California Case Clarifies Independent Contractor Classification Criteria

Now that I’ve used every word that begins with “C” in the title, here’s the post:

On July 11, 2013, a California appellate court, in Beaumont-Jacques v. Farmers Group Ins., affirmed summary judgment in favor of an insurance company on the question whether a District Manager was properly classified as an independent contractor and not an employee. In so holding, the court provided clarification on the proper analysis for determining this important issue.

Why is this important?

California employers that misclassify workers as independent contractors face potential liability, which can include compensatory damages, stiff penalties and attorney’s fees.

What happened in the Beaumont-Jacques case?

A former District Manager, Erin Beaumont-Jacques, sued Farmers Insurance on various theories all of which hinged on a determination that she was a Farmers Insurance employee. In support of her position, Ms. Beaumont-Jacques pointed out that: (1) she was bound by a contract to only represent Farmers in recruiting and training sales agents; (2) she could train such agents only to sell Farmers’ insurance products; (3) the applicable contract required her to “conform” to Farmers’ “normal business practices” and “goals and objectives”; and (4) Farmers enjoyed the option to terminate her contract without cause.

In affirming the trial court’s granting of a motion for summary judgment brought by Farmers, the California Court of Appeal for the Second Appellate District clarified that, even where other factors may suggest an employment relationship, it was sufficient for independent contractor classification that Ms. Beaumont-Jacques “exercised meaningful discretion with reference to her efforts” undertaken on behalf of Farmers. Specifically, the Court said: “While [Farmers] . . . had input over the quality and direction of [her] . . . efforts, they did not have sufficient ‘control over the details’ with respect to those efforts” to render the relationship one of employment rather an independent contractor.

What is the takeaway?

The paramount consideration in determining whether a worker can be properly classified as an independent contractor under California law is whether the worker maintains the right to control the means by which she accomplishes her duties.

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If The Courtroom Clerk Seems Grumpy, There Is A Pretty Good Reason


I have previously written about the importance of maintaining a good rapport with courtroom staff.  If you are in a California courtroom, and you notice the clerk and other staff seem less . . . er . . . satisfied with their jobs, I might have an idea why.  The Daily Journal reported Wednesday that “[a]fter years of automatic pay increases for employees at courts across the state, budget cuts have stopped so-called cost-of-living adjustment pay increases at many courts.  Now some court administrators are considering reducing for freezing ‘step increases’ which are part of many employees’ union contracts.”  This is in contrast 3-5 percent annual cost-of-living pay increases in California’s largest courts in the years before the recession started.

I suppose in the pyramid of bad news, a salary freeze ranks below a layoff.  But the courts have already been through layoffs and furloughs and, as the cost of everything from housing to cars to groceries climbs, these employees will begin feeling poorer before too long.  The best of the bunch (i.e., the better educated, organized, more motivated) will likely scout out better employment.  Some who are loyal to a particular judge might also stay.  But a pay freeze isn’t going to make anyone happy and, as Lisa Major, Assistant General Manager of the Orange County Employees Association, pointed out, “[e]liminating step increases in general, if you’re looking at it from a human resources perspective, is never a good idea.”

Brace yourselves, California litigators, our courts are going to seem more and more like a chapter out of Kafka.

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