Rejected Worker Stakes Internet Claim
When a group of former employees at Amazon filed a lawsuit in 2010 for unpaid wages and discrimination, the case caught the public's attention.
In their complaint, employees accused Amazon of racial and gender inequality, misclassifying them as independent contractors rather than employees, denying their equal pay for equal work and violating state labor laws.
The suit was rejected by three federal judges before it reached trial in 2013 after many investigative hearings with evidence from over 200 workers. The 3 judges ruled that the plaintiffs failed to meet the required standard needed to win their case because they were not directly employed by Amazon but on an individual basis instead.
The three judges also said that not all of the issues raised in the lawsuit were "materially distinguishable from those raised by other workers seeking to hold Amazon liable for their unpaid wages and other violations of law," according to court documents.
However, the plaintiffs now say this isn't good enough. They argue that their case is materially different than those of other workers because it involves an unprecedented and highly contested public policy issue — namely, whether an internet company should be required to pay its employees' wages when they are performing work on behalf of that employer.
That is the question Leigh Honeywell, a former UPS worker, wants to answer. She is joining three other Amazon workers and one worker from Google who have filed their own lawsuit on the same grounds.
In fact, their case seeks to answer this very question. Essentially, they are asking whether companies such as Amazon are required to pay employees who perform work on behalf of such companies — a matter of public policy that has been hotly debated in Washington and elsewhere. It has been called one of the most important questions facing federal courts.
The plaintiffs' argument is starkly different from those of other employees who have sued corporations for unpaid wages in recent years. The case is unique in that it seeks to address the question of whether workers who have been classified as independent contractors are also entitled to be paid for their work on behalf of such companies.
"This lawsuit is about a critical issue in Silicon Valley and beyond: whether one of the fastest growing sectors of the economy has to abide by traditional labor regulations," says Andrew Moylan, executive director at National Work Rights Institute. "I think it's an important question."
The tech industry has been hit with numerous lawsuits over whether it is misclassifying workers, denying them benefits and violating state labor laws. In the case against Uber, the company has been accused of misclassifying workers as independent contractors. Such misclassification saves companies substantial portions of money and protects them from having to provide benefits such as health insurance, disability and vacation days.
These are all issues that have come up in numerous Uber lawsuits, and Uber has argued in court that its drivers are independent contractors rather than employees.
Yet the question of whether a company is required to pay wages when an employee is doing work on behalf of that company as well as other companies — such as in the case at hand — is an issue that has yet to be fully answered by federal courts.
The U.S. Supreme Court has never ruled on the question of whether such payment is required. As a result, the question has been left to the courts in each state and other jurisdictions across the country.
Courts applying state rules about what employers are required to pay their employees have reached different conclusions about whether companies that perform work on behalf of such companies must pay the employees for their labor or must seek some type of written contract from the workers before they can be classified as independent contractors and not entitled to be paid for working on behalf of a company.
"The general principle of California law is that an employment relationship exists whenever a person performs services in exchange for compensation, regardless of whether the payor is a 'principal' or 'independent contractor'," said Michael Rubin, an attorney representing Leigh Honeywell and the other five workers. "That's pretty clear."
However, that has not been the case with some federal cases involving companies such as FedEx and Amazon. Neither company had written contracts but nevertheless classified their workers as independent contractors.
The courts that have decided these cases have made different determinations on how to classify workers. In other words, they have decided whether it would be better to classify them as employees or independent contractors.
Some courts, for instance, have decided that certain workers are more like employees than independent contractors because of the nature of their work and how integral they are to the company's core business. FedEx Ground and Amazon employ thousands of drivers who deliver packages to customers from fulfillment centers around the country. But the plaintiffs in these cases argue that this isn't at all what is at issue here.
They argue that when workers don't have a written contract with a company and perform work on behalf of such companies in exchange for compensation as well as a small fee from other companies, it is clear from state law that they should be classified as employees and paid their wages.
Plaintiffs, who include former workers at Google's advertising platform and Amazon, are arguing that even if they were paid a small fee by the companies they worked for on behalf of, they should be entitled to wages under state law.
"This is a matter of policy, what the law requires," says Rubin. "It has nothing to do with independent contractors."
The question before these workers and the courts is whether companies such as Amazon have to pay employees for their labor — even if the workers perform work for other companies in addition to those for which they primarily work — because these workers are merely working on behalf of their employers. They argue that they should be classified as employees because they have no other clients, are not involved in the core business of the companies they work with, and receive little or no power over how they do their jobs.
"I'm not a contractor at UPS. I'm an employee," said Honeywell. "Amazon is making billions of dollars selling boxes that we put in cars and deliver to people's doors."
In the case against Google, similar arguments were made by another former worker at its advertising platform named Jason Everett-Hayes. In that case, which was decided by the Ninth Circuit Court of Appeals this past April, the court disagreed and instead ruled that workers who receive more than $28,000 annually are entitled to wages.
"While we are sympathetic to the plight of plaintiffs who don't choose to be employees but do not fall within $28K per year exception, we conclude that such workers must be treated like employees regardless because they have been classified as such," said the court.
The Honeywell case is being heard in San Francisco County Superior Court. A similar case was filed in Los Angeles County Superior Court and has been consolidated with the Honeywell case. The U.S.
Conclusion
These are examples of the types of work that Uber is increasingly doing in addition to its core business of driver services and also uses employees to do. As these types of work become more common and more companies offer these kinds of services, it will be increasingly important for both Uber and other companies that use independent contractors to understand the rules surrounding this area and ensure they are adhering to them.
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