Millions of Americans are staying home to minimize the spread of COVID-19. As a result, “gig economy” workers have become a crucial lifeline, delivering food and other supplies to people living in quarantine.
Many employers label delivery and transportation workers “independent contractors,” as opposed to employees, to circumvent federal and state laws. When labeled as such, these workers are not only minimally protected but often incur additional burdens, such as relying on their personal vehicles in order to earn a paycheck.
In addition to denying many “gig economy” workers basic protections, companies have also lobbied to deny these workers their day in court. For years, businesses have increasingly pressured workers to sign arbitration agreements and thus waive their right to class and collective actions. This has effectively required gig employees to recoup unpaid wages and reimbursements through private arbitration. Businesses have embraced arbitration because it helps them avoid costly litigation and the unpredictability of a judge or jury determining whether the company neglected to fairly pay hundreds, or in some cases thousands, of workers.
Fortunately, recent court decisions offer delivery drivers and others employed in the gig economy hope for increased protection from wage theft. Two federal courts of appeal have determined delivery drivers can pursue wage-and-hour claims in court on a collective or “class-wide” basis. Accordingly, businesses can no longer rely on agreements mandating arbitration and prohibiting class actions with providers of transportation or delivery services.
The overarching federal legislation that employees rely on by setting the minimum wage and the maximum hour requirement for hardworking Americans is known as the Federal Fair Labor Standards Act (FLSA). Since 2009, the federal minimum wage has remained at just $7.25 per hour. Many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.
What legal options are available to victims of wage theft in the gig economy?
For years, businesses in the gig economy have implemented pay schemes to systematically undercompensate employees. Thus, if one employee is underpaid, there are likely hundreds, or thousands, similarly situated. When wage theft occurs on a companywide basis, employees can join together and file one lawsuit before one judge to efficiently recoup their lost wages and work-related expenses.
1. Bring a class and/or collective action.
The most effective method for holding companies accountable and requiring them to change their pay practices is when workers are able to file one collective lawsuit, referred to as a class or collective action. Using this collective mechanism, one or two employees step forward as plaintiffs to initiate a lawsuit on behalf of themselves and others similarly injured. For decades—years before Amazon, Uber, Lyft, GrubHub, Postmates, and other megacompanies entered the gig economy scene—pizza delivery workers nationwide have joined together and brought collective and class actions to hold employers accountable for wage theft.
According to Matthew Haynie, a founding partner at Forester Haynie, a law firm in Dallas, Texas, pizza delivery drivers are among the most underpaid workers in the United States, as they are required to pay for their own vehicles, car insurance, and gas in order to earn a paycheck. Pizza delivery drivers have joined together and sued operators of major franchises—including Pizza Hut, Domino’s, and Papa John’s—for reimbursing them at such low rates that their compensation falls well below the minimum wage.
For example, in 2018, two Pizza Hut delivery drivers in Chicago, Illinois, brought a collective action on behalf of themselves and other delivery drivers subject to wage theft. The drivers alleged the franchise paid its drivers as little as $5.00 per hour, relying on “tip credit” to comply with minimum wage obligations, and reimbursed them as low as $.24 per mile. The lawsuit stated that the tips delivery drivers received were not enough to compensate them at the $7.25 minimum wage required by law, and the company failed to adequately reimburse them for driving and maintaining their own automobiles. The judge determined the workers had met their burden to show there were likely hundreds of other delivery drivers affected by Pizza Hut’s unfair pay practices. Accordingly, court-authorized notice was sent to other Pizza Hut drivers, allowing them to join the lawsuit and recover unpaid wages and reimbursements.
2. Submit to individual arbitration.
Unfortunately, companies have lobbied hard to restrict employees’ ability to bring class and collective actions. In recent years, many businesses in the gig economy have required employees to sign mandatory arbitration agreements and class action waivers.
Bound by fine-print contract terms, to which many have not provided informed consent, workers often find the courtroom doors are closed to their job-related disputes. By signing their employment contracts, or sometimes simply accepting their paychecks, employees have unknowingly waived their right to sue a company collectively in court. Pursuant to the Federal Arbitration Act (FAA), courts generally uphold private agreements to resolve employment disputes out of court, unless the dispute involves employment contracts of “transportation workers.”
Compelling employees into arbitration and restricting their right to litigate collectively is problematic because, as discussed, wage theft often occurs on a companywide basis, affecting hundreds or thousands of employees. If the Chicago Pizza Hut drivers in the above example had signed binding arbitration agreements and waived their right to sue the franchise collectively, they would have been forced to recuperate unpaid wages and expenses in arbitration on an individual basis. Instead of bringing one lawsuit before one judge in court, workers would have been forced to pursue hundreds of lawsuits, before hundreds of arbitrators in private arbitration.
Studies have repeatedly shown employers fare better in private arbitration than employees for a variety of reasons. For starters, private arbitration lacks important legal safeguards such as the right to appeal the arbitrator’s decision, public access to arbitration proceedings that expose patterns of employer misconduct, and other guarantees ensuring a fair process exists in court. The National Employment Law Project estimated in 2019 alone that employers stole $12.6 billion from workers who made less than $13/hour by subjecting them to forced arbitration.
If you think you are being paid below minimum wage and are owed wages by your employer please contact us today.
Forester Haynie is a national law firm that focuses on making sure every person across America has equal access to justice. Forester Haynie has successfully recovered millions of dollars for our plaintiffs. We are dedicated to putting our clients first, and working our cases to a favorable resolution. We take a unique approach to not only the law but to how we communicate with our clients.