Best Buy, Others To Pay $3.25M Settlement Under California Labor Laws

Best Buy has agreed to pay $3.25 million to resolve claims that it violated California labor laws by misclassifying employees.

The deal received preliminary approval from U.S. District Court Andrew J. Guilford. The employee misclassification settlement will resolve claims against Best Buy Co. Inc., Penn Ridge Transportation Inc., and other affiliated companies – meaning that one company will not be responsible for the entire settlement amount. Best Buy will be required to pay about $400,000 of the multi-million dollar settlement.

“The [net settlement amount] will be distributed to settlement class members (those who don’t timely opt out) on a partial claims-made basis,” Judge Guilford wrote. “All settlement class members will receive a fixed amount payment for 20 shifts worked, and additional payments will then be distributed to those who submit claims for more than 20 shifts.”

In addition to making payments to Class Members, the settlement fund will cover $37,500 in a PAGA payment, $40,000 service awards for Class Representatives, more than $1 million in attorney fees, $75,000 in court costs, and $40,000 in administrative expenses.

An estimated settlement Class of 1,485 affected workers will benefit from the deal. Payment amounts will depend on the remaining net settlement fund after costs are deducted. The number of shifts will also determine Class Member payments.

The settlement resolves claims that delivery drivers and their assistant helpers were wrongfully classified as independent contractors. Although the employees differed from other Best Buy employees, they allegedly did not meet the requirements for being independent contractors due to the control the store had over the workers.

Best Buy and the other companies reportedly controlled work schedules, delivery procedures, clocking in and out procedures, and had the ability to discipline and fire delivery workers and their assistants at any time. Under California labor laws, this qualifies the workers as employees.

Being wrongfully classified as an independent contractor can have serious consequences for workers. Independent contractors are not entitled to benefits such as minimum wage, overtime pay, worker’s compensation, and more. By misclassifying employees as independent contractors, businesses are able to save on labor costs. However, this is unlawful under both California and federal labor laws.

In addition to employee misclassification, the plaintiffs claimed that they were not given the protection and benefits expected as employees. They were allegedly instructed to work without being paid on a regular basis for doing things like making deliveries and recycling products.

Additionally, the drivers and their assistants claimed they did not receive reimbursement for work expenses, such as phone services, Penn Ridge products, and more. The plaintiffs also said they did not receive rest and meal periods, accurate page statements, or separation pay.

The employee misclassification class action included claims under California labor laws and the Private Attorney General Act (PAGA) which allows private citizens to bring claims of California labor code violations. When PAGA claims are settled or resolved in a trial, the State of California receives a portion of the payments.

The Best Buy Employee Misclassification Class Action Lawsuit is Castellon v. Penn-Ridge Transportation Inc., et al., Case No. 5:18-cv-02136, in the U.S. District Court for the Central District of California.

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