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Class action could pair employees, contractors

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in Compensation and Benefits,Hiring,Small Business Tax Deduction Strategies

Do you try to cut labor costs by hiring independent contractors to do employees’ jobs? If so, consider this risk: Both employees and independent contractors who do the same or similar work could join together and sue over unpaid wages and overtime.

The more control you exert, the more likely the workers aren’t really independent contractors, but employees eligible to join any class actions filed by employees.

Recent case: Aaron Meseck and Jeffrey Webber worked as installation technicians for TAK Communications. Meseck was classified as an employee, while Webber was listed as an independent contractor—although both did the same work.

They sued, alleging they were not paid overtime. They petitioned the court to represent all other similarly situated employees and independent contractors. TAK Communications said the independent contractors didn’t belong in the lawsuit.

The court disagreed. It pointed out that, because the company exerted the same sort of control over how the independent contractors did their jobs as it had over employees, the label probably didn’t matter. The court granted class-action status. (Meseck, Webber v. TAK Communications, No. 10-965, DC MN, 2011)

Final note: What spurs employees and independent contractors to challenge pay practices? Often it is the small ways that employers try to shift business expenses onto workers.

In this case, employees and contractors alike were issued communications equipment, which they were told was mandatory. But both groups had to pay to “lease” the equipment through payroll deductions. And they were so pressed for time to complete installations that they ate their meals while driving from one location to the next.

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