A California federal judge has granted preliminary approval to an $8.75 million class action settlement over claims the “on-demand” delivery service misclassified its couriers as independent contractors and paid them below minimum wage.
The employee misclassification settlement will resolve a 2015 class action lawsuit filed by Postmates couriers, alleging they had been misclassified as independent contractors and denied compensation and protections provided to employees in the states of California, Massachusetts, New York, and Washington D.C.
Postmates denies any wrongdoing but agreed to the employee misclassification settlement to resolve the litigation.
Class Action Lawsuit Allegations
Postmates is an “on-demand” delivery service available in major cities throughout the United States. It uses an online platform to connect customers with local couriers who will deliver “anything from any store or restaurant in minutes” with no waiting.
The workers alleged that Postmates had violated California employment law, the Private Attorneys General Act and the federal Fair Labor Standards Act.
In a September 1 order, U.S. District Judge Jeffrey S. White agreed that the employee misclassification settlement was appropriate, noting that laws about employee classification in the emerging “gig economy” are still being hashed out in the California courts.
A gig economy is a labor market characterized by short-term contracts or freelance work by independent contractors instead of hiring full-time employees.
“A class recovery through settlement may be the best hope for most of these couriers recovering anything at all on these claims, given the very low number of couriers who would file individual claims, if required to do so,” said the judge.
Employee Misclassification Settlement Terms
According to the terms of employee misclassification settlement, $75,000 will go to the state and another $25,000 will go to the couriers to resolve the Private Attorneys General Act. An additional $300,000 will go to the settlement administrator. In addition, Postmates has agreed to change its business practices to provide its couriers occupational accident insurance and clearer termination terms.
The proposed classes include tens of thousands of Postmates couriers, including approximately 88,000 couriers in California, 28,000 couriers in New York, 8,000 couriers in Washington D.C., 3,000 couriers in Massachusetts, as well as 107,000 in other states.
The employee misclassification settlement also requires Postmates to revise their termination policy for their couriers, allowing them to appeal termination decisions in arbitration. Postmates will also provide a means for couriers to provide feedback about their interactions with the company.
Similar employee misclassification settlements have been reached in recent years, including a $27 million settlement paid by Lyft, a $7.75 million settlement by Uber, and a $4.6 million settlement by Instacart.
Employee misclassification has been emerging as the number of “gig-economy” workers increase.
This case is Sherry Singer et al. v. Postmates Inc., Case No. 4:15cv01284, in the U.S. District Court for the Northern District of California.
The ‘Gig-Economy’ and Worker Rights
Under the so-called gig-economy, workers are often deemed independent contractors and therefore not provided many of the protections and benefits provided under the law to regular employees, such as overtime pay and leave benefits.
Companies have been using gig-economy workers to cut costs and some workers enjoy the flexibility, but concerns about worker protections have been emerging over the past several years.
If you believe your rights as a worker have been violated as a member of the gig-economy, you should call an experienced employment law attorney. An experienced attorney can help determine if you should take legal action against your employer or begin an employment law class action lawsuit. Fill out the form on this page now for a FREE case evaluation.