California Court of Appeal Affirms Expense Reimbursement Award to Misclassified Employees 

From the National Law Review, William E. Weiner and Adam Y. Siegel discuss a recent California court decision that said drivers were misclassified as independent contractors despite having an “Independent Contractor Agreement.”  They write:

In analyzing the classification dispute, the California Court of Appeals primarily focused on the drivers’ working conditions.  According to the drivers, they had set work schedules and deliveries, plus they were penalized if they declined a route for any reason.   Further, the Company provided the customers and determined the prices to be charged.  The drivers also testified that they were required to stay in constant contact with the Company regarding their status and whereabouts during their work-day.  On the other side, the Company claimed that the language and intent of the negotiated transportation agreements labeled the drivers as independent contractors who owned and operated their own “leased” trucks.  Nevertheless, the appellate court rejected this argument, relying on long-standing case law that holds mere language an independent contractor agreement is not dispositive.  Ultimately, the California Court of Appeals affirmed the judgment based on the conditions of the actual working relationship.

This case should remind businesses—especially trucking companies in California—that a failure to properly classify workers as employees can be a costly mistake.  In addition to the drivers in Garcia who were awarded expense reimbursements, misclassified employees may also be entitled to various damages and penalties under the California Labor Code, including but not limited to overtime premium, meal and rest period pay, tax liability, civil penalties, and attorneys’ fees and costs.

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