California Supreme Court Leaves Unanswered Questions in Independent Contractor Case

On Monday, June 30, 2014, the California Supreme Court handed down its decision in Ayala v. Antelope Valley Newspapers, a lawsuit brought on behalf of a group of newspaper delivery carriers who alleged that they had been misclassified as independent contractors instead of employees. The trial court had initially denied certification, finding that common issues did not predominate and that a classwide trial would be unmanageable in view of the differences in the way in which each carrier performed his or her work and the type of supervision that the company exercised over each. The Court of Appeal reversed in part, finding that some of the claims were suitable for class treatment while others (such as overtime and meal and rest break claims) were not.  (Our discussion of the 2012 Court of Appeal decision may be found here.)

The California Supreme Court affirmed and held that the independent contractor analysis could be resolved on a classwide basis. This holding depends largely on a quirk of the common law independent contractor-employee test: the crucial question is not whether the company actually exercises control over the worker’s daily tasks; the question is whether the company has authority to do so. In this case, the scope of the company’s authority to control the workers was set forth in the parties’ contracts, which were all essentially identical. Therefore, the interpretation of that contract created a common issue that could answered on a classwide basis. The Supreme Court held that in at least some cases, the parties’ actual conduct could be relevant to the analysis to show that different workers had “variable rights.” However, the Court did not set forth a clear test for when this conduct should be considered.

Ayala is notable for what it does not decide. Going forward there remains an open question as to what factors California courts should apply in wage and hour cases involving independent contractors – the traditional common law test, the factors set forth in the Wage Orders, the factors used by federal courts interpreting the FLSA, or some conglomeration of all three? This may be an issue that the Court will revisit in another case. The Court also declined to set forth any broad principles of law related to class certification, as its discussion on this issue is mostly limited to a short recitation of its own prior precedent. As a result, Ayala, far from a landmark opinion, is a study in judicial restraint – a narrowly decided case, closely tied to its specific facts, without the wide-reaching ramifications of other recent cases such as Duran and Iskanian.

 

Topics:  Class Action, Class Certification, Employer Liability Issues, Independent Contractors, Misclassification, News Corp

Published In: Civil Procedure Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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