Ayala v. Antelope Valley: When are “Independent Contractors” really Employees?

On June 30, 2014, in Ayala v. Antelope Valley Newspapers, Inc., the California Supreme Court clarified the appropriate test to use when determining whether “independent contractors” are actually employees for the purposes of California’s wage and hour laws.  The Court also provided a clear road map that lays out how courts should analyze class actions that raise this issue.  These clarifications are welcome, and should help more plaintiffs achieve class certification in similar cases in the future.

The plaintiffs in Ayala deliver daily newspapers to people who subscribe to the Antelope Valley Press.  Antelope Valley Newspapers, Inc. (Antelope) classifies these delivery men and women (called carriers) as independent contractors, not employees.  As a result, they are deprived of the wage and hour protections to which they would otherwise be entitled.

The plaintiffs brought a class action in order to assert their rights.  The trial court denied class certification because it found that resolving the issue of whether the carriers were independent contractors would require many individualized inquiries into Antelope’s control over the carriers’ work.  The court of appeal agreed for the most part, finding that the plaintiffs had not shown how their claims could be managed on a class-wide basis.

The California Supreme Court reversed. Justice Kathryn Werdegar, writing for majority, noted first that when considering a motion for class certification, the role of the trial court is not to resolve legal issues.  Rather, it is to focus on whether the operative legal principles, as applied to the facts of the case, rendered the claims susceptible to resolution on a common basis.  Put another way, the focus should be on what kind of questions are likely to arise in the case-common to the proposed class or individual?-and not on the merits of plaintiffs’ case.  This emphasis is important, because employers are increasingly pushing to collapse the merits inquiry into the class certification inquiry, thereby disrupting the class certification process.

When deciding whether workers are independent contractors or employees, the principal test is whether the company has the right to control the manner and means of accomplishing the result sought.  The most important evidence of this right to control is whether the company can discharge the worker without cause.  This power provides the company with the means to control the worker’s activities.

The Court noted that it does not matter how much control a company actually exercises:  The critical question is whether the company has the right to exercise that control.  The Court described the proper question in the case before it as follows:

Is Antelope Valley’s right of control over its carriers, whether great or small, sufficiently uniform to permit classwide assessment?  That is, is there a common way to show Antelope Valley possessed essentially the same legal right of control with respect to each of its carriers?

The Court found that the fact that Antelope Valley used a form contract was particularly relevant to this inquiry.  The Court found further that variations in the extent to which an employer exercises its control over workers does not necessarily indicate variations in the right of control that the employer has.

The Court also noted that it does not matter whether the company and the worker believe that the worker is an independent contractor. Moreover, individual inquiries regarding whether workers are employees do not preclude class certification so long as they can be managed effectively.

The Ayala decision clarifies that an employer cannot defeat class certification by arguing that it exercised different amounts of control over different employees.  The relevant question in independent contractor cases-at least at the class certification phase-is whether “the scope of a hirer’s right of control, whatever it may be, is susceptible to classwide proof.”

If you are an independent contractor and have questions about whether you are actually an employee, feel free to contact Hunter Pyle Law for a free consultation regarding your rights.  Individuals who are misclassified in this way are often owed significant amounts of money because of unpaid overtime, missed meal and rest breaks, and other penalties that may apply.  We can be reached at 510.444.4400, or at inquire@hunterpylelaw.com.