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A Georgia trucking company should have classified its California drivers as employees rather than independent contractors, the 9th U.S. Circuit Court of Appeals has ruled in a case that is considering whether an employer improperly charged its drivers for workers compensation premiums.
In Fernando Ruiz vs. Affinity Logistics Corp., records show that Mr. Ruiz worked as a driver for Marietta, Georgia-based Affinity from November 2003 to October 2004, providing home delivery services for Sears Holding Corp. An Affinity manager told Mr. Ruiz, who lives in Southern California, that he needed to become an independent contractor with a business license and a commercial checking account, which Affinity also required of other drivers.
However, Affinity drivers were encouraged to rent their trucks from Affinity for $350 a week, which was deducted from the drivers’ paychecks, records show. Drivers also were required by Affinity to attend a staff meeting each morning and wear Affinity-specified uniforms, further blurring the line between independent contractor and employee under California’s labor laws.
Mr. Ruiz filed a class action suit against Affinity in U.S. District Court in San Diego in 2005, arguing that Affinity improperly classified drivers as independent contractors, and therefore failed to pay them overtime pay, sick leave, vacation time, holiday pay and severance wages, records show. He also argued that Affinity improperly deducted workers comp premiums from driver paychecks while requiring them to carry such coverage.
A U.S. District Court judge ruled in 2012 that Affinity drivers were properly classified as independent contractors, records show. Mr. Ruiz appealed to the 9th Circuit.
In a unanimous decision Monday, the federal appeals court ruled that California Affinity drivers were employees of the company under California labor law and not independent contractors. In its ruling, the court noted that Affinity controlled the details of drivers’ work, including routes, equipment and driver appearances.
The court also noted that other factors played into Affinity drivers being employees of the company, including the company’s right to terminate drivers at will and the fact that drivers received a regular rate of pay from Affinity.
The independent businesses formed by Affinity drivers “were in name only. The drivers’ only business was with Affinity because the drivers could not use their trucks for any purpose other than their work for Affinity,” the ruling reads.
The case was remanded back to District Court for further proceedings, including the workers compensation premium dispute.