Posted 12-09-2014

A trial court recently ruled that a newspaper misclassified its newspaper carriers as independent contractors following a trial for their unpaid mileage expenses as employees under Section 2802 of the California Labor Code. Sawin v. The McClatchy Co., (Cal. Super. Ct. Sept. 22, 2014).

Under California law, whether a worker is an employee or independent contractor depends upon who retains “the right to control” the manner and means of the performance of duties. In this case, each of the plaintiffs worked for the Sacramento Bee as a newspaper carrier. Each of them signed one-year agreements with the Bee that they were independent contractors. The carriers could pick up the papers at any time at the Bee’s warehouses, set their own schedules, hire their own helpers and substitutes, purchase their own supplies, and wear their own clothes. They provided their own vehicles and insurance.

However, the Bee owned the delivery routes and customer lists, trained the carriers in the performance of their duties, set completion times, reviewed complaints, assessed penalties and audited performance. Most carriers worked for many years for the Bee, and did not work for any other employers. No specialized education, tools, or equipment were required to perform their duties.

Initially, the main issue in the case was whether the case could proceed as a class action, given that so many issues were individual to the plaintiffs. In 2011, however, the Bee’s motion to deny class certification was denied, and the case was allowed to proceed to trial which proceeded this year.

In determining an independent contractor question, the California Supreme Court in another casesaid that the courts should consider: whether the work is part of the hiring entity’s regular business; the degree of skill required for the work; whether the worker provides his or her own tools and equipment; whether the worker maintains his or her own business; the length of time of the job; the method of payment; and whether the parties believed that they were creating an employment relationship.

After considering all the evidence, the trial court held that the carriers were in fact employees, because delivery was integral to the business, the Bee trained the carriers, set their duties and audited their performance, none of them worked for anyone else, were highly skilled and did not supply special equipment or services. It found they were entitled to mileage expenses, and their attorney fees and costs.

What this means to you:

Misclassification of workers as independent contractors is a costly mistake.  Along with reimbursement of employee expenses and attorney fees, employers will be liable for overtime, taxes, penalties, Social Security, Medicare, workers compensation and unemployment premiums, and any other employee benefits other employees have. Managers are at the front lines of recognizing these potential issues and must audit independent contractor relationships often to ensure the classification can be defended.

Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.