Just last month, GrubHub, DoorDash, and Caviar were sued in San Francisco Superior Court in lawsuits similar to those pending cases against Uber and Lyft.
These three new lawsuits ask the hot-button question: are workers in the shared economy employees improperly classified as independent contractors? If the current individuals working for these three shared economy companies are classified as employees under California law, then the companies will be responsible for paying overtime, meeting minimum wage requirements, and reimbursing business expenses such as the gas, parking, and phone data – costs that would fundamentally alter the way they are doing business.
Improper worker classification is not just the fodder for class action lawsuits, and the issue extends beyond the questions of employee versus independent contractor. The Department of Labor recently announced a settlement with Halliburton for $18.3 million in overtime owed to more than 1,000 employees nationwide. The DOL found Halliburton had improperly classified employees in 28 different job positions as “exempt” from overtime in violation of the Fair Labor Standards Act. Halliburton did not pay overtime to “exempt” employees who worked as field service representatives, pipe recovery specialists, drilling tech advisors, perforating specialists and reliability tech specialists and worked more than 40 hours in a workweek. Unfortunately for Halliburton, the company also failed to keep accurate records of hours worked by these employees.
Simply paying an employee a salary does not mean the employee is exempt from overtime. The FLSA provides an exemption from both minimum wage and overtime pay requirements for employees in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees. To qualify for exemption, however, employees must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status.
If you are an employer who has questions about employee vs. independent contractor classification or the FLSA, attorneys with the Sands Anderson Employment Practice Team are available to answer your questions and assist you with issues concerning these important issues.