Branigan Robertson

The career landscape continues to evolve. As workers increasingly take freelance jobs and other gigs, questions swirl about the future of worker rights. In many cases, companies have found that it’s easier to classify hard workers as independent contractors, rather than employees, in order to increase their bottom line. In many cases, the independent contractor will work as hard, if not harder, than an employee.

Worker classification affects how a company pays a person overtime and offers rest breaks.  When one thinks of independent contract work, often the first companies to come to mind include ride sharing giants Uber and Lyft. However, other companies using contract workers include restaurant delivery services, and other app-based services.

A recent CA State Supreme Court case considered the issue of independent contractors and employee misclassification and issued a ruling that came down in favor of workers.  Continue reading to learn a little more about this case, the issues explored by the State Supreme Court, and how this ruling might affect workers in the gig economy. If you feel your employer has improperly classified you as a contract worker, or hasn’t paid you proper wages, contact our office to learn how we can help.

Charles Lee Vs. Dynamex

The court case in questioninvolves a nationwide package delivery company called Dynamex, which operates multiple business centers in California. The company classifies its drivers as independent contractors rather than employees. This means that while the drivers are free to set their own schedules, they also pay for their own delivery vehicles, gas, and insurance. They also aren’t subject to state and federal laws regarding overtime and rest breaks.

Dynamex negotiates the rate paid to these drivers on an individual basis. Some workers receive a flat amount per delivery, some receive a percentage of the delivery fee. Prior to 2004, Dynamex classified its drivers as employees, but decided that there was significant savings to be had in classifying drivers as independent contractors.

In 2005, a driver named Charles Lee filed suit against Dynamex arguing that the independent contractors were essentially doing the same work as they did when classified as employees.

In his lawsuit, Lee argued that Dynamex violated the labor code, misclassified employees, and failed to pay overtime.

The case began in Los Angeles Superior Court, which considered many of the subtle nuances of state law. Other drivers joined the suit, and the trial court ultimately certified a class action suit against Dynamex. The company appealed the case to the State Supreme Court hoping to reverse the lower court’s decision to certify the class action against the company. Unfortunately for Dynamex, the court sided with the drivers allowing them to proceed with their class action.

The California Supreme Court’s Ruling

In its 85-page decision, the State Supreme Court considered a number of historic employment cases examining the employee/employer relationship. At the core of the Supreme Court’s analysis were questions about how much control a company exercises over workers, as well as the definition of the words “employ” and “employer.”

In terms of company control, the court looked at a landmark case from 1989, in which an agricultural company called Borello classified its cucumber harvesters as independent “sharefarmers.” The sharefarmers would work long hours to share in some of the profits (as well as potential losses) during the harvest season. The workers felt they were improperly classified given the amount of work they did for the company.  In that case, the court ruled that the company exercised a significant amount of control over the cucumber harvesters, and as such, improperly classified them as independent.

Continuing with its analysis, the Supreme Court examined the definitions of the terms ‘employ’ and ‘employer,’ which are found in the state’s work orders. The court accepted a definition of the term employ as meaning “suffer to work.” This phrase means that when a company permits a person to work, the worker is on the clock whether the workflow is heavy or light. This means that even if an employee is sitting at his or her desk waiting for an assignment, he or she is considered to be working.

The Supreme Court accepted a definition of the term ‘employer’ as someone who “employs or exercises control over the wages, hours, or working conditions of any person.”

Dynamex had hoped that the Supreme Court wouldn’t adopt the definitions of these terms, which had been accepted by a lower court. But the Supreme Court did accept these terms, and as a result, ruled in favor of the drivers. The court ruled that under these definitions, the drivers have a common interest in proceeding with their class action suit against Dynamex.

“We conclude that under a proper understanding of the suffer or permit to work standard there is, as a matter of law, a sufficient commonality of interest within the certified class to permit the question whether such drivers are employees or independent contractors for purposes of the wage order to be litigated on a class basis.

What this Means For Workers

In the simplest of terms, California’s recent Supreme Court ruling against Dynamex means that workers in that case can proceed with their class action suit. However, there are some in the legal profession that feel the ruling could have more immediate effects for California companies. A recent Los Angeles Timesarticle suggested that California employers could start questioning their employee classifications right away, even changing some classifications to avoid stiff fines. The Timesposed the question to Michael Chasalow, a professor at USC Gould School of Law.

“A huge number of businesses will be calling their lawyer saying ‘What should I do,’” Chasalow told the Times.

Are You a Worker Who’s Been Misclassified?

It’s important to note that the California Supreme Court did refer to some professions as properly classified independent contractors. The court specifically mentioned such workers as plumbing contractors and electricians. However, there are many workers out there who feel they aren’t getting the compensation they deserve because of their independent contractor status. Ride sharing companies are one area where this discussion has been heavily focused. Other app-based services might also raise some serious questions about worker classification.

If you believe you’ve been misclassified as an independent contractor, contact our office for a consultation. Many cases are taken on a contingency basis, which means the client doesn’t pay any up-front costs.

If you have questions about anything discussed on this page, or some other employment law issue, give us a call to learn how we can help you.

In May 2018, the United States Supreme Court ruled on a case involving arbitration clauses that heavily favors employers. The 5-4 decision delivered yet another blow to the rights of workers who are increasingly pinched between stale wages and ever-increasing living expenses.

While the case was damaging to worker’s rights, it doesn’t mean there isn’t hope if you’ve been mistreated by an employer wielding an arbitration contract. The Supreme Court might be unwilling to protect your rights as a worker, but a good employment attorney can still determine if you have a case, and fight on your behalf.

Continue reading to learn a little about the Supreme Court’s ruling on the Federal Arbitration Act, and what it means for workers forced to sign these agreements. If you feel you’ve been the victim of an employer’s unlawful behavior, contact our office to find out how we can help.

Epic Systems Corp. v. Lewis

The US Supreme Court considered this case, in which several workers argued their employers had underpaid them. As a condition of their employment, the workers had signed arbitration agreements, which allow companies to settle employee grievances in a private setting as opposed to a court of law.

The employees maintainedthat their right to file a class action suit was protected by the National Labor Relations Act (NLRA). They specifically cited a section of the Act, which guarantees employees:

“The right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection…”

The phrase “other concerted activities” is the passage that divided the court in this case.

Trump appointee Justice Neal Gorsuch, who wrote the decision for the majority, took a very narrow view of the text of the law and argued that the wording of the Act, which does protect union activity, does not specifically give workers the right to file class action lawsuits. Gorsuch also repeatedly referred to the Federal Arbitration Act (FAA), which was passed 10 years before the NLRA, and allows companies to divert court claims to an arbitration setting.

Justice Ruth Bader Ginsburg, who wrote the dissenting argument (and actually read it from the bench), suggested that the FAA is unlawful, and reminiscent of “yellow dog contracts” in which employers were once allowed to compel employees to sign agreements promising they wouldn’t join a union. She further argued that the FAA was not designed to settle disagreements between workers and companies, but rather was made to settle disputes between companies. Ginsburg eloquently argued that the NLRA was designed to protect workers who have little bargaining power when dealing with employers. She added that this protection extends to employees who wish to band together and collectively sue an employer (strength in numbers).

Alas, the court handed down its decision, which means that for now, employees who sign arbitration clauses as a condition of their employment, have little option but to abide by terms of the agreement.

What Exactly is an Arbitration Clause?

Oftentimes, when an employee is hired at a new job, he or she is handed a packet of documents, many of which require signatures. These packets frequently include a document in which the employee agrees to have any potential claim against the company heard in an arbitration proceeding.

Such a proceeding is heard by a “neutral” third party, known as an arbitrator. These folks are often retired judges and attorneys, who are paid by the company to render a decision on the claim. Unlike a court proceeding, there is no jury, and the hearing is not public. Employees may be able to request fewer evidentiary documents when making their case against the employer than they would in a court setting

Arbitration does provide certain benefits in that the costs of the proceeding are covered by the employer, and the case is often decided in a much speedier fashion than would happen in a court setting. However, there is generally no appeal process, and the final decision is legally binding.

Arbitration is on the Rise

In 2015, the New York Timeswrote an article on the recent increase in arbitration cases nationwide, which stem from a series of Supreme Court decisions. While the article focused on arbitration clauses in cell phone and other product-related contracts, it noted that employee arbitration is also on the rise. In many cases, these contracts effectively ban class action law suits against already wealthy and powerful companies.

“Some state judges have called the class-action bans a ‘get out of jail free’ card,” the Timeswrote. “Because it is nearly impossible for one individual to take on a corporation with vast resources.

Can You Refuse to Sign an Arbitration Agreement?

Of course. However, in an at-will state like California, an employer can fire you or rescind the job offer if you refuse to sign. When deciding whether to refuse to sign an arbitration agreement, you must carefully consider your value to the company. Is the employer likely to cut ties with you and find another employee who will sign without question? Or are you irreplaceable?

Are Arbitration Agreements Bullet Proof?

Not always. It’s important to remember that every case is different. If you suspect that the agreement you signed wasn’t on the level, it might be worth your time to have the document reviewed by a qualified employment attorney. There are certain factors that can render an arbitration contract void. Was the contract signed under duress? Was it signed fraudulently? Were the agreement terms unconscionable? These things could affect the validity of an arbitration agreement.

Have Questions? Contact an Employment Lawyer

If you have questions about arbitration agreements or other employment issues, contact our office for more information. If our attorneys determine you have a case, and are able to proceed with a lawsuit, you might be able to pay our attorneys on a contingency basis. This means you don’t pay out-of-pocket legal fees.

If you successfully win a claim against an employer, you could be eligible for lost wages, pain and suffering, and back pay. Give our office a call to find out how we can help.