And what they can do to fight back
RONALD Shephard installed garage doors for Lowe’s, a home improvement retailer that operates nearly 100 stores in California. Lowe’s offers its customers installation services for products bought at its stores. In June 2012, Shephard sued Lowe’s in a class action for misclassification, reimbursement and denial of benefits. The case claimed that Lowe’s misclassified their workers as independent contractors rather than employees. As a result, the workers were denied benefits such as health insurance, basic term life insurance, a retirement savings plan and workers comp insurance.
The workers argued that even though Lowe’s classified them as independent contractors, they were really employees because the company had the right to control, and in fact did control, all aspects of all their installation jobs. The company designated which customers the workers would do installations for. Customers must pay for the installation service directly to the company. The company would then pay the workers. The workers were required to wear Lowe’s shirts and hats. They were specifically instructed to identify themselves to customers and the general public as employees of Lowe’s. The company oversaw all the work performed by the workers, and directed what they could or could not do as installers. The installers were prohibited from working for anyone aside from Lowe’s.
In August 2013, the class of workers, who installed products or performed services for the company in California and who were treated as independent contractors even though the company exercised control and discretion in the performance of their installation services, was granted class certification by the court. Rather than proceed to trial, the parties recently agreed to settle the case for $6.5 million.
The above case is another illustration of how keeping labor costs down by taking unlawful shortcuts does not pay. Misclassifying workers as “independent contractors” results in companies depriving workers of their rights and protections as employees.
Unlike employees, independent contractors do not have to be paid minimum wage, overtime, or missed break. They are not entitled to benefits such as health insurance, retirement or pension benefits, and workers’ compensation protection. There are also no deductions for taxes and Social Security. Some companies pass on the costs of doing business to the “independent contractors” by deducting them from workers’ pay.
There are true independent contractors out there. However, their status is defined by law. Courts look at several factors to determine whether a worker is an employee or an independent contractor. The most important factor is the employer’s right to control the worker’s manner and means of performing the job. If the employer dictates how the worker should do the work, what tasks to accomplish and how to accomplish them, then the worker is an employee and not an independent contractor.
Misclassified employees lose money such as overtime pay, wages for missed breaks, and reimbursements for business expenses. These expenses may include fuel, insurance, living, and other travel expenses; purchasing supplies, tools, materials, or equipment such as cell phones related to work. If the misclassification occurred for several years, the back wages and reimbursements owed may be significant.
An evaluation of whether a worker is an employee or independent contractor involves an analysis and application of technical requirements. “Independent contractors” or “1099 workers” should not hesitate to consult with experienced employment attorneys to determine if they are really employees entitled to greater protections under the law.
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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. Atty. Sayas’ Law Office is located at 500 N. Brand Blvd. Suite 980, Glendale, CA 91203. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com.
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C. Joe Sayas, Jr., Esq. is trial attorney who has obtained several million dollar recoveries for his clients against employers and insurance companies. He has been selected as a Super Lawyer by the Los Angeles Magazine, featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements, and is a member of the Million Dollar-Advocates Forum.