Is Your Company on an Independent Contractor Misclassification “Hit List”?

From JDSupra, Richard Reibstein discusses recent misclassification lawsuits in the oil and gas industry. What is eye-opening is the “hit list” of companies by a law firm representing plaintiffs in misclassification or other labor law claims. Richard writes:

As reported six months ago in an article in the E&P Journal, the oil and gas industry is under attack by plaintiffs’ class action lawyers filing independent contractor misclassification lawsuits. My colleagues Bill Swanstrom and Mike Rose joined me in commenting on some of the more notable lawsuits against energy companies that use independent contractors to perform specialty services in the areas of exploration and production.
We commented in that article on an IC misclassification case brought by a rig welder in Colorado against a modest-sized oil exploration and production company; another brought in California by well site managers who sued a large energy company; a third brought by flow testers against an Oklahoma oil patch company; and a fourth by welders in Texas against a Chinese oil rig company.
Even more lawsuits against companies in the oil and gas industry have surfaced in the past six months, several of which are discussed below. While on the lookout for additional IC misclassification cases, we came across a website for a plaintiffs’ class action law firm includes a “hit list” of energy companies as potential defendants in claims for independent contractor misclassification. That list has over 130 companies’ names, and the site suggests that workers “may have claims” if they are providing the following types of services: Base Operators, Flow Back Operators, Pipeline Inspectors, Drillers, Field Specialists, Field Engineers, Field Operators, Field Coordinators, and Tool Pushers.
This type of advertising by plaintiffs’ class action lawyers is increasingly common. What can companies do to minimize the risk of class action IC misclassification lawsuits? After summarizing these new cases, we provide an in-depth analysis and then discuss in our “Takeaways” some ways that companies, including those in the oil and gas industry, can maximize compliance with federal and state IC laws and reduce the likelihood of becoming a defendant in these types of class actions.
More Recent IC Misclassification Cases in the Oil and Gas Industry
OIL AND NATURAL GAS COMPANY AGREES TO PAY OILFIELD WORKERS $2.9 MILLION IN SETTLEMENT OF IC MISCLASSIFICATION CLASS ACTION
Less than two weeks ago, a Pennsylvania federal court granted final approval of a $2.9 million settlement of a class and collective action brought by oilfield workers against Rice Energy, Inc., an oil and natural gas company. The plaintiff, a drilling fluid engineer, provided specialty services in Ohio and Pennsylvania in the Marcellus, Utica, and Upper Devonian Shales for six months beginning in August 2016. The plaintiff asserted that Rice Energy engaged in violations of the federal Fair Labor Standards Act (FLSA) and state wage and hour laws as a result of its alleged misclassification of plaintiff and other oilfield workers as independent contractors and not employees.
According to the complaint, the plaintiff’s primary job duties included monitoring fluid activities at jobsites, operating oilfield equipment, coordinating transfer of fluids between rigs, controlling fluid within defined specifications, and building and maintaining various fluid systems associated with drilling and completion of wells. In support of the misclassification claims, the complaint alleged that: Rice Energy directed the hours and locations where the plaintiff worked, the tools he used, and the rates of pay he received; the plaintiff did not provide his own equipment or incur operating expenses like rent, payroll, marketing, and insurance; no real investment was required of the plaintiff; the plaintiff was economically dependent on the company and was prohibited from working other jobs while working on jobs for the defendant; Rice Energy directly determined the plaintiff’s opportunity for profit and loss; and that very little skill, training, or initiative was required of plaintiff to perform work for the company.
The defendant’s answer denied these allegations and focused on the fact that the plaintiff “independently contracted with Patriot Drilling Fluids, a company with which [Rice Energy] contracted to perform services at well sites.” The answer also contained more than a dozen defenses, including: the plaintiff and proposed class and collective members were properly classified as independent contractors; they were engaged by a third party, Patriot Drilling Fluids, and not by the defendant; and any alleged damages were the sole responsibility of the third party and not the defendant. The court’s order approving the settlement expressly stated that it “makes no finding or judgment as to the validity of any claims released under the Settlement or whether Rice Energy is liable under the Fair Labor Standards Act or any other applicable law.” Williford v. Rice Energy, Inc., No. 2:17-cv-00945-DSC (W. D. Pa. Dec. 19, 2018).