FLSA Status and the New ‘Gig Economy’

Misclassifying the FLSA Status

A dirty secret in the employment world is that there are very few true independent contractors. That being said, legitimate employees have a number of rights and protections under the law. As an employee, many aspects of your daily work are dictated by the company like your schedule and terms of payment. Generally speaking, employees have more benefits, such as overtime pay and sick days. Independent contractors on the other hand, have fewer benefits and must deal with added expenses like vehicle maintenance upkeep and mileage but have more discretion over determining things such as their hours and rate of pay. Workers of this new “gig economy” began to notice discrepancies in being labeled as independent contractors but being treated like an employee with none of the added benefits. It turns out, these workers frequently have their FLSA status misclassified as independent contractors as opposed to employees of the company.

Misclassified independent contractors often work long hours with no overtime pay – a sometimes common consequence of an FLSA status being improperly classified as such.  Workers have alleged in countless lawsuits that the issue arises when a company tries to avoid paying a worker correctly but still manages many aspects of how they do their job. For example, workers are controlled as employees without seeing any of the benefits that come with it. Labeling workers as independent contractors rather than employees is a method employers frequently utilize in bad faith to keep labor costs low. As a result the company avoids obligations like payroll taxes, minimum wage, and overtime. It also allows them to avoid paying for workers health insurance or other benefits.

Big Payouts Over Misclassification

FedEx, which had been hiring drivers as independent contractors according to several FLSA status lawsuits, established an employment relationship with the drivers. They exercised complete control over them, but would do so under the guise of an independent contractor title. In this manner, FedEx was able to control its drivers as employees without allowing them any of the benefits that come with it. As a result the company avoided paying payroll taxes, minimum wage, and overtime.  They have agreed to cough up a total of $466 million so far over this issue.

FedEx has added itself to the growing list of companies that have allegedly misclassified its workers as independent contractors. Such companies include Uber, which has agreed to pay up to $100 million to its drivers, and Lyft, which is in the early stages of a $27 million settlement that will be available to eligible drivers and have their terms and conditions more accurately reflect the independent contractor title since their classification will remain the same. These settlement amounts will also help provide some relief for the expenses drivers have incurred over the years.

What Can Be Done?

If you or anyone you know has doubts or concerns about their FLSA status and being classified or paid correctly at work, do not hesitate to contact an employment lawyer for more information. Fitapelli & Schaffer offers a free phone consultation with an experienced attorney who will address your questions. One of our attorneys will be able to go into detail with you regarding your current pay structure and what it should be under the law. Fitapelli & Schaffer is committed to fighting for the rights of hardworking individuals. Give us a call at 212-300-0375 or visit our website at www.fslawfirm.com for more information.