Conditional Certification Granted in Case Involving "Independent Contractors"

The federal court in Nashville just granted conditional certification in a case where we serve as class counsel. It alleges that ECT Contracting, who installs satellite TV dishes, misclassified workers as "contractors." This allowed them to avoid paying overtime to numerous workers. The case is Johnson et al v. ECT Contracting in the United States District Court for the Middle District of Tennessee. I encourage anyone who is classified as a "contractor" to contact me or some other experienced wage and hour lawyer to determine whether you have been misclassified.

Following up on my last post, the New York Times published a similar article about federal and local governments' newfound interest in empoyers who misclassify employees as "contractors" to avoid overtime and payroll tax obligations. The article, by Steven Greenhouse, was published on February 17, 2010. The following is a summary provided by the National Wage and Hour Clearinghouse:

Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors. President Obama’s 2010 budget assumes that the federal crackdown will yield at least $7 billion over 10 years. More than two dozen states also have stepped up enforcement, often by enacting stricter penalties for misclassifying workers.
Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.
Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers. Companies do not withhold income taxes from contractors’ paychecks, and several studies have indicated that, on average, misclassified independent workers do not report 30 percent of their income.
One federal study concluded that employers illegally passed off 3.4 million regular workers as contractors, while the Labor Department estimates that up to 30 percent of companies misclassify employees. Ohio’s attorney general estimates that his state has 92,500 misclassified workers, which has cost the state up to $35 million a year in unemployment insurance taxes, up to $103 million in workers’ compensation premiums and up to $223 million in income tax revenue