Costco Wins Independent Contractor Case: Is The Tide (Hopefully) Changing? 

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From JDSupra, Mark Tabakman discusses a recent case which turned, in part, on the court’s finding that the services provided by the worker were not part of Costco’s usual course of business because it was not integral to the business. Mark writes:

There are so many independent contractor cases that go against the employers that when one goes the other way, it is a big deal. That is what has just happened with a Costco contractor who alleged the Company misclassified her to avoid paying her overtime. The case is entitled Williams v. Costco and issued from the Ninth Circuit Court of Appeals. The appellate court affirmed a lower court decision, where the Judge found that the Company did not have sufficient control over her activities and her roadshow job was not integral to the Company’s business.

These workers are in-store demonstrators; they provide sample products to customers who could then purchase those products. The Ninth Circuit wrote that “she presented no evidence to dispute Costco’s factual assertions and no evidence to suggest that, notwithstanding the distinctions identified by Costco, roadshows are sufficiently similar to Costco’s other selling activities to fall within its usual course of business.”

The plaintiff argued that Costco controlled her work activity by mandating that roadshow booths were to be manned at all times, as well as giving guidelines for appropriate dress. The Company responded by asserting that it told its suppliers, not the roadshow workers, that the booths should be staffed at all times and that the demonstrators had to (naturally) be dressed appropriately. The Court agreed, also rejecting the contention that the plaintiff’s direct interactions with Costco staff without a supplier supervisor being present meant that Costco controlled her working conditions.

The Ninth Circuit also disagreed that the plaintiff’s work was integral to Costco’s main business. The lower court had concluded that the work of a demonstrator was not within the “usual course of business.” Further, as the Company did not control work hours or working conditions, the (very onerous for employers) ABC test did not apply. Lastly, the plaintiff’s claim that Costco jointly (with the supplier) employed her because she had a Costco badge and was admonished for leaving her merchandise display station also fell on deaf ears.

The Takeaway

I like this holding because the Court, quite importantly, made the finding that the work of this person was not integral to the business of Costco. Many independent contractor defenses founder on that issue, such as a trucking company hiring a truck driver and deeming him an independent contractor, because driving a truck is an integral part of the business if a trucking company, as oppose to someone fixing a hole in the roof. Also, the Court emphasized the lack of control, giving short shrift to the contention that wearing a badge of the entity shows control.

All in all, a good roadmap…

Source: Costco Wins Independent Contractor Case: Is The Tide (Hopefully) Changing? | Fox Rothschild LLP – JDSupra

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