An Allegheny County Court of Common Pleas Court judge has denied the preliminary objections of three defendants in a class action brought by two truck drivers who claim they were misclassified as independent contractors and therefore deprived of employees’ rights, privileges and benefits.
In Watson v. Prestige Delivery Systems, Judge R. Stanton Wettick Jr. said the plaintiffs’ claims are based on what they allege was a scheme by the defendants to make improper deductions from their pay.
Wettick said that while the defense argues that these deductions were authorized in writing by the plaintiffs, the plaintiffs correctly contend that Sections 9.1(11) and 9.1(12) of the Wage Payment and Collection Law also require that the deductions be made "for the convenience" of the employee.
Wettick noted that while Section 9.1(12) specifically limits deductions for purchases or replacements from third parties to those made for the convenience of the employee, Section 9.1(11) does not specifically place such a limit on deductions for purchases or replacements from the employer.
Still, Wettick said failing to interpret Section 9.1(11) as limiting deductions to those made for employees’ convenience would lead to a "result the Department of Labor and Industry could not have intended: that an employer may deduct from the employee’s wages the cost of work uniforms purchased from the employer, but the employer cannot make similar deductions if the employer directs the employee to purchase the uniforms from a third party."
"The purpose of the Wage Payment and Collection Law is to protect employees from economic coercion," Wettick said. "Consequently, the Department of Labor and Industry, in enacting regulations authorizing deductions ‘for the convenience of employees,’ would not have intended to give employers a free pass as long as the job-seeking worker would sign a piece of paper authorizing a deduction."
Wettick said the defendants’ interpretation of Section 9.1(11) would allow employers to deduct from an employee’s pay the purchase of safety equipment, tuxedos for parking attendants, maintenance fees and equipment repair costs.
Wettick said he is "certain" the Department of Labor did not intend to allow employers to make deductions for their own convenience rather than for employees’ convenience.
In Watson, according to Wettick, plaintiffs Richard Watson and David Clary were truck drivers who delivered packages to customers of defendant Prestige Delivery Systems Inc. pursuant to an agreement with Prestige that refers to the drivers as an independent contractor.
Wettick said the agreement requires each driver to be an affiliate of defendant National Independent Contractor Association, which provides third-party administrative services to independent contractors.
Under the agreement, NICA is responsible for paying each driver, according to Wettick.
But the plaintiffs allege in their fourth amended complaint that the defendants have misclassified them and other drivers as independent contractors as part of a scheme to make illegal deductions from their pay.
The defense filed preliminary objections arguing that, pursuant to the independent contractor operating agreement, the plaintiffs’ claims must be brought in Ohio.
But Wettick said that forum selection clause cannot be enforced because it was not freely agreed to by the plaintiffs.
Wettick said that, because the clause was buried deep into the agreement under the heading "Entire Agreement," it’s unlikely the plaintiffs were aware of the clause.
But even if the plaintiffs were aware of the clause and understood it, Wettick said, they would not have believed they had a choice in the matter.
Wettick further reasoned that it would be against public policy for the court to enforce a forum selection clause that would make it more difficult for workers to enforce their statutory rights.
"In this case, the legislative goal of securing prompt payment of wages is thwarted if a worker must sue in Ohio rather than commencing an action before the local magisterial district court," Wettick said.
Wettick also overruled the defendants’ preliminary objections to the plaintiffs’ claims for unjust enrichment.
Wettick also overruled NICA’s preliminary objection to the plaintiffs’ claims for violation of the Pennsylvania Minimum Wage Act.
Wettick said the plaintiffs are alleging NICA was involved in a scheme with Prestige to deny them minimum wages, bringing NICA within the scope of the Minimum Wage Act’s broad definition of "employer."
Wettick did, however, sustain defendant and NICA head Thomas McGrath’s preliminary objections with regard to claims based on piercing the corporate veil.
According to Wettick, "Case law does not permit the corporate veil to be pierced on a showing that a corporation is owned and operated by a single person coupled with general allegations that the corporation is a shell."
But Wettick did allow the plaintiffs to proceed with their claims alleging McGrath was liable for the actions of NICA because of his individual participation in tortious activities.
Counsel for the plaintiffs, Margaret Fried of Pittsburgh, could not be reached at press time.
Counsel for Prestige, A. Patricia Diulus-Myers of Jackson Lewis in Pittsburgh, and counsel for NICA, Stephen L. Korbel of Babst Calland in Pittsburgh, also could not be reached.
Zack Needles can be contacted at 215-557-2493 or firstname.lastname@example.org. Follow him on Twitter @ZNeedlesTLI.
(Copies of the 18-page opinion in Watson v. Prestige Delivery Systems, PICS No. 13-0376, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •