DeSoto Cab Company’s Misclassification Lawsuit: Distinguishing Between Employees and Independent Contractors

by Norman B. Blumenthal on November 1, 2017

blumenthal nordrehaug & bhowmik, southern california employment law, southern california employment law attorneys, overtime class action, ot class action, petco overtime class action, petco class action, overtime suit, overtime lawsuitIn October 2017, the San Francisco division of the court of appeal addressed the question of how to distinguish between and employee and an independent contractor when considering the case of Darnice Linton, taxi driver. Linton drove cabs for the DeSoto Cab Company. In the beginning of his working relationship with DeSoto, he signed a lease agreement affirming that he was not a company employee. In his orientation with the company, Linton was offered advice about how he, as a driver, should interact with customers.

At the beginning of each of Linton’s shift, a cashier at the company assigned him a cab, a taxi medallion, and provided him with a “waybill.” The waybill offered obvious instruction to the drivers from the DeSoto Cab Company, stating clearly across the bottom, “Driver carefully, Dress neatly. Be courteous.”

While Linton could reject calls from DeSoto dispatch and he was not actually required to check in during his shift in the cab, the vehicle was equipped with GPS tracking and had video recording devices inside and outside of the cab. When Linton’s shift was completed, he returned the cab along with an approximate $100 “gate fee” for the leasing of the vehicle. As the driver, he kept the fares and tips received from passengers. DeSoto’s only income was the $100 gate fee.

Linton’s agreement with DeSoto was terminated following a passenger’s accusation that Linton made repeated unauthorized charges on the credit card she used for payment. DeSoto filed a claim with the Labor Commissioner alleging that DeSoto misclassified him as an independent contractor. He sought to recover the approximate $50,000 in gate fees he had paid to the company during his time as a driver as well as additional fees and penalties. The Labor Commissioner sided with Linton, but the trial judge reversed the order when he decided Linton was actually an independent contractor.

The court of appeal reversed the ruling, concluding that the trial judge was wrong when disregarding prior rulings applying a multi-part test used in cases involving claims for workers compensation and unemployment benefits that identified whether or not a worker had been improperly classified.

The test requires that the court consider certain elements:

  • The degree of control in the hands of the worker.
  • Whether the worker is engaged in a distinct business.
  • Whether the work is highly skilled.
  • Whether the company provides the worker with tools.
  • Whether the work is a part of the company’s regular business.
  • Whether the parties involved believe they are creating an employer-employee relationship.

The appeals court directed the trial court to reconsider their conclusion based on the use of the test in order to determine whether Linton was misclassified as an independent contractor and was thus due a return of the gate fees.

Important Aspects of the Ruling in this Case:

1. Workers are employees unless the company they work for can prove they are an independent contractor. In the case of DeSoto v. Linton, the court of appeal extended the worker’s compensation statute stating that a person rendering service to another is an employee unless proven otherwise to wage claims. The court noted that DeSoto’s contention that the service Linton provided was to passengers, not the company, was weak at best since without taxicab drivers, there is no taxicab company.

2. The more power the company holds over their employees, the more likely it is that the worker would be accurately categorized as an employee. The degree of control the company olds over a worker is the most important element when determining classification of an employee on the job. Workers may be employees even if the company does not control EVERY aspect of their work.

3. When the company holds an at-will right to end the working relationship it is seen as strong evidence that they hold the ultimate “control” over the worker. For instance, Linton was terminated due to a passenger’s accusation, but Linton was not allowed to challenge the claim and he alleges it was not fully investigated by the company.

4. Requiring a worker to comply with government regulations does not make a worker an employee, but when workers are required to attend mandatory company training or follow company rules outside of government regulations, it may indicate that the worker is actually an employee.

5. Little weight is given to company drafted written contracts stating that the employer/worker relationship is one of employer/independent contractor. The court will delve deeper into the issue by considering the actual conduct of both parties involved and the “economic realities” of the situation.

If you have questions about misclassification or if you think you have been misclassified as an independent contractor, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.

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