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March 7 — Delivery drivers for a company that operates restaurants in the Chicago area are entitled to unpaid wages because they were misclassified as independent contractors, a federal judge in Illinois ruled March 4.
The drivers' pay was below minimum wage because the restaurants didn't satisfy the rules for taking tip credits, Judge Sharon Johnson Coleman said. A tip credit allows an employer to pay a subminimum wage if the employees' tips make up the difference. The businesses didn't qualify because they retained a portion of the drivers' tips to pay sales tax obligations, said Coleman of the U.S. District Court for the Northern District of Illinois.
It's “a matter of economic reality” that the drivers are employees under the Fair Labor Standards Act and a state wage and hour law, Coleman said. Weighing six factors enumerated by the U.S. Court of Appeals for the Seventh Circuit in , 835 F.2d 1529, 28 WH Cases 654 (7th Cir. 1987), showed they were “dependent upon” the restaurants, she said.
For example, the restaurants exercised a high degree of control over how their drivers performed their jobs, Coleman said. Prescribing shift schedules, delivery fees and drivers' routes went beyond other delivery services that simply dictate that food be delivered but leave “details of manner and means entirely within the control of the drivers,” she said.
For more information, see Compensation and Benefits Library’s Fair Labor Standards Act: General Principles chapter.
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