Ride-hailing company Lyft settled a lawsuit with its California drivers for over $12 million, while Flower Foods, the bakery responsible for such brands as Wonder Bread, Nature’s Own and Tastykake, is facing 18 lawsuits in multiple states.
The battle between employers and drivers over independent contractor classification has slowly but surely spread beyond the scope of the shipping and logistics industries.
Uber rival Lyft last week agreed to pay $12.25 million and extend additional benefits to settle a proposed class-action lawsuit brought by drivers working for the ride-hailing company in California. Under the terms of the settlement agreement, however, which is still subject to a judge’s approval, the company is under no obligation to make them official employees.
“While the settlement does not achieve everything we had hoped for – namely a reclassification of the drivers as employees…it will result in some significant changes that will benefit the drivers,” said Shannon Liss-Riordan, a Boston-based attorney who represented Lyft drivers in the suit.
Previously, Lyft’s terms of service stated that the company could deactivate a driver for any reason, but now it will only be able to do so for one of a list of predetermined reasons, such as a low passenger rating.
Under the settlement agreement, Lyft must now allow drivers at risk of deactivation clear notice and the opportunity to present reasons why they should be allowed to continue working for the company. Further, deactivated drivers now have the ability to challenge those rulings and address other issues related to fair compensation in arbitration at Lyft’s expense.
Specific payout amounts will depend on how many hours the over 100,000 California drivers covered in the suit worked for Lyft.
Liss-Riordan also represents drivers bringing a similar class-action lawsuit against Uber, now the largest crowd-sourced car service in the world.
“In the litigation we are pursuing against Uber, we hear daily complaints from drivers about how they feel Uber has mistreated them…cutting fares without their input, shortchanging them on pay they are owed, and deactivating them for no reason or no legitimate reason,” she noted.
“We have not been hearing so many concerns from Lyft drivers, which leads us to believe that Lyft is treating its drivers with more respect than Uber is treating its drivers.”
Meanwhile, Flowers Foods Inc., the bakery responsible for such brands as Wonder Bread, Nature’s Own and Tastykake, is facing 18 lawsuits in over a dozen states for allegedly violating the federal Fair Labor Standards Act by classifying drivers on its delivery routes as independent contractors.
A $3.7 billion company and the second largest packaged bread producer in the U.S. after Grupo Bimbo S.A.B. de C.V., Flowers distributes its products to grocery stores and retailers such as Target Corp., Wal-Mart Stores Inc. and Dollar General Corp.
In order to do that, Flowers has relied almost entirely on independent contractor drivers since the 1980s, selling drivers exclusive rights to specific delivery routes within a given territory. In the lawsuits, the drivers claim Flowers’ routes cannot be classified as independent businesses because the company negotiates every detail of delivery, from where drivers go to pricing and procedures, directly with the retailers.
Last July, the United States Department of Labor issued guidance to employers in determining a workers classification status, and those guidelines primarily revolved around to what extent the company exerts control over a worker’s daily activity and freedom to make decisions.
Flowers has argued in court documents its drivers are exempt from the FLSA because they engage in interstate commerce. The company’s model “has been upheld as an independent contractor model in the past when similar claims were brought in various legal forums,” according to Flowers.
The independent contractor model, also prevalent across the trucking industry, has increasingly come under attack in recent years as drivers seek to be treated as employees. At question in all of these cases, is whether drivers are truly independent contractors or, as they argue, full-time employees who are by definition entitled to certain requisite wages and benefits.
Just last month, drayage drivers from three XPO Logistics Inc. port tucking subsidiaries filed a class-action lawsuit in Los Angeles Superior Court alleging the companies misclassified them as independent contractors.
And courts have, for the most part, sided with the drivers, who contend their employers have committed wage theft and deprived them of benefits and legal protections by misclassifying them as independent contractors. FedEx Corp., for example, settled a similar case with drivers in its domestic parcel unit in California last year for $228 million.
Driver misclassification suits spread to other industries
