HR Connection blog

5 companies that have faced massive misclassification hits

Posted by Raquel DeSouza | Dec 19, 2016 1:52:56 PM


Classifying real estate agents as independent contractors means that the employer steers clear of many obligations.

These include not being required to give their workers employee benefits, minimum wages and overtime pay. But the murkiness of agents' legal status has been debated at the courts time and time again. For now, real estate corporations still don't have a final and clear law or court ruling to go by. 

Read below to see how 5 companies (including two real estate lawsuits) have already faced massive misclassification hits. You'll be amazed at the financial costs involved. It can get into the thousands, millions or even hundreds of millions of dollars.


1. Coldwell Banker

Their story starts in 2012 when an agent filed a class-action compliant in California claiming he was "willfully misclassified" as an independent contractor. But the case never got to court and in January 2016, a federal judge approved the settlement. The cost? Coldwell Banker paid a whooping $4.5 million to real estate agents and associates. 


2. McDonalds 

Since 2014, McDonalds has been waging the legal war over whether they're a joint employer with their thousands of franchise restaurants. The answer is still "no," but big payouts were still handed over. The fast food chain chose to avoid the limping drag of the court case and on October 31 they reached a settlement of $3.75 million. 


3. Uber

The ride-sharing company that is valued at $62.5 billion aren't out of their court trouble. In August of this year, a federal judge rejected the $100 million settlement that Uber offered to the 385,000 Uber drivers in California and Massachusetts. The judge, Edward Chen, said that it "is not fair, adequate and reasonable."


4. Redfin

If you're not familiar, Redfin is a Seattle-based online real estate brokerage firm, and they got slammed with a class-action lawsuit in 2013. The issue was, you guessed it, over classifying their field associates and agents as independent contractors in Califorinia. The cases of Galen v. Redfin Corporation and Cruz v. Redfin Corporation don't have a ruling yet. But according to Inman, "willful misclassification o f employees" can have penalties between $5,000-$15,000 or even up to $25,000 per case.


5. FedEx

Here's yet another example set in the west coast. Over 2,000 FedEx Ground and FedEx Home Delivery pickup and delivery drivers have been filing claims on misclassification since 2000. Then in 2014 the Ninth Circruit ruled that FedEx has been misclassifying these employees as independent contractors. This ruling was fought until a settlement was approved to a tune of $228 million. FedEx got badly hit with this, but for now it only applies to the state of California. 


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Topics: Blogs, Benefits, Original Content, Pay-rolling

Written by Raquel DeSouza

Raquel DeSouza is the Marketing and Communication Specialist at EE, Inc.

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