Companies and individual managers
on hook for misclassification
of independent contractors?

Are you personally liable for wages and taxes?

States are targeting industries with a history of paying drivers and delivery laborers as independent contractors. Joint liability for clients and vendors is a big worry.

Misclassification is expensive. New Jersey charged Uber $649 million for misclassifying workers.

Companies are rushing to replace independent contractors with their own employees or with employee-staffed vendors.

Publishers have the option of hiring or trading out with employee-staffed coupon, door hanger, and TMC delivery vendors. Temps, laborers from staffing agencies, and fund-raising groups are also options.

Mail distribution is not an attractive option.

Disclaimer: The purpose of this article is to increase awareness and encourage discussion of issues that may impact the directory industry. Nothing here should be considered legal advice or relied upon for any purpose. Consult with professional legal and human resource advisers on all matters.

“We had no idea that the feds and states could hold us personally liable. Being incorporated, even declaring bankruptcy might not help us."

"Everybody else was using independent contractors so we thought it was ok. I never figured the government would change the rules just like that. Not just change the rules now but go back in time and change the rules, you know, retroactively."

Over 100,000 directory delivery workers were invited as potential opt-in plaintiffs in California and Texas class action lawsuits. Attorneys attempted to hold Directory Distributing Associates (DDA) and the yellow pages publisher that hired the delivery vendor jointly liable for laborers who delivered phone books. The country's second biggest directory delivery company ceased operations and declared bankruptcy ending its almost 70 year history. Remaining assets were earmarked for legal fees and back wages.


Why switching from hand delivery to mail is not an ideal solution:

Yellow page advertisers have always competed with other advertisers in the same phone book. With mailed phone books, yellow page ads also have to compete with direct mail ads in the same mailbox.

"Which ad is gonna get noticed...the standalone direct mail post card or the ad in the bottom quarter of page 200 of the phone book in the mailbox stuffed with standalone direct mail pieces?” explained a yellow pages sales manager.


The yellow pages industry got away with paying delivery laborers as independent contractors for decades. What changed? There are a number of theories. The administrative overhead of employment is excessively burdensome for short-term casual labor so perhaps the government chose to look the other way. Some say enforcement agencies were underfunded as a result of pro-business politicians and lobbyists. Reclassifications can easily bankrupt vendors so authorities may have been reluctant to enforce. That has changed.

In recent months, state and local authorities have started to clamp down hard on independent contractor misclassifications. Why? Perhaps it has something to do with the recent emphasis on undocumented workers or economic disparities. Maybe the strong economy and employment levels are seen as conducive to the disruption that comes along with enforcement. Maybe it's the recent, rapid growth of the app-based gig economy. Perhaps it is media coverage of Uber and Lyft or the high-profile protests of their drivers.

What seems clear is that there is a tsunami of employment-related court decisions, new laws, and heightened enforcement sweeping the country. Dynamex, ABC, AB5, PAGA, punitive damages, retroactive liabilities, even prison time for the most extreme offenders.

A big concern: growing fears of joint liability. Publishers that outsource sales, ad production, or distribution may find themselves vulnerable for the acts and omissions of suppliers. Vendors may cease operations. Others may refuse to finish contracts.

Due diligence requires everyone to measure exposure, make contingency plans, and take steps to mitigate liabilities and prevent operational disruption resulting from, what many see, as the almost inevitable reclassification of a large part of the nation’s work force from independent contractors to employees. For the directory industry, the biggest vulnerability may be circulation since most phone books are delivered by laborers paid as contractors rather than as employees.

Said one publisher: "We decided to switch to mostly part-time employees and temps instead of independent contractors. The newspaper people deliver [a couple markets] and we're going to try some local employee-based delivery businesses, maybe trade out some ads with them. Yeah, it's a bit more hassle than dealing with just one vendor but we have no choice. Mail is not an option."

We can help.

Using delivery kits or route maps from DirectoryDistribution.com, anyone can quickly and easily deliver phone books. Use the kits to switch from independent contractors to employee-based delivery crews. Hire and manage your own delivery teams or provide route maps to one or more employee-based delivery companies, temps or staffing agencies. The kits facilitate standardization and prevent missing or overlapping deliveries when using multiple crews or vendors.



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