Economy

Labor-law court cases rise, but only some workers benefit

Workers fighting to have their bosses treat them as employees rather than independent contractors are squaring off in the courts more and more in recent years.

But the resolution they find varies greatly, depending on the collective strength of the workers and the depth of the companies’ pockets.

The workers who find resolution – and multimillion-dollar payouts – in the courts prevail in large part because they’re joining forces in taking on some of the biggest companies in America. For other workers, though, success in the courts can be elusive. A single worker, or a small crew, taking on a business with modest holdings often faces overwhelming obstacles and long delays.

“It’s a big headache,” said Edy Solares, a 38-year-old truck driver who’s struggled to recoup more than $145,000 that the California labor commissioner said a former boss owed Solares.

The disparity comes amid increased court action across the country. Private-action federal Fair Labor Standards Act cases have increased steadily year by year since 2008, according to federal judicial statistics. In fiscal year 2013, more than 7,700 cases were filed, up from 5,302 in 2008.

Workplace experts say the rise in lawsuits coincides with the growth of a scheme, called misclassification, in which companies try to skim costs by wrongly classifying regular employees as independent contractors to avoid tax obligations.

Cases have been filed by state officials and the Obama administration, which has been pushed by organized labor to crack down on the practice, which often cuts workers out of overtime pay and employee protections.

But the expansion in lawsuits largely has been in the private sector, with the biggest payouts coming in class action-type suits. Alfred Robinson, a former acting administrator of the Department of Labor’s Wage and Hour Division, said lawyers had been able to capitalize on provisions of the Fair Labor Standards Act that minimized the risk for themselves and boosted financial winnings.

“The cost of litigation, should they prevail, is not a deterrent,” Robinson said. “In fact, it’s a magnet in some instances, particularly if you can get . . . a collective action.”

In one recent high-profile example, more than 2,300 FedEx drivers wrongly classified as independent contractors could receive hundreds of millions of dollars after a U.S. Circuit Court of Appeals ruled this year in the employees’ favor.

But in other cases, whether at the federal or state level, workers have been reluctant to challenge such practices for fear of losing work. Many are low-skilled immigrants. They don’t have the money to hire lawyers for cases that might take years. And even if they prevail, collecting the damages can be another battle.

And that’s if the company hasn’t disappeared or declared bankruptcy.

Solares drove a delivery truck filled with metal and materials to remodel kitchens across the Los Angeles metro area. He thought justice had prevailed when he received a letter from the California labor commissioner ruling that his boss owed him more than $145,000 after wrongly classifying him as an independent contractor.

Solares, who’s from Guatemala, and his wife talked about buying a home and putting some money aside for their three kids’ college education. But more than a year later, they’ve been able to recover only a fraction of the award.

“When we got that letter, the family celebrated,” he said. “We were happy. But now, today, we’re still in the same place. We have nothing.”

In California, only 17 percent of workers who won wage cases before the state’s Division of Labor Standards Enforcement, the agency that enforces California wage laws, were able to recover any payment at all from 2008 to 2011, according to the UCLA Labor Center.

“The difficulty is not in winning your claims for unpaid wages or proving you’re an employee as opposed to an independent contractor,” said Tia Koonse, the center’s legal and policy research manager. “The difficulty is in collecting.”

In Florida, Miami-Dade County regulators ruled last year that Enrique Banegas, 49, was an employee and not a “self-employed” contractor as his boss said. The county said his employer, Merkury Development, owed Banegas and two other workers more than $66,000 in unpaid wages for work they’d done on the amphitheater at the Miami zoo.

Banegas, who’s from Honduras, hasn’t been able to recover a dime. His attorney, Zandro Palma, said the company had responded by filing a fraud lawsuit against Banegas in state court. The IRS also is looking into the cases against Banegas and Merkury, Banegas said. And Palma just filed another case in federal court seeking to recover the lost damages.

“I can’t even sleep because I don’t know what is going to happen,” Banegas said. “This company is looking for ways to put everything on me so they can escape free.”

Calls to Merkury Development and its attorney were not returned.

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