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Lowe’s Settlement Shows Perils of Misclassifying Contractors

By   |  Misclassification  |  No Comments  |  Posted on January 26, 2015  


As workers stand up for their rights and federal regulations crack down on employment classification practices, the number of corporations facing accountability continues to grow. Just this week Lowe’s joined the ranks of Google, FedEx, and Uber in settling its lawsuit over misclassifying its independent contractors.

Lowe’s current and former employees will recover over $10 million in compensation for wages previously unpaid due to independent contractors designations. Many companies use this method of classifying employees as independent contractors to avoid paying overtime wages and other benefits; but the Fair Labor Standards Act (FLSA) clearly defines that workers must operate in certain ways to be considered contractors. Since these Lowe’s employees had no control over their tasks, how much they were paid for each task, or much of their day-to-day activities, they are entitled to full compensation from the company as regular employees.

Employers may choose working with businesses rather than with individuals for some of their job tasks, because they consider it riskier to work with individual contractors. Working with a company won’t save them, however, as a limited liability corporation (LLC) is just as likely to seek compensation for misclassification issues. In the instant matter, the claim against Lowe’s was filed on behalf of both individuals and businesses. Even workers who are operating together or under a parent company are protected by the FLSA and are entitled to seek compensation if their employment rights are violated.

All Companies Must Adhere to FLSA Standards

As seen by the growing number of companies facing multi-million dollar class action lawsuits, even the largest corporations are not exempt from employee classification laws. Although it can seem intimidating to take on these giant businesses in court, workers have the right to do so, and settlements such as the Lowe’s result show that obtaining significant compensation is a real possibility.

In addition to lawsuits levied by workers, corporations that violate federal labor regulations could also face staggering fines from the IRS and individual state labor departments. With fines and lawsuits for employee misclassification occurring more frequently, corporations may turn their attention toward appropriately classifying their workers.

Wage Claim Lawyers Handling Lowe’s Settlement

No matter how big the company or whether you worked as an individual or part of a business, every worker is entitled to correct classification and compensation. If you fear that your rights have been violated and you have been denied overtime pay or other employment benefits due to misclassification, the attorneys of  Josephson Dunlap LLP can review your case and determine what options are available to you.

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