Another day, another wage and hour class action lawsuit filed against another employer …
One New York publication headline reads:
“Lawsuit: Four Central New York companies cheated workers out of ‘hard-earned’ pay.”
No trial, verdict or settlement yet … just a filed claim, but one that reflects the latest trend of some of the media painting employers as stealing from their employees. Rick Moriarty “Lawsuit: Four Central New York companies cheated workers out of ‘hard-earned’ pay,” http://www.syracuse.com (Apr. 13, 2015).
Flower Foods, Inc. faces a potential class action lawsuit by 200 workers in North Carolina, who allege Flowers Food’s has a long-standing, illegal practice of classifying distributors of its bakery items as independent contractors.
The plaintiffs’ trial attorneys argue that by misclassifying the workers, the employer avoids paying wages, including overtime, pensions, and other benefits of employment.
Flower Foods argues that the workers should be classified as independent contractors because they are engaged in other activities, like sales and promotions.
Flower Foods is just one of many, misclassifications cases the trial bar and the DOL are filing against employers in every state and against employers in all industries. The case is just one among other lawsuits against similar employers that use contractors to distribute their goods. Through litigation and regulation, the trial bar and federal and state governments are reshaping how employers classify and pay their employees and view contractors. James McCarthy “Lepage Bakeries’ parent firm faces class-action lawsuit over ‘independent contractors,'” http://www.mainebiz.biz (Apr. 8, 2015)
Although headlines “dumb down” and sensationalize the issue, reports often omit that many of the practices now demonized, like using independent contractors as distributors, have occurred for decades and were deemed a compliant and normal industry practice in the past.
In fact, the law that enforces these practices has been in place for over 75 years, but only in the last six years, have the government and the trial bar chosen to interpret them in the manner we see today.
Talk about moving the goal posts … But why now?
Obviously, all workers want the additional wages and benefit from the new interpretation (or recent enforcement) of the rules now allows. But, the “real money” does not go to the workers, it goes to the trial attorneys and the government.
Although workers may receive a few hundred dollars or even a thousand or more in back pay if they are successful, trial attorneys receive multi-millions in fees, literally taking half or more of the fees due to the workers. For that reason, wage and hour class actions are the fastest growing workplace-related litigation type in our courts today.
For the government, the reason is also money, but in the form of taxes. The more employee wages are paid, the more payroll taxes are collected.
Although the DOL and the trial bar argue that they are doing this for workers, in the end, it is workers and consumers who take the hit when employers raise prices to pay for the increased wages, taxes, and benefits.
Services will take a blow as well, and entire industries will go away, like the person who delivers your newspaper or delivers them to vending machines … most are independent contractors paid by the publisher to deliver the paper. Ironically, the same media, that accuses employers of stealing, is, based on the legal theory proposed under the Flowers case, doing the same missteps other employers are.
Like it or not, employers have to reevaluate how they pay and classify their employees and contractors. Eventually, all employers will be targeted. Arguing that this is how it has always been done for decades will not persuade plaintiffs or regulators today.