Lowe’s Agrees to Settlement Over Allegations It Treated Independent Installers as Employees Without BenefitsJune 13th, 2014 by DWM Magazine
Lowe’s management recently agreed to pay $6.5 million to settle a California class action complaint in which former independent contractors installing garage doors allege they were treated like company employees without the benefits, violating state labor law. The settlement could have implications for the door and window industry, as many companies may outsource installation work to independent sub-contractors.
The legal dispute began when two former contractors—Ronald Shephard and Henry Romines—filed a complaint alleging Lowe’s violated California labor law to install garage doors. Romines later voluntarily dismissed claims; however, Shephard continued on with his attorneys arguing in favor of class action status. The court certified a class of: “All persons who installed products for Lowe’s or performed services for Lowe’s in the State of California and who were treated as independent contractors by Lowe’s but over whom Lowe’s exercised control and discretion in the performance of their installation services.”
Lowe’s attorneys continued to argue against class action status and the court set a hearing date of September 19, 2014.
“Specifically, plaintiffs assert that Lowe’s had the right to control, and in fact did control all aspects of installation services performed by Shephard and all other Type 1 and general contractor installers,” according to the settlement for preliminary approval proposed to the U.S Northern District Court of California, Oakland division.
“Plaintiffs further allege that Lowe’s misclassification of the installers caused harm not only to the installers who did not receive the benefits attendant with being treated as employees, but also resulted in harm to the installation companies that contracted with Lowe’s,” the attorneys allege in the documents.
In discussing the proposed settlement, Shephard’s attorneys write, “Shephard determined that if this action proceeded to trial and if Shephard prevailed on all of his claims, the maximum amount recoverable for the class would have been approximately $33 million. Shephard submits that a recovery of $6.5 million, or approximately 20 percent of the recoverable damages, is an eminently fair and reasonable recovery.”
Approximately 4,029 individual installers and 949 installation companies are eligible to receive payment from the proposed settlement.
“The maximum settlement amount equates to about $1,613.30 per settlement class member,” according to court documents.
The class action complaint was originally filed on June 15, 2012. The certified class period runs from 2008 to the present.
While pre-trial discovery occurred, the parties entered private alternative dispute resolution.
“Plaintiffs believe that their claims are meritorious and that, at trial, they could prove that Lowe’s misclassified Shephard and all other installers because Lowe’s had the right to control the performance of the installers’ work and other secondary indicia of an employment relationship are present. Moreover, this conduct harmed MGDI and all other installation companies,” plaintiffs’ attorneys claim.
“[H]owever, despite plaintiffs’ confidence in the merits of their claims, they recognize that an outcome in their favor is far from a certainty. … Plaintiffs recognize that Lowe’s would assert strong factual and legal defenses to the claims alleged herein and that plaintiffs and the class prevailing in this action was far from certain. Lowe’s asserted that each installation company operated their own separate business, hired their own employees, paid their employees’ wages and benefits and made all decisions relating to employment matters and issues relating to their employees so they could not possibly be deemed employees of Lowe’s. … Therefore, plaintiffs’ submit that the proposed settlement is in the best interests of the settlement class members because it provides a certain favorable outcome,” attorneys explain.