Misclassification of Workers - Proskauer Rose LLP

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former newspaper carriers. 37
ii. The suit alleged that the newspaper carriers were
misclassified as independent contractors and, thus, were
denied benefits to which they were entitled as employees
under California’s Labor Code, such as minimum and
overtime wages and proper meal and rest breaks. 38
b. FedEx
i. In December 2008, after years of litigation, FedEx agreed
to pay nearly $27 million, which included roughly $12
million in attorneys’ fees, to approximately 200 drivers in
California who had been misclassified as independent
contractors.
c. Microsoft
i. In 1996, in the case of Vizcaino v. Microsoft Corp., 97 F.3d
1187 (9th Cir. 1996), “freelancers” originally hired by
Microsoft as contractors filed a class action lawsuit against
the company, seeking employee benefits under the
company’s retirement and employee stock purchase plan.
The court held that the workers met the “common law”
definition of “employee” despite the fact that the
freelancers were hired with the understanding that they
would not be eligible for benefits, were paid through the
accounts receivable department instead of through
Microsoft’s payroll, and were paid higher salaries than
comparable common law employees. After the court’s
ruling, Microsoft settled the case for $97 million. 39
37 Gonzalez v. Freedom Commc’ns Inc., No. 03CC08756 (Cal. App. Dep’t Super. Ct. Orange County), Notice of
Class Action Settlement, available at http://orangecountyregistersettlement.com/pdf/Gonzalez%20v%20Orange%
20County%20Register_Notice_v1.pdf (last visited on March 21, 2010); see also Kathleen Dunham, Combating the
Underground Economy, LAWDRAGON, available at http://www.lawdragon.com/index.php/newdragon/fullstory/
combating_the_underground_economy/ (last visited on March 21, 2010).
38 Id.
39 Bill Virgin, Microsoft Settles ‘Permatemp’ Suits, SEATTLE PI BUSINESS, Dec. 13, 2000, available at
http://www.seattlepi.com/business/micr13.shtml (last visited on Jan. 29, 2010).