A number of companies that hire drivers and couriers have classified them as independent contractors. Courts are rejecting this. The effect is that the companies are liable for workplace violations that employees may sue for, as well as taxes and penalties for not withholding employment taxes from the drivers’ pay.

The latest case is Narayan v. EGL, Inc. handed down by the Ninth Circuit Court of Appeals on July 13, 2010. In Narayan, the employer sought to avoid liability by making the drivers sign a form contract stating that there were independent contractors, and by making them agree that the law of another state applied to this contract - a state that might uphold such a contract. California drivers sued for overtime wages, business expenses, meal compensation and unlawful deductions from wages. The California Labor Code contains many protections for employees, including the right to be reimbursed for business expenses, the right to meal and rest breaks, and to overtime pay for hours worked in excess of eight per day and 40 per week.

The drivers lost in the trial court, where summary judgment was granted on all their claims. That court said that Texas law would apply and thus their claims were barred. But the Ninth Circuit Court of Appeals reversed the trial court.

Texas law did not apply, and the attempt to make drivers into independent contractors by making them sign a “contract” stating that they were was not enforceable. The way that workers prove they are employees is very different under California law than under Texas law. Once a worker shows that s/he provided services for an employer, then the burden is on the employer to prove the employee was really an independent contractor.

That is a challenge for employers, since California uses a test that considers up to 13 different factors. In the Narayan case there was ample evidence that the drivers really were being treated like employees, without getting the benefits of that employment. They had to report to work at a specified time every day, follow lots of instructions about how they spent their time, provide advance notice of their vacation days and be subject to disciplinary action for showing up late to work. The employer controlled and manner and means by which the drivers made their deliveries. Company equipment and logos were used in their jobs. The work they did was not highly skilled, requiring only the ability to drive and the possession of a valid driver’s license.

And the “contracts” between the drivers and the employer were automatically renewed, so there was no real end date to the drivers’ services for the company.

In the end, the fact that the drivers had signed contracts acknowledging that they were independent contractors mattered not at all. The court of appeals reversed the lower court ruling, allowing the drivers to pursue all their claims in court.

 

 

 


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