Large companies save a lot of money by hiring independent contractors rather than employees: they save on taxes, pensions, insurance, and other benefits reserved for employees. Whether you are classified as an employee or an independent contractor makes a big difference in your entitlements under the law. Contractors are not entitled to key benefits and protections that employees enjoy such as minimum wage, overtime pay, family and medical leave, unemployment, and workers’ compensation insurance.

A recent New Jersey class action involving Lowe’s Home Center shows what can happen when businesses misclassify workers as independent contractors rather than the employees that they truly are. Lowe’s has agreed to pay $2.85 million dollars to settle an employee misclassification case involving 450 installers. The plaintiffs asserted they should have been classified as employees and entitled to benefits, because Lowe’s controlled all aspects of the business relationship, including hours and use of tools, and precluding simultaneous work for other supposed clients. Misclassifying them as contractors caused harm to the installers and their families.

The Department of Labor lists a series of factors that must be considered when determining whether an employment relationship exists:

• Extent to which the work performed is an integral part of the employer’s business – for Lowe’s installers, they are installing fixtures and other products sold by the store retail giant, often as part of the sales transaction with the customer.
• Whether the worker exercises managerial skills that affect opportunities for profit and loss – it is unclear whether any formal hierarchy exists among Lowe’s installers, but it’s feasible they sometimes work together with natural divisions of labor and leadership occurring for efficiency.
• The nature and degree of control by the employer – this was one of the most dispositive factors in the Lowe’s settlement as it was shown that Lowe’s controlled all aspects of the relationship.

Other factors include the relative investment in facilities and equipment by the worker compared to the employer, the worker’s skill and initiative, and the permanency of the relationship with the employer. Under the proposed settlement, each of the 450 class members will receive about $6,333 prior to subtraction of costs and attorney fees, while being reclassified as employees should they continue working with Lowe’s.

If you need assistance regarding your employment rights, based on unfair labor practices, including misclassification, then speak to an experienced employment law attorney for workers. Schedule a near-term reduced fee initial consult in our convenient Central Jersey law offices in Kingston. Call 609-683-7400 or contact us online to speak to one of our attorneys. We will listen to your facts, advise you on the law, and suggest the best pathways to economic and social justice. Call today. You will be glad you did.