The 6 Tell-Tale Signs That Someone Is An Employee And Not A Contractor

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Uber to appeal California Labor Commission ruling that it is ‘involved in every aspect of the operation’

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Dallas, TX: An employment class action lawsuit has been filed against Michaels Stores Inc, on behalf of certain current employees and online job applicants, hired or not, based on allegations that Michaels violated their privacy rights. The lawsuits are in connection with background or consumer reports obtained through Michaels’ online application for employment.

The lawsuit alleges it is unlawful for an employer, like Michaels, to procure a background report concerning a job applicant or employee unless a “clear and conspicuous” disclosure is made in a stand-alone document that “consists solely of the disclosure” informing the applicant or employee that a report may be obtained for employment purposes.

A class action complaint was originally filed in the United States District Court Northern District of Texas in January, and the case has been subsequently transferred to multi-district litigation in the United States District Court District of New Jersey for pre-trial proceedings.

Cases were originally filed in Texas, Missouri, and New Jersey. On March 26, 2015, a panel of seven federal judges reviewed the cases and ordered that all pre-trial matters be heard by one judge.

Under the applicable law, statutory compensation is available to those whose privacy rights have been violated. Plaintiffs are represented by Jamie McKey at the Kendall Law Group.

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San Francisco, CA: AT&T Inc is facing an unpaid overtime class action lawsuit brought by a training manager who alleges the company is in violation of California labor law and the Fair Labor Standards Act.

Specifically, the lawsuit contends that the telecommunications giant intentionally misclassified the workers as being exempt from overtime requirements in order to avoid giving them the extra pay they were entitled to under state and national employment laws.

Filed in the US District Court for the Central District of California, plaintiff Wendell Watson alleges that despite assigning the trainers their work and being aware that they often worked longer than 40 hours a week, AT&T refused to pay overtime to training specialists nationally.

“My fellow designers and instructors and I work hard for AT&T and take pride in contributing to its success,” Watson said in a statement. “We just ask that we be paid fairly under the law.”

According to a statement issued by attorney’s representing the plaintiff, AT&T employees involved in designing company trainings often work nights and weekends interviewing experts at the company and then passing the information on to instructors. In the lawsuit, Watson, an AT&T training design manager since 2001, states that the workers not only did not receive overtime but also regularly worked more than five consecutive hours without a required half-hour meal break or a second break after working for 10 hours.

The lawsuit also states that “In addition, the California plaintiff and California class members regularly work and have worked without being afforded at least one 10-minute rest break, in which they were relieved of all duty, per four hours of work.”

AT&T is also being accused of failing to provide accurate wage statements, such that workers were not able to determine how much and for what hours they were being paid.

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Employers without a paid sick time policy should start drafting one that complies with the law’s requirements

California has joined a growing number of jurisdictions mandating employers to provide paid sick leave to their employees, including part-time and temporary workers. Below is a summary of the California law’s key points:

Effective dates

There are two dates to keep in mind: January 1 and July 1.

The employer’s obligation to provide paid sick leave under the law does not take effect until July 1, 2015.

However, on Jan. 1, 2015, covered employers are required to:

• Post in a conspicuous place at the workplace a poster containing various requirements under the law. A compliant poster is available on the California’s Division of Labor Standards & Enforcement (“DLSE”) website.
• Issue newly hired nonexempt employees an updated “Notice to Employee” (required under California Labor Code section 2810.5) that includes paid sick leave information. A revised “Notice to Employee” form is available on the DLSE’s website. The law is not clear as to whether current nonexempt employees must be reissued a new “Notice to Employee” after January 1, or if the poster will suffice.

Covered employers 

Employers who employ at least one employee who works in California at least 30 days within a year from the commencement of their employment, on or after Jan. 1, 2015, are covered by the California law.

Covered employees

Employees are eligible for paid sick leave if they are not covered by one of the limited exemptions to the law (discussed below); and they work for an employer on or after Jan. 1, 2015, for at least 30 days within a year from the commencement of employment.

The law applies to part-time, temporary, seasonal and per diem employees. The law also applies to employees who are exempt from overtime requirements.

According to the DLSE, employees must have been employed for 90 days before they begin using their sick leave. However, employers must provide the leave at the commencement of employment or July 1, 2015, whichever is later.

Employees exempted

Under specified conditions, the law does not apply to the following types of employees:

• Employees covered by a valid collective bargaining agreement that provides for paid leave for sickness and other terms of employment
• Employees in the “construction industry” covered by a valid collective bargaining agreement under certain conditions
• Providers of in-home supportive services
• Employees of an air carrier as a flight deck or cabin crew member under certain conditions

By: InsideCounsel.com

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McDonald’s gets a lot of bad press for its low pay. But there’s an even bigger offender when it comes to fast food companies underpaying their employees: Subway.

Individual Subway franchisees have been found in violation of pay and hour rules in more than 1,100 investigations spanning from 2000 to 2013, according to a CNNMoney analysis of data collected by the Department of Labor’s Wage and Hour Division.

Each investigation can lead to multiple violations and fines. Combined, these cases found about 17,000 Fair Labor Standards Act violations and resulted in franchisees having to reimburse Subway workers more than $3.8 million over the years.

It’s a significant sum considering many Subway “sandwich artists” earn at or just above the minimum wage of $7.25 an hour.

The next most frequent wage violators in the industry are McDonald’s (MCD)and Dunkin’ Donuts(DNKN) stores.

The numbers only reflect unlawful acts that have been caught. To be fair, Subway has more than 26,000 locations throughout the country — the most of any fast food chain — so it might not be surprising that it also tops the list of offenders.

That said, Subway’s problems were considered serious enough to prompt the Department of Labor (DOL) to partner with the company’s headquarters to boost compliance efforts last year.

“It’s no coincidence that we approached Subway because we saw a significant number of violations,” a Department of Labor spokesperson said.

The franchise model impact

In cases like these, the corporate parents like to draw a distinction between themselves and their independently operated stores. While Subway declined to comment for this article, both McDonald’s and Dunkin’ Donuts submitted comments to that effect.

Dunkin’ Donuts noted its franchisees “are solely responsible for all employment decisions at their restaurants,” and McDonald’s cautioned “against drawing broad conclusions based on the actions of a few”. (Read their full comments at the end of this article).

Related: 10 big overtime pay violators

The fast food franchise model provides a layer of protection for Subway, McDonald’s and Dunkin’ Donuts. Even though fast food locations may look the same and restaurants abide by similar branding and business guidelines, each franchise owner is treated essentially as a small business.

Meanwhile, the corporate parents can distance themselves from being found liable of labor violations.

This makes the Labor Department’s enforcement efforts harder. Consider that the agency can investigate a large company like Wal-Mart in one fell swoop and order changes to all Wal-Mart stores nationwide (as it did following certain overtime violations in 2012), but it cannot do the same for a chain restaurant.

To crack down on wage violations in the fast food industry, the DOL has to investigate each franchise individually.

Over the last few years, DOL has been doing exactly that, intensifying its focus on so-called “fissured workplaces.” These are businesses in which there’s an indirect relationship between the worker and the parent company that ultimately benefits from their labor. Not limited to just franchises, this category also includes companies that rely on independent contractors or staffing agencies.

Restaurants and hotels in particular, are a major focus, not only because they fall into this category, but also because they employ a large share of low-wage workers.

Wage violations are common

A 2009 study by several think tanks estimates about 18% of restaurant and hotel workers face minimum wage violations, 70% face overtime violations and 74% encounter what are known as “off-the-clock” violations, where workers are expected to do tasks without being paid.

Common incidents include employers forcing workers to deduct a 30-minute lunch break, even though the employee didn’t take a break. Some workers are forced to pay for a company uniform, which can be a violation if, after deducting that expense, the worker’s hourly rate falls below the minimum wage.

In a 2012 lawsuit, a Subway franchisee in Ohio, Hray Enterprises, was found in violation of labor laws after it failed to pay employees for the time they spent doing the nightly closing routine. For example, Hray Enterprises might say a worker’s shift stopped at 10 p.m. when it actually took another half hour to shut the restaurant down and clean up.

The franchise also made illegal deductions from employees’ wages when there were cash register shortages, causing their pay to fall below the federal minimum wage. These were repeat offenses, and owners Joseph and Tammy Hray were ordered to pay $9,900 back to 72 employees. The Hrays could not be reached for comment.

These are small amounts, but they add up for low-income workers.

Some employers also try to skirt overtime rules by asking workers to sign contracts waiving time-and-a-half pay. Such was the case at a Subway franchisee in Michigan, Farha Group #4, which operated eight restaurants. Following a Department of Labor investigation, the company agreed to pay 53 workers back wages and damages totaling nearly $52,000.

Starbucks CEO backs higher minimum wage

The Fair Labor Standards Act, known as the FLSA for short, requires most fast food employees be paid at least the federal minimum wage of $7.25 an hour, plus time-and-a-half for any work beyond 40 hours a week.

Employers are also required to maintain accurate time and payroll records.

Labor law violation lawsuits on the rise

In addition to the Department of Labor’s investigations, there has also been a rise in private lawsuits related to wage and hour complaints. Lawsuits related to FLSA violations reached a record high in 2013, according to law firm Seyfarth Shaw.

But few private cases have focused on the fast food industry. Instead, plaintiff’s attorneys have gone after higher paying industries like financial services in pursuit of larger payouts.

“It’s only now that the fast food industry is getting attention from the private sector, probably because of all the organizing and workers speaking out,” said Hollis Pfitsch, staff attorney for the Legal Aid Society.

That may change soon.

President Obama’s push for a higher minimum wage and expanded overtime pay are increasing awareness about FLSA laws among workers, said Brett Bartlett, a partner at Seyfarth Shaw who has represented companies in more than 100 wage and hour cases and even written a book on the subject.

“All of this chatter around minimum wage, overtime and these franchise issues is educating everybody about the laws,” he said. “We’re going to see an uptick in these cases.”

McDonald’s workers suing for wage theft

Unions are also pushing low-wage workers to organize. Seven lawsuits filed by McDonald’s workers in March alleging wage theft, for example, come as part of a movement backed by the Service Employees International Union.

In the McDonald’s lawsuits, the workers’ lawyers are arguing that the corporation should share liability with its franchisees — a move that breaks with most prior cases.

A similar situation occurred recently in a case filed by Domino’s employees and argued by Legal Aid attorneys Pfitsch and Karen Cacace.

While the original lawsuit was against a New York-based franchisee, the international corporation Domino’s Pizza (DPZ) was added to the suit as a joint employer after employees alleged the company held control over hiring policies, training, staff uniforms, point-of-sale systems and time and pay records. The case was settled with the franchisee agreeing to pay back wages to 61 employees, and Domino’s corporate parent agreeing to minor concessions.

If McDonald’s headquarters is found jointly liable in a similar way, this would be a big win for workers and could trigger more FLSA lawsuits filed against the mega fast food chains.

“For some of these restaurants, there are numerous, highly sophisticated plaintiffs’ law firms that have sued the corporate operations before and are hungry to find a way to connect the dots between the franchise operations and corporations. There’s a huge potential payoff,” Bartlett said.

Related: Fast food workers, share your story

Bartlett recommends restaurant corporations insist individual store managers participate in training programs and set up hotlines for workers, enabling them to anonymously report wage or hour complaints. While the corporate parents still need to maintain some distance, they can also include a line in their franchise agreements that gives them the right to inspect stores for compliance.

“The corporate headquarters want to make sure that its franchisees are complying with the law, but there’s a fine line that they have to avoid crossing. Overzealous compliance efforts might cause them to be deemed employers of the franchise employees,” he said.

It may not sound like much, but Subway’s compliance efforts currently include inviting Department of Labor staff to speak at its annual meetings and publish articles in the company newsletter. The department also provides FLSA posters to new franchise owners.

“We are quite excited at that collaboration that we do have with Subway,” said Laura Fortman, principal deputy administrator for the Department of Labor’s Wage and Hour Division. “We think it’s significant and can be a model for others.”

As for workers, “They don’t have to understand every complexity of the law. They need to know to just give us a call,” she said.

The Department of Labor has more information about wage and hour rules at www.dol.gov/whd and 1-866-4US-WAGE.

Corporate response

While Subway declined to comment, McDonald’s and Dunkin’ Donuts submitted the following responses to CNNMoney:

McDonald’s:

McDonald’s and our independent owner-operators share a concern and commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants. Whether employed by McDonald’s or by our independent owner-operators, employees should be paid correctly. When McDonald’s learns of pay concerns in restaurants which we own and operate, we review the concerns and take appropriate action to resolve them. We trust that our independent owner-operators do the same. McDonald’s and our owner-operators employ separately but in total over 750,000 workers in the United States, and we caution against drawing broad conclusions based on the actions of a few.

Dunkin’ Donuts:

The Department of Labor report represents a very small percentage of cases per year involving the Dunkin’ Donuts system, given that there are more than 7,700 Dunkin’ Donuts restaurants independently owned and operated by our franchisees who employ approximately 120,000 crew members at any given time across the country. However, we and our franchisees, who are solely responsible for all employment decisions at their restaurants, take these matters seriously and are committed to the well-being and fair treatment of all crew members. 

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San Francisco, CA: Uber, the technology company behind the app of the same name, is facing an employment class action lawsuit filed by a former driver who claims that he and others similarly situated, are misclassified by the company as being independent contractors, when they are employees, in violation of California labor law. 

In the lawsuit, Abdo Ghazi, who was stabbed in the face by a passenger, claims that he is owed worker’s compensation by Uber, which he would automatically receive if he were classified as an employee. According to the complaint, “As a consequence of misclassifying its drivers, Uber illegally lowered its cost of doing business by fialing to secure payment of workers’ compensation insurance covering its drivers pursuant to California Labor Code 3700. Uber’s misclassification of drivers as independent contractors gave it an unfair advantage over competing transportation companies, harmed Uber’s drivers and violated California law.”

The lawsuit seeks to reclassify Uber drivers as employees. Anyone who is an Uber driver, or who has worked in that capacity, is included as a plaintiff in the suit.

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Los Angeles, CA: A proposed wage and hour class action lawsuit has been filed iagainst 70 Domino’s Franchises stores in California and Arizona by a delivery driver who alleges Domino’s fails to reasonably reimburse drivers for the costs of using personal vehicles for work, in violation of the federal Fair Labor Standards Act (FLSA) and California labor laws. 

Field by driver Derek Gibbins, the lawsuit alleges franchise operator Hishmeh Enterprises Inc. uses a flawed method to determine reimburse rates. Specifically, it typically pays $1 per trip whch that does not accurately reflect costs incurred by drivers.

The complaint further claims that Hishmeh’s “systematic failure” to provide adequate reimbursement constitutes a “kickback” such that hourly wages paid to its drivers are not free and clear, resulting in net wages that fall beneath federal and state minimum-wage requirements in violation of the FLSA and state labor codes.

“The net effect of defendant’s flawed reimbursement policy is that it willfully fails to pay the federal and state minimum wage to its delivery drivers,” according to the complaint filed in California federal court. “Defendant thereby enjoys ill-gained profits at the expense of its employees.”

The complaint alleges all Hishmeh drivers have similar experiences because they operate under the same reimbursement policy. The suit seeks to include an estimate of several hundred current and former Hishmeh delivery drivers in California over the past four years.

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New York, NY: A proposed unpaid overtime class action lawsuit has been filed in California against Merrill Lynch by employees who allege they are owed overtime for work performed during a financial adviser training program. According to the complaint, any Merrill Lynch trainee who began working for the company in August 2011 can opt in to the suit.

Plaintiffs Celeste Orozco and Derrick Chambers claim they regularly worked in excess of 60 hours a week while in the Merrill Lynch trainee program but were regularly denied overtime. Further, they allege Merrill Lynch refused to properly record the hours the trainees worked.

“Defendants have encouraged and required training-stage trainees to work more than 40 hours per workweek, but have not compensated them for all of their hours worked,” the complaint states.

The complaint alleges both Merrill Lynch and its parent, Bank of America Corp, engaged in a nationwide practice of forcing trainees to work long hours and refusing to pay overtime.

According to the lawsuit, the plaintiffs are not exempt from overtime pay under federal law, therefore, they are suing as a putative collective under the Fair Labor Standards Act. The complaint proposes two classes, with Orozco hoping to lead a class of Merrill Lynch workers in California and with Chambers proposing a class of workers under New York law.

Plaintiffs Orozco and Chambers left the program within months of beginning it, according to the complaint. Chambers claims he regularly worked 80 hours a week or more during his seven months in the program.

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Los Angeles, CA: The Hertz Corp is facing a potential $4 million unpaid wages and overtime class action alleging the company doesn’t pay its employees for working through breaks, and fails to pay them overtime wages.

The lawsuit was filed by Plaintiff Juan Herrera on behalf of himself and all other non-overtime exempt California Hertz employees for the previous four years. The complaint alleges that the vehicle rental chain systematically underpaid its customer service representatives in various ways, in violation of the California labor law .

“Defendants knew they had a duty to accurately compensate plaintiff and class members for all hours worked, including overtime wages and meal and rest period premiums, and that defendants had the financial ability to pay such compensation, but willfully, knowingly, recklessly and/or intentionally failed to do so,” Herrera states.

Specifically, the complaint states that Hertz fails to provide meal and rest periods for its employees by structuring its schedules, policies and workload requirements to not allow the workers their full meal and rest breaks. The company then fails to properly compensate them for the loss.

Additionally, Herrera alleges that Hertz requires its customer service representatives to prepare for their shifts without pay and failing to factor commissions into the employees’ regular rate of pay when calculating overtime pay rates.

That suit also seeks to represent non-overtime exempt employees in California, which Hertz estimates amounts to as many as 2,000 former employees and as much as $11.5 million in alleged damages.

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