Winning a lawsuit is not always just about the money. For many plaintiffs, the goal is to put a stop to illegal behavior that treats a certain group of people unfairly. For this purpose, a lawsuit can have far reaching consequences, beyond attaining restitution for the plaintiff, or plaintiffs, of just one lawsuit. For example, FedEx recently settled a class action wage and hour lawsuit in which the plaintiffs alleged they were misclassified as independent contractors.
Unlike employees, independent contractors do not get any benefits, such as healthcare, a 401k, or social security. They are expected to cover all those costs on their own, in addition to any necessary business expenses. This means that hiring independent contractors is often a much cheaper option for a company than hiring new employees.
But there’s another side to the coin. Because independent contractors bear a heavier burden than employees, they are also afforded much more freedom than employees. Under the federal Fair Labor Standards Act (FLSA), in order to be paid as an independent contractor, a worker must be able to control when and where she works, the environment she works in, and what she wears while working. She should also be able to take on new clients and work with them whenever necessary. Any worker that does not have all these rights needs to be classified as an employee and paid accordingly.
A number of businesses have recently been charged with allegations of misclassifying drivers as independent contractors, when they should be classified as employees. When this happens, workers are saddled with all the responsibilities of independent contractors, without any of the benefits, which is illegal.
Last year, a federal appeals court ruled against FedEx, having found that the delivery company had allegedly misclassified 2,300 drivers as independent contractors. The decision covered employees who worked for FedEx any time between 2000 and 2007 in California and Oregon.
But that’s just one of the class action wage and hour lawsuits FedEx is facing across the country. Recently, FedEx agreed to pay $228 million to settle another wage and hour lawsuit alleging drivers were improperly denied wages as a result of being misclassified as independent contractors. The decision to settle, while continuing to deny any wrongdoing, was a direct result of the federal court’s ruling against FedEx last August. This proves that, even though a lawsuit can only have a direct impact on those involved in the lawsuit, a successful lawsuit can still affect people all over the United States who face similar
However, this is still just one settlement that resolves the claims of one group of drivers for the giant delivery service. Numerous class action wage and hour lawsuits are still being argued in trial courts and appellate courts across the country. Hopefully the federal decision in favor of the drivers last year, combined with the recent settlement, will encourage FedEx to settle the other lawsuits. Even better, it could encourage FedEx to implement changes to its policies and procedures to make sure employees are never again allegdly misclassified as independent contractors.The Chicago overtime lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims against many companies who misclassify employees as independent contractors or managers or for erasing or altering time sheets or time records, pressuring workers not to report or record overtime, failing to pay for time spent on security checks, and otherwise failing to pay workers for overtime and other wages. If you are the victim this practice call us at (312) 869-4095 or contact us online.