Labor Employment Law Blog

On November 19, 2009, the Ninth Circuit handed down its opinion in Fleming v. Yuma Regional Medical Center, 07-16427. The court faced the difficult task of interpreting the interplay between Section 504 of the Rehabilitation Act (29 U.S.C. § 794) and Title I of the Americans with Disabilities Act. The Sixth and Eighth Circuits had previously held that the Rehabilitation Act incorporated Title I in its entirety, requiring an employer-employee relationship as a prerequisite to suing for discrimination. On the other hand, the Tenth Circuit had disagreed, and only incorporated the "standards" of Title I, allowing independent contractors to sue even without an employment relationship. In Fleming, the Ninth Circuit agreed with the Tenth Circuit, and held that the Rehabilitation Act would indeed cover claims by an independent contractor notwithstanding the lack of an employer-employee relationship.

On September 15, 2008, a California Court of Appeal decided the case of Varisco v. Gateway Science and Engineering, Inc., holding that - where all other indicators point to a valid independent contractor relationship - a single clause in a contract allowing either party to terminate the relationship "at will" does not transform it into an employment relationship.

The existence of an employer-employee relationship is a necessary precursor to wage and hour protection under California law.  With its recent decision in NLRB v. E. Bay Taxi Drivers Ass'n et al., the Ninth Circuit reminded employers that they cannot simply avoid their wage and hour obligations by self-anointing individuals as "independent contractors" despite the economic realities of the relationship.

In a suit filed by Air Couriers International ("Sonic") against the Employment Development Department ("EDD"), to recover employment taxes paid for drivers who operated as independent contractors, the California Court of Appeal rejected Sonic's claim that the drivers were independent contractors and instead found that the drivers acted as Sonic's employees.

by Greg S. Labate

Employers often unintentionally misclassify workers as independent contractors when they should really be employees. This common error can lead to serious consequences, including audits, lawsuits, and liability. Accordingly, all employers should conduct a careful review of their independent contractor relationships to determine if they are valid and proper.