Presented by Cameron Roberts Roberts & Kehagiaras LLP November 19, 2014

Transcription

1 Presented by Cameron Roberts Roberts & Kehagiaras LLP November 19, 2014

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6 IRS: The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. &-Self-Employed/Independent-Contractor-Defined &-Self-Employed/Independent-Contractor-Self- Employed-or-Employee

7 IRS Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. &-Self-Employed/Employee-Common-Law- Employee

8 EDD: A service-provider is defined as an independent contractor; an independent contractor is any individual who is not an employee of the servicerecipient for California purposes and who receives compensation or executes a contract for services performed in or outside California. _California_Independent_Contractor_Reporting.htm #Whoisaserviceprovider

9 EDD The basic test for determining whether a worker is an independent contractor or an employee is whether the principal has the right to direct and control the manner and means by which the work is performed. When the principal has the "right of control," the worker will be an employee even if the principal never actually exercises the control.

10 A person who provides services to another is presumed to be an employee.

11 California Labor Code Section imposes penalties on employers who willfully misclassify their employees as independent contractors. Willful misclassification is defined as voluntarily and knowingly misclassifying that individual as an independent contractor. The penalties for violating Section include fines between $5,000 and $15,000 per violation of the law. If the employer is engaged in a pattern or practice of violating this law, the fines are increased to between $10,000 and $25,000 per violation. bin/displaycode?section=lab&group= &file=

12 According to the Los Angeles Times July 8 th article, the labor commissioner has ruled in recent months that as many as 40 drivers were improperly classified as independent contractors; $4.3 million in back pay and penalties has been awarded to these drivers. More than 500 complaints were filed in 2012 and 2013, against 17 trucking companies story.html#page=1

13 Dilts v. Penske Logistics, LLC, 769 F.3d 637 (9th Cir. Cal. 2014): The panel held that California's meal and rest break laws as applied to the motor carrier defendants were not "related to" defendants' prices, routes, or services, and therefore they were not preempted by the Federal Aviation Administration Authorization Act of 1994.

14 People ex rel. Harris v. Pac Anchor Transportation, Inc., 59 Cal. 4th 772 (Cal. 2014): In a case in which the People alleged that defendants misclassified their truck drivers as independent contractors, the Federal Aviation Administration Authorization Act of 1994 ( FAAAA ) did not facially preempt the People's unfair competition law ( UCL ) action against defendants; The People's UCL claim was not preempted as applied under the FAAAA.

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16 Slayman v. FedEx Ground Package Sys., 765 F.3d 1033 (9th Cir. Or. 2014): Plaintiffs' claims under Or. Rev. Stat were governed by Oregon's right-to-control test; Plaintiffs were employees under both the right-to-control and economic-realities tests where defendant had the right to control its drivers as the Operating Agreement and defendant's policies and procedures unambiguously allowed defendant to exercise a great deal of control over the manner in which its drivers did their jobs.

17 Alexander v. FedEx Ground Package Sys., 765 F.3d 981 (9th Cir. Cal. 2014): The extrinsic evidence supported a conclusion that defendant the right to control its drivers and controlled the appearance of its drivers and their vehicles where defendant controlled its drivers' clothing from their hats down to their shoes and socks and defendant assigned each driver a specified service area and told drivers where in their service area to deliver packages.

18 Ruiz v. Affinity Logistics Corp., 754 F.3d 1093 (9th Cir. Cal. 2014): Sears terminated it contract with Penske. Penske s drivers were Penske employees. Sears awarded the contract to Affinity. Affinity recruited the former Penske employees to become independent contractors, not employees. Drivers had to have a DL and sign the ITA & ELA, and pass a drug test and physical exam.

19 Hanson, an Affinity employee, told drivers, including Ruiz, that they needed: a fictitious business name, a business license, and a commercial checking account; With Affinity s help, Ruiz did business as R&S Logistics (R&S), and Ruiz also obtained a Federal Employer Identification Number, and A separate business banking account for R&S.

20 The parties intend to create an independent contractor relationship and not an employeremployee relationship. Outlined procedures drivers were required to follow regarding the following: Loading trucks, delivering goods, installing goods, interacting w/customers, reporting to Affinity after deliveries, addressing returns & refused merchandise, also damaged goods; The procedures manual included mandatory language such as must, will report, must contact, required, not acceptable, 100% adherence, & exactly as specified.

21 Drivers had to request time off three to four weeks in advance, & Affinity had discretion to deny those requests; request for time off were denied when it was decided that the delivery schedule was to busy; Affinity encouraged, if not required, drivers to lease trucks from Affinity, and $ automatically deducted from drivers pay check to pay for leased trucks.

22 Affinity required drivers & helpers to attend a minute stand-up meeting at 7:15 a.m. Drivers required to wear uniforms & abide by certain grooming requirements, as set forth in the Delivery Team Apparel and Appearance section of the Procedures Manual; drivers made deliveries according to the route manifests provided to them daily, and Drivers required to call automated Sears customer service # after each delivery.

23 Whereby an Affinity supervisor followed a driver for a few stops to ensure that the driver was wearing the uniform and using proper delivery techniques; Affinity admitted that it strongly discouraged drivers from taking the trucks home or otherwise removing trucks from the warehouse lot overnight or on weekends.

24 1) Who has the right to control the worker s manner and means of performing his or her duties an independent contractor has more control over the day-to-day details of his or her job than an employee; 2) The skill required in the worker s job independent contractors often perform highly skilled jobs; 3) Whether the worker is engaged in a distinct business or occupation if the worker is engaged in a distinct business or occupation, it is more likely the worker is an independent contractor;

25 4) Whether the work is done under supervision the more an employer is directly supervising the worker, the more likely he or she is an employee; 5) Whether the worker can be discharged at will or for cause allowing discharge at will often weighs in favor of an employer-employee relationship; 6) Who supplies the tools, instrumentalities and place of work if the worker supplies these, he or she is more likely an independent contractor; 7) The length of time the services are to be performed discrete jobs are generally performed by independent contractors;

26 8) The method of payment, whether by time or by the job payment by time generally signals an employee relationship; 9) Whether the work is part of the regular business of the principal if it is, the worker is more likely an employee, and 10)Whether the parties subjectively believe they are creating an employer-employee relationship. See S. G. Borello & Sons, Inc. v. Dep t of Indus. Relations, 48 Cal.3d 341, (1989); 38 Cal. Jur. 3d Independent Contractors 3.

27 The Ninth Circuit, based on Borello, determined that Ruiz and his fellow class members were employees and NOT independent contractors.

28 Godfrey v. Oakland Port Services Corp., 230 Cal. App. 4th 1267 (Cal. App. 1st Dist. 2014). In a meal and rest break case, a class of truck drivers was awarded $964,557, and, in a postjudgment order, the trial court awarded attorney fees, litigation expenses, and class representative enhancements.

29 Godfrey v. Oakland Port Services Corp., 230 Cal. App. 4th 1267 (Cal. App. 1st Dist. 2014). cont. The Federal Aviation Administration Authorization Act of 1994 does not preempt application of California's meal and rest break requirements to motor carriers because the meal and rest break laws plainly are not the sorts of laws related to prices, routes, or services that Congress intended to preempt. (Relying on Dilts and Pac Anchor, distinguishing ATA v. Port of Los Angeles and rejecting Mass Delivery v. Coakley.)

30 The National Labor Relations Board Office of the General Counsel has investigated charges alleging McDonald s franchisees. The Office of the General Counsel has authorized complaints on alleged violations of the National Labor Relations Act. If the parties cannot reach settlement in these cases, complaints will issue and McDonald s, USA, LLC will be named as a joint employer respondent.

31 Patterson v. Domino's Pizza, LLC, 60 Cal. 4th 474 (Cal. 2014) Domino's Pizza - not liable for the sexual harassment of a franchisee s employee. A uniform marketing and operation plan does not create an agency or employment relationship. A franchise contract that made the franchisee solely responsible for "recruiting [and] hiring" local store employees. Use of a Domino's employee handbook and orientation did not change the employment status.

32 Look for drivers who own their own tractor; The right to control = Avoid anything that makes the worker is economically dependent upon the alleged employer; Encourage anything that establishes that the worker is in business for himself, and Establishing a FMCSA broker model for drayage: Meeting the requirements of the UIIA, and Meeting the requirements of the Port Concessions.

33 Mass. Delivery Ass'n v. Coakley, 769 F.3d 11 (1st Cir. Mass. 2014) holds that Mass. s three-point test to differentiate employees from independent contractors is preempted P-01A.pdf Mass. Law Prong b (2) the service is performed outside the usual course of the business of the employer; and, = FAIL!

34 Changes to recruiting, interviewing, and hiring; the need for human resources management; and the increased compensation, fringe benefits, and taxes; That routes would change since couriers treated as employees would have to drive to and from Xpressman's facility, would have less flexibility to accept short routes, and could not drive the long routes without a mandatory break. No longer provide on-demand services with employees. Double Xpressman's labor costs... annually.

35 Domino s was not held to be a joint employer; No control the franchisee s day-today operations; Franchising law can be complex, but there are large vested interests and strategic alliances, and consultation with tax and business professionals is required.

36 Drayage quotes based on an hourly rate? Hourly, plus a productivity incentive? Hours of service, overtime and minimum wage considerations.

37 A "right-to-work" laws prohibits certain agreements between labor unions and employers requiring an employees' membership, payment of union dues, or fees as a condition of employment, either before or after hiring. Taft Hartley Act outlawed the closed shop, which required all new employees to join the union after a minimum period after their hire, Closed shops are illegal in right-to-work states. Nevada, Arizona, and Texas are right to work states: and

38 Cameron Roberts Roberts & Kehagiaras LLP ex