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Postmates Settles “Independent Contracts” Overtime Class Action

The idea of being one’s own boss is very appealing to many people all across the country, although it often sounds better in theory than it works out to be in practice.

The rise of the so-called “gig economy” in recent years, as a reaction to both the recent Great Recession and an increased ability to telecommute and do odd side jobs on a regular basis, has given millions of Americans the chance to be their own boss.

But are they really their own boss?

The federal Fair Labor Standards Act (FLSA) provides certain protections for employees, including defining overtime, requiring they be paid a premium hourly rate for all the overtime they spend working, defining minimum wage, and requiring employers to help pay taxes and social security benefits for each of their employees.

Independent contractors don’t have any of these protections and they have to pay all their own taxes, including Social Security and a self-employment tax. But because they are on their own, the FLSA requires workers to meet very specific criteria in order to be classified as an independent contractor. For example, true independent contractors must be able to control their own hours, what they wear while working, the space and environment in which they perform their work, their rate of pay (as well as how they get paid), etc. Any worker that does not meet all of these requirements must be classified as an employee, rather than an independent contractor, and compensated accordingly.

According to a recent class action wage and hour lawsuit against Postmates, the on-demand delivery service allegedly misclassified its workers as independent contractors, even though they allegedly did not meet all the requirements for that classification under the FLSA.

The class action lawsuit was filed in California federal court and represented couriers who worked for the delivery service in California, New York, Massachusetts, and Washington D.C. The lawsuit was seeking to represent additional couriers all over the country.

Postmates and the class of plaintiffs, as it exists with couriers in the three states and Washington D.C., have recently agreed to settle the lawsuit for $8.75 million, of which $100,000 would go to settle the claims of violations of the Private Attorneys General Act. Approximately three quarters of the total settlement amount would be paid to the state, with the remaining quarter being paid to the plaintiffs themselves.

Of the gross payment, attorneys representing the plaintiffs are requesting one quarter of the gross payment (a little more than $2 million), while $300,000 will be set aside for the settlement administrator.

As part of the agreement, Postmates has also agreed to change its termination policy to state that it will only terminate couriers for specific reasons, and will offer them occupational accidental insurance. It will also give couriers a chance to challenge any terminations in arbitration, at Postmates’s own expense.

In his ruling granting preliminary approval, the California federal judge said the settlement agreement is fair to the workers because defining employees vs. independent contractors in the “gig economy” is still relatively new and has yet to be definitively settled in the courts. As a result, the couriers cannot be certain they would receive a ruling in their favor if they were to continue pursuing the dispute in the courts. The settlement agreement is therefore fair and proper for them.

The Chicago class action lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims by waiters and bus boys and other restaurant and hotel workers against national restaurant chains including Hilton, DoubleTree, W, Marriott, Sheraton, Holiday Inn, Extended Stay America, Staybridge Suites, Best Western, HomeTown Buffet, Old Country Buffet, Applebees, Chipotle, Red Lobster, Olive Garden, Cracker Barrel, Outback Steak House, Taco Bell, Burger King, Chili’s, Kentucky Fried Chicken, Starbucks, Dunkin’ Donuts, Wendy’s and hotels for mis-classifying employees as managers or assistant managers, forcing employees to work off the clock at business, failing to share all tips, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, and otherwise failing to pay workers for overtime and other wages. If you are the victim these wage theft practices call us at (312) 869-4095 or contact us online.

The Chicago class action attorneys at the Chicago Overtime Law Center have three decades of experience fighting to help employees who are victims of wage, overtime and tip theft by their employers. We have a team of Chicago unpaid overtime lawyers who concentrate on prosecuting state and nationwide class action lawsuits. Our attorneys work out of Chicago and Oak Brook offices and pursue claims for workers all over the Chicago area including Rolling Meadows and Arlington Heights. We protect unpaid workers who haven’t received overtime throughout the Chicago area including in DuPage, Lake, McHenry, Kane and Cook Counties.

Our Naperville and Schaumburg overtime lawyers are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers mis-classify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

The Chicago Overtime Law Center is based in Chicago, and represents clients throughout the country who have unpaid overtime and other employment right claims.