'Independent contractor' litigation heats up

FedEx is facing 57 lawsuits in 38 states by delivery drivers who claim FedEx cheated them out of overtime pay, benefits and eligibility for workers' compensation and unemployment insurance because it classified them as independent contractors instead of employees.

An increasing number of employers are classifying workers as "independent contractors" and in certain industries, like package delivery and construction, it's become the norm.

Employers see this as a way to avoid liabilities under various employment statutes, and possibly avoid unionization. It's also a way to pass on operating costs like insurance. If a worker is truly an independent contractor, an employer isn't responsible for withholding and unemployment taxes, as well as workers' compensation and unemployment insurance. Independent contractors are also not eligible for various employee benefit plans.

But classifying workers as independent contractors doesn't always work. For example, in 1996 a federal court decided Microsoft's independent contractors were instead employees – even though the software giant had required them to sign agreements acknowledging their independent contractor status and waiving their claims to company benefits.

In the FedEx case, the Internal Revenue Service has determined

that FedEx Ground independent contractors should be reclassified as employees for tax purposes, and ordered the company to pay more than $319 million in back taxes and penalties for 2002.

A California appeals court last year ruled FedEx Ground drivers should be reimbursed for work-related expenses, awarding $11 million in damages.

And the Massachusetts' attorney general in December 2007 fined FedEx Ground more than $190,000 for intentionally misclassifying 13 drivers as independent contractors rather than employees.

The IRS and various courts have established criteria to gauge whether a worker is an independent contractor or an employee. The criteria essentially boil down to the amount of control the employer exercises over the workers –such as instructions on how, when or where to do the work and what equipment to use.

Government challenging 'no-match' ruling

The federal government continues to press ahead in attempting to implement a new immigration policy despite a judge's ruling that blocked the new rule from going into effect.

The new rule would require employers to fire workers whose names don't match their Social Security numbers.

Last October, a federal judge in California stopped the "no-match" rule from going into effect.

The judge said the proposal would likely impose hardships on businesses and workers. For example, employers would incur new costs in complying with the regulation, which the government hadn't evaluated, and innocent workers unable to correct mistakes in their records in time would lose their jobs, according to the ruling.

The government has appealed that decision.

In a response to the ruling, the Department of Homeland Security addressed several of the judge's concerns, contending, among other things, that the rule doesn't create

new legal obligations for businesses.

"The no-match rule is an important tool for cracking down on illegal hiring practices while providing honest employers with the guidance they need," DHS Secretary Michael Chertoff said.

The AFL-CIO, the American Civil Liberties Union and the U.S. Chamber of Commerce object to the program, saying it would foster discrimination at work sites, lead to job losses by lawful employees, and expose businesses to additional expense and fear of prosecution.

DNA testing a possibility in employment lawsuits

Employees suing over exposure to chemicals and toxins on the job may soon be able to use DNA testing to prove for sure they actually have been exposed and suffered injuries because of it.

With objective, scientific testing that can determine with near-100 percent accuracy whether someone has been exposed to a harmful toxin or chemical, long court battles may become unnecessary and settlements more frequent.

The testing would be most useful in toxic tort, workers' compensation and environmental injury cases.

Current scientific studies are often ambiguous as to whether an individual has been exposed to chemicals or toxins, and whether symptoms are related to that exposure.

But DNA testing, which is even more accurate than what's used in criminal cases, looks for tiny proteins produced by a person's DNA when they have been exposed to harmful substances.

Currently an individual test costs $12,500. The cost should decline, though, as the technology used for the testing continues to improve.

The DNA testing – essentially a genetic sample – could lead to privacy and discrimination concerns, however. Employers could use the tests to screen out potential applicants, or determine

whether they have already been exposed to a toxin, or might be genetically predisposed to a certain illness. The testing could create a baseline at hiring in case a worker is later injured.

Subsequent testing during employment could lead to termination if an employer felt an employee's toxin levels were too high or not safe.

DNA testing like this is no silver bullet. Even if a victim proves toxic exposure from the test, it can still be contested in court. Some toxins remain in the body for years without causing any harm, so victims who may have been exposed in multiple places may still have to establish where and by whom they were injured.

'English only' policies draw scrutiny

As a wide-ranging debate about immigration policy continues to rage in the United States, new data from the Equal Employment Opportunity Commission (EEOC) suggest conflicts over English-only policies in workplaces may be on the upswing.

The EEOC reports the number of charges alleging national origin discrimination based on unlawful English-only rules jumped from 125 in 2006 to 190 in 2007. In 2004, employees filed 194 English-only rules complaints and in 2002 they filed 236.

The EEOC's record on bringing English-only lawsuits is surprisingly sparse – over the last 10 years the commission has brought only 28. But the agency has brokered several significant settlements in recent years.

In 2006, the former Melrose Hotel New York and Berwind Property Group, Ltd. agreed to pay $800,000 to 13 former employees who claimed national origin discrimination, including an English-only requirement.

Also in 2006, Highland Hospital of Rochester, Inc. and Strong Health agreed to pay $200,000 to Hispanic housekeeping employees who were

ordered to speak only English. A similar charge led to a $1.5 million settlement in 2003 with Central Station Casino in Colorado.

Employers can adopt English-only policies when it is necessary to do so, according to the EEOC, such as when job safety is at stake. However, blanket prohibitions draw attention because the EEOC considers them to be a form of national origin discrimination.

For example, the EEOC will look askance at policies prohibiting workers from speaking with each other in their native language at the lunch table or on break. But if communication in English is important to job safety, then the policy will likely withstand a legal challenge.