FedEx settles Independent Contractor lawsuit

January, 2009 --FedEx recently announced that it has agreed to a $26.8 million settlement with California drivers who alleged they were employees rather than contractors.

FedEx doesn't expect the California settlement to change the company's system of using independent contractors for ground package deliveries, according to company sources. FedEx still faces legal challenges to the contractor model in Washington state and in federal court in Indiana.

Since the lawsuit was filed, FedEx has converted many single-route contractors to multiple routes to undermine the argument that the workers are employees in future cases.

NY State Finds Long Island Employer Unlawfully Deducted Hundreds of Thousands From Paychecks

ALBANY, NY - November 2008 -- State Labor Commissioner M. Patricia Smith ordered a Long Island cleaning firm to repay 70 employees more than $300,000 for illegal paycheck deductions, plus a civil penalty of $59,645. A state investigation determined that Icon Cleaning, owned by Richard Bag, had made illegal paycheck deductions for uniforms, equipment, an employee "security deposit," customers' bounced checks, and customer discounts.

An state investigation rof a Long Island cleaning service by the New York State Department of Labor's Division of Labor Standards revealed a series of illegal deductions from worker paychecks, announced today. Approximately 170 cleaners, deemed "technicians" by Amityville-based Icon Cleaning, spent up to 12 hours a day and 60 hours a week cleaning air ducts and carpets in privately-owned residences and businesses. After numerous unlawful deductions were taken into account, some workers brought home less than $100 in a given week.

In announcing the action, Commissioner Smith commented, "I have never seen such an inventive list of absurd and illegal deductions from workers' wages. It's inexcusable to think that in these tough economic times, employers choose to balance their books on the backs of their workers."

In New York and most states, employers can only make deductions from employees' paychecks for a narrow, specified list of reasons, including payments for insurance premiums, pension or health benefits, charitable contributions, payments for union dues, court-ordered deductions, and similar payments for the benefit of the employee. In addition, the employer must have the employee's written permission for most deductions.

Icon Cleaning also classified the workers as "independent contractors," even though they wore the company uniform, took direction from company management, and used equipment and materials supplied to them by the company. Because the workers were probably misclassified, the case has been referred to New York's Joint Enforcement Task Force on Worker Misclassification.

Nokia Settles Misclassification Suit

September 2008 -- Nokia has agreed to settle a class action lawsuit with a group of workers who alleged they were misclassified as independent contractors. The employees, who were paid through a staffing company, were working as engineers at a field support center, providing tech support to other Nokia employees.

The lawsuit was based on the Fair Labor Standards Act, which requires employers to pay proper overtime. The Texas suit sought to collect unpaid back wages, attorneys’ fees and costs.

The workers alleged that they were "employees,” because they worked only for Nokia, at Nokia facilities and used Nokia equipment. The plaintiffs, who were paid by the staffing company, also alleged that the staffing entity misclassified them.

Third Phase of Southern California Public Permatemps Settled

February 2008 - A California Superior Court Judge recently gave final approval to multi-million dollar settlement in a class action suit filed in 1997 on behalf of over 3,900 employees who were labeled as “district temporary,” “agency temporary,” and “consultant” workers by the Metropolitan Water District of Southern California (MWD).

The recent settlement (known as the CalPERS Pension Benefits Settlement) provides for certain pension rights and benefits in addition to the non-pension benefits covered by the previous settlement (the MWD Ad Code Settlement). Attorneys for the workers are engaged in representing the nearly 2,000 individuals who are timely CalPERS claimants in a lengthy, interactive process with MWD and CalPERS to ensure that they receive the relief that they are entitled to under this settlement. This complex process is expected to continue until the end of 2009, at the earliest.

More information about the lawsuit can be found at www.c-blaw.com.

Wal-Mart Still Tops State Health Care Subsidy List

Seattle – December 2007 - Two state surveys show Wal-Mart still ranks number one in Washington State for the number of employees using public health care programs, even though it is not one of the state’s largest employers.

An analysis of the report by Seattle’s Center for a Changing Workforce projected the total cost to taxpayers at $18.2 million for 2006, including both state and federal tax dollars, based on state survey reports released this month.

The January and June 2006 surveys by the Health Care Authority and the Department of Social and Health Services counted 3,194 Wal-Mart employees either enrolled in Medicaid or the Basic Health Plan (BHP), or with enrolled dependents. There were an additional 2,943 dependents enrolled. The agencies placed the total cost to taxpayers at more than $1.5 million per month, based on 2006 budget figures.

While Wal-Mart is once again the largest beneficiary from state health care programs, it is not the largest employer in the state. Boeing, Microsoft, Safeway, and Kroger each have more employees, but all four of the largest employers combined have fewer employees using public health care programs than Wal-Mart.

The cost of Wal-Mart’s Washington State taxpayer health care subsidies for 2006 exceeds:

• The combined cost of health care subsidies to all of its major discount store competitors: Home Depot, Costco, Sears, K-Mart, and Target.

• The combined cost of health care subsidies to all of its major grocery store competitors: Safeway, Fred Meyer, Albertsons, QFC, and Haggens.

Workforce Study Points to Hidden Uninsured

Seattle - The number of uninsured Americans may be greater than the commonly reported figure of 46 million, according to a study released by the Center for a Changing Workforce and the Iowa Policy Project (IPP).

The study, “Nonstandard Jobs, Substandard Benefits,” was completed with funding from the U.S. Department of Labor and Commonwealth Fund.

In a household survey of fringe benefits available to U.S. workers in part-time, temporary, contract and on-call positions, the authors found that medical discount cards were commonly mistaken for health insurance. It also found that such “nonstandard” jobs provide few fringe benefits such as health insurance.

The study suggests that the official government survey tracking health insurance coverage nationwide understates the number of Americans without health insurance. That survey fails to identify individuals who report having insurance but in fact possess only a medical discount card.

Discount cards, as opposed to health insurance policies, offer very limited benefits and consumers are responsible for paying all claims and the full cost of services up front.

“If the government’s survey on health insurance coverage is going to remain relevant, they must find a way to include questions about new types of health insurance and non-insurance products,” said Peter Fisher, research director of the IPP. Fisher co-authored the report with Elaine Ditsler and Colin Gordon of the IPP and David West of the Center for a Changing Workforce in Seattle.

“The report also shines a new light on America’s hidden ‘permatemp’ workforce — employees who are labeled as ‘temps’ and ‘contractors,’ but who work year-round without benefits,” said David West. The study estimates a minimum of 3.3 million “permatemps” working in America—long-term workers misclassified as temps, contract workers and independent contractors.

“Some employers who hire large numbers of part-time workers (Wal-Mart alone has over 300,000 part-time workers) without affordable insurance are effectively shifting the burden to other employers,” said West. “Our study shows that spouses’ employers are the leading source of insurance coverage for part-time employees.

With about 1 in 4 workers in a nonstandard job, nonstandard work has contributed to the decline in job-based health insurance and the increasing numbers of uninsured Americans since 2000, the survey found.

Among findings of the report:

* Almost 1 in 5 nonstandard workers had a medical discount card and no health insurance. All but 1 percent of these workers mistakenly reported that their discount card was health insurance.

* Workers in nonstandard jobs are far less likely to have health insurance and other fringes than are workers in traditional work arrangements. About 1 in 4 nonstandard workers is completely uninsured compared with 12 percent of traditional, full-time workers. Without access to job-based health insurance or retirement plans, such workers face greater economic insecurity.

* About 74 percent of all standard workers had employer-provided health insurance in 2001, compared to just 21 percent of nonstandard workers. As a result, a much larger share of nonstandard workers — 39 percent vs. 11 percent — relied on a spouse or other family member for health insurance.

* Family members were three times more likely to be covered through the spouse’s job than through the nonstandard job.

* As part of the “working but uninsured” population, nonstandard workers pose a stark challenge for policy makers. Efforts to regulate employment-based health provision may miss or exclude workers in nonstandard jobs. Efforts to expand public coverage may encourage private employers to withdraw health insurance benefits. Policy makers must find a way to ensure affordable access to health insurance for all workers.

To download a PDF copy of the report,click on the link, Nonstandard Jobs, Substandard Benefits.

Wal-Mart's new healthcare plan goes from bad to worse

REPORT: Wal-Mart and Health Care: Condition Critical

SEATTLE -- A study released in 2006 reveals how Wal-Mart, the nation's leading retailer with over 1.3 million employees, is considering even less health care coverage for its employees as a cost-saving measure. A company memo, leaked to the New York Times and published today, provides a vivid backdrop for this new study revealing how Wal-Mart's new plans will wreak havoc on the lives of its workers.

Center for a Changing Workforce (CFCW), a Seattle nonprofit employment research and policy organization today releases Wal-Mart and Health Care: Condition Critical, a study showing how Wal-Mart health care plans, formulated to cut costs, will wreak havoc on the lives of company employees and will affect all workers as it serves as a universal model for any business looking to cut costs.

Today's New York Times report on the confidential memo (leaked by Wal-Mart Watch ) reveals the company's motives behind the new cost-saving cuts and admits the company's insurance is too expensive for workers. The memo also cites the large numbers of uninsured Wal-Mart workers on Medicaid.

"These Wal-Mart practices will spread like a virus and decimate what we know as health care coverage in America," said David L. West, executive director of Center for a Changing Workforce. "Hard working families, who deserve to be treated better, will be susceptible to its brand of deficient and defective health care coverage."

Center for a Changing Workforce's Wal-Mart and Health Care: Condition Critical examined the company's employee health insurance practices using the retailer's own documents and Federal Government filings. The report's main conclusions were:

  • Wal-Mart provides health insurance to far fewer employees than the company claims.
  • The average store employee on Wal-Mart's Associates Medical Plan is "underinsured," based on national standards.
  • For Wal-Mart employees facing medical catastrophes, the company admits that bankruptcy is possible with Wal-Mart insurance: "On the Family Plan, an Associate must spend between 74 and 150 percent of household income on healthcare (approximately $13,000 to $27,000) before insurance takes over completely. Though few Associates reach this level of spending, those who do almost certainly end up declaring personal bankruptcy;"
  • Bad coverage means Wal-Mart workers more are uninsured or forced to apply for Medicaid. Wal-Mart leads the nation among employers who are subsidized by taxpayers through their employees' use of Medicaid and similar programs. The company admits: Five percent of our Associates are on Medicaid compared to an average for national employers of four percent. Twenty-seven percent of Associates' children are on such programs, compared to a national average of 22 percent. In total, 46 percent of Associates' children are either on Medicaid or uninsured.
  • Part-time Wal-Mart employees are required to work for two years before they qualify for company-provided insurance. Wal-Mart's waiting periods deny eligibility to over 300,000 employees.
  • In 2006, Wal-Mart's new HSA benefit option won't help Wal-Mart's low-wage employees. The cheapest family plan has a $6,000 deductible and a $10,200 cap on out-of-pocket expenses, which is 60 percent of a Wal-Mart worker's average wage.
  • By 2008, the company is proposing dumping older and sicker employees by switching all employees to Health Savings Accounts (HSA). The company says this move will get rid of high insurance "utilizers"- employees. The company admits the sickest 20 percent of its workforce would be worse off with HSAs.
  • The company is also proposing adding hard physical work to store job descriptions, which less healthy employees may not be able to perform, raising questions about possible violations of the Americans with Disabilities Act (ADA).
The CFCW report recommends two policy actions: 1) Setting a standard minimum amount that large employers be required to contribute in employee health care costs-or to require them to contribute to state Medicaid funds and help cover the cost of the uninsured; 2) The National Association of Insurance Commissioners (NAIC) and State insurance departments should track, investigate and consider banning the sale of defective insurance policies sold through the workplace that provide no real economic value to low-wage workers.

(Note: This website is not intended to offer legal advice.  For legal advice, please see an attorney specializing in employment law.)

Website updated:  February 20, 2009


New CFCW Report -- New York's Fair Share for Health Care: No Significant Employment Impact

A review of the evidence on the employment impact of employer responsibility health care proposals, including a jobs impact analysis of New York's proposal "Fair Share for Health Care" legislation.

IPP/CFCW Report -- The Hidden Uninsured

A recent report on the growth of the nonstandard workforce, and health insurance available to nonstandard workers, with new estimates on the number of the uninsured and the number of nonstandard workers with substandard health protection, including medical discount cards.

CFCW Report -- Wal-Mart and Health Care: Condition Critical

An indepth analysis of health insurance offered to Wal-Mart employees, the impact on employees and their families, and the future of health insurance for Wal-Mart employees.

Internal Wal-Mart Memo on Health Insurance

A confidential memo prepared in 2005 for the Wal-Mart Board of Directors on health insurance options for the company's workforce. One of the most insightful looks yet at how large, low-wage employers view their employees and health care.

Are You a Permatemp? - Common Questions