A federal district court in Minnesota recently ruled in favor of 21 drivers after a U.S. Department of Labor (DOL) investigation found that their employer, a non-emergency medical transportation business, misclassified them as independent contractors. The misclassification resulted in the denial of overtime pay for the drivers. The court awarded $254,628 in back wages and liquidated damages to the affected employees.
Transportation business misclassified 21 employees as independent contractors denying them overtime pay.
The judgment, issued on June 27, 2023, in the U.S. District Court for the District of Minnesota, marks a significant step in the DOL’s ongoing efforts to recover wages and damages from a transportation business and its owner. The court’s decision came after a jury found on June 16, 2023, that the drivers were employees, not independent contractors. The jury determined that the drivers had no profit or loss, were integral to the business, and were controlled by the company.
The DOL initiated legal action against the employer after it refused to comply with the findings of an investigation by the Wage and Hour Division. The investigation revealed that the transportation business had misclassified its drivers, leading to violations of minimum wage, overtime, and other provisions of the Fair Labor Standards Act (FLSA).
The specific violations of the FLSA committed by the transportation business included:
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Failing to pay some drivers for weeks they worked.
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Making various deductions from the drivers’ wages, such as van leasing, insurance, maintenance, dispatch, and tablet use, resulting in occasional wages below the federal minimum wage.
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Failing to pay overtime at the required rate of one and a half times the regular rate for hours worked beyond 40 in a workweek due to misclassification as independent contractors.
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Failing to maintain accurate records of employees’ hours worked.
The jury trial took place after the transportation business appealed a 2021 judgment by the district court that awarded back wages and damages. In July 2022, the 8th Circuit Court of Appeals overturned the previous summary judgment and sent the case back for trial.
Wage and Hour Regional Administrator Michael Lazzeri in Chicago emphasized that the court’s ruling confirmed that the transportation business owed the 21 drivers back wages and damages. He stated that since the company dictated the drivers’ work hours, conditions, and pay rates, and limited their ability to work elsewhere, the drivers were economically dependent on the transportation business and therefore classified as employees, not independent contractors.
In addition to paying the wages and damages, the court issued an order prohibiting future violations of the FLSA by the employers, including those identified by the DOL’s Wage and Hour Division.
“The Department of Labor is committed to ensuring workers receive the pay they rightfully earned,” said Regional Solicitor Christine Heri in Chicago. She added that the DOL would utilize all necessary legal measures to compel employers to comply with the law. The case was litigated by the DOL’s Office of the Solicitor in Chicago.
The transportation business since 1998, provides transportation services for older individuals and those with disabilities, private van services, and airport transfers.
Conclusion
This case serves as a reminder to small and midsize business owners about the importance of properly classifying employees and complying with employment laws. Misclassifying workers can lead to significant financial liabilities, as demonstrated by the substantial back wages and damages awarded in this case.
It is crucial to accurately determine whether individuals should be classified as employees or independent contractors based on the relevant legal criteria. By understanding and following the laws and regulations governing employment, businesses can avoid legal troubles and maintain fair and ethical practices.
Consulting with legal professionals or labor experts can provide valuable guidance in ensuring compliance and protecting both the business and its employees.