Asian Journal- The Filipino-American Community Newspaper

WE have previously discussed in this column why it is very important that workers be correctly classified as employees and not independent contractors (or 1099 workers). Independent contractors are not employees and do not have the same rights and protections that employees enjoy.

For example, independent contractors do not have the rights to minimum wage or overtime payment that employees have. The former cannot claim overtime compensation or the premium hourly rate (1.5 or 2 times the regular hourly rate) and they lose significant compensation simply because of the classification. Also, employees can avail of the basic employment benefits such as unemployment or worker’s compensation protection while independent contractors or 1099 workers cannot.

In order to save costs and maximize profits, some employers misclassify their workers as independent contractors. They get the workers to agree to this arrangement, perhaps as a condition to being hired. However, even if the worker has agreed to be classified as an independent contractor and has agreed to receive a 1099, this does not mean that the worker has been correctly classified as an independent corrector. The independent contractor status is determined by law, not by the parties’ agreement.

Although the law does not define the term "independent contractor" the courts and enforcement authorities look at several factors to determine whether a worker is an employee or an independent contractor. The most important factor they consider is the employer’s right to control the worker’s manner and means of performance of the job. If the employer has complete control over how the worker should do the work, directs the employee what tasks to accomplish and how to accomplish these tasks, then the worker is an employee and not an independent contractor.

In a recent case that demonstrates how risky and expensive it can be to misclassify workers, a group of couriers and drivers filed a class action lawsuit against their employer, UPS Supply Chain Solutions, a subsidiary of UPS, the world’s largest package delivery company. The employees claimed that the company created a fake independent contractor relationship in order to misclassify them as independent contractors. As a result, they were deprived of overtime compensation and other employee benefits.

In December 2009, a federal judge approved a $12.8 million settlement of the case, affecting 2,400 employees. Two settlement groups were approved: workers who made claims under the Fair Labor Standards Act (FLSA) and workers claiming violations of California state wage and hour law and seeking to recover unpaid minimum wages and overtime wages, reimbursement for business expenses, reporting time pay, and waiting time penalties.

The employees who worked for the company during the periods set for both class action groups which run from July 2, 2004 through October 31, 2009 will share in the recovery. In the proposed settlement, the FLSA workers will receive an average of $9,500 per member. The California workers will receive an average of $25,000 per member.

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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business. He is a member of the Million Dollar-Advocates Forum—a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy. He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations. His litigation practice concentrates in the following areas: serious personal injuries, wrongful death, insurance claims, unfair business practices, wage and hour (overtime) litigation. You can visit his website at www.joesayaslaw.com or contact his office by telephone at (818) 291-0088.