Earlier this month, the United States Court of Appeals, Ninth Circuit held in Ruiz v. Affinity Logistics Corp. that Affinity Logistics violated California law by misclassifying its home delivery drivers as independent contractors rather than employees.
Before working for Affinity Logistics, Ruiz worked as a driver for Penske Logistics, a furniture delivery company that had a contract with Sears. Ruiz was classified as an employee. In 2003, Sears announced that Affinity Logistics was taking over the services that had previously been provided by Penske. Affinity told Ruiz and the other drivers that if they wished to work for Affinity, they would have to do so as independent contractors.
Ruiz filed a class action lawsuit against Affinity, alleging that Affinity misclassified its drivers as independent contractors, thereby depriving them of various benefits afforded employees (sick leave, vacation, holiday, and severance wages, charging workers’ compensation fees, etc.). The district court concluded that the drivers were properly classified as independent contractors under California law. The drivers appealed and the Ninth Circuit reversed.
The Ninth Circuit applied the Borello & Sons, Inc. v. Dep’t of Industrial Relations “control” test to analyze whether a worker is an employee or an independent contractor. The primary consideration is the degree to which the principal has the right to control the manner and means by which the work is accomplished. Several secondary factors, such as whether the type of work performed is typically done under the direction of a principal, are also relevant but not dispositive.
The Ninth Circuit held that under the “control” test, Affinity’s drivers were employees and not independent contractors. Affinity substantially controlled the manner and means of its drivers’ performance of their duties because Affinity determined and controlled the flat “per stop” rate paid to the drivers for their work and the drivers could not negotiate for higher rates, as independent contractors commonly do. Furthermore, Affinity decided the drivers’ schedules and set their daily routes each day, with specific instruction not to deviate from the order of deliveries list on the route manifests. Affinity also controlled the drivers’ appearance, required its drivers to comply with a detailed procedures manual, and closely monitored and supervised their work. The court held that the balance of the secondary factors also supported a finding that the drivers were employees, not independent contractors.
Litigation surrounding independent contractor/employee classification continues to increase in California. Ruiz v. Affinity Logistics serves as a reminder that improper classification carries substantial risk for employers. Employers who have independent contractor arrangements should carefully review these classifications to ensure workers are properly classified.