How serious is the U.S. Department of Labor about cracking down on employers that misclassify workers as independent contractors instead of employees? It has begun a weekly media campaign to tout its growing list of legal victories in misclassification cases.
The latest salvo—an Aug. 18 press release—trumpeted two California lawsuits in which DOL lawyers beat Bay Area transportation companies, sending judgments of $5 million and $3 million in back wages to workers who had been misclassified.
“Misclassification is workplace fraud, plain and simple,” said U.S. Secretary of Labor Thomas E. Perez. “It hurts workers by denying them a fair day’s pay for a fair day’s work, and it also undermines the competitiveness of businesses that are playing by the rules. At the Labor Department, through vigilant and vigorous enforcement, we are cracking down on irresponsible employers who game the system and cheat their employees—and that’s what they are: not contractors, but employees.”
The two cases show that DOL investigators and attorneys are looking for big wins in court, especially against employers that try to thwart the department’s efforts.
National Consolidated Couriers Inc., based in San Leandro, will pay $5 million in back wages and damages to more than 600 drivers it misclassified as independent contractors. Investigators found that National Consolidated Couriers tried to destroy records showing an employment relationship with its drivers, and had been misclassifying drivers for at least five years.
Mountain View-based Stanford Yellow Taxi Cab will pay nearly $3 million in back wages and damages to dozens of drivers that a judge ruled were employees, not contractors as the company contended. The DOL found evidence that the company intimidated drivers who cooperated with investigators, including an instance where it fired a worker just days before trial to discourage him from testifying.
The media blitz—the DOL has been pushing misclassification stories at least once a week all summer—comes on the heels of guidance released in July spelling out when employers can classify workers as independent contractors.