Fernando Ruiz v. Affinity Logistics Corporation , 754 F.3d 1093 ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FERNANDO RUIZ, individually and on No. 12-56589
behalf of all others similarly
situated, D.C. No.
Plaintiff-Appellant, 3:05-cv-02125-
JLS-KSC
v.
AFFINITY LOGISTICS CORPORATION, OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of California
Janis L. Sammartino, District Judge, Presiding
Submitted February 22, 2013*
San Francisco, California
Filed June 16, 2014
Before: Harry Pregerson and Richard A. Paez, Circuit
Judges, and James P. Jones, District Judge.**
Opinion by Judge Pregerson
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
**
The Honorable James P. Jones, District Judge for the U.S. District
Court for the Western District of Virginia, sitting by designation.
2 RUIZ V. AFFINITY LOGISTICS
SUMMARY***
Labor Law
Reversing the district court’s judgment on remand, the
panel held that home delivery drivers who alleged failure to
pay sick leave and other state-law causes of action were
employees, rather than independent contractors, under
California law.
The panel reasoned that the drivers’ employer had the
right to control the details of their work, and that additional,
secondary factors also weighed in favor of a finding that the
drivers were employees. The panel remanded the case to the
district court for further proceedings.
COUNSEL
Daniel A. Osborn, Osborn Law, P.C., New York, New York,
for Plaintiff-Appellant.
James H. Hanson, Scopelitis, Garvin, Light, Hanson & Feary,
P.C., Indianapolis, Indiana, for Defendant-Appellee.
***
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
RUIZ V. AFFINITY LOGISTICS 3
OPINION
PREGERSON, Circuit Judge:
This is the second time this case is before us. Plaintiff-
Appellant Ruiz and putative class members (collectively,
“drivers”) are California residents who worked for
Defendant-Appellee Affinity Logistics (“Affinity”), a
Georgia corporation. Drivers allege that Affinity wrongfully
classified them as independent contractors; failed to pay them
sick leave, vacation, holiday, and severance wages; and
improperly charged them workers’ compensation insurance
fees. The outcome of these state law causes of action
depends on whether the drivers were employees or
independent contractors of Affinity.
This case first came before us after the district court,
following a three-day bench trial in December 2009, held that
the drivers were independent contractors under Georgia law.
Ruiz appealed. On February 8, 2012, in Ruiz v. Affinity
Logistics Corporation (“Affinity I”), 667 F.3d 1318, 1325 (9th
Cir. 2012), we concluded that California law, not Georgia
law, applies to the independent contractor versus employee
question in this case, and remanded the matter to the district
court. On remand, the parties agreed that no further evidence
was necessary. The district court ordered the parties to
submit briefs arguing their respective contentions under
California law. Based on these briefs and the December 2009
bench trial record, the district court, on August 27, 2012,
issued a memorandum decision and order concluding that,
under California law, the drivers were independent
contractors.
4 RUIZ V. AFFINITY LOGISTICS
Ruiz timely appealed the district court’s judgment on
remand. We have jurisdiction under 28 U.S.C. § 1291. For
the reasons set forth below, we reverse.
FACTUAL BACKGROUND
The following facts are undisputed.
A. Affinity’s Hiring of Ruiz
Fernando Ruiz previously worked as a driver for Penske
Logistics Corporation, a furniture delivery company that had
a contract with Sears. His job status was that of an
“employee.” When Sears terminated its contract with Penske
in November 2003, Sears advised the drivers that Affinity
Logistics Corporation (“Affinity”), a company providing
home delivery services for various home furnishing retailers,1
would take over Penske’s contract. Sears advised Ruiz and
other drivers employed by Penske to speak with Danny
Hansen, an Affinity manager, about working for Affinity.
Hansen told Ruiz and the other drivers that if they wished
to be hired by Affinity, they had to become independent
contractors. Specifically, Hansen told the drivers they needed
a fictitious business name, a business license, and a
commercial checking account. Affinity then advised the
drivers on how to complete the necessary forms. Affinity
went so far as to complete the forms for Ruiz, leaving only
the spaces for his signature blank. With Affinity’s help, Ruiz
formed R&S Logistics (“R&S”). Ruiz obtained a Federal
1
Affinity describes itself as an “experienced and competent home
delivery contractor [that] desires to perform home delivery services.”
RUIZ V. AFFINITY LOGISTICS 5
Employer Identification Number and a separate business
banking account for R&S.
Additionally, to work for Affinity, each driver was
required to sign an Independent Truckman’s Agreement
(“ITA”) and Equipment Lease Agreement (“ELA”). The ITA
and the ELA included clauses stating that the parties were
entering into an independent contractor relationship. The
ITA and ELA stated:
Control and Exclusive Use. . . . The parties
intend to create an independent contractor
relationship and not an employer-employee
relationship.
Independent Contractor
(a) Contractor,2 in the performance of this
Agreement, will be acting in his own separate
capacity and not as an agent, employee,
partner, joint venture or associate of Affinity.
It is expressly understood and agreed that
Contractor is an independent contractor of
Affinity in all manners and respects and that
Contractor is not authorized to bind Affinity
to any liability or obligation or to represent
that it has any authority. . . .
The ITA was a one-year contract that automatically renewed
from year to year. The contract could be terminated at any
time by either party without cause upon giving the other party
sixty days notice, or with cause upon breach of contract. The
2
The ITA and ELA repeatedly referred to the drivers as “Contractors.”
6 RUIZ V. AFFINITY LOGISTICS
ITA set out the drivers’ rate of pay, which, regardless of
experience, was a flat “per stop” rate of $23.00 in 2004. The
ITA also included a provision that a driver “at [Affinity’s]
option, may be transferred to another location then being
served by [Affinity],” and a driver’s failure to comply with a
transfer would be a breach of the ITA.
After Ruiz and the other drivers signed the ITA and ELA,
the drivers received an Affinity Contractor Procedures
Manual (“Procedures Manual”). The Procedures Manual,
prepared by Affinity, outlined procedures drivers were
required to follow regarding loading trucks, delivering goods,
installing goods, interacting with customers, reporting to
Affinity after deliveries, and addressing returns and refused
merchandise, damaged goods, and checking in with Affinity
after deliveries. The Procedures Manual included mandatory
language such as “must,” “will report,” “must contact,”
“required,” “not acceptable,” “100 percent adherence,” and
“exactly as specified.”
Affinity hired Ruiz as a driver in 2003. Ruiz worked for
Affinity from November 2003 to October 2004. Ruiz and the
other drivers were responsible for loading furniture and
appliance deliveries, unloading the deliveries, and installing
the deliveries. Affinity did not require that drivers obtain
special licenses. Nor did Affinity require that drivers have
any specific work experience or training; rather, drivers
simply had to have a driver’s license, sign the ITA and ELA,
and pass a drug test and physical exam.
B. Affinity’s Regulation of Its Drivers
Drivers regularly worked about five to seven days per
week. An Affinity employee would call the drivers each day
RUIZ V. AFFINITY LOGISTICS 7
to tell them whether or not they were working the following
day. Drivers had a fairly regular rate of pay since they
worked five to seven shifts per week, and every route had
approximately eight deliveries. Drivers had to request time
off three to four weeks in advance, and Affinity had
discretion to deny those requests. Affinity denied requests for
time off when it decided the delivery schedule was too busy.
Affinity encouraged, if not required, drivers to lease
trucks from Affinity. All but one driver in the San Diego area
leased their trucks from Affinity. Affinity automatically
deducted $350 per week from a driver’s paycheck to pay for
the leased truck. Drivers were required to paint their trucks
white, and could not put signs on their trucks. The trucks had
a Sears logo and Affinity’s name and motor carrier number
on the door. Most drivers drove the same truck every day.
Affinity handled upkeep of trucks and arranged for loaner
trucks when trucks broke down, deducting these costs from
drivers’ pay.
Affinity required drivers to stock their trucks with certain
supplies, as outlined in the Procedures Manual. These
supplies included appliance and furniture totes, plastic
mattress return bags, protective blankets, pads, tie-down
straps, and tools including a level, power drill, and drill bits.
Affinity required that drivers use a specific type of mobile
telephone. Affinity supplied the phones and deducted
monthly costs for the phones from drivers’ paychecks.
Affinity also required each driver to have a “helper” or
secondary driver on the truck with them. Helpers had to
submit to a background check and be approved by Affinity.
While working for Affinity, at 6:00 or 6:30 a.m.
everyday, drivers were required to report to the San Diego
8 RUIZ V. AFFINITY LOGISTICS
Market Delivery Operation (“MDO”) warehouse where
Affinity’s offices were located. When drivers arrived at the
MDO, they had to report to one of the supervisors and pick
up their route manifests, which told them how many
deliveries they had that day and where the deliveries were.
Drivers then checked to make sure they had all the furniture
and appliances to be delivered.
Next, as outlined in the Procedures Manual, Affinity
required drivers and helpers to attend a fifteen to thirty
minute “stand-up” meeting at 7:15 a.m. The stand-up
meeting was led by an Affinity supervisor. The Affinity
supervisor would review the drivers’ customer satisfaction
survey scores from previous deliveries, discuss problems
encountered in recent deliveries, and discuss any other issues
Affinity thought would be “beneficial to help [drivers] out in
the field.”
Drivers were required to wear uniforms and abide by
certain grooming requirements, as set forth in the “Delivery
Team Apparel and Appearance” section of the Procedures
Manual. The uniform consisted of an “industrial light blue
[shirt] with blue stripe, American flag on sleeve, emblem
with ‘Sears-Authorized Delivery’”; black pants; a belt
without a metal buckle; and “industrial, black leather shoes”
ordered from a particular company, Lehigh Safety Shoes.
Drivers had to keep their shoes “neat and clean.” Affinity
provided the uniforms, but charged drivers for them by
deducting the costs from drivers’ paychecks. Affinity also
required that tattoos and piercings be covered or removed and
that facial hair be “neatly groomed and properly shaved
surrounding the beard.” Affinity provided shaving kits to
drivers with facial hair that did not meet Affinity’s grooming
requirements.
RUIZ V. AFFINITY LOGISTICS 9
After each morning stand-up meeting, Affinity required
that Hansen or Jimmy Starnes, another Affinity supervisor,
check the drivers’ trucks to ensure that drivers had the
required tools, that deliveries were loaded with the necessary
padding and properly secured, and that no appliances were
left on the dock. The supervisors also checked that the
drivers were in their required uniform and properly groomed.
Drivers made deliveries according to the route manifests
Affinity provided to them daily. Drivers could not control the
order of deliveries; they were instructed in the Procedures
Manual to maintain “100 percent adherence” to the manifests
created by Affinity. The assignment of routes was based on
scores drivers received from Sears’s customer surveys known
as the Quality Measurement/Incentive Program. Drivers with
higher scores selected their routes first, while drivers with
lower scores were given the least desirable routes.
Affinity required drivers to call an automated Sears
customer service number after each delivery; this requirement
is listed in the Procedures Manual as “a very important
requirement.” During these calls, drivers would report the
stop number that was just completed, the arrival time, and
departure time. Throughout the day, drivers also had to
contact an Affinity supervisor after every two or three
deliveries. When a driver did not call, Affinity would call the
driver to find out the driver’s location. If a driver was
running late, Affinity would call Sears to inform them that
Affinity had “a driver running late.” Affinity supervisors also
monitored the progress of each driver throughout the day on
a “route monitoring screen,” and would contact a driver if
they noticed he or she was running late or off-course.
10 RUIZ V. AFFINITY LOGISTICS
Affinity also engaged in “follow-alongs,” whereby an
Affinity supervisor followed a driver for a few stops to ensure
that the driver was wearing the uniform and using proper
delivery techniques. Sometimes the Affinity supervisor
would talk to a customer after a delivery to evaluate the
driver’s performance. Occasionally, for heavier loads, the
Affinity supervisor would also assist the driver in a delivery.
After drivers completed their daily delivery routes, they
returned to the warehouse to park their trucks. At the end of
the day, drivers were required to fill out a form (also known
as a “cover sheet”), and return the route manifest to Affinity.
Drivers left the trucks and the keys for the trucks at the MDO
warehouse. Affinity admitted that it “strongly discouraged”
drivers from taking the trucks home or otherwise removing
trucks from the warehouse lot overnight or on weekends.
Moreover, Affinity sometimes used the drivers’ trucks for
other jobs. Drivers were told to leave their keys at the MDO
“just in case they need that truck to run another load with
somebody else.” Affinity did not compensate drivers for the
use of their trucks for these other deliveries.
PROCEDURAL BACKGROUND
Ruiz’s claims—Affinity’s wrongfully classifying the
drivers as independent contractors; Affinity failing to pay
drivers sick leave, vacation, holiday, and severance wages;
and Affinity improperly charging drivers for workers’
compensation insurance3—turn on whether the drivers are
independent contractors or employees of Affinity. After a
3
Ruiz also alleged a claim for overtime pay, but on June 5, 2008, the
district court granted Affinity’s motion for summary judgment as to this
claim. Ruiz does not appeal that ruling.
RUIZ V. AFFINITY LOGISTICS 11
three-day bench trial in December 2009, the district court
concluded that Georgia law applied to the independent
contractor/employee question and that Ruiz was an
independent contractor under Georgia law. Ruiz appealed the
district court’s ruling.
On February 8, 2012, in Affinity I, we held that California
law, not Georgia law, applies and remanded the matter to the
district court to apply California law. See Affinity I, 667 F.3d
at 1325. On remand, the district court filed a memorandum
decision and order on August 27, 2012, holding that, under
California law, the drivers were independent contractors
rather than employees of Affinity. The district court based its
findings on evidence from the December 2009 bench trial and
arguments made by the parties in their briefs following
remand.4
Ruiz timely appealed the district court’s August 27, 2012
memorandum decision and order.
STANDARD OF REVIEW
The California Supreme Court has held that the standard
of review for the employee versus independent contractor
question under California law may be de novo or clear error,
depending on whether the facts are disputed:
4
At a March 28, 2012 hearing, the district court asked the parties
whether they wanted to introduce additional evidence. According to the
district court, “[t]he parties represented that no further evidence was
necessary, and that the case would not need to be retried.” Neither party
asked to submit additional evidence.
12 RUIZ V. AFFINITY LOGISTICS
The determination of employee or
independent-contractor status is one of fact if
dependent upon the resolution of disputed
evidence or inferences, and the Division [of
Labor Standards Enforcement]’s decision
must be upheld if substantially supported. If
the evidence is undisputed, the question
becomes one of law, but deference to the
agency’s view is appropriate.
S.G. Borello & Sons, Inc. v. Dep’t of Industrial Relations
(“Borello”), 769 P.2d 399, 403 (Cal. 1989) (citations
omitted).
This case requires us to address the independent
contractor versus employee question under California law.
Because the parties do not dispute the operative facts, the
standard of review is de novo under Borello. Thus, we
review de novo the district court’s legal conclusion that the
drivers were independent contractors. We review, however,
the district court’s underlying factual findings following a
bench trial for clear error. Fed. R. Civ. P. 52(a)(6); Twentieth
Century Fox Film Corp. v. Entm’t Distrib., 429 F.3d 869, 879
(9th Cir. 2005). A finding is clearly erroneous if we are “left
with the ‘definite and firm conviction that a mistake has been
committed.’” Id. (quoting Easley v. Cromartie, 532 U.S. 234,
242 (2001)); United States v. Hinkson, 585 F.3d 1247,
1260–61 (9th Cir. 2009).
DISCUSSION
“[U]nder California law, once a plaintiff comes forward
with evidence that he provided services for an employer, the
[plaintiff] has established a prima facie case that the
RUIZ V. AFFINITY LOGISTICS 13
relationship was one of employer/employee.” Narayan v.
EGL, Inc., 616 F.3d 895, 900 (9th Cir. 2010). The burden
then shifts to the employer to “prove, if it can, that the
presumed employee was an independent contractor.” Id.(citing Cristler v. Express Messenger Sys., Inc., 89 Cal. Rptr.
3d 34, 43–44 (Cal. Ct. App. 2009)). Because Ruiz has shown
that he provided services for Affinity, the burden shifts to
Affinity to demonstrate, if it can, that Ruiz and the other
drivers were independent contractors, not employees.
The California Supreme Court has explained that to
determine whether a worker is an employee or independent
contractor, a court should evaluate “[e]ach service
arrangement . . . on its facts, and the dispositive
circumstances may vary from case to case.” See Borello,
769 P.2d at 407. The Borello court, however, also provided
a number of factors that should guide courts in making that
determination. First, the Borello court stated that “the right
to control work details is the most important or most
significant consideration.” Id. at 404 (emphasis added)
(internal quotation marks omitted); see also Tieberg v.
Unemp’t Appeals Bd., 471 P.2d 975, 977 (Cal. 1970) (holding
that “[t]he principal test of an employment relationship is
whether the person to whom service is rendered has the right
to control the manner and means of accomplishing the result
desired”); Estrada v. FedEx Ground Package Sys., 64 Cal.
Rptr. 3d 327, 335 (Cal. Ct. App. 2007) (“The essence of the
test is the ‘control of details’—that is, whether the principal
has the right to control the manner and means by which the
worker accomplishes the work . . . .”).
In Borello, the California Supreme Court also explained
that additional, “secondary” factors may be relevant in
making that determination:
14 RUIZ V. AFFINITY LOGISTICS
These include (a) whether the one performing
services is engaged in a distinct occupation or
business; (b) the kind of occupation, with
reference to whether, in the locality, the work
is usually done under the direction of the
principal or by a specialist without
supervision; (c) the skill required in the
particular occupation; (d) whether the
principal or the worker supplies the
instrumentalities, tools, and the place of work
for the person doing the work; (e) the length
of time for which the services are to be
performed; (f) the method of payment,
whether by the time or by the job; (g) whether
or not the work is part of the regular business
of the principal; and (h) whether or not the
parties believe they are creating the
relationship of employer-employee.
Borello, 769 P.2d at 404; see also Tieberg, 471 P.2d at 980(referring to these factors as “secondary elements”).
“Generally, . . . [these] individual factors cannot be applied
mechanically as separate tests; they are intertwined and their
weight depends often on particular combinations.” Germann
v. Workers’ Comp. Appeals Bd., 176 Cal. Rptr. 868, 871 (Cal.
Ct. App. 1981). Regarding the final secondary factor, the
California Court of Appeal has noted that the label that
parties place on their employment relationship “is not
dispositive and will be ignored if their actual conduct
establishes a different relationship.” Estrada, 64 Cal. Rptr.
3d at 355.
As we explain below, contrary to the district court’s
conclusion, the totality of the undisputed facts indicate that
RUIZ V. AFFINITY LOGISTICS 15
the drivers were Affinity’s employees rather than independent
contractors.
A. Primary Factor: Affinity Had the Right to
Control the Details of the Drivers’ Work
In Borello, the California Supreme Court “emphasize[d]
that the [defendant] growers, though purporting to relinquish
supervision of the harvest work itself, retained absolute
overall control of . . . [a]ll meaningful aspects of this business
relationship: price, crop cultivation, fertilization and insect
prevention, payment, [and] right to deal with buyers . . . .”
769 P.2d at 407–08 (third and fourth alterations in original)
(citations omitted) (internal quotation marks omitted). In
these circumstances, the court concluded, the defendant
“retains all necessary control over the harvest portion of its
operations.” Id. at 408; see also JKH Enters., Inc. v. Dep’t of
Indus. Relations, 48 Cal. Rptr. 3d 563, 579 (Cal. Ct. App.
2006) (holding that “[b]y obtaining the clients in need of the
service and providing the workers to conduct it, [delivery
company defendant] retained all necessary control over the
operation as a whole”).
Here, the undisputed facts indicate that Affinity had the
right to control the details of the drivers’ work, and that
Affinity retained all necessary control over the drivers’ work.
Like defendant FedEx in Estrada, a case where the California
Court of Appeal held that FedEx delivery drivers were
employees, Affinity controlled the drivers’ rates, schedules,
and routes. 64 Cal. Rptr. 3d at 336. Affinity set the drivers’
flat “per stop” rate; the drivers could not negotiate for higher
rates, as independent contractors commonly can. See Borello,
769 P.2d at 409–10. Affinity decided the days drivers
worked, and retained the discretion to deny drivers’ requests
16 RUIZ V. AFFINITY LOGISTICS
for days off. Affinity determined routes, and instructed
drivers not to deviate from the order of deliveries listed on the
route manifests Affinity created.
Like FedEx in Estrada, Affinity also controlled the
equipment—the trucks, tools, and mobile phones—and the
helpers the drivers used. See Estrada, 64 Cal. Rptr. 3d at 336(holding that drivers were FedEx’s employees in part because
“[t]he larger items—trucks and scanners—are obtained from
FedEx approved providers, [are] usually financed through
FedEx, and [are] repaid through deductions from the drivers’
weekly checks”).
Affinity controlled the appearance of the drivers by
requiring that drivers wear uniforms and by prohibiting
drivers from wearing earrings, displaying tattoos, and
sporting certain designs of facial hair. The district court
recognized that Affinity regulated the drivers’ uniforms and
appearance, but dismissed these measures of control as
“driven by a need to comply with federal regulations or with
Sears’ requirements.” But, in Estrada, the California Court
of Appeal “summarily reject[ed] FedEx’s suggestion that
[uniform and grooming] constraints such as these are
necessary to ensure the drivers’ compliance with government
regulations.” 64 Cal. Rptr. 3d at 336 n.9; see also Borello,
769 P.2d at 409 n.13 (rejecting defendant’s argument that
because defendant’s customers made defendant adopt the
contract with its migrant workers, the contract should not be
considered as evidence of control). The Estrada court noted
that “FedEx’s control over every exquisite detail of the
drivers’ performance, including the color of their socks and
the style of their hair, supports the . . . conclusion that the
drivers are employees, not independent contractors.” 64 Cal.
Rptr. 3d at 336. This case presents similar undisputed facts
RUIZ V. AFFINITY LOGISTICS 17
concerning Affinity’s control over “every exquisite detail” of
the drivers’ appearance, including the “color of their socks”
and “the style of their hair.”5
Affinity also closely monitored and supervised its drivers.
Each morning, Affinity required drivers to report to the
warehouse, where Affinity had several offices, and attend the
stand-up meeting. This requirement, as the district court
correctly acknowledged, shows that Affinity exercised “some
degree of control” over the drivers’ start times. See Estrada,
64 Cal. Rptr. 3d at 337 (holding that drivers were employees
in part because “drivers . . . must be at the terminal at regular
times for sorting and packing as well as mandatory meetings,
and they may not leave until the process is completed”).
Affinity continued to monitor the drivers by inspecting their
appearance and loading of their trucks; conducting “follow-
alongs”; requiring that drivers call their Affinity supervisor
after every two or three stops; monitoring the progress of
each driver on the “route monitoring screen”; and contacting
drivers if Affinity noticed drivers were running late or off
course.
Finally, the provisions of the ITA and the Procedures
Manual demonstrate that Affinity retained the right to control
its drivers. The ITA sets out the drivers’ rate of pay, allows
5
The district court also erred by emphasizing that the rules regarding the
drivers’ appearance were “intended to ensure customer security rather than
control the driver.” (internal quotation marks omitted). In doing so, the
district court misunderstood the Borello test. The district court
incorporated a subjective requirement when it dismissed Affinity’s
appearance requirements as not motivated by Affinity’s intent to control
its drivers. Whether Affinity intended to control the drivers does not
matter under Borello; what matters only is whether Affinity had the right
to control the drivers’ work.
18 RUIZ V. AFFINITY LOGISTICS
Affinity to terminate drivers without cause with sixty days
notice, and allows Affinity to transfer drivers to other
locations. And, as the district court recognized, the
guidelines contained in the Procedures Manual “were more
than mere ‘suggestions.’” The Procedures Manual outlined
the above-described procedures that Affinity required its
drivers to follow, including wearing uniforms, loading trucks,
delivering goods, and reporting to Affinity after deliveries.
The district court held that Affinity did not have the right
to control the details of the drivers’ work almost entirely
based on one fact: the drivers could hire helpers and
secondary drivers. But the district court overlooked the fact
that often the reason drivers hired helpers was that they were
required to do so by Affinity. Further, like defendant FedEx
in Estrada, Affinity retained ultimate discretion to approve or
disapprove of those helpers and additional drivers. See id. at
337. While the district court found that approval was largely
based upon neutral factors, such as background checks
required under federal regulations, it is still true that the
drivers did not have an unrestricted right to choose these
persons, which is an “important right[] [that] would normally
inure to a self-employed contractor.” See Borello, 769 P.2d
at 408 n.9 (holding that a contract provision restricting
sharefarmers’ right to choose employees evidenced
defendant’s right to control sharefarmers).
Although Affinity did not require their drivers to obtain
additional drivers, the testimony at trial indicated that the
impetus for doing so came from Affinity whenever it had
additional need for such drivers, rather than any desire by the
drivers to profit from such hiring. Moreover, any additional
drivers were subject to the same degree of control exerted by
Affinity over the drivers generally.
RUIZ V. AFFINITY LOGISTICS 19
In any event, the district court’s reliance on this factor as
dispositive in light of the overwhelming evidence of
Affinity’s control over its drivers was error. Like Estrada,
Borello, and JKH Enterprises, Inc., the undisputed facts in
this case show that Affinity retained all necessary control
over the drivers’ work. While “purporting to relinquish”
some control to the drivers by making the drivers form their
own businesses and hire helpers, Affinity “retained absolute
overall control” over the key parts of the business. See
Borello, 48 Cal. 3d at 355–56. This control included much
more than obtaining clients and providing workers, which the
JKH Enterprises, Inc. court found sufficient to establish right
of control. 48 Cal. Rptr. 3d at 579. Affinity retained absolute
control over drivers’ rates, payment, routes, schedules, trucks,
equipment, appearance, decision to hire helpers, choice of
helpers, and the right to deal with customers. In light of
Estrada, Borello, and JHK Enterprises, Inc., the district
court’s contrary conclusion—that Affinity did not exercise
sufficient control over the drivers’ work—was in error.
We also note Affinity’s relationship with its drivers is
very different from the relationship between the parties in
State Compensation Insurance Fund v. Brown, 38 Cal. Rptr.
2d 98 (Cal. Ct. App. 1995), where the California Court of
Appeal found that the truck driver plaintiffs were independent
contractors. There, the truck driver plaintiffs worked for
more than one broker at a time, had “complete control over
their working conditions and the manner in which a load was
transported (including whether or not to hire assistants),” and
were “entirely free to accept or reject an assignment without
reprisal.” Id. at 105. Unlike in State Compensation
Insurance Fund, where the defendant’s “participation is
limited to offering the assignments and paying compensation
upon proof of delivery,” here, as described above, Affinity
20 RUIZ V. AFFINITY LOGISTICS
regulated many details of the drivers’ work, including
working conditions and the manner in which drivers made
their deliveries. See id.Thus, the most important factor under the Borello
analysis—right to control—indicates overwhelmingly that the
drivers were Affinity’s employees.
B. Secondary Factors
Moreover, most of the secondary factors outlined in
Borello also point to the conclusion that the drivers were
employees. Borello, 769 P.2d at 404; see also JKH Enters.,
Inc., 48 Cal. Rptr. 3d at 579 n.14.
(1) Distinct occupation or business: Although the district
court recognized that the drivers would not have formed their
own businesses in the absence of Affinity’s requirement that
they do so, the district court stated that “[r]egardless of the
motive for forming their businesses . . . Plaintiffs ultimately
had the ability to expand their businesses by hiring more
employees, operating multiple trucks, and making managerial
decisions regarding the employment and performances of the
employees hired.” The district court clearly erred by not
giving enough weight to the fact that Affinity required drivers
to create these businesses as a condition of employment.
Affinity even helped drivers set up the businesses by filling
out necessary paperwork.
Moreover, in the real world, these businesses were in
name only. The drivers’ only business was with Affinity
because the drivers could not use their trucks for any purpose
other than their work for Affinity. Affinity admitted that it
“strongly discouraged” drivers from removing trucks from
RUIZ V. AFFINITY LOGISTICS 21
the warehouse lot overnight or on weekends. And, as the
district court found, “Affinity would on occasion allow other
drivers to use their trucks to make deliveries on days the
drivers were not operating their trucks themselves. Plaintiffs
were not compensated for this use.”
(2) Work under principal’s direction or by specialist
without supervision: The district court emphasized that the
drivers’ work included not only driving but also the delivery
and installation of the appliances, and that the delivery and
installation work “requires substantial skill” and was
unsupervised. But in hiring drivers, Affinity did not require
special driving licenses or even any work experience; rather
a driver simply had to have a driver’s license, sign a work
agreement, and pass a physical examination and drug test.
These facts parallel Estrada, where the court found that
FedEx drivers “need no experience to get the job in the first
place and [the] only required skill is the ability to drive.”
64 Cal. Rptr. 3d at 337. Moreover, as explained above,
Affinity closely supervised the drivers’ work through various
methods. The district court therefore clearly erred when it
concluded that the drivers were specialists without
supervision.
(3) Skill required: As described above, the drivers’ work
did not require substantial skill.
(4) Provision of instrumentalities, tools, and place of
work: As the district court found, “[t]he delivery truck was
the main tool [that] Plaintiffs used to conduct their business.”
This main tool was provided by Affinity. Affinity advanced
the drivers’ costs of leasing and maintaining their trucks, and
deducted these advances from drivers’ paychecks. Affinity
also required that drivers use a specific type of mobile phone,
22 RUIZ V. AFFINITY LOGISTICS
provided the drivers with these phones, and deducted the
associated monthly costs from drivers’ paychecks.
The district court recognized these leasing and cost-
advancing arrangements, but reasoned that under these
arrangements the drivers furnished their own tools because
they ultimately paid for them. We find this conclusion to be
clearly erroneous. Affinity supplied the drivers with the
major tools of the job by encouraging or requiring that the
drivers obtain the tools from them through paid leasing
arrangements. Moreover, the drivers did not own the trucks
or cell phones, but only leased them from Affinity to perform
their work for Affinity.
(5) Method of payment: As the district court found, the
drivers were paid per delivery. The district court recognized
that construing each delivery as an independent “job” would
be unrealistic because jobs are typically longer-term and,
here, drivers made approximately eight deliveries per day.
The district court nonetheless concluded that the payment
scheme was closer to “by the job” rather than “by the hour”
because “[t]here were no set hours to the day, nor did each
delivery take the same amount of time, even though the
amount paid essentially remained the same.” But the district
court’s findings that drivers made approximately eight
deliveries per day and the amount paid to each driver
“essentially remained the same,” lead to the conclusion that,
although labeled “by the delivery,” the drivers were
essentially paid by a regular rate of pay. See Estrada, 64 Cal.
Rptr. 3d at 335 (finding that the fact that drivers “are paid
weekly, not by the job” weighs in favor of employee status).
(6) Parties’ belief: Ruiz and Affinity understood their
relationship to be an independent contractor arrangement. As
RUIZ V. AFFINITY LOGISTICS 23
the California Court of Appeal has noted, however, “the
parties’ label is not dispositive and will be ignored if their
actual conduct establishes a different relationship.” Estrada,
64 Cal. Rptr. 3d at 336 (citing Borello, 769 P.2d at 403).
(7) Right to terminate at will: As the district court
concluded, the parties’ mutual termination provision is
consistent with either an employer-employee or independent
contractor relationship.
(8) Work part of principal’s regular business: Affinity,
by its own definition, is an “experienced and competent home
delivery contractor [that] desires to perform home delivery
services.” (emphasis added). As the district court
recognized, Affinity’s drivers perform those very home
delivery services that are the core of Affinity’s regular
business. Without drivers, Affinity could not be in the home
delivery business.
(9) Length of time for performance of services: As the
district court explained, “there was no contemplated end to
the service relationship” when Affinity and the drivers signed
their contracts, and drivers often stayed with Affinity for
years.
Because Affinity had the right to control the details of the
drivers’ work, and because the totality of the secondary
factors weigh in favor of the drivers, under California’s
Borello test, the drivers are employees of Affinity rather than
independent contractors.
24 RUIZ V. AFFINITY LOGISTICS
CONCLUSION
The undisputed facts indicate that Affinity had the right
to control the details of the drivers’ work, and the application
of the secondary factors weigh in favor of a finding that the
drivers were employees. We therefore reverse the district
court’s decision that the drivers were independent contractors
and hold that they were Affinity’s employees under
California law. We remand to the district court for further
proceedings consistent with this disposition. Costs shall be
awarded to Ruiz.
REVERSED and REMANDED.