Glorious blatant misclassification

Employees misclassified as independent contractors present great opportunities for major recoveries of unpaid wages and overtime.  

Undercapitalized or greedy contractors bid jobs low on the basis of low cost labor.  They will bid low because they know they can pay their laborers straight time for their hours, no matter how many, and most of those laborers will be glad to be getting paid.

Some contractors tell their employees that they will be classified as contractors and will not get unemployment insurance or workers comp. or have taxes taken from their pay, or get overtime.  The employees think this is fine.  All they hear is "no taxes." 

Prevailing wage states require contractors working on state funded jobs to pay their employees an inflated wage similar to what the local union members would get for the same work.  It's an incentive to hire union members.  The catch is that independent contractors don't have to receive prevailing wage.  They get paid for the job.  So, unscrupulous subcontractors purposely mis-classify their employees as subcontractors and then deny them the prevailing wages they are due on the grounds that they are not employees and are merely getting paid for the job. 

Even when they think they are right, they are wrong.  Some of these contractors will even issue paychecks from their in-house payroll system, to their "independent contractor" employees, showing pay for say 56 hours at regular pay for a week.  This is printed above the "overtime" line which shows 0 hours and $0.  That's 16 hours of overtime paid at the regular rate.  This violation sets up damages equal to 16 hours at the regular rate.  And that is just for one week.  Think three years of this nonsense, for multiple employees, and add in attorney's fees.  That's right, it gets big fast.

These willful violations of the Federal Fair Labor Standards act lead to three years of trailing liability and liquidated damages, not to mention attorney's fees.  Thanks to Zavala v. Wal Mart Stores, an unpaid overtime case out the federal District Court of New Jersey, liability for unpaid wages can extend to the general contractor or the owner of the job.

This kind of case makes me tingle all over. 

Offers of Judgment

Rule 68 of the federal rules of civil procedure operates to put plaintiffs suing for damages on a defensive footing.  If a defendant wants to shake a poorly financed plaintiff off their attack, then the defendant will make an offer of judgement.  In an unpaid overtime case brought under the Fair Labor Standards Act the offer has to include an amount of damages AND an offer to pay the plaintiff's attorneys fees. This damages plus requirement is a function of the mandatory fee shifting required by the FLSA.

The offer has strict time limits and because it is made by letter from defendant's counsel to plaintiff's counsel with varying terms, it can be confusing in its form.  Offers are enforced using the principles of contract law and they are often effective.

I hate them.

Today finds me working on a motion to certify a class/collective action in an unpaid overtime case in the Federal Southern District Court of Ohio.   The issue is whether the employer's shifting of a seven day workweek, seven, twelve-hour-a-day workweek at that, over two calendar weeks, without paying any overtime, is lawful.  I say no.

Of course the employer says "Sure, it's lawful.  We can designate any period as a workweek.  Haven't you seen the regulations that say workweeks don't have to be the same as calendar weeks or pay periods?" while citing to 29 CFR 778.105.  "Look at the regulations Langendorf," they say.

I have.  I conclude differently.  The regulation that says a workweek is a seven consecutive day period is the period upon which overtime is calculated and each workweek stands alone. 29 CFR 778.104.  My clients work a seven day on, seven day off schedule repeatedly.  The employer calls it a "seven on seven off" schedule.  They don't call it a "three off, four on, three on four off"  schedule.  It's seven on seven off.  If the employees worked Sunday to Saturday, they'd get 44 hours of overtime pay. The way the employer has interpreted the workweek regs, the employees get no overtime at all.  Despite being subjected to a grueling schedule the likes of which the Fair Labor Standards Act was supposed to eliminate, BY ITS OWN TERMS.

The relevant regs have been interpreted in favor of employers, for the most part.  But this misuse, this cheap end around, needs to be changed.  I'm on it.

Independent Contractor... or not?

Employers in many industries like to call their employees independent contractors.  Construction, sales, landscaping, computer services, law even.  The reason?  If someone is classified as a contractor, then there are no unemployment insurance bills to pay, no workers compensation contributions, no employer payroll contributions and no Social Security contributions.  The employer gets work done at a fraction of the cost of employing an employee and takes no responsibility for the lawful contributions to society that being an employer requires.

The rub is that the employer still wants to CONTROL the person they call a contractor.  Control is the essence of the employment relationship.  A contractor gets to work when he feels like it.  He has a job to do and he does it on his own time, subject of course to contract deadlines.  An employee has to work regular hours as determined by his employer.  A contractor often works for many employers.  An employee, not so much.  Employees usually work one job.  Sometimes two, but then generally in different fields.  Like working at IBM during the day and at a bowling alley at night.  Contractors bring their own tools to get their jobs done.  They bring in their own supplies and help.  Employees use their employer's tools, their employer's resources and their coworkers to get work done.  Employees are guaranteed minimum wages and overtime for weekly hours worked in excess of forty.  Contractors have no such protection.  They make as much or as little profit as they can squeeze out the contract price and they sure don't get Social Security contributions from the person for whom they perform work.

If you are offered a job and the employer says you will be classified as a contractor, at an employee like pay rate, then look long and hard at that employer and the offer.  Unless you intended to be a contractor, working on your own, without any support and for more than one employer, charging what you thought you should be paid, and without getting any payroll or Social Security contributions, then you might just want to clarify that relationship before accepting the position.  Or you could just charge a contract rate and come in late to work. 

Working Overtime

Donning and doffing is a term of art used in unpaid overtime lawsuits.  It means the activity some employees undertake before beginning their usually dirty jobs.  They don protective suits before starting work and then doff those soiled suits before going home for the evening.  It is a time of changing from one status, e.g., father, mother, band member, etc., to another, less desirable status, e.g., employee.

People get paid to change their clothes when the change is a necessity for the employer.  Think radioactivity suits, or heat suits for a steel mill.  An employer could not send a radioactive suit home with the employee, could they?  Anyway, this isn't about clothes, it's about change.

I love unpaid overtime cases.  I sue companies for exploiting their employees.  They tell workers they don't pay overtime.  They tell them they are contractors when they aren't.   I love getting my employee clients paid all the back pay they are due plus all of my fees.  It is a great feeling.  But I can't help but to wonder about what my narrow focus has cost me.

There is always opportunity to change and profit from the change.  For example, the changing view of interns in the eyes of the law.  Recent cases in federal courts are casting doubt on the long time practice of using unpaid workers to perform gopher type duties while calling them interns.  They aren't learning anything but how everybody likes their coffee and how to un-jam the copier.  Both useful skills, but not educational for credit.  Too bad, but that change may see ways of business changing and some big back pay awards.

Certainly this  may be a change in overtime from which to profit.