Employees of a company often enjoy significant benefits from their employer. Independent contractors, although they are often paid more money than employees, do not enjoy these benefits and have to cover the related expenses from their salary. It is therefore important to properly identify these types of workers to ensure that they are being appropriately compensated.
Four individuals that make deliveries for Amazon Prime Now have filed a potential class action lawsuit against the company in California state court, claiming that they have been improperly classified as independent contractors. The drivers claim that they were initially hired by a courier contractor, however, they allegedly work exclusively for Amazon, wear Amazon uniforms and receive work assignments from Amazon. As a result, they feel that they should be classified as Amazon employees, which would entitle them to unpaid overtime, breaks and additional expenses. They also claim that there are hundreds of other drivers that are similarly situated and that Amazon has misclassified each of the drivers as contractors.
It is important for companies to properly classify independent contractors based on their employment circumstances, rather than as a method to get out of paying taxes, benefits and overtime. There are certain common characteristics held by independent contractors that can aid in this determination. Contractors work for multiple companies, work independently without employer input, set their own hours, and have a specialized skill set sought out by various employers. Such a classification may prevent them from being paid overtime hours, as well as receiving employee benefits or workers' compensation. They are also responsible for paying expenses related to the job duties.
Certain employers may seek to classify individuals as independent contractors as a means to avoid incurring additional tax or benefit liability. However, if their job duties and methods of work indicate that they are an employee, such classification may provoke a wage and hour dispute against the employer.
Source: CNBC, "Amazon Prime Now drivers sue company for unpaid overtime," Oct. 28, 2015