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Compliance July 14, 2010
9th Circuit Says CA Law Trumps Labor Contracts
July 14, 2010 (PLANSPONSOR.com) – The 9th U.S. Circuit Court of Appeals has ruled that while workplace contracts may be subject to out-of-state law, actual workplace terms and conditions affecting workers in California are governed by state statutes.
Reported by Rebecca Moore
The plaintiffs’ “claims arose under the Labor Code, a California regulatory scheme, and consequently, California law should apply to define the boundaries of liability under that scheme,” District Judge Edward Korman wrote for the unanimous three-judge panel, according to The Recorder. The panel also held that under California law, a jury trial would be necessary to determine whether the plaintiffs were properly designated as independent contractors.
Three California freight-truck drivers employed by EGL, Inc. alleged they were improperly classified as independent contractors and denied employee benefits, including overtime, business-related expenses, and meal compensation. EGL required the workers to sign contracts acknowledging their status as independent contractors subject to the labor laws of Texas.
The news report said plaintiffs’ lawyers claim multistate companies have increasingly tried to designate workers as independent contractors to avoid California’s perceived worker-friendly regulations on overtime and meal-and-rest periods.
The court’s opinion is here.