Drivers Rack Up Misclassification Settlements, While GrubHub Fights Back

In 1984, the Cars released a sad-sounding song called Drive. I assume it was about a guy longing for a girl, but it’s too depressing to listen to the whole thing. Throughout the song, Ric Ocasek asks “Who’s gonna drive you home tonight?” (Why the long face, Ric? Kidding.)

If you use a ride hailing service, chances are it’s an independent contractor driver who’s gonna drive you home. But in several high profile lawsuits, drivers have challenged their independent contractor status. While these suits have been in the news for years, there have been a recent flurry of high dollar settlements. Earlier this year, Lyft agreed to pay $27 million to a class of 95,000 drivers in California and Door Dash agreed to pay $5 million. Just last week, Postmates agreed to pay $8.75 million.

Notably, none of these settlements resolved the issue of whether drivers for these companies are employees or independent contractors. The settlements involved payouts and agreed-upon changes in company policies, but none of the drivers were reclassified as employees.

GrubHub, on the other hand, has taken a misclassification case to trial. The case being tried is not a class action, and only about $600 is at issue. But the case may have significant ramifications for the status of independent contractor driviers, both at GrubHub and potentially elsewhere, and the case is being watched closely. (You can read more here and here.) As of this morning (9/18/17), the case is still in trial and there has been no verdict.

The point to remember is that companies who use an independent contractor model face a substantial risk of being sued. Plaintiffs’ lawyers are aggressive in recruiting contractors to file lawsuits that challenge their status as independent contractors, arguing that they should be paid as employees instead.

Companies using a contractor model should be proactive. Take steps to evaluate these relationships now. Adjust the facts and contract language to best position your business to defend against a misclassification challenge.

Independent contractor misclassification litigation is active and should be watched closely — unlike the Cars, who broke up in 1988 (for the most part, anyway; you can read more here in the unlikely event you care about the current status of the Cars).

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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Misclassification settlement strips $6 million from Club Assets

IMG_1090When I was an undergrad at Michigan, any time I would drive to the airport or to Tiger Stadium, I’d see billboards for Deja Vu, a strip club with (apparently) lots of locations. I never visited (not into that sort of thing, thanks for asking), and I never thought much of it. I certainly did not expect to be writing about Deja Vu and independent contractor misclassification 25 years later. But here goes.

When patrons of these fine establishments partake in the traditional lap dance, it’s doubtful they’re thinking about whether these often-single-mom “entertainers” who are just trying to make a living have been properly classified under wage and hour law. More likely, they’re thinking about — never mind.

But that’s an important issue, as Deja Vu recently learned, when it was sued by a class of 28,177 dancers alleging they were misclassified as independent contractors, rather than paid as employees. The class alleged that the clubs intentionally misclassified them as contractors, failed to pay them minimum wage, unlawfully required them to split gratuities, and unlawfully deducted wages through rents, fines, and penalties.

After a fairness hearing in federal court in Detroit, the parties finalized a $6.55 million dollar settlement. In addition to cash compensation, the settlement includes an unusual provision allowing dancers to choose whether to be contractors or employees.

Dancers will receive between $443 and $6,007 each. Their lawyers will enjoy a payout of $1.2 million in fees, which could buy them a lot of — never mind.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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