Employment Law – Delivery Drivers Wrongfully Classified as Independent Contractors Rather Than Employees

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Fernando Ruiz, et al. v. Affinity Logistics Corp.

United States Court of Appeals for the Ninth Circuit (June 16, 2014)

The causes of action that can be asserted against an employer often depend on whether the plaintiff is considered an employee or an independent contractor. In this case, the Ninth Circuit reversed the district court’s judgment on remand based on its determination that home delivery drivers who alleged various state-law causes of action were employees, rather than independent contractors.

Plaintiff Fernando Ruiz and putative class members were California residents who worked for defendant Affinity Logistics (“Affinity”). Their job responsibilities included loading, unloading and installing furniture and appliances. Prior to being hired by Affinity, the drivers were required to obtain a fictitious business name, a business license, and a commercial checking account.  In addition, each driver was required to sign an Independent Truckman’s Agreement and Equipment Lease Agreement. The agreements included clauses stating the parties were entering into an independent contractor relationship. After being hired, the drivers received an Affinity Contractor Procedures Manual which outlined procedures the drivers were required to follow regarding loading trucks, delivering goods, installing goods, interacting with customers, and reporting to Affinity after deliveries. The complaint filed by the drivers alleged that Affinity wrongfully classified them as independent contractors, failed to pay them sick leave, vacation, holiday and severance wages; and improperly charged them workers’ compensation insurance fees.  After a bench trial and supplemental briefing, the district court determined that the drivers were independent contractors. The drivers appealed.

Under California law, once a plaintiff comes forward with evidence that he provided services for an employer, the plaintiff has established a prima facie case that the relationship was one of employer/employee.  The burden then shifts to the employer to prove that the presumed employee was an independent contractor. A number of factors are considered in making the determination as to whether a plaintiff is an employee or independent contractor. The right to control work details is the most important consideration.  Additional “secondary” factors may also be relevant in making the determination. These include whether the one performing the services is engaged in a distinct occupation; the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of a principal or by a specialist without supervision; the skill required; whether the principal or worker supplies the instrumentalities, tools, and place of work; the length of time for which the services are to be performed; the method of payment, whether by time or by the job; whether or not the work is part of the regular business of the principal; and whether or not the parties believe they are creating the relationship of employer-employee. The label that the parties place on their relationship is not dispositive and will be ignored if their actual conduct establishes a different relationship.

The Ninth Circuit determined that, contrary to the district court’s conclusion, the totality of the undisputed facts indicated that the drivers were Affinity’s employees rather than independent contractors. The facts indicated that Affinity had the right to control the details of the drivers’ work, and that Affinity retained all necessary control over the drivers’ work. Affinity controlled the drivers’ rates, schedules and routes. Affinity also controlled the equipment, e.g., the trucks, tools and mobile phones, the drivers used.  Moreover, most of the secondary factors pointed to the conclusion that the drivers were employees. The Court reversed the district court’s decision and remanded the case for further proceedings consistent with the determination the drivers were Affinity’s employees.

COMMENT

The Ninth Circuit’s decision is consistent with California’s policy of applying deference to remedial statutes that provide protection for employees.  Written agreements identifying the working relationship between two parties as an independent contractor relationship will not protect an employer if the facts reveal the employer controls the details of the work.

For a copy of the complete decision, see:

http://cdn.ca9.uscourts.gov/datastore/opinions/2014/06/16/12-56589.pdf

Topics:  Appeals, Delivery Drivers, Employee Definition, Employer Liability Issues, Independent Contractors, Misclassification, Trucking Industry

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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