Recently, the U.S. Court of Appeals for the Ninth Circuit published a decision regarding the misidentification of employees as independent contractors. Such a decision by a court could have serious consequences for Humboldt County employers. In short, having your employees acknowledge that they’re independent contractors doesn’t make it so.
In Narayan, et al. v. EGL, INC., et al., No. 07-16487, the employer, “a global transportation, supply chain management and information services company[,]” was a Texas company with driving operations in California. Three of the employer’s California drivers signed agreements for “Leased Equipment and Independent Contractor Services,” which provided that the parties’ intentions were to enter into an independent contractor relationship. Subsequently, the California drivers filed a lawsuit seeking unpaid overtime, expense reimbursement, meal compensation, and reimbursement for unlawful wage deductions—all owed to employees under California law.
The District Court granted summary judgment to the employer on the basis that the drivers were not California employees, by the terms of their own contracts.
The Ninth Circuit reversed, finding that, under California law, the drivers were employees, not independent contractors. The Court explained that its decision was fact-driven because, for example:
- the employer had control over when the drivers arrived for their shifts;
- the employer had control over what the drivers wore;
- the employer had control over what routes the drivers drove;
- the employer had control over how the drivers responded to dispatch;
- the employer had control over how the drivers responded to customer complaints;
- the employment period was for an unspecified term, much like at will;
- there was no specialized skill—largely driving and making deliveries—which weighed against independent contractor;
- the drivers provided some hand tools (like a hand cart), but the employer provided forms, boxes, and identification cards; and
- the employer drafted the contract, which was signed by the drivers, and it automatically renewed by its terms (in other words, there was no evidence of negotiating a contract by the drivers).
This employer received a very expensive lesson: you can’t contract around whether someone is an employee or an independent contractor. If there’s any question of the appropriate categorization at all, the prudent thing would be to err on the side of categorizing workers as employees, not independent contractors.
Posted in Amelia Burroughs, Employment Law | No Comments »
Tags: Amelia F. Burroughs