Employee versus independent contractor

California court rules on employee versus independent contractor determination.

The Second District Court of Appeal recently decided whether a trial court properly determined that four truckers were employees and not independent contractors. On July 30, 2015, the court published its opinion in Garcia v. Seacon Logix, Inc. (Cal. App. 2d Dist. July 16, 2015) 2015 Cal. App. LEXIS 660, in which the truckers sued Seacon Logix, Inc. for reimbursement of paycheck deductions. The law the truckers sued under (Labor Code section 2802) allows individuals to recover work-related expenses they pay for, but only if they are employees. Consequently, the trial court had to determine whether the truckers were employees.

In Garcia, the truckers worked for Seacon delivering cargo. Seacon owned the trucks, required the truckers to enter into lease agreements for use of the trucks, and deducted lease and insurance payments from the truckers’ paychecks. The truckers also paid for fuel and repair expenses.

To determine whether the truckers were employees or independent contractors, the trial court considered multiple factors. The most important one is whether the employer has the right to control the manner and means of how the work is carried out. If so, this supports a finding of an employment relationship.

The appellate court found no fault with the trial court’s finding that Seacon controlled how the truckers got their work done. Seacon set the truckers’ hours and monitored their absences. Seacon also provided the customers and set prices. The truckers did not have choice of assignments and could only use the trucks for Seacon jobs. The truckers had to enter into agreements to lease the trucks and drive for Seacon; otherwise, they would lose their trucks. Although the agreements contained language that the truckers were independent contractors and were free to decide how to carry out assignments, these “labels” did not overcome the evidence that in practice Seacon controlled the manner and means of work.

The court of appeal also reviewed the trial court’s findings concerning the “secondary” factors. Seacon’s practice, contrary to a term in an agreement, was to terminate truckers without notice. There was no difference between Seacon’s business and the truckers’ work: delivery of cargo in both cases. Accordingly, the truckers’ work was part of Seacon’s regular business. The truckers did their work under Seacon’s direction and supervision. Seacon provided the trucks that were used to get the work done because it owned them and did not allow the truckers to use the trucks for non-Seacon business. The appellate court agreed with the trial court’s findings that each of these factors supported a finding of an employment relationship.

Two factors were neutral. One was the skill required for the work. While the truckers were required to carry a certain driver’s license, the work required little other skill. The second was the parties’ belief. The truckers believed they were employees while Seacon believed they were independent contractors. There was also one factor that supported a finding of an independent contractor relationship: Seacon paid the truckers on a weekly basis as opposed to by the job. Nevertheless, considering all of the factors as a whole, including the primary “control” factor, the appellate court agreed with the trial court’s determination that the truckers were employees.

Posted by deanroyerlaw