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3 Ways Worker Lawsuits Can Clean Out Your Cleaning Business

3 Ways Worker Lawsuits Can Clean Out Your Cleaning Business

Friday, April 8, 2016/Categories: Workers' Compensation Insurance

When you run a cleaning business, your workers are the best resources you have. Unfortunately, between growing your business, managing finances, and focusing on customer needs, there’s a danger of overlooking your responsibilities to your workers.

Take this case for example: a group of eight janitors brought a class-action lawsuit against their employer last year over allegations that they were being unfairly worked and paid. The suit, writes Twin Cities’ weekly CityPages, alleged that the workers…

  • Earned less than minimum wage after being forced to buy their cleaning supplies.
  • Never received pay stubs.
  • Had meal breaks taken out of their pay even if they worked through their break to get a job done.

The janitors ended up receiving $425,000 in the settlement.

For a small cleaning business, an employee lawsuit can be a deathblow. To help you avoid a similar legal debacle, be careful when classifying workers, follow your state's Workers' Comp regulations, and adhere to federal and state employment laws.

1. Your Cleaning Business Misclassifies Workers

The problem: Lindsay Coobs, HR consultant with the HR firm , says employee misclassification is a common misstep. “Many businesses will classify individuals as independent contractors," Coobs notes. "By doing so, the business receives financial benefits from not having to pay overtime and certain taxes, such as payroll, state, federal, unemployment, and Workers’ Compensation.”

The catch: “Many times these individuals are actually performing the work of an employee,” Coobs says.

The distinction between employee and contractor isn’t the employer's call – it’s the government's. A worker is generally considered an employee if the business controls…

  • The pay rate.
  • How the work is done.
  • How the worker is trained and what tools they use.

The stakes: “Misclassification of employees can leave businesses open to all kinds of legal liabilities,” says Coobs. That may include paying financial penalties and back taxes, as well as the possibility of a lawsuit brought by the misclassified workers.

Olga Mack (@OlgaVMack), Head of Legal at sales and marketing platform , offers a word of warning about misclassification, referencing the now-defunct cleaning service Homejoy. “Most employment laws have historically increased protection of employees and have made it increasingly difficult to classify a worker as an independent contractor instead of a full-fledged employee,” she says. “Homejoy unrealistically aimed to disrupt this very established legal trend, contradicting numerous federal and state administrative laws and regulations.”

As a result, the company was sued and is no longer in business.

2. Your Cleaning Business Doesn’t Follow Workers’ Comp Insurance Laws

The problem: Some employers don't realize that Workers' Comp is mandatory coverage in most states. Workers’ Compensation Insurance protects employees by helping to pay for their medical bills and replacement wages when their job takes a physical toll on their health.

The catch: State laws vary from place to place. In some states, certain industries (e.g., construction) must have the coverage even if they don't have employees. In other states, the laws are triggered when an employer has a certain number of employees. Make sure you understand your state's requirements so your cleaning business stays compliant.

The stakes: Failing to follow your state's Workers’ Comp Insurance laws can result in hefty financial consequences (e.g., paying fines and missed premiums) and worker-initiated lawsuits. In extreme cases, Workers' Comp breaches can lead to jail time.

3. Your Cleaning Business Doesn’t Follow Standard Employment Laws

The problem: Employee benefits and complicated employment laws can make compliance an uphill battle for a business owner who isn't well versed in HR intricacies.

The catch: Unlike Workers' Comp laws, the federal government mandates some employment standards and the state dictates others. For example, consider the following:

  • Minimum wage laws. Employees are guaranteed a minimum wage of $7.25 under federal law (as of April 2016), but some states or municipalities require higher wages. For more information, check out this map from the US Department of Labor.
  • Mandatory rest laws. Some states require minimum paid rest periods for employees who work a certain number of hours, according to the US Department of Labor.  
  • Protected leave laws. The Family and Medical Leave Act allows employees to take job-protected, unpaid leave for certain circumstances, such as childbirth, immediate family medical care, and military deployments of family members.

The stakes: Failure to follow the laws that apply to your cleaning business could lead to a lawsuit from your employees, as well as fines and penalties from state or federal labor authorities.

If the picture isn’t clear yet, here’s the takeaway: treat your employees well and offer the benefits you're legally required to provide. It’s a foolproof way to avoid some of the most common causes of worker lawsuits in the cleaning service industry. Better yet, it’ll pay off in the long run when your business provides the best workers – and the best cleaning – in town.

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