Verizon’s Employee Woes, Won’t Seem to Disappear

By: Justin DiCicco

Verizon Communications Inc., has been facing issues with its employees over the course of the past few months, and when it finally seemed that this company’s employment problems have been resolved, another one has risen.  This past April, thousands of Verizon’s employees went on strike seeking improved benefits, better working conditions, and wanted Verizon to slow down its outsourcing of jobs.[1]  While Verizon’s workers were on strike, this company had to hire replacement workers to keep its services running.  This strike lasted until May, when Verizon and union leaders representing the striking workers were able to arrange a deal that satisfied all the parties involved.[2]  What seemed like a victory for Verizon was just the end to one of its problems.

On September 1, 2016, the replacement workers which Verizon hired while its employees were on strike filed a class action lawsuit against their temporary employer.[3]  These workers claimed that Verizon violated the Fair Labor Standards Act (“FLSA”) by only paying them at their normal wage rate for the entire duration of their employment.[4]  Many of the replacement workers stated that they regularly worked between twelve to thirteen hour days for seven days a week and were on average working between eighty to ninety hours a week without getting any overtime pay.[5]  The complaint further alleged that Verizon refused to pay the replacement workers for additional duties such as attending meetings, completing paperwork, and maintaining work vehicles and equipment.[6]

Verizon responded to the complaint by stating that it did not have a legal relationship with the replacement workers and that they were independent contractors from three of its subordinate entities.[7]  Under the FLSA, employers have to pay overtime only to their employees[8] and not independent contractors.  Verizon classifying the replacement workers as “independent contractors” means that they are not legally obligated to pay a minimum of time and a half overtime wages to any of the replacement workers when they worked in excess of forty hours during their work week.

This is not the first time Verizon has been accused of trying to withhold overtime wages from its employees[9].  Last June the company had a proposed wage and hour class action lawsuit filed against them in New York Federal Court from an employee who claimed that Verizon had wrongfully classified him and other logistic workers as supervisors to avoid paying overtime.[10]  This dispute is still ongoing.[11]

Courts have generally used two different tests when determining if a worker is an employee or an independent contractor.  The first is called the “economic reality test.”[12]  Under this test, the court focuses on whether the individual in question is in business for himself or is economically dependent on the business that he is working for.[13]  The second test that courts rely on is the “right to control test.”[14]  Under this test courts look to a number of factors to determine if an individual is an employee or an independent contractor, and they include: (1) the degree of control over the manner in which the work is to be performed; (2) the potential contractor’s opportunity for profit or loss, depending upon the amount of his investment, skills, and management; (3) who has made investment into materials and equipment; (4) if the service requires special skills; (5) the degree of permanence of the working relationship; and (6) if the worker’s service an integral part of the employer’s business.[15]

Wage rate and hour litigation has been rapidly increasing since 2000[16] and while this case or any other case still pending may never see the light of a courtroom, Verizon should tread carefully in the future when classifying workers to avoid further lawsuits.

[1] Noam Scheiber, Verizon Strike to End as Both Sides Claim Victories on Key Points, N.Y. Times, (May 30, 2016), http://www.nytimes.com/2016/05/31/business/verizon-reaches-tentative-deal-with-unions-to-end-strike.html?_r=0.

[2] Id.

[3] Kurt Orzeck, Verizon Replacement Workers Launch OT Pay Suit, Law360 (Sep. 2 2016, 3:45 PM), https://www.law360.com/articles/835638/verizon-replacement-workers-launch-ot-pay-suit.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] 29 U.S.C § 207 (2010).

[9] Orzeck, supra note 3.

[10]Id.

[11]Id.

[12] Daniel B. Abrahams et al, Employer’s Guide to the Fair Labor Standards Act, (2016).

[13] Id.

[14]  Id.

[15] Id.

[16] Lydia DePillis, Why wage and hour litigation is skyrocketing: With unions on the decline, workers have sorted out their employment disputes in the courts., Wash. Post, Nov 25, 2015, https://www.washingtonpost.com/news/wonk/wp/2015/11/25/people-are-suing-more-than-ever-over-wages-and-hours/.

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