized skills to perform the work; were not allowed to hire or subcontract other qualified individuals to provide additional sales work to improve their profitability; had a minor relative investment compared to companies; and were an integral part of business activity. The settlement, which releases FLSA claims only, provides a gross settlement amount of $500,000 for a limited number of class members, with each of the two companies contributing $250,000. McWilliams v Platinum Advertising LLCNo. 2:21-cv-00607 (WD Pa. 4 May 2022).
TEXAS DIRECTIONAL DRILLS HAVE BEEN INDEPENDENT CONTRACTORS. The United States Court of Appeals for the Fifth Circuit upheld the granting of summary judgment by a Texas district court in favor of a drilling company accused of wrongfully classifying a directional driller as a as an independent contractor. Directional drillers guide the path of drilling and provide guidance on how to most effectively implement the well plan provided by the company’s clients. The Company provides customers with oil and gas directional drilling, horizontal and mud motor drilling, and measurement-while-drilling services and tools. The plaintiff alleged that the company violated the FLSA and New Mexico’s minimum wage law by improperly classifying him as an independent contractor and failing to pay him overtime compensation. The company sought summary judgment, which was granted, and the plaintiff appealed the decision regarding the FLSA claims only. In affirming the district court’s decision, the Fifth Circuit found that only minimal control was exercised over the plaintiff because he had not been instructed on how to perform the drilling calculations or operate the plan. of preconceived wells, and was free to accept or reject company gigs; the plaintiff had sufficient opportunity for profit and loss; the applicant was highly qualified; and the plaintiff’s relationship with the company was not permanent and was project-based. The only factor weighing in favor of employee status, according to the Fifth Circuit, was the relative investments of the company versus the plaintiff. The Court gave little weight to the latter factor given the nature of the industry and work involved. Hargrave v AIM Directional Services, LLCno. 21-40496 (5th Cir. May 11, 2022).
Legislative developments (2 items)
GEORGIA CHANGES ITS INDEPENDENT CONTRACTOR TEST FOR UNEMPLOYMENT PURPOSES. On May 2, the Georgian legislature passed a law, effective July 1, 2022, that changes the definition of employment for unemployment insurance purposes under Georgia’s Job Security Law. Later last month, Governor Brian Kemp signed into law the law HB 389, which changes the definition of employment to presume that a person is an employee if they provide services for remuneration, unless the company can establish a) that the person has been and will continue to be free from all control or direction over the performance of his or her services, and (b) that the individual is habitually engaged in an independently established trade, occupation, profession or business. Under the new law, freedom of control or direction must be determined “as demonstrated by the fact that the individual” (i) can provide services to other businesses (including concurrently), (ii) is free to accept or refuse commitments without consequence, (iii) is bound by a minimum number of hours or orders to be obtained, (iv) can establish his own schedule, (v) receives minimal instructions and no supervision direct, (vi) has no territorial or geographic restrictions, and (vii) is not required to perform, behave or act in any particular manner in order to perform the Services in question. The law further provides that a decision by the Georgian Ministry of Labor must take into account “all the circumstances”. The law provides two sectoral exceptions to the definition of employment: services provided by a music industry professional and services performed or facilitated by a network company, such as ride-sharing companies and delivery services. , provided specific factors are met for each exception. .
SEATTLE CITY COUNCIL PASSES ORDER TARGETING APP-BASED DELIVERY DRIVERS. The Seattle City Council unanimously passed “PayUp” legislation on May 31, 2022 that will guarantee app-based delivery drivers certain wage protections, including at least minimum wage plus expenses and tips. According to the Council’s official website published on that date, this law would, among other things, make Seattle the first city in the country to offer such a guarantee. In addition to guaranteeing a minimum wage, the law aims to increase transparency in the distribution of payments between workers and app-based companies, and to protect the flexibility of working arrangements. One of the bill’s sponsors, Lisa Herbold, said in a Press release“We live in an expensive city; many delivery people earn less than minimum wage after expenses and tips are taken into account. App-based work is one of the fastest growing sectors of our economy and more and more workers are turning to this type of work. Passing this legislation will help tens of thousands of couriers make ends meet while retaining their flexibility.