Dive Brief:
- The owner of three Portland, Oregon, courier companies will pay $3,087,100 to settle claims that the employer misclassified couriers as independent contractors, according to the U.S. Department of Labor (DOL). The consent judgment also requires the companies to pay $112,900 in civil money penalties.
- DOL sued Gerald Brazie, Jr., alleging that the drivers were misclassified. The drivers weren't paid for all hours worked and were charged for expenses, including the cost of gas, according to the agency.
- In addition to the monetary award, the judgment requires the employers to obtain a third-party audit of their employment practices within six months and to issue notices to workers and managers regarding employees’ rights under the FLSA.
Dive Insight:
Industries such as trucking and delivery services often classify their drivers as independent contractors, but DOL has said that "common industry practice" is not an excuse to misclassify under the Fair Labor Standards Act.
The classification issue remains unresolved generally, as DOL rescinded an Obama-era guidance on the topic and has yet to replace it. Meanwhile, federal agencies and the courts continue to enforce disparate tests for such classification. California, in particular, saw a major shift this year. The state's supreme court in April adopted a test for independent contractors that generally assumes workers are employees, making it harder for California employers to classify workers as independent contractors.
DOL did, however, issue a field assistance bulletin on independent contractors this summer in response to an industry-specific inquiry about healthcare registries. It directed Wage and Hour Division investigators to apply a "totality of the circumstances" standard in evaluating whether an employment relationship exists.
