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Aug 09

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Big setback in California to reclassify workers as employees

On July 11, 2013, in re: Beaumont-Jacques v. Farmers Group Insurance, a California appellate court affirmed summary judgment in favor of an insurance company. The issue was whether a District Manager was properly classified as an independent contractor, rather than an employee.

The decision is perhaps not as significant once one understands the underlying written agreement between the parties, and the description of the underlying duties. The Appellate Court described these duties as follows:

“Among other things, the DMAA addresses certain subjects, which form the contractual framework for this dispute. For instance, paragraph H states: “Nothing contained herein is intended or shall be construed to create a relationship of employer and employee. The time to be expended by District Manager is solely within his/her discretion, and the persons to be solicited and the area within the district involved wherein solicitation shall be conducted is at the election of the District Manager. No control is to be exercised by the Companies over the time when, the place where, or the manner in which the District Manager shall operate in carrying out the objectives of this Agreement provided only that they conform to normal business practice” and to applicable law. Appellant testified at her deposition that, when she signed the DMAA, she understood she was an independent contractor and the Signatory Defendants thought so too.”

The Court cared little about the job title, performance standards established by the customer/employer, or the independence of the work and the worker’s customer/employer. Instead, the most important factor in determining whether a worker can be properly classified as an independent contractor under California law is whether the worker is able to control the means by which the worker performs the duties.

This article provides important background regarding recent efforts by California government to have workers reclassified as employees.

 

About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2013/08/big-setback-in-california-to-reclassify-workers-as-employees/

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