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COMPANIES WHO WORK WITH INDEPENDENT CONTRACTORS BEWARE:

9th Circuit Ruling Offers Protection For Independent Contractors In Employment Contracts.

The U.S. Court of Appeals for the Ninth Circuit recently ruled in Narayan v. EGL Inc. that employers cannot avoid California labor regulations by claiming that the laws of another state apply to their independent contractor agreements.

The case involved delivery truck drivers who claimed that EGL, a freight forwarder, misclassified them as independent contractors and thereby denied them important employee benefits under the California Labor Code.  The drivers, who lived and worked in California, had signed contracts that identified them as independent contractors and contained language requiring that those agreements be interpreted according to Texas laws.  However, the court stated that the language used by the parties does not determine the drivers’ status.  More importantly, the court held that Texas law only applied to the contracts themselves, but not to the drivers’ claims, which were based on California laws.

The case represents a significant victory for independent contractors who claim to be mis-classified.  Plaintiffs’ attorneys note that more multistate companies have tried to designate workers as independent contractors to avoid California regulations on overtime wages, meal-and-rest periods, and other employee protections.  We can expect a rise in litigation surrounding these issues so please consult us before entering into independent contractor agreements with your service providers.

If your company works with independent contractors, please contact us for more information at info@mitzelgroup.com.