Sometimes a title tells you all you need to know. If you listen to the 1969 Pink Floyd track, “Several Species of Small Furry Animals Gathered Together in a Cave and Grooving with a Pict,” you pretty much know what you are going to get. Sure enough, the track consists of four-plus minutes of noises resembling rodents and birds, with echoes (they’re in a cave, remember?) and other effects.
Sometimes a title tells you nothing. If you look up the lyrics to “Careful with that Axe, Eugene,” which appears on the same album,  you’ll get nothing. No matter how much you want to know who Eugene is and why he should be wary of that axe, no words can be found. It’s an instrumental.
The Ninth Circuit’s view of independent contractor relationships is all axe and no furry animals. Ignore the titles and be careful. You might get hurt.
In Ruiz v. Affinity Logistics Corp., Case No. 12-56589 (9th Cir. June 16, 2014), the plaintiffs performed delivery services in California for the defendant under contracts that provided both that the relationship was governed by Georgia law and that the drivers were independent contractors. They asserted in a putative class action that they should have been paid sick leave, as well as other employment benefits under California law, but had been misclassified. The district court originally applied Georgia law and, following a bench trial, entered judgment for the defendant on the grounds that the plaintiffs were indeed independent contractors. The plaintiffs appealed.
In the first appeal, in 2012, the Court of Appeals disregarded the parties’ contract provision that said Georgia law would apply to any disputes and applied California law instead, finding that Georgia law was too favorable to the company’s position. It then remanded the case for application of California law. Ruiz v. Affinity Logistics Corp., 667 F.3d 1318 (9th Cir. 2012).
On remand, and largely on the same record, the district court again entered judgment for the employer, but this time under California law. The plaintiffs again appealed.
In a decision issued June 16, 2014, the Ninth Circuit ruled that despite the contract terms to the contrary, delivery drivers for Affinity Logistics were employees under California law, not independent contractors. The Court of Appeals disregarded the fact that the drivers all had independent contractor agreements, formed their own corporate entities, paid for their own trucks, and could hire their own helpers.
Instead, based on the same record reviewed by the district court, it held that Affinity controlled enough aspects of the drivers’ workday and work methods that they were employees under California law, regardless of the titles the parties used to describe the relationship. The Court of Appeals cited a long list of reasons, including the company’s tight control over routes and schedules, a detailed procedures manual that demanded “100 percent adherence,” employment-like policies relating to vacation time, use of the drivers’ leased trucks leased by other drivers without compensation, mandatory daily meetings, company uniforms, daily inspections, and real-time monitoring of routes.
The case provides a reminder both that mere language reciting that the relationship is one of an independent contractor may not be enough if other factors reflect an employment relationship and that courts will not hesitate, under the right facts, to axe an independent contractor relationship and find that workers should have deemed employees. The business model of classifying delivery drivers as independent contractors has been under particularly harsh scrutiny lately, with various class actions being filed and settlements making news. A New York statute also took effect this spring that makes it harder to classify commercial drivers as independent contractors.
On the flip side, the Ninth Circuit has recognized that insurance agents are independent contractors. Barnhart v. New York Life Ins. Co., 141 F.3d 1310 (9th Cir. 1998).
More information about the Ninth Circuit’s Ruiz decision can be found here on our sister blog, Employment Law Spotlight.
And by the way, a Pict is a Scotsman. Unless you are in California. There, it’s just another word for employee.
The Bottom Line: Some courts, and the Ninth Circuit in particular, will look well past the terms of a contract to determine whether an independent contractor relationship truly exists.