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Posts Tagged ‘independent contractor’

Navigating the Employee v. Independent Contractor Landscape in a Post-Dynamex World

Posted on: March 25th, 2019

By: Ariel Brotman

In a post-Dynamex world, hiring entities are finding it increasingly difficult to determine whether or not to classify a worker as an independent contractor or an employee.

On April 30, 2018, the California Supreme Court issued its decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. The Court established an ABC test requiring all parts to be met in order to classify a worker as an independent contractor. A hiring entity must prove: “(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact and (B) that the worker performs work that is outside the usual course of the hiring entity’s business and (C) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.” (Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903, 957.) 

The applicability of this seemingly strict ABC test was clarified in Garcia v. Border Tranportation LLC (2018) 28 Cal.App.5th 558. On October 22, 2018, the Court of Appeal released its opinion on Garcia v. Border Transportation Group, LLC. In Border Transportation, Plaintiff Garcia, a taxi driver, filed a complaint against Border Transportation Group, LLC for wrongful termination, overtime, waiting time penalties, unfair competition and various wage order claims based on his alleged misclassification as an independent contractor. Border Transportation filed a motion for summary judgment arguing that under the Borello test, which largely focuses on control, Garcia was properly classified as an independent contractor. The trial court agreed with Border Transportation. Garcia appealed the ruling granting the motion for summary judgment, and while the appeal was pending, the California Supreme Court released its opinion on Dynamex Operations West, Inc. v. Superior Court.

The Court of Appeal ultimately decided that in determining a worker’s status as an independent contractor, Dynamex only applies to wage order claims. As to all non-wage order claims, Borello remains the proper standard.  (Garcia v. Border Transportation LLC (2018) 28 Cal.App.5th 558, 570-71). Therefore, summary adjudication should not have been granted as to Garcia’s wage order claims but was proper as to his non-wage order claims.

Overall, although the Supreme Court has not ruled at this time, the Court of Appeal in Garcia v. Border Transportation LLC has provided an important exception to the strict Dynamex ABC test as it pertains to non-wage order claims. We will be paying close attention to further developments in the interpretation of this important exception.

If you have any questions or would like more information, please contact Ariel Brotman at [email protected].

NLRB Decisions are Trending Pro-Employer

Posted on: February 27th, 2019

By: Amy C. Bender

The National Labor Relations Board (“NLRB”) under the Trump administration is showing a return to more conservative, employer-friendly interpretations of the laws regarding employees’ rights to engage in concerted activity to improve wages and working conditions. As a reminder, these protections apply to almost all private-sector employees, regardless of whether they belong to a union.

Independent Contractors – The NLRB recently issued a decision returning to the pre-Obama era, employer-friendly “common law agency” test for determining whether a worker is an employee or an independent contractor. This ruling makes it easier for employers to classify workers as independent contractors, which benefits employers since independent contractors do not have certain rights that employees have, such as the right to unionize (and employers do not have to pay taxes or insurance on independent contractors, among other distinctions).

Joint Employers – The NLRB recently closed the period to submit comments on its proposed rule regarding the standard for when two entities are considered joint employers. Under the proposed rule, an entity will be deemed a joint employer only if it has and exercises substantial, direct, and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. The current standard from the Obama administration allows a finding of joint employment if an entity exercises indirect control or merely has the contractual right to exercise control, which can result in increased liability for businesses.

Employee Handbook Rules – The NLRB recently issued guidance on when an employer’s workplace policy interferes with employees’ rights to engage in protected concerted activity. The guidance provides that a policy will be placed into one of three categories (generally lawful, warrants individualized scrutiny, or unlawful) and be subject to a balancing test between the policy’s negative impact on employees’ ability to exercise their rights and the policy’s connection to employers’ right to maintain discipline and productivity in their workplace. This guidance provides employers more clarity and detail on how to craft lawful policies and also makes clear that policies will be analyzed to determine the impact they would have (and not just conceivably could have) on employees’ rights.

These developments signal good news for employers, and let’s hope this trend continues.

For questions or assistance in reviewing or preparing your workplace policies, contact Amy Bender at 770-818-1421 or [email protected]

PA Fed. Ct. Finds UberBLACK Limousine Drivers Maintain Independent Contractor Status

Posted on: April 30th, 2018

By: John P. McAvoy

On April 12, 2018, Uber Technologies, Inc. won its legal battle on the recurring issue of independent contractor misclassification when the Eastern District of Pennsylvania granted the company’s motion for summary judgment in Razak v. Uber Technologies, Inc., No. 16-cv-573 (E.D. Pa. Apr. 11, 2018) (Baylson, J.). In so holding, the court concluded that UberBLACK limousine drivers are not employees of Uber covered by state and federal wage laws.

Uber has been defending independent contractor misclassification cases in state and federal courts throughout the country since the company first opened its doors in 2009. Like several other ride-sharing companies, Uber has persistently maintained that its drivers are independent contractors and that, as such, the company is exempt from the state and federal wages laws of all jurisdictions in which it conducts business. Despite these salient arguments, the vast majority of courts have concluded that the workers were Uber employees subject to wage laws, indicating that a slightly different set of facts may have swayed the decision in the other direction. However, based on the Honorable Michael M. Baylson’s opinion in the Razak case, it appears this pattern has reached its natural end.

Unlike other federal and state courts that have addressed this issue, the Eastern District concluded that almost all of the factors the court considered weighed heavily in favor of classifying UberBLACK limousine drivers as independent contractors that do not enjoy the rights, benefits and securities provided by state and federal wage laws.

The Eastern District reached its decision by applying the six factor test set forth in Donovan v. Dialamerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985); namely, (1) the degree of Uber’s right to control the manner in which the work is performed (“Right to Control”); (2) the UberBLACK limousine drivers’ opportunity for profit or loss depending on their managerial skill (“Opportunity for Profit or Loss”); (3) the UberBLACK limousine drivers’ investment in equipment or materials required for their task, or their employment of helpers (“Employee Investment”); (4) whether the service rendered requires a special skill (“Special Skills”); (5) the degree of permanence of the working relationship (“Relationship Permanence”); and (6) whether the service rendered is an integral part of Uber’s business (“Integration”). The court found that all but two of the factors (i.e., Special Skills and Integration) strongly favored independent contractor status. Accordingly, the court concluded that the UberBLACK limousine drivers had not met their burden of showing that they are employees and that Uber is their employer.

If upheld on appeal to the Third Circuit, the Razak decision could finally put to rest the issue of whether Uber drivers and workers at companies that employ similar business models are being misclassified as independent contractors under the Fair Labor Standards Act and any state wage laws that test for independent contractor status in the same or similar fashion.

If you have any questions or would like more information about this case, please contact John P. McAvoy at [email protected].