Contractor or employee status — why is it a big deal?

Ron Carter worked for XPO Last Mile, Inc. (“XPO”) as a delivery driver. XPO provides delivery services to retail merchants like Home Depot, Lowe’s, and Macy’s. These companies contract with XPO to provide delivery and basic installation of newly purchased appliances, and removal of old appliances from their customers’ homes.

Carter and drivers like him sued XPO in a class action claiming that misclassified them as independent contractors. The workers argued that they are employees because the company essentially controlled their work, as follows:

• Delivery drivers had no ability to negotiate rates of pay;
• Drivers are assigned by XPO to one or more retailer stores and cannot refuse deliveries;
• Drivers must notify XPO upon completion of delivery through a scanner or smartphone app provided by XPO;
• Drivers must wear XPO shirts, dark pants, black shoes, and a company issued badge;
• Drivers must use trucks that meet certain requirements for age, appearance, and have an XPO logo when making deliveries;
• Drivers are required to attend meetings to discuss the customer satisfaction;
• Delivery drivers routinely work more than 40 hours a week for XPO, and do not perform deliveries for other companies

In their complaint, the drivers sought to recover payment of minimum and overtime wages, reimbursement for business expenses, payment for missed meal and rest periods, and waiting time and other civil penalties. The court later granted the drivers request to proceed with trial as a class. Before the case could go trial, the parties reached a settlement of the case. XPO agreed $16.5 Million to the drivers.

Last week, we wrote about Assembly Bill 5, a bill created to deter businesses from engaging in misclassification of independent contractors. After being approved by lawmakers, the bill was recently signed into law by Governor Gavin Newson. The new law states that a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that:

1) the person is free from the control and direction of the hiring entity in connection with the performance of the work;

2) the person performs work that is outside the usual course of the hiring entity’s business; and

3) the person is customarily engaged in an independently established trade, occupation or business.

The legal trend that guards the status of workers as employees reflects the public policy of protecting the basis rights of working men and women. Those basic rights are what workers lose when they are misclassified as independent contractors. They include the following: the right to overtime pay, meal and rest breaks, reimbursement of business expenses, and the right to be provided with Worker’s Compensation coverage.

The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. [C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a Presidential Awardee for Outstanding Filipino Overseas in 2018.]