January 3, 2017 11:40 AM, EST

Feds Allege Wisconsin Chain Wrongly Classifies Drivers as Contractors


Wisconsin-based home improvement chain Menards has been slapped with a federal complaint alleging the company misclassified its delivery drivers as independent contractors and therefore deprived them of workplace protections afforded to employees, a charge the company calls "ridiculous" and vows to fight.

The complaint, filed Dec 22 by the National Labor Relations Board's Minneapolis regional office, also accuses Menards of violating federal labor law by maintaining a mandatory arbitration clause in its employee handbook to prohibit workers from filing class-action lawsuits in court and unfair labor practices charges with the NLRB.

The NLRB's complaint is in response to a charge brought in August by the Office and Professional Employees International Union Local 153, which is based in New York and represents some 17,000 workers in a variety of positions, including office and clerical workers as well as vendors at Yankee Stadium. The union is affiliated with the AFL-CIO.

The complaint adds to a growing list of cases examining who should be classified as employees eligible for workplace protections. Unlike employees, independent contractors are not covered by laws that provide for minimum wage, overtime pay, unemployment insurance, workers compensation and unionizing activities.

"This is the way that Menards cuts their costs, and we don't think it's fair," said Seth Goldstein, a Local 153 senior business representative who provided the Tribune with a copy of the NLRB's complaint.

The NLRB's online docket shows the agency filed a complaint against Menards on Dec. 22 but does not include the contents of the document. NLRB representatives did not immediately respond to queries and a Freedom of Information Act request Dec. 27.

Menards, which is based in Eau Claire, Wisconsin., and has some 280 stores, including 57 in Illinois, disputes the allegations of misclassification.

"We feel that the NLRB is wrong," Menards said in a statement provided by spokesman Jeff Abbott. "Our corporation has contracts with various corporations to deliver goods to our customers. These corporations include FedEx, UPS, the United States Postal Service, Stephens Delivery Inc., Quick Hauling Inc., Rhodes Delivery Service, R & R Delivery, Spee-Dee Delivery Service and more than 500 other corporations. We plan to vigorously defend ourselves against these ridiculous allegations."

FedEx ranks No. 2 and UPS ranks No. 1 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

It continued: "We are puzzled why the NLRB is involved with this because we have no disputes with any of these corporations or any of their employees. We believe that ultimately the charge will be dismissed because it lacks any merit."

The misclassification complaint comes several months after Menards entered a settlement agreement with the NLRB, also spurred by charges filed by Goldstein, in which it agreed, among several provisions, to revise its employee handbook to make clear that its arbitration program doesn't constitute a waiver of rights to file class-action suits of unfair labor practice charges with the NLRB.

Goldstein said he learned later that "several thousand" delivery drivers classified as independent contractors would not be covered by the agreement. He estimates that each Menards store has three or four drivers, also called "haulers," who deliver purchased goods to customers' homes.

Goldstein said Menards exercises enough control over its drivers that they should be classified as employees. In addition to requiring drivers to sign arbitration and class-action-waiver agreements, Goldstein said Menards requires drivers to use a certain design of truck, prohibits them from refusing loads and has a noncompete clause that limits their right to work for competitors within 25 miles of the store.

According to the NLRB complaint, the agency wants Menards to rescind or revise any portions of any agreements with delivery drivers that purport to classify them as independent contractors and to revise its mandatory arbitration clause to clarify that the drivers can still engage in class actions. A hearing before an administrative law judge is scheduled for April 4 in Minneapolis.