Home Health Care, Franchise, and Food Industries Under Attack: April 2022 IC Legal News Update | Locke Lord LLP

Three industries experienced setbacks last thirty day period in independent contractor misclassification situations, although an additional qualified business scored a achievements.  As we have reported in quite a few prior web site posts, class action attorneys who on a regular basis pursue IC misclassification conditions have had in their crosshairs, for around a decade, a amount of industries including dwelling overall health care, franchise, and foodstuff producing and distribution enterprises.  One particular of the circumstances documented down below requires a court docket determination granting summary judgment in opposition to a Florida household wellness care corporation and in favor of a house health aide / companion exactly where the courtroom observed that the company misclassified the aide as an unbiased contractor.  A further scenario relates to a franchisor of tool distributorships that settled with California franchisees for $15 million.  A third scenario pertains to a $23 million settlement between a significant baked products manufacturer and individuals who distribute its items to grocery retailers in Maine.  A logistics enterprise serving as a freight forwarder broker, however, was profitable in decertifying a class action by drivers in New York.  Prudent organizations in every of those and other industries can and need to acquire techniques to minimize their exposure to these types of lawsuits by using a system to restructure (even if only modestly), re-document, and re-employ their independent contractor and franchisee associations in a method that not only considerably minimizes the probability of these types of lawsuits but also, if sued, lessens noticeably the quantities for which these kinds of lawsuits are in many cases settled. One particular system applied by quite a few companies is IC Diagnostics (TM). That method involves the use of condition-of-the-art arbitration clauses with class motion waivers, which may not have been deployed by some or all of the organizations in the 4 cases below.

In the Courts (4 scenarios)

‎‎FLORIDA Property Well being Organization MISCLASSIFIED CAREGIVER / COMPANION AS Independent CONTRACTOR.  A Florida federal courtroom located that Pathfinders for Independence, Inc., a house health care company, violated the time beyond regulation provisions of the federal Truthful Labor Standards Act by misclassifying a caregiver as an unbiased contractor and not an worker. The agency contracts with Florida’s Agency for People with Disabilities to offer you in-household healthcare and companion products and services to elderly men and women and grownups with disabilities.  The plaintiff employee in the situation was the two a are living-in companion and support living coach for the agency’s shoppers. In granting the caregiver’s movement for summary judgment, the court used the financial realities take a look at and concluded that the company exercised important regulate more than the caregiver’s do the job, together with the prerequisite to comply with a organization plan handbook there was no option for the worker to recognize a earnings or decline the place the caregiver could not bid for distinct engagements or established her own fees the plaintiff’s work as an unlicensed caregiver was not regarded as a specialty position there was permanency in her a few and a single-half yr romance with the company and the caregiver’s products and services ended up an integral section of the agency’s company. The court docket also granted summary judgment on the issues of liquidated damages and the agency’s willful violation of the FLSA.  Mason v. Pathfinders for Independence, Inc., No. 8:19-cv-307 (M.D. Fla. Apr. 12, 2022).

Device FRANCHISOR TO Spend About $15 MILLION TO SETTLE FRANCHISEES’ IC MISCLASSIFICATION Course Motion.  Matco Applications ‎Corporation supplies professional mechanics and vehicle fans with top quality instruments and products via franchised distributorships that offer, provide, and service tools via mobile instrument stores. Matco was sued in 2019 in a class motion lawsuit alleging that the distributor franchisees were workers of Matco and not impartial contractors.  The plaintiff alleged on behalf of himself and other similarly located distributor ‎franchisees that they ended up denied ‎overtime payment, meal and rest breaks, reimbursement of expenses, and other rewards ‎in violation of condition law. ‎According to the class action complaint, the distributors, among the other factors, had been not permitted to engage in any organizations that had been the same or very similar to the company’s were being not permitted to promote solutions that competed with the company’s items and were expected to indicator a Distributor’s Arrangement that essential them to work in accordance with the company’s expectations and technical specs, together with necessities for weekly product sales phone calls and least stock and income ranges. A federal district court docket in California approved a $15.8 million settlement of the course action concerning Matco and a course of 273 franchisee distributors.  The settlement incorporates a monetary aid component of $13.5 million that incorporates $4 million for attorneys’ costs and fees, as perfectly as a personal debt forgiveness part of $2.3 million whereby the business will forgive the debts owed by class customers who terminated their business distributorships prior to a selected day. In addition, the settlement earmarks $250,000 to solve plaintiff’s Private Lawyers Basic Act declare. Every course member is envisioned to receive an typical of roughly $42,000 in money and financial debt relief.  Fleming v. Matco Resources Corp., No. 3:19-cv-00463 (N.D. Cal. Apr. 29, 2022).

BAKING Firm PAYS $23 MILLION TO SETTLE IC MISCLASSIFICATION Class Actions WITH DISTRIBUTORS.  Flowers Foodstuff, Inc.  and two other companies have settled 3 connected unbiased contractor misclassification cases with distributors of its baked goods merchandise for $23 million.  In the lawsuits towards Bouquets Food items, which can make Question Bread, Tastykake, and other makes of baked items, Lepage Bakeries Park Street LLC, and CK Revenue Co. LLC, which distributes Lepage products, the distributors claimed they were misclassified as impartial contractors below the FLSA and Maine’s wage payment guidelines.  They alleged they were denied overtime compensation for several hours worked around 40 in a workweek and were being not reimbursed for their business-connected costs, this kind of as administrative and warehouse fees, insurance policy rates, and truck obtain and lease payments. According to the complaint in one particular of the three connected circumstances, the corporation allegedly demanded the ‎distributors to follow strictly its recommendations and retained the unique suitable ‎to command the way and suggests by which the distributors executed their get the job done which includes the buy and ‎sequence of deliveries. The firm denied the allegations and contended that the distributors had been responsible for ‎controlling the manner, process, and suggests of overall performance of their expert services. ‎‎

Just after six decades of litigation, the functions arrived at a settlement that presents for $9 million in immediate payments to users of a accredited class of personnel injunctive relief in the kind of the company’s arrangement to repurchase, for about $6.6 million, the distribution rights of distributors that desire to supply expert services as utilized route sales associates and $7.5 million to go over course counsel service fees and expenditures. The arrangement includes a non-admission clause and does not involve Bouquets Food items to do away with its IC interactions with those distributors that desire to continue being ICs.  Noll v. Flowers Foodstuff Inc., No. 1:15-cv-00493, Aucoin et al. v. Bouquets Foodstuff Inc., No. 1:20-cv-00411, and Bowen v. Bouquets Meals Inc., No. 1:20-cv-00410 (D. Maine Apr. 26, 2022).

NEW YORK Court docket DECERTIFIES DRIVERS’ Course Action Versus NEW YORK LOGISTICS Supplier.  A New York federal courtroom has decertified a course of shipping and delivery motorists in an unbiased contractor misclassification course action from a ‎logistics service provider, HomeDeliveryLink, Inc.  HDL ‎operates as a freight-forward broker for Innovel Methods, Inc., a company that warehouses ‎merchandise for large suppliers. Two motorists submitted a class action on behalf of themselves ‎and other drivers who shipped items to customers’ properties through New York Condition, ‎alleging that HDL experienced violated wage and hour provisions of the New York Labor Legislation thanks to its ‎alleged misclassification of the drivers as ICs and not workforce.  In June ‎‎2020, the court in the beginning accredited the drivers as a course. Subsequent class discovery uncovered ‎conflicting testimony with regards to donning of uniforms, exclusivity, ‎HDL’s role in selecting, and HDL’s total direction and manage.‎  HDL then filed a motion for decertification. In granting the movement, the courtroom agreed there ended up enough dissimilarities in drivers’ activities with HDL this kind of that plaintiffs could not set up on a ‎class-huge basis that all motorists had been “employees” of HDL. It further more mentioned that “[t]he discrepancies between at minimum some of the Plaintiffs’ ‎testimony shows that the central concern in this scenario – whether or not Plaintiffs were personnel or ‎independent contractors – would have to have an intense critique of each and every Plaintiff’s relationship with ‎HDL.” Wilson v. HomeDeliveryLink, Inc., No. 17-CV-6296 (W.D.N.Y. Apr. 25, 2022).

Other Noteworthy Issues

Analyze Reveals Gals AND Persons OF Color Captivated TO CONTINGENT Operate.  A March 2022 study entitled, “What Drives a Assorted Prolonged Workforce: Fostering thoughts ‎of inclusion for various contingent talent,” identifies essential place of work motivators that catch the attention of women and ‎people of color to the contingent workforce: equity, opportunity to transfer to long lasting ‎employment, and holistic aid. The analyze, executed by Werklabs, the investigation and insights ‎division of The Mom Project,‎ ‎included 943 contingent workers from diverse backgrounds‎ and ‎had the twin objectives of highlighting exceptional differences amid critical segments of the contingent ‎workforce, as well as being familiar with the experiences of mothers and gals of shade who “often ‎see contingent get the job done as a feasible next-move in their professions as they seem to pivot industries and ‎refine freshly acquired skills.” The investigation success showed that, of the “surveyed demographic ‎segments, Hispanic/Latino (65.4{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}), Black (64.9{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}), and woman (60.8{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}) specialists would ‎recommend contingent perform to other folks the most.”‎