Worker Misclassified as Independent Contractors Sues Google

Jacob McPherson, former Google Play unit site merchandiser out of New York, sued Google and the online staffing company Elance-oDesk. He alleges that he and others in similar positions were misclassified as independent contractors by the online search engine giant. He is demanding unpaid wages, including wages that should have been paid for overtime hours. He also seeks damages and attorneys’ fees.

The plaintiff, McPherson, worked for Google from January 2013 through December 2013 as contracted. McPherson claims that he (and many others) worked up to 45 hours/week, but that Google never provided them with payment for more than 30 hours/week. While at Google, McPherson worked through oDesk who released a statement regarding the lawsuit. In their statement about the overtime suit, oDesk stated that they were committed to operating in a “lawful and ethical manner.” They researched the claims and are confident that they have no merit.

McPherson was offered employment at $35/hour for a maximum of 15 hours per week (the maximum hours per week was later raised to 30 hours, according to the suit filed against Google). McPherson was required to register at oDesk in order to receive their employment offer and he would be considered a freelancer paid only through oDesk.

McPherson claims in the lawsuit that he performed work similar to that of (and alongside at the same offices as) W-2 employees. He was assigned to teams that included W-2 employees. He was required to be in attendance for mandatory meetings and training alongside W-2 employees. He was even issued a Google owned cell phone, tablet and laptop just like the W-2 employees of the massive online search engine giant. “Freelancers” were also required to use an email signature that designated them as representatives of Google and offering the office address, follow a Google-approved method for completing assigned tasks, adhere to dress codes and the Google blogging policies, etc.

This case could be a stepping-stone for others and could mean drastic changes for online staffing and freelance sites regarding the risk associated with managing independent contractors.

If you have questions regarding your employer/worker relationship and whether or not the classification of independent contractor is appropriate according to federal regulations, contact the southern California employment law experts at Blumenthal, Nordrehaug & Bhowmik. 

Recruiting Manager Files Overtime Suit Against Robert Half

On September 5, 2014, a California recruiting manager filed an overtime suit against Robert Half International Inc. The recruiting manager, Theresa Daniels, worked at Robert Half as a recruiting manager from January 2014 through June 2014. She filed suit in San Mateo County Superior Court in California.

The suit filed by Ms. Daniels made a number of claims, including:

• The company misclassified her and other, similar employees as exempt from overtime.
• She and other, similarly classified employees, did not have managerial duties that would classify them as exempt from California overtime laws.
• She and other, similarly classified employees, did not have managerial authority.
• She and other, similarly classified employees, had only a minimal role in supervising employees and not authority to make employment related decisions regarding other employees.
• All recruiting managers, Theresa Daniels included, were strictly monitored and tightly controlled by both the company policy and their direct supervisors.

The suit seeks class action status and back overtime pay for unpaid wages.

Robert Half indicated that there are meritorious defenses to the allegations being made by Ms. Daniels and they will be defending themselves against litigation.

If you or someone you know are misclassified as exempt – preventing you from receiving the overtime pay you are entitled to at work, please contact your southern California employment law experts right away: Blumenthal, Nordrehaug & Bhowmik.

FedEx Drivers Are Employees, Not Contractors According to the National Labor Relations Board (NLRB)

The recent National Labor Relations Board (NLRB) decision in the FedEx case concluded that drivers are employees, not contractors. Their agreement supports the decisions of many other jurisdictions to date.

The ruling was directly related to the FedEx drivers in the Connecticut terminal of a FedEx ground package Systems Inc. unit. The ruling by the National Labor Relations Board that the drivers are employees and not independent contractors was founded on a wide range of factors that all favored employee status.

A four-member panel ruled over one dissenting vote that FedEx Home Delivery was in violation of the National Labor Relations Act in its refusal to recognize a union and appropriately bargain when they sought to represent the drivers. A closer examination of the relationship between the drivers’ and FedEx made it clear to the board that the drivers fit the criteria of classification as employees.

Traditionally, courts and governing agencies have utilized the now familiar “multi-factor” common law test in order to differentiate between workers who should legally be designated as employees and those who should be designed at independent contractors. Over time a new trend has gradually emerged in which the focus has shifted to include and some might argue, focus on, one single factor: who has control over the individual’s work. It has become apparent that this focus does not always rely on the use of power over the individual’s work, but simply the existence of the possibility to exert power/control over the individual’s work even if it hasn’t been invoked.

If you are unsure of your appropriate classification on the job and fear that you may be being denied benefits through misclassification as an independent contractor, contact the experts in employment law at southern California’s Blumenthal, Nordrehaug & Bhowmik. 

California Labor Law: Governor Brown’s New Law

Governor Jerry Brown recently signed Assembly Bill 1897, creating new Labor Code section 2810.3. The new labor code section created by the Assembly Bill applies to almost all companies with 25+ employees that obtain or receive workers to complete work through the “usual course of business” from other businesses that provide workers (otherwise known as labor contractors). The new law makes such companies liable for three things:

• Payment to contractor’s employees
• Any contractor’s failure to secure appropriate workers’ compensation coverage as required
• Compliant actions regarding occupational health and safety requirements (OSHA) in place

Companies will now have a new statutory liability. The legal contraction of labor services in regards to the new Labor Code section isn’t related to the required finding of joint/co-employment or any type of control over working conditions, the method of payment, scheduling of work hours, or the overall work site environment. Under the new law, each company is liable even if they can exhibit proof that they were not aware of violations that existed or occurred.

The new labor code law applies to workers who are completing their job in the normal course of business on site. California employees who are exempt from overtime (i.e. executive, administrative and professional employees) are excluded from the new law’s reach. There are also a few exemptions from the definition of a “client employer” who is covered under the new law: companies with fewer than 25 workers, companies who use 5 or less labor contract workers at any given time, state organizations, homeowners and home-based businesses who receive labor contract services in their homes, and companies providing transportation services. Additional limited exemptions in relation to non-profit, community organizations, unions, apprenticeship programs, motor club services, cable operators, telephone corporations, etc.

The new law will be effective as of January 1, 2015. For additional information regarding exceptions and exclusions of the new labor law, contact your southern California employment law experts at Blumenthal, Nordrehaug & Bhowmik. 

When Independent Contractors are Actually Employees

Sometimes it’s difficult to know if you are an employee or an independent contractor. Even more often it’s hard to know if you actually en employee even though you’re called an independent contractor. If you’re not sure, you might be one of the many who are “employees” in everything but title.

You might be an “employee” if you:

• Work for ONLY one company
• Put in very long hours
• Are under close supervision 

Why should you care if you are classified as an employee or as an independent contractor?

1. Independent contractors pay self-employment taxes.

2. Independent contractors do not qualify for state unemployment relief if they are let go or not “renewed.”

3. Independent contractors are not eligible for employer-paid benefits.

The IRS has a multipart test in place that has to be met in order to qualify for legitimate independent contractor status. If it is determined that an employer has been misclassifying employees as independent contractors according to the multipart test, employers may be subject to penalties assessed for back employment taxes and/or overtime wages for workers.

In recent news, the FedEx drivers in California and Oregon, that were considered independent contractors by the company, were dubbed employees by the court. Now there are drivers for both Uber and Lyft car-sharing services (popular in southern California urban areas) that are also challenging their independent-contractor status.

This isn’t an issue that is likely to go away any time soon. Many businesses tend to push the limits on legal definitions in order to keep labor costs low, and avoid passing official employee count thresholds that can trigger additional coverage requirements and programs (such as family leave and health care).

That’s not to say that being an independent contractor is a bad thing. Independent contracting has a lot of benefits for both the employer and the contractor. A lot of workers enjoy the freedom is can offer. They can set their own hours and the pace of their work. They can work for a variety of different clients. They can deduct their own business expenses from their income. But the problem comes when a worker is hired as an “independent contractor” and then treated like an employee. This set up takes all the benefits out of the arrangement on the side of the worker leaving the employer with all the “good” cards.

If you suspect that you might be misclassified as an independent contractor, contact an expert in southern California employment law as soon as possible at Blumenthal, Nordrehaug & Bhowmik. 

Exempt and Non-Exempt California Employees Affected by Increase in California’s Minimum Wage

On July 1, 2014, California raised its minimum wage from $8/hour to $9/hour. Both non-exempt and exempt salaried employees will be affected. An additional increase to $10/hour will take effect on January 1, 2016. Some employers view the change as inconsequential as they already have to meet local minimum wage requirements for their non-exempt employees, but there will in fact be a noticeable impact because the change applies to exempt status employees and commissioned inside sales employees.

To understand the potential changes the increase in minimum wage could have for exempt employees you must first consider the requirements for the exempt status. In order to be classified as exempt, an employee must meet certain requirements regarding the type of work they are performing. In addition, they must meet the minimum salary test. California law requires that all employees classified as exempt earn a monthly salary that is at least twice the minimum required by the state for a full time employee (working 40 hours per week). ) Prior to the increase in California’s minimum wage, this left the minimum monthly salary for a full time, exempt employee at $33,280. The change that took effect on July 1, 2014 bumps it up to $37,440. By 2016, this number will be even higher, bringing exempt employees’ minimum salary to $41,600 per year in order to meet the minimum salary test. 

In regard to commissioned inside sales employees, the new California minimum wage applies to overtime pay. California law dictates that an inside salesperson is exempt from overtime pay if they earn more than 1.5 times the state minimum wage and more than half of their income is commission pay. After July 1, 2014, an inside sales person must earn at least $13.51 per hour in order to be exempt from overtime pay. With the arrival of 2016, these employees will need to be making at least $15.01 per hour in order to retain exempt status.

Employers who disregard of delay the necessary adjustment of applicable employee pay rates and exemption statuses could face costly penalties and interest on back pay due employees, possible overtime premium pay (as a result of the loss of exempt status for some workers) and more. If you have questions regarding how the change to minimum wage law may apply to you, get in touch with Blumenthal, Nordrehaug & Bhowmik today. 

California Labor Lawsuit Led to Class Action v. Barnes & Noble

A class action suit against Barnes & Noble based out of New York has roots in California. The California labor lawsuit will continue – a New York judge refused to grant summary judgment for the defendants. Barnes & Noble, the major chain and online bookseller, is being accused of avoiding the payment of overtime to employees by purposefully misclassifying them as exempt. Allegations would leave Barnes & Noble in violation of the Fair Labor Standards Act (FLSA).

Court documents indicate that until 2005, Barnes & Noble classified all assistant store managers as FLSA exempt. This meant that no assistant store managers were eligible for overtime pay on hours worked above and beyond the standard workweek or workday. Generally speaking, managers (who are paid a salary and perform managerial tasks) are properly exempt in just this fashion. However, Barnes & Noble assistant store managers in California filed suit citing violations of California labor law.

The assistant store managers who filed suit in this California case made allegations that they performed tasks that fell outside of the managerial realm. They also indicated that despite their official title (assistant store manager) they had no actual authority over other employees.

The lawsuit resulted in Barnes & Noble reclassifying its assistant store managers in California as nonexempt. As nonexempt employees, they can now qualify for overtime pay. But Barnes & Noble apparently did not make the change at other stores in other locations throughout the country until a much later date.

Barnes & Noble did eventually (in 2010) reclassify all of its assistant managers as nonexempt throughout the states. This was the basis for Barnes & Noble’s petition for summary judgment in the lawsuit (originally brought in 2005 as an action citing California labor code). It would seem that the FLSA violations ended in June 2010, but the wider lawsuit was filed in January 2013. The defendants cited that the lawsuit fell outside the FLSA’s two-year statue of limitations.  

US District Court Judge John Koeltl disagreed, pointing out that the FLSA two-year limit extends to three years when there is proof, evidence or suspicion that there was a willful violation. Considering that Barnes & Noble reclassified California based assistant managers as a result of the California labor lawsuit, but failed to do so nationwide for 5 years, it would be easy to suggest that there was at least some evidence that a jury could perceive as willful violation.  

The three plaintiffs (named) in the current, New York based lawsuit, are all former assistant store managers for Barnes & Noble. They note that their duties were not limited to managerial duties, they often performed tasks performed by other non-exempt employees, such as working the cash register, processing product returns, etc.

If you feel you have been misclassified as an exempt employee, contact the employment law experts at Blumenthal, Nordrehaug & Bhowmik today.