Home -> Law Blog Directory -> Labor & Employment Law Blogs -> New York Public Personnel Law

Labor & Employment Law

: New York Public Personnel Law

Misclassification of Independent Contractors and Employees Can Be Expensive

By Harvey Randall, Esq.

Misclassification of Independent Contractors and Employees Can Be Expensive
Source: Adjunct Law Prof Blog; http://lawprofessors.typepad.com/adjunctprofs/
Reproduced with permission. Copyright © 2008, Mitchell H. Rubinstein, Esq., Adjunct Professor of Law, St. Johns Law School and New York Law School, All rights reserved.

Misclassification of Independent Contractors and Employees Can Be Expensive is an interesting December 14, 2007 law.com article by Carla J. Rozycki and Darren M. Mungerson about the murky line between employee and independent contractor. The article reports on recent litigation involving FedEx drivers and provides:

Recently, on Nov. 29, 2007, in related class action litigation, the California Supreme Court rejected FedEx's appeal of a California appeals court's affirmance of a trial court's finding that single-route drivers were employees rather than independent contractors for the purpose of their entitlement to reimbursement for work-related expenses under California Labor Code §2802(a). Estrada v. FedEx Ground Package Sys., Inc., 64 Cal. Rptr.3d 327, 330 (Cal. Ct. App. 2nd Dist. 2007), aff'd 2007 Lexis 13422 (Cal. Sup. Ct. Nov. 28, 2007); see also §2802(a) (providing that "[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.").

Notwithstanding that FedEx drivers executed a non-negotiable Pick-up and Delivery Contractor Operating Agreement, which identified the driver as an "independent contractor" and not as an "employee" for any purpose, the trial court found that the drivers were employees and therefore had the right to be reimbursed for their expenses.

Because the California Labor Code does not expressly define "employee" for purposes of §2802, the appellate court applied the common law test to determine how to classify the FedEx drivers.

Emphasizing that the essence of the test is the amount of control that the employer has over the worker, the court instructed that employers should consider:

Whether the worker engages in specialized work;

Whether the work is usually done with supervision;
The skill required;

Who supplies the equipment, tools and place of work;

The length of time for which the services are to be performed;

The method of payment, whether by hours worked or by job;

Whether the work is integrated into the employer's business;

Whether the parties believed that they were creating an employer-employee relationship; and

Whether the parties' actual conduct, regardless of the label given in the contractual agreement, reflected an employer-employee relationship.

Applying these factors, the appellate court concluded that there was substantial evidence to support the trial court's finding that the FedEx drivers were employees for purposes of §2802.

The court stressed that FedEx had control over "every exquisite detail" of the driver's performance . . .

By Mitchell H. Rubinstein

Full post as published by New York Public Personnel Law on January 14, 2008 (boomark / email).