Judge Gives the OK on Postmates’ $9M Misclassification Settlement

by Norman B. Blumenthal on October 16, 2017

blumenthal nordrehaug & bhowmik, southern california employment law, southern california employment law attorneys, independent contractors, misclassification, misclassified as independent contractors, misclassification suitPreliminary approval was granted for Postmates Inc.’s $8.75 million settlement meant to resolve a proposed class action claiming the on-demand delivery service misclassified its couriers as independent contractors and did not provide the legally required minimum wage.

In his order, U.S. District Judge Jeffrey S. White, states that worker claims in the “gig economy” are still fairly new and there is not yet a definitive precedent set in California court regarding whether or not gig workers are actually employees or not. This means that it’s not clear whether or not Postmates couriers would actually prevail at trial – especially since Postmates’ arbitration agreement covers approximately 70% of workers.

As such, he saw a settlement as a good opportunity for class recovery – enabling couriers to recover something on their claims.

If the deal is granted final approval, the settlement would resolve a putative class action originally filed in spring of 2015 that included allegations that Postmates misclassified couriers as independent contractors (applicable to couriers hired by Postmates during that time in California, Massachusetts, New York and Washington, D.C.) The suit alleges that by misclassifying couriers, Postmates was in violation of California labor law, the Private Attorneys General Act and the federal Fair Labor Standards Act. The suit seeks to represent a nationwide class.

The settlement deal approval would mean:

$100,000 allocated to resolve PAGA claims

75% paid to the state

25% paid to couriers

Approximately $300,000 would be set aside for the settlement administrator and class attorneys will also request 25% of the gross payment for attorneys’ fees and costs.

On top of the financial settlement, Postmates also agreed:

  • To adopt a provision that states they can only terminate couriers’ contracts for specific reasons.
  • To provide couriers with occupational accident insurance.
  • To implement a method enabling couriers to challenge termination decisions at Postmates’ expense.
  • Provide a means for courier feedback to the company regarding platform use and corporate interactions.

Each proposed class includes thousands of couriers: approximately 88,000 in California, 28,000 in New York, 3,000 in Massachusetts, 8,000 in Washington, D.C., and 107,000 in other part of the nation.

If you have questions about misclassification in the work place or if you need to talk about what constitutes an “employee” and/or an independent contractor, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

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