The multi-million dollar issue of employee misclassification

The issue of employee misclassification results in millions of dollars in lost wages, benefits and bonuses every year.

On-demand transportation provider Uber has made the news recently in what could be a potentially landmark employment law decision declaring that, at least in one particular case, Uber drivers should be classified as employees of the company, not independent contractors. Similar suits have been filed in jurisdictions across the country, with mixed results, and a class-action lawsuit is currently pending against the company in California.

This decision could have an impact far outside the limited facts of the case, and outside the boundaries of the state of California as well; Uber, Lyft, other transportation companies and various other "on-demand" consumer industries with similar business models (like personal shopping service Instacart, for example) all generally classify those providing services as independent contractors even though the companies retain substantial input into day-to-day job duties, responsibilities and performance.

The hazards of misclassification

In many ways, there are real advantages to employers when workers are classified as independent contractors instead of employees. For example, independent contractors are often not entitled to key benefits like overtime pay, mandated rest and meal breaks, bonuses, minimum wage requirements, life/health insurance, accrued leave time (including vacation and sick days and Family and Medical Leave Act eligibility, as well as paid holidays), access to unemployment insurance and protection from illegal discrimination.

With so much riding on the proper classification of employees, in early 2015, Florida became one of several states to partner with the United States Department of Labor's Wage and Hour Division to crack down on purposeful misclassification. According to a "Memorandum of Understanding" signed by both the DOL and the Florida Department of Revenue, employee misclassification is a multi-million dollar problem in America, particularly in lower-wage industries like custodial/janitorial services, food preparation and sales, construction, hospitality and garment manufacturing. Wage and hour investigations in the year 2013 alone resulted in nearly $84,000,000 in wages being paid to more than 108,000 previously misclassified and under-compensated workers.

Florida officials have, as part of their collaboration with the DOL, agreed to ensure compliance with both federal and state employee classification laws, and to prevent those businesses skirting the rules with purposeful misclassification from gaining an unfair economic advantage over law-abiding employers. Similar initiatives are underway in Alabama, California, Louisiana, Missouri and several other states.

What to do if you've been misclassified

If you are a Florida worker who feels that you have improperly or illegally been classified as an independent contractor instead of an employee, you have legal rights. Contact an experienced employment law attorney at the Boca Raton-based Law Office of William M. Julien, P.A. for more information. You can arrange a free consultation to discuss your case by calling the firm at 866-569-7398 or sending an email.