Legal Briefing: Contractors and Control

When Fernando Ruiz was hired by Affinity Logistics Corp. as a driver, he signed an “Independent Truckman’s Agreement” and “Equipment Lease Agreement” stating that he was an independent contractor and not an employee. Ruiz and other drivers filed a class-action lawsuit against Affinity alleging they were employees and that Affinity violated the Fair Labor Standards Act and California’s wage laws. The U.S. District Court for the Southern District of California found that the FLSA and state wage laws did not apply to them as independent contractors and dismissed the claims.

On appeal, the U.S. Court of Appeals for the 9th Circuit reversed and held that “overwhelming evidence” demonstrated that Affinity “had the right to control the details of the drivers’ work [and] retained all necessary control over the drivers’ work.” Under California law, “the right to control work details is the most important or most significant consideration.” Affinity controlled drivers’ work, including pay rates, schedules, routes and use of specified equipment including the trucks, tools and mobile phones. Moreover, “Affinity’s drivers perform those very home delivery services that are the core of Affinity’s regular business.” Ruiz v. Affinity Logistics Corp., No. 12-56589 9th Cir. (June 16, 2014).

IMPACT: Employers cannot avoid an employer-employee relationship with an individual simply by calling the individual an independent contractor. The right to control work details is controlling.