Uber, the San Francisco startup that offers a popular international ride-hailing app, will continue to use independent contractors as drivers after settling class-action lawsuits arguing that the drivers were actually employees rather than independent contractors. The lawsuits for drivers in California and Massachusetts were highly publicized disputes in the ongoing battle between employers and workers over their labor rights in the new economy.
Recent news headlines have focused on the “unsafe” and “grueling” working conditions that employees labor under in Amazon warehouses across the globe. While the media focuses its attention on the warehouses, delivery drivers working for Amazon are now stepping forward to have their stories told as well.
Amazon is famed for its lightning fast delivery times, with customers often receiving orders within the same day. These tight delivery schedules make for stressful and often hazardous working conditions that endanger drivers.
Amazon Drivers Are Overworked and Underpaid
Amazon delivery drivers are reporting working ten to fourteen hours in a shift. This is in part because drivers are not allowed to return any packages from their routes, meaning drivers can make over 160 stops per shift.
While the pay rate seems decent enough, with drivers starting at $15 an hour, this rate is actually far less than the average starting wage for other delivery drivers. For example, UPS drivers are represented by the Teamsters Union that starts their wages at $21 an hour, up to $40 an hour or more for more experienced drivers.
The Amazon Mentor App Leads to Invasive Oversight for Drivers
When drivers start their shift, they first log into the Amazon “Mentor” app. The Mentor app provides information on where to leave packages, access codes to apartment buildings, and dictates every step of the drivers day. The app tracks and measures driving behaviors such as speeding, harsh braking, or making phone calls, and gives the drivers a score based on these behaviors.
Since the Mentor app is constantly monitoring the drivers every move, it also alerts their supervisors if they deviate or stop along the route even briefly. When a van stops for longer than three minutes, a dispatcher will call the driver and ask why. This constant oversight creates a stressful environment for drivers when dropping off packages or simply trying to take a lunch or restroom break.
No Bathroom Breaks for Delivery Drivers
With the Mentor app constantly monitoring drivers, every stop has to be accounted for. That leaves most drivers with no time to use the restroom on their ten hour shifts. Drivers need to use public restrooms such as ones inside grocery stores, so if their route does not include an area that has such a location, drivers have to make a long detour that could cost them their job. Because of these strict measures, drivers report using empty water bottles in their vehicles instead of stopping to use the restroom.
Amazon Hires Contractors To Prevent Workers From Organizing
Amazon has consistently stated that they are not responsible for these working conditions because the drivers are not actually Amazon employees. That’s because Amazon uses contractors for delivery services, a move that allows them to duck responsibility, while also helping to prevent workers from organizing for better conditions.
The Teamsters Union has been working with Amazon drivers and the delivery service providers that hire them in an attempt to curtail these exploitative practices, with the director of the Teamsters Amazon project stating, “This sort of model is problematic for the entire (delivery) industry”.
Do Amazon Delivery Drivers Get Overtime?
Although drivers are being asked to work long hours with few breaks, they are still only paid flat day rates for their work with no additional pay for overtime hours. This has led to multiple class-action lawsuits being filed against the company in over ten states.
Amazon recently agreed to pay out over $8.2 million in a class-action lawsuit alleging that they were engaging in wage-theft by refusing to properly compensate drivers. The lawsuit claims that Amazon failed to pay the minimum wage, and denied compensation for rest breaks or overtime. Amazon has also been fined $6.4 million by California regulators for similar wage-theft violations, though Amazon has stated it is appealing the fine.
Workers Deserve Protections
While Amazon founder Jeff Bezos disputes Elon Musk for the title of world’s richest person, the drivers who keep his company running are struggling to pay rent, while working under increasingly stressful and unsafe conditions.
The team at McEldrew Young Purtell Merritt have decades of experience fighting for workers, and are following these developments closely. If you work as a delivery driver for Amazon and have been subject to unfair working conditions, contact us today at 1-866-333-7715 or online via our form.
Last week, Chief Judge Conner in the Middle District of Pennsylvania approved a settlement in a wage theft case we brought against Vantage Foods on behalf of our client and the other workers at the Camp Hill, PA facility.
At the end of August only a few days before Labor Day, a federal judge struck down the new rule issued by the Labor Department during the Obama administration to make more than 4 million workers eligible for time and a half overtime by setting a higher salary threshold for the overtime exemption. The Obama administration rule released in May 2016 would have doubled the threshold to exempt executive, administrative and professional employees from overtime to $47,476 from $23,660.
There are a few different wage proposals at various levels of the government which we thought we would call attention to at the conclusion of a work week of beautiful weather here in Philadelphia. Philadelphia, Pennsylvania and the Federal Governments are considering wage proposals to increase the minimum wage, stop wage theft and help unemployed workers get back to a job.
A bill passed back in December to fight wage theft in Philadelphia will go in effect today, July 1, 2016. It’s one more reason for employees to cheer Mayor Nutter’s tenure in charge of the city.
Independent contractors may wish to have an employment lawyer examine the appropriateness of their company’s claim that they are not an employee in light of two recent events in California.
The California Labor Commission has ruled that a San Francisco driver for the popular on demand taxi-alternative app Uber is an employee and not an independent contractor. The company now owes the individual unpaid expenses during her two months as a driver. A state agency in Florida has previously ruled that Uber drivers are employees as well. There are lawsuits (as well as protests) over on this issue in other states.
FedEx has also settled a longstanding California lawsuit brought by its Ground and Home Delivery drivers about their misclassification as independent contractors for $228 million. The court must still approve the settlement. The settlement only deals with drivers in California, and it is still too early to say whether FedEx will settle or continue to defend that lawsuits in other states on this issue.
By labeling their work force as independent contractors, companies can shift expenses such as Social Security and tax withholding on to their workforce. This has proven especially popular among early technology startups, such as Uber, as they try to create a marketplace of on-demand service fulfillment.
This area could also be one for whistleblowers to report to the federal government as well, since misclassification can result in unpaid taxes to the Internal Revenue Service.
The Department of Labor has finalized regulations to require overtime pay to approximately 4.2 million salaried workers. In order for a business to claim that an employee is eligible for the overtime exemption as an executive, administrative or professional worker under the Fair Labor Standards Act (“FLSA”) past November, the individual will need to make a salary of over $47,476 a year.
Over the course of the past month, there have been two important developments in labor law. The first involves the classification of independent contractors, the other involves when an unpaid intern is not an employee that must be paid the minimum wage. I wanted to take a minute to cover them today.
Department of Labor Independent Contractor Classification
The Department of Labor has issued new guidance on how to distinguish between employees and independent contractors. This issue is one of importance to both employees (who miss out on employer paid taxes and benefits) and whistleblowers (who can report unpaid taxes from misclassified workers to the IRS). The sx factor test places renewed emphasis on the economic realities test. This means that a worker who is economically dependent on an employer is an employee. If the individual can be said to truly be in business for him or herself, then they can be an independent contractor. Changing the label that is applied to these individuals (such as calling them “owners” or “members of a limited liability company” does not change the analysis.
The list of factors includes:
– whether the work is an integral part of the employer’s business.
– whether the worker’s managerial skill affects the worker’s opportunity for profit or loss.
– whether the worker is making an investment in the business compared relatively to the investment made by the employer to allow the individual to do their work
– whether the work preformed requires special skill and initiative.
– whether the relationship between the worker and the employer is permanent or indefinite.
– the nature and degree of the employer’s control.
Second Circuit on Unpaid Interns
At the beginning of the month, the Second Circuit ruled in Glatt et al. v. Fox Searchlight Pictures, Inc. et al.
The three plaintiffs were hired as unpaid interns at Fox Searchlight and have asserted a claim for compensation as employees under the Fair Labor Standards Act (FLSA) and New York Labor Law. The district court granted a partial motion for summary judgment concluding that two of the plaintiffs were improperly classified as unpaid interns rather than employees.
The FLSA requires that employees be paid a specified minimum wage and time and one-half for the hours worked in excess of forty per week (non-exempt employees). The issue of when an unpaid intern was an employee under the FLSA and entitled to compensation was one of first impression in the Second Circuit.
Both parties agreed that there are cases where an unpaid intern is an employee and should be paid under the law. Both sides also agreed that some unpaid interns are not employees under the FLSA. The court noted that some employers are looking to exploit their unpaid workers while others have developed a program that greatly benefits the interns. The Department of Labor, as amicus curiae, argued that each of the six factors in its Intern Fact Sheet were a requirement for interns to be legally unpaid.
The Court agreed with the Defendants that the question is whether the intern or the employer is the primary beneficiary of the relationship. The court proposed a non-exhaustive list of factors to aid in judicial analysis of the question. No factor is to be considered dispositive and every factor need not point in the same direction for the court to conclude an intern is not entitled to the minimum wage. The factors specified included:
1. The extent of the understanding that there is no compensation.
2. The extent to which the internship provides training similar to that provided in an educational environment.
3. The extent the internship is tied to a school’s educational program by integrated coursework or academic credit receipt.
4. The extent of accommodation to academic commitments by corresponding to the academic calendar.
5. The extent the internship is limited to a period providing beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, paid employees while providing significant educational benefit to the intern.
7. The extent to which the intern and the employer understand that there is no entitlement to a paid job at the conclusion of the internship.
Popular startups that rely on freelancers to perform on-demand services in a two-sided marketplace are having to re-examine whether their workers are in fact employees amid lawsuits across the country challenging their practices. The contractors, on the other hand, are simply standing up for the wages that they should have been paid all along under the Fair Labor Standards Act and have to this point been denied at the hands of those exploiting their need for a job.
Many startups have paid these workers via 1099s, the IRS form that companies report taxable income on their independent contractors. If a worker is a contractor, then businesses do not have to pay minimum wage, overtime or benefits to them. The company also does not have to pay employment taxes to the IRS based on their income.
The Department of Labor recently issued an interpretive memorandum that expressed the opinion that most workers are actually employees under the FLSA. The Wall Street Journal article published today essentially suggested that every startup paying workers on 1099s should expect to get sued. According to the article, many are already planning to make their freelancers into employees following the lawsuits and DOL guidance.
Venture Capitalists quoted in the WSJ article suggested that it might be tough for many of these startups to continue operating if they have to absorb increased labor costs. Housecleaning service Homejoy shut down after they were unable to raise additional funds from investors under the cloud of threatened wage and hour lawsuits. Transportation app Uber has some 200,000 contract drivers and has already been the subject of both protests and lawsuits.
These aren’t the only startups that have run afoul of the nation’s employment laws. LinkedIn paid $6 million in back overtime and damages last year following a Labor Department investigation into. According to news reports, the company’s sales force, who are non-exempt workers under the law, were working off-the-clock and the company was not paying them for that time.