Uber was hit with yet another class action lawsuit, this one in Pennsylvania, alleging that drivers for the company had been cheated out of reimbursement for expenses and tips as a result of being misclassified as independent contractors.
“Misclassification class action lawsuits are increasing, fact-intensive and very expensive to defend,” said Jim Evans, partner in Alston & Bird’s Labor and Employment Group. “But at the same time, as many companies are increasingly hiring more independent contractors for financial and organizational incentives, they must be aware of the complexity of misclassification claims in order to minimize their risk exposure.”
Evans added that the National Labor Relations Board, Department of Labor and Internal Revenue Service have all expressed concern over companies using contract labor.
There are several ways a company can safeguard against misclassification claims, Evans said. First, review your contract and training materials.
Once independent contractors are on board, do not get involved in managing, supervising or directing the contractor or assigning work other than giving a general description of duties, he added.
“Remember that the characterization contained in a written contract or other materials is not controlling on a court or a regulatory agency. Each will look through and consider the economic reality of the relationship,” said Evans.