- A class of approximately 847 current and former delivery drivers will receive a payout of $16.5 million as XPO Logistics settled federal and California wage and hour claims (Carter v. XPO Logistics, Inc., No. 16-cv-01231-WHO (N.D. Calif. June 27, 2019)).
- The drivers claim they were employees entitled to minimum wage and overtime pay but were required to sign Delivery Service Agreements that misclassified them as independent contractors.
- The employer is not admitting any fault or wrongdoing as part of the settlement. In an unrelated incident, XPO recently shut down a Tennessee warehouse amid allegations of sexual harassment and pregnancy bias.
Employers have to be careful about classifying workers as independent contractors. Enforcement agencies and courts use a variety of different tests, but most boil down to how much control an employer exerts — or has a right to exert — over someone's work and working conditions.
Even a written agreement stipulating independent contractor status will not negate a finding of an employment relationship if the facts point in that direction. In a recent case involving 7-Eleven, the 9th U.S. Circuit Court of Appeals ruled that a trial court incorrectly focused on an agreement between 7-Eleven and its franchisees instead of looking at how much control 7-Eleven actually exerted over the franchisees.
Another court recently concluded, similarly, that a signed independent contractor form did not trump a delivery driver's claims that he was actually an employee.
Earlier this year, Flowers Foods agreed to pay out $9 million to settle allegations that it misclassified its distributors as independent contractors. Flower Foods controlled all aspects of the distributors' relationships with the company and their customers, the plaintiffs claimed, supporting a finding that they were actually employees who were entitled to overtime pay.
In light of a new California bill seeking to codify a new independent contractor test at the state level, employers around the country may want to review their current practices relating to independent contractors to ensure they are legally sound.