Plaintiffs in Ruiz v. Affinity Logistics Corporation performed delivery services in California for the defendant under contracts binding the drivers as independent contractors and governed by Georgia law. The putative class action asserted that under California law drivers should have been paid sick leave as well as other employment benefits, but because they were wrongfully classified, they were denied the benefits. Originally, the district court applied Georgia law and found in favor of the defendant due to the classification of the drivers as independent contractors. The drivers appealed.
The first appeal in 2012 resulted in the Court of Appeals disregarding the contract’s provision stating the employer/employee relationship would be handled according to Georgia law. Instead they applied California law to the disputes as they found Georgia law to be too favorable to the employer. The case was then remanded for application of California law. The district court again entered judgment in favor of the employer, and again, the plaintiffs appealed.
On June 16, 2014, the Ninth Circuit gave a different ruling. The ruling stated that despite the contract terms, delivery drivers were employees under California law and were not independent contractors. (This finding was in spite of the fact that all the drivers had independent contractor agreements, formed their own corporate entities, paid for their own vehicles, and hired their own help as needed. The ruling found that the drivers were wrongfully classified under California Law as independent contractors due to the employer’s right to heavily control their work regardless of the titles of the parties involved or how the employee/employer relationship was described. Some of the specific instances cited as “heavy control of work” included: tight control over driver routes and schedules, 100% adherence requirements to the detailed procedure manual, vacation policies (and other similar policies) indicative of employment, use of the drivers’ leased trucks by other drivers without additional compensation, required daily meetings, uniforms, inspections, monitoring of routes (real time), etc.
The case reminds us that merely stating that a relationship is that of an independent contractor is not enough when the relationship itself exhibits signs of an actual employee/employer relationship. It is prudent for companies to remember that the courts will not hesitate to rule that independent contractors should have been classified as employees if the actual working relationship defies what is agreed on paper.
For more information on differentiating between an independent contractor and an employee contact your Southern California employment law experts at Blumenthal, Nordrehaug & Bhowmik.