We have covered the issue of whether a worker should be classified as an employee or independent contractor, but the issue is an important one for businesses. When a worker is classified as an employee (as opposed to an independent contractor), an employer has additional financial obligations, including unemployment insurance or income tax withholdings. Failure to properly classify workers can result in significant legal and financial liability. A recent California court decision viewing home delivery carriers as employees is instructive for how a court will classify the relationship between an employer and a worker.
Home Delivery Carriers: Employees or Independent Contracts?
In Sawin v. McClatchy Company, et al., home delivery carriers of the Sacramento Bee newspaper filed a class-action lawsuit against the newspaper. The lawsuit claims, among other things, that home delivery carriers were entitled to reimbursement for reasonably incurred mileage expenses because they should have been classified as employees and not as an independent contractors.
Carriers would sign standard contracts that could be terminated at any time by either party. The carriers would pick up the newspapers at various warehouses where newspaper employees would identify by route how many papers to give to each carrier. The bundle of papers would include carrier mail to identify to the carrier any route changes, vacation stops, or any other information that might affect delivery service on a specific route. In addition, carriers would receive any complaints and would notify the newspaper company.
Court Holds That Carriers Were Employees
Following the trial on the issue of whether the home delivery carriers were employees or independent contractors, the Superior Court of California, County of Sacramento, issued a written opinion. The court held that the carriers were employees and were misclassified as independent contractors. In reaching its decision, the court applied California’s right-to-control test to determine whether the newspaper controlled the manner and the means of accomplishing the result desired. Under this test, a court may consider the skill required in the occupation, whether the one performing the service is engaged in a distinct occupation or business, whether the work is usually done under supervision, the length of time for the services being performed, and whether the work is a regular part of the business.
In holding that the carriers were employees, the court cited various factors. First, the carriers had to sign standard contracts and had little leverage to negotiate terms. Second, the method of payment was inconsistent with an independent contractor relationship. Third, the newspaper managed, trained, and supervised the carriers.
The newspaper tried to argue that the carriers were independent contractors because they had certain discretion as to the manner and means of work. Notably, the court mentioned that the right-to-control test does not require absolute control. Therefore, the fact that the employees had some discretion to choose what they wore, the order of delivery, and where they folded the papers had little effect.
Contact a California Business Attorney
If you have any questions regarding how to properly classify workers in your business, Janathan L. Allen, APC’s California business attorneys can help you understand how to classify workers to minimize your legal exposure. Contact Janathan L. Allen, APC today for a free consultation.