Uber Is Facing Unpaid Overtime Lawsuits

Paycheck lawyer is your source for updates to overtime laws in your state and at the Federal level. We keep you informed on the ongoing unpaid overtime class actions and are always searching for unpaid overtime news and alerts that may be of interest to our followers. Uber, the new interesting concept in drivers continues to be faced with class action overtime lawsuits.
An Uber  class action law suit is now in  federal court in Trenton, N.J.  The lawsuit was originally filed by former Uber driver, Jaswinder Singh, in Monmouth County Superior Court on April 22nd and was moved  to U.S. District Court for the District of New Jersey on May 27th.  The suit claims  Uber violated the New Jersey Wage and Hour Law and the New Jersey Wage Payment Law because the failed to pay overtime to drivers working more than 40 hours per week.    Uber drivers in New Jersey and other states are currently classified as “independent contractors” under their contracts, meaning Uber has no legal obligation to pay the requested overtime wages. The Uber drivers in New Jersey are claiming they are  eligible employees because they “completely relied on Uber for driving assignments” and did not have the independence to make important decisions.

Uber has faced a series of wage claim lawsuits.  The first major case, O’Connor v. Uber Technologies, Inc., involved California and Massachusetts Uber drivers, similarly claiming they were wrongly categorized as independent contractors.  That case was settled in April 2016.  It left the independent contractor question unresolved.   Uber drivers in Arizona, Florida, Illinois, New York, Ohio, and Texas have filed similar lawsuits.

Will these cases go to trial? If so, courts may have the opportunity to finally determine the employment status of Uber drivers. A designation of employee could result in overtime wages along with other legal protections offered exclusively to employees.
If courts do categorize the drivers as employees, how will it affect the Uber experience? Much of Uber’s success lies in its business structure. Designating drivers as independent contractors reduces or eliminates many expenses for the company and it allows for greater freedom for drivers.   Will Uber have to make drivers employees?This  will certainly change the internal structure of Uber,
Will Uber be able to continue settling these lawsuits? The large $100 million settlement has clearly attracted drivers in other states. We will soon see if Uber continues to settle these cases as a cost of doing business or if/when it will risk going to trial to decide the employee designation dispute.  In December, 2015, The Wall Street Journal predicted the value of Uber could exceed $60 billion, so paying settlement claims to quiet disgruntled workers seems to be a viable option, at least for now.

If you are an Uber driver and would like to represent Uber Drivers in a class action lawsuit or wish to join one of the ongoing class action lawsuits contact paycheck lawyer.

Misclassification Of Independent Contractor Wage Claims

Wage, hour and overtime claims are very common and many revolve around an independent contractor missclassification. Fed ex is one  company  hit with such a misclassification lawsuit. We have seen and tried many cases thru-out Florida, New Mexico and Illinois and have won dollars for employees who have been victims of  misclassification. Employee misclassification and the labeling workers as independent contractors, rather than employees is a big win for employers.  Misclassified employees are  denied access to overtime pay for time worked over 40 hours in a given work week. The practice allows employers to avoid paying unemployment and other taxes on workers, and from covering them on workers compensation and unemployment insurance and paying them overtime pay for working over 40 hours in a works week.  If you are an employee but are working under the independent contractor title your employer may have  cheated you out of overtime pay. It is that straight forward and simple.

Employees who are classified as independent contractors (ICs) are denied their  rights and benefits under wage and hour and overtime law. These Fedex employees decided to go after FedEx and get what they were entitled to.

$228 Million was The Cost of Independent Contractor Misclassification for FedEx Ground in California
Yesterday, June 12, FedEx announced in papers filed with the SEC that its Ground Division “has reached an agreement in principle with [drivers] in the independent contractor litigation that is pending in …California [federal court] to settle the matter for $228 million.” The proposed agreement, which has not yet been filed in court, is subject to judicial approval. This proposed settlement comes nine months after the U.S. Court of Appeals for the Ninth Circuit ruled in appeals from federal district courts in California and Oregon that, as a matter of law, the drivers whom FedEx Ground treated as independent contractors (ICs) were employees and, therefore, FedEx had misclassified them and denied them rights and benefits under law.

In our blog post on August 29, 2014 entitled “Earthquake in the Independent Contractor Misclassification Field,” we noted that FedEx Ground has been at the epicenter of the crackdown on IC misclassification by government regulators, state legislators, and plaintiffs’ class action lawyers since 2007. But in 2010, FedEx Ground won a significant court decision involving the IC status of its Ground Division drivers in an opinion by a federal district court judge presiding over dozens of IC misclassification cases in a “multi-district litigation.” But all changed on August 27, 2014, when the Ninth Circuit Court of Appeals reversed that lower court decision in cases involving drivers in California and Oregon.

This settlement covers 2,300 drivers in California who had filed class action claims for a variety of alleged violations under federal and state law, including claims for reimbursement of business expenses, unpaid overtime, failure to provide meal and rest periods, reimbursement of deductions in pay, and non-payment of termination pay. The drivers also sought litigation costs and attorneys’ fees in their court complaint. Alexander v. FedEx Ground Package System, No. 3:05-cv-00038-EMC (N.D. Calif.).

In its June 12, 2015 SEC filing, FedEx stated that it “faced a unique challenge in defending this case given the decision of the Ninth Circuit Court of Appeals last summer.” It noted that the settlement “resolves claims dating back to 2000 that concern a [business] model FedEx Ground no longer operates.”

Where Did FedEx Ground Fail?

In the case of FedEx Ground, the Ninth Circuit was not won over by FedEx’s argument that it lacked control over the drivers’ jobs. FedEx pointed out that the FedEx IC agreement permits a driver to delegate to other drivers, take on additional routes, or sell his route to a third party. But the Court noted that FedEx may refuse to let a driver take on additional routes or sell his route to a third party, and FedEx’s senior managers have the authority to reject proposed replacement drivers based on failure to meet FedEx standards such as grooming requirements. The Court concluded that a lack of control over certain parts of the drivers’ roles was not sufficient to “counteract the extensive control [FedEx] does exercise.”

The Kansas Supreme Court last year reached a similar conclusion, but it was not as mellow in its critique of the contract used by the company. The Kansas court characterized the IC agreement as a “brilliantly drafted contract creating the constraints of an employment relationship with [the drivers] in the guise of an independent contractor model – because FedEx not only has the right to control, but has close to absolute actual control over [the drivers] based upon interpretation and obfuscation.” Said in fewer words but with even more imagery by the Court: “FedEx established an employment relationship with its delivery drivers but dressed that relationship in independent contractor clothing.”

The Impact of This Settlement on FedEx – and Others Using ICs

This settlement by FedEx Ground resolves only the claims by its drivers in California. IC misclassification claims have been brought against it in other states, some of which have already been resolved, such as a lawsuit it settled for $5.8 million with FedEx Ground drivers in Maine. FedEx may choose to resolve cases that remain pending or have not been reported as having fully resolved in other state venues, such as those in Kansas, Missouri, Massachusetts, Florida and Oregon that have been the subject of our monthly IC misclassification updates on this site.

FedEx Ground has not only been plagued by driver misclassification lawsuits over the years but also by state attorney generals and state workforce agencies in New York, Montana, Massachusetts, and other states for allegedly unpaid unemployment insurance taxes.

FedEx Ground also faces unionization efforts in Connecticut and other locations following decisions by the National Labor Relations Board (NLRB) that its Ground Division and Home Delivery drivers are employees and not independent contractors under the federal labor laws.

As we noted following the Ninth Circuit decisions last August, this setback for FedEx Ground is likely to reinvigorate the crackdown against companies using ICs to supplement their workforce or are built on an IC business model, where the IC relationship is not structured, documented, or implemented in a manner that complies with state or federal IC laws.

Lessons For Other Companies Using ICs

IC misclassification can, as we observed in our White Paper on the subject, be the result of intentional violations of the labor, tax, and employee benefits laws or, as is quite common, unintentional or misplaced failures to comply with applicable state and federal laws governing the use of ICs. Many businesses face a situation similar to FedEx Ground – a company that sought to comply with the law but did not fully satisfy the requirements. So, what lessons can be learned from this $228 million settlement and the other recent setbacks suffered by FedEx Ground?

1.  A failure to properly structure, document, and implement independent contractor relationships can and should be avoided

The laws in almost all states allow companies to contract with individuals or businesses to provide services to customers and clients of the company, yet many companies that do so fail to take steps to properly structure, document, and implement their IC relationships to fully comply with those laws.

Prudent businesses that use independent contractors or pay workers on a 1099 basis address the issue of IC compliance before being served with a class action summons and complaint and before receiving a notice from a state unemployment, wage, or workers compensation office, the IRS, or the NLRB inquiring about workers whose wages are reported on a Form 1099 but may well be employees misclassified as ICs.

As noted above, FedEx Ground lost before the appellate courts because of a misplaced reliance on an IC agreement and its policies and procedures that were good, but by no means good enough.  A quick review of the language in the FedEx IC agreement and the policies and procedures issued by FedEx would give one the impression that FedEx and its lawyers knew what to write and how to write it, but close scrutiny by the courts found one fallacy after another – sufficient in degree to lead to rulings against the company. By their very nature, therefore, IC agreements and policies and procedures that are not drafted in a state-of-the-art manner, free from language that can be used against the company, can cause businesses that use ICs not only to face legal challenges they may otherwise have been able to avoid but, once sued, they may well have been able to win.

This and similar class action lawsuits illustrate the value of using, in advance of a legal challenge, a methodology to evaluate whether an existing or proposed IC relationship can be legitimately structured as such, and if so, whether it needs to be restructured, re-documented, and re-implemented to maximize the likelihood that those workers will be regarded by the courts and government regulators as ICs and not employees. Some companies have used IC Diagnostics™ to enhance their level of IC compliance and determine whether a group of workers not being treated as employees would pass the applicable legal tests for IC status under governing state and federal law. That process also offers a number of practical, alternative solutions to enhance compliance with those laws, such as reclassification and redistribution.

2.  Retaining contractors who operate in the form of business entities, such as LLCs, do not necessarily insulate companies from IC misclassification exposure

A common misconception by many businesses is that contracting with an LLC, corporation, or other form of business entity eliminates the possibility of misclassification liability. While FedEx Ground observed in its comments to its June 12, 2015 SEC filing that it was settling a case that involved “a model FedEx Ground no longer operates,” its current business practice is not necessarily free from legal exposure. Beginning a few years ago, FedEx announced that it was converting to a new business model where it would only contract with incorporated Independent Service Providers (ISPs) who operate three or more routes in the same geographical area. Yet, last year, the Kansas Supreme Court ruled that “the employer/employee relationship between FedEx and a full-time delivery driver . . . is not terminated or altered when the driver acquires an additional route for which he or she is not the driver.” Drivers who “acquire more than one service area from FedEx” are also employees, the court held.

In January of this year, Lowe’s Home Centers settled an IC misclassification class action brought by home improvement contractors comprised of both individuals and small businesses. The $6.5 million settlement includes payments not only to individuals but also to LLCs and other forms of business entities.

Some state laws expressly carve out from their definitions of “employee” a business entity where the hiring party does not exercise direction or control over the performance of the services and meets other requirements. Companies that wish to minimize IC misclassification liability wisely do not rely solely on the fact that the IC has chosen to operate as a business entity. Structuring, documenting, and implementing a compliant IC relationship is still the key.

3.  There are “hidden costs” of class action settlements as well as other misclassification exposures that can arise after settlement

FedEx has invested heavily in its legal defense of dozens of IC misclassification lawsuits as well as audits, investigations, and proceedings by state and federal regulatory agencies. These “hidden costs” are not reflected in settlements such as the one just entered into by FedEx in California. Typically, class action settlements include legal fees that can range as high as 25-33% of the amounts paid to the class members, and oftentimes the legal fees paid by the companies defending such lawsuits equal or exceed the amount of fees paid to the plaintiffs’ class action lawyers.

The costs of worker misclassification do not always terminate once a class action is settled and all monies are paid to the workers involved, their counsel, and the lawyers representing the business being sued.  Companies that settle class action cases may also be facing claims for unpaid payroll and unemployment taxes at the state and federal levels and unpaid workers compensation premiums – although there may be defenses to those types of claims.

Finally, settlements in one state can provoke new lawsuits in other jurisdictions or create pressure to settle other outstanding IC misclassification claims. Plainly, the most prudent path is to enhance compliance when the potential for IC misclassification exposure first becomes evident to a business that is based on an IC business model or uses ICs to supplement its workforce.

This is particularly meaningful to start-up companies in the on demand, sharing, or gig economy. Businesses like Uber, Lyft and an array of other tech businesses are quickly finding that they, too, are targets of class actions, regulatory enforcement, and labor organizing by those who believe that such start-ups are not complying with federal and state IC laws. They are quickly rivaling FedEx Ground as a lightning rod for those seeking to crack down on IC misclassification. The hidden costs of such misclassification lawsuits and administrative proceedings are undoubtedly increasing.

4.  Companies that can financially survive class action IC misclassification settlements or judgments in court or before an administrative agency need not necessarily reclassify the workers as employees

FedEx is a Fortune 100 company, so it can absorb the $228 million settlement. FedEx is a good example of a company that chose to revise its business model while in the midst of legal challenges. While it is too early to tell if its actions to restructure, re-document, and re-implement its IC/ISP relationships will survive legal scrutiny, it wisely choose not to stand pat.

On the other hand, many companies treat the costly termination of a class action lawsuit or an adverse determination by a regulatory agency as imparting upon them an obligation to treat the workers in question as employees on a going-forward basis. This overlooks the fact that many businesses can adopt an IC model, even after the commencement or termination of a class action lawsuit or an adverse regulatory ruling, that may well survive future scrutiny under federal and most state laws. How? By undertaking bona fide restructuring, re-documentation, and implementation of new, state-of-the-art IC compliance practices. This is one of the reasons some businesses have resorted to methodologies such as IC Diagnostics™ even after they have become the target of legal challenges.

While efforts today to enhance IC compliance cannot eliminate past exposure to misclassification liability, any changes that enhance compliance with the IC laws going forward will not only minimize or avoid future liability but also lessen the likelihood that the business will become a target for class action lawyers and government agencies.

If you have been denied your over time pay because you were misclassified as an independent contractor by FedEx or any company contact us to discuss your rights to an overtime or wage and hour claim lawsuit. These FedEx employees stood up and you should too.

New Mexico Overtime Lawyer Sues For Your Overtime Pay

Were you cheated out of your  Albuquerque, Las Cruces, Santa Fe,  Rio Rancho, Roswell, Farmington, South Valley,
Alamogordo, Clovis, Hobbs,  Carlsbad, Gallup, Deming, Sunland Park,  Las Vegas, NM overtime pay?

In New Mexico state law requires overtime pay, for non exempt employees,  at a rate of not less than one and one‐half times an employee’s regular rate of pay after 40 hours of work in a week of seven days. Some exceptions to the 40 hours per week standard apply under special circumstances to police officers and firefighters employed by public agencies and to employees of hospitals and nursing homes.

2015 New Mexico Overtime Rules

Most hourly employees in the New Mexico are entitled to a special overtime pay rate for any hours worked over a total of 40 in a single work week (defined as any seven consecutive work days by the Fair Labor Standards Act).

While some states have daily overtime limit which entitles any employee who works for more then a certain number of hours in a single day to be paid overtime, New Mexico does not have a daily overtime limit.

New Mexico’s overtime minimum wage is $11.25 per hour, one and a half times the regular New Mexico minimum wage of $7.50. If you earn more then the New Mexico minimum wage rate, you are entitled to at least 1.5 times your regular hourly wage for all overtime worked. Can’t find the answers you need on the New Mexico Overtime Law FAQ below? Ask us your New Mexico overtime law question.
Am I eligible for overtime?

The FLSA automatically qualifies certain types of workers who meet overtime pay requirements for guaranteed overtime for all hours worked over 40 in a single week (or daily overtime limits set by New Mexico overtime laws). If your work involves manual labor (such as construction worker, factory attendant, cashier, etc) you are probably protected under overtime law.

All first-responders, including police, paramedics, and firefighters, are specifically offered overtime protection under the FLSA.

Practical nurses and paralegals, who would otherwise fall under the exempted category, are also specifically protected by overtime law as these particular professionals often endure long hours of work, and may be exploited or overworked by their employers otherwise.
Overtime Exemptions in New Mexico

Overtime laws in New Mexico are designed to prevent workers from being exploited by their employers, with hourly wage earners (particularly those in blue-collar industries) being the primarily protected group. Because of the nature of the work environment and working hours required by certain careers, there are a wide variety of specific exemptions to New Mexico overtime eligibility. Out of an estimated 120 million workers in America, almost 50 million are exempt from overtime law.

Executives, administrators, and other professionals earning at least $455 per week do not have to be paid overtime under Section 13(a)(1) of the Fair Labor Standards Act.

External salespeople (who often set their own hours) are also exempted from NM overtime requirements, as are some types of computer-related workers. Independent contractors, who are not considered legal employees, are also exempt from overtime law. Other exempt positions include some transportation workers, certain agricultural and farm workers, and some live-in employees such as housekeepers.

In order to determine if a job is exempt from overtime, the FLSA provides a series of tests to determine the overtime eligibility of an employee based on pay rate, working conditions, skill level, and other factors.
Is my job exempt from overtime?

If your job fits into one of the four main exemption categories to overtime law (executive, administrative, professional, and outside sales), then you are not protected by New Mexico and federal overtime regulations.
Executive Overtime Exemptions

Your job is classified as an Executive position if your full-time responsibility is management of two or more employees. You must spend no more then 20% of your time doing other activities (or 40% in a retail environment), and your job should be a salaried position.
Administrative Overtime Exemptions

Your job is classified as an Administrative position if your primary duty is non-manual work related to business operations, management policies, or administrative training. Your job must be salaried to fulfill the requirements, and you must spend no more then 20% of your time doing activities that do not fit in the categories described above (or 40% in a retail environment).
Professional Overtime Exemptions

Your job is classified as a Professional position if your primary duties require advanced knowledge and extensive education, including artists, certified teachers, and skilled computer professionals. Your job must be salaried, primarily intellectual, and you must be expected to use discression and judgement. You must spend no more then 20% of your time doing activities that are not directly related to the duties described above in order to be classified as a Professional.
Outside Sales Overtime Exemptions

Your job is classified as an Outside Sales position if your main duties are making sales or taking orders outside of their employer’s main workplace. You may be paid either bn a salary or commission-based structure, but you must not spend more then 20% of your time doing work other then sales to fall under this classification.

If your job falls under any of the four categories described above, then you are not covered by federal or New Mexico unemployment regulations and your employer is not required to pay you an overtime premium.
I’m eligible for overtime, but my employer didn’t pay me

If your job is eligible for overtime protection under New Mexico and Federal overtime law and you were cheated out of your pay call the Loren Law Group today.

New Mexico Overtime Lawsuits

New Mexico Overtime Lawyer

Overtime Lawyer  in New Mexico for:  Albuquerque, Las Cruces, Santa Fe, Rio Rancho, Roswell, Farmington, South Valley, Alamogordo,  Clovis, Hobbs,  Carlsbad, Gallup, Deming, Sunland Park,  Las Vegas, Los Ranchos de, North Valley,  Corrales,  Bernalillo,  Los Lunas, Belen, Los Alamos,  Grants, Espanola, Socorro, and Taos, NM.

Loren law Group of  New Mexico  helps workers who are  denied the overtime  wages that they are owed under Federal and New Mexico law. If you are a New Mexico worker who has been robbed of your  overtime pay  you can file a lawsuit against your employer. New Mexico overtime lawyerm James Loren  can help you recover your  paycheck.

About New Mexico Overtime Law
Overtime law in New Mexico allows for  workers to  receive one-and-a-half times their regular hourly rate when working more than 40 hours in a seven-day period.

Your employer must keep accurate time and wage records for  your work hours.