Independent Contractors

The First Appellate District’s recent decision in Subcontracting Concepts, LLC v. DeMelo, A152205 (April 10, 2019) applies well-established unconscionability principles to an arbitration agreement signed by an employee of an independent contractor. The doctrine of unconscionability refers to an absence of meaningful choice with respect to the terms of a contract, usually the result of unequal bargaining power between the parties.
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On May 2, 2019, the Ninth Circuit ruled in Vazquez v. Jan-Pro Franchising International, holding that the new independent contractor test established by the California Supreme Court in its 2018 decision in Dynamex v. Superior Court applies retroactively to franchisors. As a result of this decision, employers and franchisors who have classified workers as independent contractors may see an increase in wage and hour class actions alleging that the workers are or have been misclassified. Additionally, the decision has serious implications for any California companies that operate under a franchise business mode
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In a rare win for plaintiffs seeking to avoid arbitration, the U.S. Supreme Court rejected a trucking company’s attempt to compel arbitration in a driver’s proposed minimum wage class action.  The Court held that the Federal Arbitration Act’s exemption for interstate transportation workers applies not only to employees, but also to those classified as independent contractors. 
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Andrea Mickles filed a complaint against her employer Country Club Inc., alleging it had violated the Fair Labor Standards Act (FLSA) by improperly classifying her and other employees as independent contractors and failing to pay them minimum wage and overtime.  She filed her case as a collective action, and others opted into the case before any ruling on conditional certification. 
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In a press release issued this morning, the Department of Labor has announced that it is withdrawing two administrative interpretations issued by the Department of Labor under the Obama administration in 2015 and 2016 relating to misclassification of independent contractors and joint employment.
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Across the country, worker misclassification issues continue to be a significant risk for employers. One hot button issue is whether workers in newer, technology-based industries, such as ride-sharing, are properly classified as independent contractors rather than employees. Last week, an appellate court in Florida considered whether Uber drivers are properly classified as independent contractors or employees for purposes of benefits under Florida’s unemployment insurance statute.
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In Euchner-USA, Inc. v. Hartford Cas. Ins. Co., No. 13-2021-cv, 2014 U.S. App. LEXIS 10797 (2d Cir. June 10, 2014), the United States Court of Appeals for the Second Circuit found that an insurer must defend its insured in a case alleging ERISA violations because the facts alleged (as opposed to the embedded legal