Supreme Court Denies Review of Reyes v. Van Elk
Review Granted in Amalgamated Transit Union

Courts Find Couriers to be Employees, Not Independent Contractors

Last month, after requests by, among others CELA and the State Labor Commissioner, the Third District Court of Appeal ordered published a previously unpublished opinion upholding a trial court determination that a group of couriers were misclassified as independent contractors and should have been classified as employees. In Air Couriers International v. Employment Development Department (2007) 150 Cal.App.4th 923, the plaintiff company filed a complaint for a refund against the EDD to recover employment taxes it paid for the drivers, claiming that they were independent contractors.

Among the factors that the employer argued in favor of independent contractor status:

  • Drivers serviced numerous customers; fewer than one percent performed services for only one customer.
  • Drivers worked flexible schedules.
  • Individual drivers determined their own schedules and decided when and how long to work.
  • Some drivers, by choice, worked long hours.
  • Drivers took breaks, and they alone determined the frequency and duration of the breaks.
  • Many drivers worked other jobs while driving for the employer, which made no effort to prevent drivers from working other jobs, including delivering for other companies.
  • Drivers were not required to accept each and every job. To the contrary, drivers rejected jobs for a variety of reasons and were not required to provide reasons for doing so.
  • Drivers who rejected jobs did not suffer adverse consequences; they continued to receive assignments.
  • Drivers were paid by the job, with mileage factored into the job rate.
  • Drivers were paid biweekly based on handwritten and computer manifests.
  • Drivers got no sick leave, paid vacation, or medical insurance.
  • Many jobs were paid under a flat rate, based on the number of miles driven.
  • Drivers negotiated higher rates on some jobs for a variety of reasons, including “after hours” charges, premiums for long drives, amounts added for “deadhead miles,” and weekend charges.
  • There were no negative repercussions for negotiating rates.
  • Drivers with superior skills made more money.
  • Drivers got no formal training.
  • Drivers supplied their own vehicles, supplies, and equipment.
  • Drivers used their own cellular phones, and some provided their own business cards.
  • They did not require drivers to wear uniforms, and most did not, although some drivers wore uniforms to expedite access to buildings and airports.
  • Drivers were not required to wear identification badges, although some drivers used identification badges to gain access to airports and high security buildings.
  • Drivers got IRS 1099 forms, and reported the income earned from driving on their individual tax returns and deducted expenses incurred.

Nonetheless, the trial court found the drivers to be employees, and even though the EDD failed to comply with the requirement that it provide the Court of Appeal with an accurate summary of the evidence, complete with page citations, that supports the trial court’s judgment, the Court of Appeal found that the trial court’s judgment was supported by ample evidence.

The EDD presented testimony from several drivers and an auditor from Franchise Tax Board, that, among other things:

  • Many drivers never signed a Contract.
  • Most did not turn down jobs relayed to them by the dispatchers.
  • Drivers were terminated if they proved unreliable.
  • New drivers began by driving with more experienced drivers, and there was a training video provided.
  • Uniforms were available for drivers; were useful for identification and prevented drivers from working for other employers while uniformed.
  • Many drivers worked for lengthy tenures.
  • Some add the company to their automobile insurance or obtain workers’ compensation insurance.
  • Most did not obtain a business license or solicit other delivery customers.
  • The employer provided some drives with pagers.
  • Every job involved a deadline.
  • Drivers did not advertise.

The court determined that the drivers performed an integral and entirely essential aspect of the business. The employer provided forms to the drivers, encouraged them to wear uniforms, and provided identification badges and vehicle placards. The customers serviced by the drivers were not customers of the drivers. Therefore, the company retained all necessary control over the drivers, negating its claim that the drivers operated as independent contractors.

The determination was upheld. The “most important factor is the right to control the manner and means of accomplishing the result desired [but] other factors to be taken into consideration are (a) whether or not the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.”

Here, the company's failure to control the actual routes and speeds drivers chose when making deliveries denoted no lack of control. The simplicity of the work made detailed supervision, or control, unnecessary. Drivers testified they worked a regular schedule, consistent with employee status and reflect employer control. As a practical matter, drivers did not turn down jobs. They were not engaged in a separate profession or operating an independent business. The company required only a car and insurance; drivers made no major investments in equipment or materials. The drivers' contract did not control. Most did not recall signing a contract, and the terms of the contract were never enforced by the company. The drivers never had the contract explained to them and did not understand it. The trial court considered the Contracts and all other indicia relating to the employment relationship between the company and the drivers and found that the drivers were properly classified as employees.

You can download the full text of Air Couriers International here in pdf or word format. A request to depublish has been filed.

Comments

George Darden

The fact that the driver's did not obtain a business license may have stemmed from the fact that they go into so many cities and counties that it would be next to impossible to apply for so many business licenses. However, I have discovered a website where you can get every state, county, and local business license online. It is www.businesslicenses.com.

The Court of Appeal most certainly did receive a brief from EDD
with a full explanation of the evidnec supporting the judgment,
all with appropriate page citations (as in 19 of the 44 pages)
of the brief I filed. I also tired and argued the case for
EDD. The court's comments about the biref came out of nowhere
and were totally unfounded.

Steven J. Green
Deputy Attorney General

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