Independent Contractors Challenge Wage Structure

Galvin B. Kennedy
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Galvin Kennedy is a founding partner of Kennedy Hodges. He focuses his practice to overtime and wage claims.
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Advancements in technology have changed the way Americans shop and travel, giving rise to an increasing number of workers who provide on-demand services. Driver-on-demand apps can provide a consumer with a vast array of services that are available simply by pressing a button on their phone. With quick efficiency, consumers can call a taxi or an Uber driver to take them home, order groceries to be picked up or delivered, and find a dog walker or sitter. Many of these services are performed by independent contractors.

According to the Government Accountability Office (GAO) report compiled from the Bureau of Labor Statistics, 10 percent of the workforce—10.3 million people—work as independent contractors, including drivers for Uber and Lyft. As a consumer, you can enjoy the benefits and convenience of these on-demand delivery services; however, if you work for these types of companies, you need to be cautious about how your job is classified because that status directly impacts your wages and benefits. The distinction is crucial, as employees are entitled to benefits such as minimum wage and overtime, and contractors are not.

Employee vs. Independent Contractor

Knowing how your employer classifies (or misclassifies) your status is key to collecting a fair wage and benefits. Employees are entitled to benefits such as minimum wage, unemployment, workers’ comp, social security, and reimbursement for expenses.

According to the Department of Labor (DOL), an employee is someone who only takes assignments from one company, and that company exercises control over every step of work performed. You may be classified as an employee if:

  • Your employer has the ability to hire and fire.
  • Your employer stipulates work hours including lunch and quitting time.
  • Your employer requires that you wear a uniform.
  • Your employer has the ability to define disciplinary actions.

Pending Lawsuits Hinge on Definition of Employee

Lawsuits are pending against many on-demand services companies for wage and overtime violations. Some of these lawsuits involve two transport network companies, Uber and Lyft. The key to these lawsuits is how much control each of these companies exerts over workers up to and including the ability to terminate employees. Drivers for Uber and Lyft have filed lawsuits claiming their jobs are structured in a way that makes them employees rather than independent contractors. However, the companies designate their drivers as independent contractors, which requires the drivers to pay for their own gas, insurance, vehicle maintenance, and toll fees.

Uber and Lyft face class-action lawsuits that will go to jury trials because both companies failed to convince federal judges that their workers were independent contractors instead of actual employees. In both cases, the juries will determine the status of the drivers for each company.

Both Lyft and Uber have contended that it’s mutually beneficial for their drivers to be classified as contractors because it offers flexibility to both the company and the driver to allow for termination of their work agreement at any time. Lyft and Uber also say that drivers sign with their companies knowing that they are considered contractors.  

Class-action labor lawyer, Shannon Liss-Riordan, filed suit against Uber on behalf of Douglas O’Connor and other drivers, claiming they had been misclassified as independent contractors when they are actually employees. Liss-Riordan argues that actual employees can also be given flexibility, and even if drivers sign on as contractors, Uber and Lyft have power over the drivers, including the right to fire them on the spot—evidence that they are employees.

Other Workers Affected by the Outcome

Uber and Lyft drivers are not the only workers who could be affected by the outcome of the lawsuits. Others workers who may be considered independent contractors include:

  • Nurses, healthcare workers, and technical workers
  • Paralegals and legal assistants
  • Oil and gas workers, field workers, and field service technicians
  • Call center or customer service employees
  • Cable installers
  • Loan officers, loan consultants, loan processors, and mortgage industry employees
  • Repair technicians
  • Retail store employees
  • Computer and IT employees
  • Janitors
  • Waiters, waitresses, and other tipped employees
  • Dry cleaner workers
  • Construction workers
  • Accounting personnel
  • Secretaries, payroll clerks, and general admin personnel

We Can Help

If job misclassification is depriving you of wages you believe you’re rightfully owed, contact a wage and hour lawyer at Kennedy Hodges to schedule a free consultation and case review. We represent employees who filed with the DOL but received an offer that was unacceptable. You’ll be given personal representation, and we’ll work to ensure you receive all that you’re entitled to.


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