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


Three industries suffered setbacks last month in cases of misclassification of independent contractors, while another targeted industry scored success. As we’ve reported in numerous previous blog posts, class action attorneys who routinely pursue IC misclassification cases have had their sights set for more than a decade on a number of industries, including home health care, franchises, and food manufacturing and distribution businesses. One of the cases reported below involves a court ruling granting summary judgment against a Florida home health care company and in favor of a home health care aide/companion where the court found that the company had incorrectly classified the helper as an independent contractor. Another case involves a tool distributor franchisor who settled with California franchisees for $15 million. A third case involves a $23 million settlement between a major bakery products manufacturer and those who distribute its products to Maine grocery stores. A logistics company acting as a freight forwarder, however, has successfully had a class action lawsuit dismissed by drivers in New York. Prudent companies in each of these sectors and others can and should take steps to minimize their exposure to these types of lawsuits by using a process to restructure (even if only modestly), re-document and re- implement their independent contractor and franchisee relationships. in a manner that not only significantly minimizes the likelihood of such lawsuits, but also, if sued, significantly reduces the amounts for which such lawsuits are often settled. A process used by many companies is IC diagnosis (MC). This process includes the use of state-of-the-art arbitration clauses with class action waivers, which may not have been deployed by some or all of the companies in the four cases below.

In the courts (4 cases)

‎‎FLORIDA HOME HEALTH COMPANY HAS MISCLASSIFIED CAREGIVER / COMPANION AS AN INDEPENDENT CONTRACTOR. A federal court in Florida has found that Pathfinders for Independence, Inc., a home care agency, violated the overtime provisions of the federal Fair Labor Standards Act by wrongly classifying a caregiver as an independent contractor and not as an employee. The agency contracts with the Florida Agency for the Disabled to provide home health care and companion services to seniors and adults with disabilities. The plaintiff worker in the case was both a live-in companion and a living companion for the agency’s clients. In granting the caregiver’s motion for summary judgment, the court applied the economic realities test and found that the agency exercised significant control over the caregiver’s work, including the requirement to follow an agency policy manual. business ; there was no opportunity for the worker to make a profit or loss if the carer could not bid for particular engagements or set his own rates; the plaintiff’s work as an unlicensed caregiver was not considered skilled work; there was permanence to his three-and-a-half-year relationship with the agency; and caregiver services were an integral part of agency operations. The court also entered summary judgment on the issues of damages and the agency’s willful violation of the RSA. Mason vs. Pathfinders for Independence, Inc., No. 8:19-cv-307 (MD Fla. April 12, 2022).

TOOL FRANCHISOR WILL HAVE TO PAY MORE THAN $15 MILLION TO SETTLE FRANCHISEES’ IC CLASSIFICATION CLASS ACTION. Matco Tools Corporation provides professional mechanics and automotive enthusiasts with premium tools and equipment through franchised distributors who sell, deliver and service tools through mobile tool stores. Matco was sued in 2019 in a class action lawsuit alleging that distributor franchisees were employees of Matco and not independent contractors. Plaintiff alleged on his own behalf and on behalf of other franchised distributors in the same situation that they were denied overtime pay, meals and breaks, reimbursement of expenses and other benefits in violation of the state law. According to the class action lawsuit, distributors, among others, were not permitted to engage in the same or similar activities as the company; were not allowed to sell products that competed with company merchandise; and had to sign a distributor agreement that required them to work according to company standards and specifications, including requirements for weekly sales calls and minimum inventory and sales levels. A federal district court in California has approved a $15.8 million class action settlement between Matco and a group of 273 franchised distributors. The settlement includes a $13.5 million monetary relief component which includes $4 million for attorneys’ fees and expenses, as well as a $2.3 million debt forgiveness portion whereby the Company will cancel debts owed by Group Members who have terminated their Company Concessions before a certain Date. Additionally, the settlement provides $250,000 to resolve the plaintiff’s claim under the Private Attorneys General Act. Each group member is expected to receive an average of about $42,000 in cash and debt relief. Fleming v. Matco Tools Corp.no. 3:19-cv-00463 (ND Cal. 29 April 2022).

BAKERY COMPANY PAYS $23 MILLION TO SETTLE IC INCORRECT CLASSIFICATION CLASS ACTIONS WITH DISTRIBUTORS. Flowers Foods, Inc. and two other companies have settled three independent contractor misclassification cases with distributors of its baked goods for $23 million. In lawsuits against Flowers Foods, which makes Wonder Bread, Tastykake and other brands of baked goods, Lepage Bakeries Park Street LLC and CK Sales Co. LLC, which distributes Lepage products, the distributors claimed they were incorrectly classified as independent contractors under the FLSA and Maine Wage Payment Laws. They allege that they were denied overtime pay for hours worked in excess of 40 hours in a work week and that they were not reimbursed for their business expenses, such as administrative and warehouse expenses, insurance premiums, and truck purchase and lease payments. According to the complaint in one of the three related cases, the company required distributors to strictly follow its instructions and reserved the exclusive right to control the manner and means by which distributors performed their work, including the order and sequence of deliveries. The company denied the allegations and argued that distributors were responsible for controlling the manner, method and means of performing their services. ‎‎

After six years of litigation, the parties have reached a settlement that provides $9 million in direct payments to members of a class of certified workers; an injunction in the form of a company agreement to buy out, for approximately $6.6 million, the distribution rights of distributors who wish to provide services as salaried traveling sales representatives; and $7.5 million to cover class counsel fees and expenses. The agreement includes an opt-out clause and does not obligate Flowers Foods to terminate its IC relationships with distributors who wish to remain IC. Noll c. Flowers Foods Inc.No. 1:15-cv-00493, Aucoin et al. against Flowers Foods Inc.No. 1:20-cv-00411, and Bowen c. Flowers Foods Inc.., No. 1:20-cv-00410 (D. Maine 26 April 2022).

NEW YORK COURT DECERTIFIES DRIVERS CLASS ACTION AGAINST NEW YORK LOGISTICS PROVIDER. A federal court in New York has struck down the certification of a class of delivery drivers in an independent contractor misclassification class action lawsuit against a logistics service provider, HomeDeliveryLink, Inc. distribution. Two drivers filed a class action lawsuit on their behalf and on behalf of other drivers who delivered goods to customers’ homes throughout New York State, alleging that HDL violated wage and hour provisions of the law of New York Labor because of its alleged misclassification of drivers as CIs and not employees. In June 2020, the court initially certified the drivers as a class. Subsequent discovery of the class revealed conflicting testimony regarding the wearing of uniforms, exclusivity, HDL’s role in hiring, and HDL’s general direction and control. HDL then filed a motion for revocation. In granting the motion, the court agreed that there were enough differences in the drivers’ experiences with HDL that the plaintiffs could not establish class-wide that all the drivers were “employees” of HDL. He further stated that “[t]The discrepancies between at least some of the plaintiffs’ testimonies show that the central question in this case – whether the plaintiffs were employees or independent contractors – would require a thorough examination of each plaintiff’s relationship with HDL. » Wilson vs. HomeDeliveryLink, Inc.No. 17-CV-6296 (WDNY April 25, 2022).

Other topics worth mentioning

STUDY SHOWS WOMEN AND PEOPLE OF COLOR ATTRACTED TO CONTINGENT WORK. One March 2022 survey titled “What Drives a Diverse Extended Workforce: Fostering Feelings of Inclusion for Diverse Contingent Talent,” identifies key workplace motivators that attract women and people of color to the workforce occasional work: equity, possibility of transitioning to permanent employment and holistic approach. Support. The study, conducted by Werklabs, the research and analytics division of The Mom Project, included 943 casual workers from diverse backgrounds and had the dual purpose of highlighting the unique differences between critical segments of the workforce- casual labor, as well as understanding the experiences of mothers and women of color who “often see casual labor as a viable next step in their careers as they seek to pivot industries and hone newly learned skills” . The research results showed that, among the “demographic segments surveyed, Hispanic/Latino (65.4%), Black (64.9%), and female (60.8%) professionals would most recommend casual work to others.


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