Flat Rate Movers dodges misclassification lawsuit
New York-based flat rate movers will not face a misclassification lawsuit from former drivers after a federal court dismissed the case.
On Nov. 30, Justice Alison J. Nathan of the Southern District Court of New York granted Flat Rate Movers’ motion to dismiss a 2017 misclassification lawsuit against the company. The court ruled the lawsuit was filed beyond the law of limitations.
Submitted by Mirko Djurdjevich, the former driver worked for Flat Rate Movers from 2006 to 2008. Djurdjevich started working for the company as a driver before being promoted to foreman of a truck crew. After his promotion, he served Form 1099 as a driver and employee of W-2. Djurdjevich received a commission for every job he worked. He resigned in 2008 when he was downgraded after an employee he supervised was injured at work.
According to the complaint, the New York attorney general fined flat rate movers approximately $ 1 million in 2010 for failing to pay overtime wages. That was the same year the company began using independent crew members, according to court records.
In fact, Djurdjevich’s company, D&M Corp., signed a subcontract with Flat Rate Movers in May 2010. In July 2010, Djurdjevich founded Big M Delivery, took out employee compensation insurance, and signed another subcontract with Flat Rate Movers. The lawsuit alleged that the moving company asked Djurdjevich to create Big M Delivery. Although a subcontractor agreement has been signed, Djurdjevich claims he was hired as an employee under both contracts.
Flat rate movers would receive payments from customers and would pay Big M a weekly commission. Big M would then use that commission to pay its workers.
Djurdjevich argued that although his employees were paid by Big M, flat rate movers set how much his employees were paid for each job.
There was a dispute over who was responsible for the members of the truck crew. The plaintiffs argued they would refer problems to flat rate movers. However, the moving company claimed that all questions, including payment, would be directed to Djurdjevich. Plaintiffs also argued that they were administered and reported to Flat Rate Movers, which the company denied.
Big M’s contract with Flat Rate Movers was terminated in October 2011. Djurdjevich then declared unemployment. Big M’s drivers worked for other Flat Rate Movers subcontractors until around early 2015. Former drivers don’t know exactly how much money they owe for unpaid wages, according to court records. They claim they were underpaid and owed “something,” the court order says.
Flat rate movers moved the case to be dismissed for two reasons. First, the plaintiffs were never employees of the company but were independent contractors. Second, the statute of limitations for both federal and New York labor laws prevented the lawsuit from being filed this late, even if they were employees.
According to the court order, the Law on Fair Labor Standards provides a two-year limitation period for measures to enforce its provisions.
With the completion of Djurdjevich’s work in 2011, the 2017 complaint was filed well beyond the two-year period. Although one of the co-plaintiffs’ work did not end until 2015, that plaintiff did not join the lawsuit until 2019, two years after the statute of limitations.
Plaintiffs in the case tried to argue a fair toll, which essentially allows someone to circumvent the statute of limitations if they did not discover the alleged violation until after the statute of limitations had expired. In this case, the drivers argued that Flat Rate Movers’ classification of independent contractors was an act of deception. However, the court was not convinced by this argument.
The drivers also argued that their immigration status was an exceptional circumstance. Specifically, given their immigrant status, they were less likely to take legal action for workplace misconduct. However, the court pointed out that “a lack of education, limited financial resources and ignorance of the law are not exceptional circumstances that justify a fair toll.”
Since the case was dismissed due to the statute of limitations, the court declined to address issues related to employee status. The Federal Supreme Court also refused to rule on the statute of limitations of state labor law, as all federal claims were dismissed. LL