In Alexander v. FedEx Ground Package System, Inc., 2014 U.S. App. LEXIS 16585 (9th Cir. Aug. 27, 2014), the Ninth Circuit Court of Appeals held that former Federal Express drivers were employees rather than independent contractors pursuant to California’s right-to-control test. This important decision is likely to reach across all industries and will cause regulators and attorneys to closely examine independent contractor agreements to determine if the employer retains sufficient direction and control over the manner or means by which the work is to be performed. This case teaches that no matter how workers are labeled by the employer, the substance of the work relationship is what controls the classification status.
Articles Discussing Independent Contractors.
During Tuesday’s Senate Subcommittee hearing – Payroll Fraud: Targeting Bad Actors Hurting Workers and Businesses – Senator Robert P. Casey, Jr. (D-PA) announced that he, along with Senators Tom Harkin (IA) and Sherrod Brown (D-OH), had that day introduced the Payroll Fraud Protection Act of 2013 (S. 1687), a bill that would “hold employers accountable” for independent contractor misclassification. This hearing occurred just days after the Department of Labor (DOL) sent its proposed Worker Classification Survey to the Office of Management and Budget (OMB) for review and approval. The proposed survey will likely provide the groundwork for the future “right-to-know” rule that would amend an employer’s recordkeeping requirements under the Fair Labor Standards Act (FLSA) to provide employees with greater information about their employment status.
The district court’s opinion denying cross-motions for summary judgment in Bobbitt v. Broadband Interactive, Inc., No. 8:11-cv-2855 (M.D. Fla. Oct. 21, 2013) illustrates how not to structure an independent contractor relationship and how not to lay the groundwork to defend that relationship in the event of litigation. The case also serves as a warning that even well-conceived independent contractor relationships may be open to question by a court that is inclined to distrust them.
Executive Summary: A federal trial court in New Jersey has dismissed a lawsuit brought under the federal Fair Labor Standards Act (FLSA) by a group of drivers against a trucking company, holding that the drivers are not employees but independent contractors. Luxama v. Ironbound Express, Inc. et al., Civil Action No. 2:11-cv-02224 (D.N.J. June 28, 2012).