The "Independent Contractor" Scam

Are you an employee or are you an independent contractor?  The answer to this question could determine whether you get the rights that you are entitled to if you're hurt on the job.  If you are an "independent contractor" then you do not get the protections of the workers' compensation laws of Pennsylvania.  Your employer will not pay for your medical bills or pay your lost wages if you are hurt at work.  Because of this, many employers try to label their employees as "independent contractors" as opposed to actual employees in order to deny you what is owed to you under the law of the Commonwealth of Pennsylvania.

This practice of misclassifying workers as "independent contractors" rather than "employees" enables corporations to: (i) cheat workers out of basic benefits (such as, for example, overtime pay, worker’s compensation insurance, and unemployment insurance), (ii) cheat the government out of tax dollars, and (iii) gain an unfair advantage over competitors who comply with the law.

Make no mistake about it:  the practice of misclassifying employees as “independent contractors” is a disaster for American workers and their families.  Congress’ failure to effectively crack down on this practice is a national embarrassment.

Since our politicians are incapable of protecting working families against the independent contractor scam, it’s up to Trial Lawyers and the hard-working (but under-resourced) Department of Labor to protect working families.

Based on our review of the recent caselaw, Federal Court decisions appear to be trending in favor of workers in lawsuits alleging independent contractor misclassification.  It seems that Federal Judges are becoming more skeptical of the independent business model.

We see hints of the growing judicial skepticism in Seventh Circuit Court of Appeals opinion issued in the massive, multi-district litigation involving thousands of FedEx package delivery drivers allegedly misclassified as independent contractors.  (Our firm has the privilege of working on the FedEx litigation alongside many excellent law firms throughout the United States.)

The Seventh Circuit opinion, issued on July 12, 2012, made some very cogent observations about the importance of the independent contractor misclassification issue:

The question [of whether the drivers were properly classified as independent contractors] appears to be a close one.  And the issue is of great importance not just to this case but to the structure of the American workplace.  The number of independent contractors in this country is growing.  There are several economic incentives for employers to use independent contractors and there is a potential for abuse in misclassifying employees as independent contractors.  Employees misclassified as independent contractors are denied access to certain benefits and protections.  Misclassification results in significant costs to government:”[B]etween 1996 and 2004, $34.7 billion of Federal tax revenues went uncollected due to the misclassification of workers and the tax loopholes that allow it.”  And misclassification “puts employers who properly classify their workers at a disadvantage in the marketplace[.]”  FedEx has approximately 15,000 delivery drivers in the U.S.  This case will have far-reaching effects on how FedEx runs its business. . . throughout the United States.  And it seems likely that employers in other industries may have similar arrangements with workers, whether delivery drivers or other types of workers.  Thus, the decision in this case will have ramification beyond this particular case and FedEx’s business practices, affecting FedEx’s competitors and employers in other industries as well.

Craig v. FedEx Ground Package System, Inc., 686 F.3d 423 (7th Cir. 2012)

The Seventh Circuit hit the nail on the head.  In these tough economic times, the fight against independent contractor abuse is more important than ever.

If your firm represents current or former independent contractors in workers compensation lawsuits or other types of litigation, we would be delighted to speak with your clients about whether, due to misclassification, they might be able to recover overtime wages and other valuable benefits.  As you know, we always pay a fair referral fee.

****The foregoing article was provided by the law firm of Winebrake & Sintillo, LLC.  If you feel that you have been unfairly denied your wages or overtime pay, please contact Winebrake & Sintillo, LLC.  They are the best wage & hour lawyers in Pennsylvania.

Overtime Wage Complaints Hit Record Level

If you think you've been short-changed on your overtime pay, you need to call me immediately.  I and a few of my colleagues who specialize in overtime pay disputes handle these types of cases often.  And....as this article describes....the practice of employers not paying proper overtime is occurring more and more.  Sometimes the practice can be wide-spread throughout an organization-- such as the massive class action against Walmart that resulted in Walmart paying to workers millions of past due overtime pay.

From the article:

The number of workers filing complaints against their employers under the Fair Labor Standard Act has skyrocketed, a report published by the law firm Seyfarth Shaw shows. Since 1993, the number of federal case loads relating to misclassification of workers, failure to pay overtime and miscalculated overtime for non-exempt workers has risen to a new all-time record of 7,006 in 2011 from 1,457 cases in 1993. 

And this year is on track to beat that, with 7,064 cases already filed. Lack of clarity in overtime laws and lucrative settlements for plaintiffs are just some of the reasons why the number of reported wage abuse cases is going up. In addition, a weak economy has pushed corporations operating with a slimmed-down staff to squeeze more out of their employees. 

Findings from other studies echo the data. In a report cataloging wage violations in New York City, the National Employment Law Project found that 77 percent of the study's surveyed low-wage workers who had worked more than 40 hours in one week did not receive their required overtime pay; the number rises to 93 percent for workers who worked more than 10 hours in one day. 

The study also found that 21 percent of workers reported that they were being paid less than the required minimum wage. Only non-white U.S. born workers did not report a minimum wage violation. The average low wage worker loses out on $58 per week and $3,000 per year due to wage violations by employers, according to the study.

Low wage workers are often cheated, study says

Attached is a link to a New York Times article detailing a new study based upon workers in New York, Los Angeles and Chicago. The gist of the study is that low wage workers are routinely denied proper overtime pay and are often paid less than the minimum wage, which is against the law.

Some of the specifics of the study indicate that sixty eight percent (68%) of the workers interviewed had experienced at least one pay related violation in the previous work week. The typical worker had lost Fifty One Dollars ($51.00) the previous week through wage violations, out of average weekly earnings of Three Hundred and Thirty Nine Dollars ($339.00) per week. That translates into a fifteen percent (15%) loss of pay for that specific week. For low wage workers, this is a significant amount of loss.

The survey included 4,387 workers from various low wage industries including para manufacturing, child care and discount retailing.

One of the most surprising findings that relate to the workers' compensation practice at Carroll & Carroll, P.C. was that only eight percent (8%) of those who suffered serious injuries on the job filed for workers' compensation to pay for medical care and missed days of work. This is obviously due to the fact that employers are very good at pressuring low wage workers into not filing claims or just completely misleading their injured employees.

Some of the other findings in the study: seventy six percent (76%) of those who had worked overtime the week before were not paid their proper overtime. Twenty six percent (26%) of the workers had been paid less than the minimum wage the week before being surveyed. Further, one in seven had worked off the clock the previous week.

In instances where the employee was injured and workers' compensation should have been applied, the study found that one third (1/3) of all injured workers had to pay the work related medical bills out of their own pocket and that workers' compensation insurance paid medical expenses for only six percent (6%) of the injured workers surveyed.

This study clearly demonstrates the need for more enforcement of wage and hour laws. It also clearly demonstrates why our workers' compensation practice is so busy.