Make Sure Your Indepent Contractors Are Correctly Classified/ Williams Kastner Labor & Employment Advisor

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A recent lawsuit against Northwestern Mutual Life Insurance Company underscores the need for employer care in correctly classifying independent contractors. On June 25, 2009, three former employees of Northwestern Mutual filed a class action lawsuit alleging that sales and financial representatives of the Company had been incorrectly treated as independent contractors under federal and California state law. The complaint seeks class certification and damages of more than $200 million. Plaintiffs’ case is based upon the degree of control Northwestern Mutual had over these alleged independent contractors, including their hours of work, their office and equipment, performance quotas and non-competition agreements. According to the complaint, the Company required the alleged independent contractors to work a minimum of 10 hours a day for five or six days a week. Plaintiffs therefore seek overtime and a higher hourly rate since the effective rate for these California employees was less than the minimum wage. Given this case, and a string of other recently filed cases of similar nature, author Judd Lees advises employers to make sure that their use of the independent contractor classification is defensible and warranted.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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