Technology & Employee Misclassification: A Plaintiff’s Attorney’s Dream Come True

Amazon workers

Technology & Employee Misclassification: A Plaintiff’s Attorney’s Dream Come True

Employee misclassification shifts costs from employers to workers and society. People who are employees under the law but classified by employers as independent contractors pay taxes that employers should pay and miss out on benefits that employees receive. Employers want the benefits of employment (control) but at the lower costs of using a gig worker. Amazon’s treatment of delivery drivers is a good latest example.

The legal test for whether someone is in one category or another varies from state to state, between state and federal law, and even issue to issue. Definitions of employees in state law may change whether it’s for unemployment compensation, workers compensation, or employment discrimination. Generally, the test boils down to how much potential control the company has over how the job is performed. With enough potential and actual control, a worker may be able to prevail in a claim they’re an employee.

Misclassification Doesn’t Prevent Costs, It Shifts Them From Employers Onto Others

Increased misclassification sends costs traditionally paid by employers onto workers and society. A 2015 study by the Economic Policy Institute Businesses states:

  • Companies that misclassify don’t pay payroll taxes (Social Security and Medicare (FICA) and unemployment insurance) or workers’ compensation insurance. The worker pays the full FICA tax (rather than half). They can’t collect unemployment or workers’ comp benefits, so they pay the costs themselves, or they file for benefits and fight with the company over the misclassification issue
  • This loss of billions of dollars in tax revenue is a financial burden for local, state, and federal governments because of lost revenue and the costs of providing social services to uninsured workers
  • Businesses that follow the law and properly classify employees are at a competitive disadvantage because of their higher costs

About 10 to 20 percent of employers misclassify at least one worker, according to the study. By one estimate, the percentage of workers misclassified by Massachusetts employers ranged from 25 to 39 percent of their workforces between 2001 and 2003.

Can Amazon Have It Both Ways?

Companies want to control gig workers like they’re employees while paying them like they’re independent contractors. The most recent example is Amazon installing cameras in delivery trucks driven by independent contractors. The company says they want drivers to drive safely so they’ll be on the lookout for U-turns, hard braking, and acceleration. Drivers currently use an app that scores their driving by tracking braking, acceleration, cornering, speeding, and distraction.

An Amazon spokesperson told CNN drivers wouldn’t lose their jobs for a single mistake but didn’t say how Amazon would recommend to the companies that make its deliveries handle feedback, coaching, and discipline.

If you’re using an independent contractor to deliver packages, you should give the package to the person, tell them the address, and when it should be delivered. Amazon has reached the point where drivers could potentially lose their work if the company’s unhappy with how a driver accelerates or takes left turns.

Plaintiffs’ Attorneys Can Use Technology Against Companies That Use It

As workforce technology becomes more invasive and companies use them to exert more control over their independent contractors, it will be easier for attorneys to claim their clients are employees. Companies would be subject to discovery, including the data and video about their workers. It may not be hard to link behavior as evidenced by data and videos with adverse actions taken against their clients. Depositions and e-discovery could show how much control Amazon wants and what they’re willing to do to get it.

Attorneys could exploit what these companies want – technology that surveils workers and information used to control them. It could provide evidence that undoes the myth of the independent contractor.

Want More Clients? Take the Next Step and Contact Me

Want help attracting clients who are misclassified by companies who stiff them out of pay and illegally dodge taxes? If so, I can help you make that happen. Contact me today. You have better things to do than write website and marketing content. I don’t.

Photo by Bryan Angelo