United States: Another Logistics And Delivery Company Found To Have Misclassified Its Drivers As Independent Contractors

The use of independent contractors in the logistics and home delivery industry has suffered another legal setback. Earlier this week, the United States Court of Appeals for the Ninth Circuit, applying California law, concluded that 300 drivers who were retained by Affinity Logistics Corp. to make home deliveries and install products purchased by customers from Sears were common law employees who had been misclassified as independent contractors – even though the contractors were all separate business entities.

The drivers' class action lawsuit sought damages for unpaid sick leave, vacation pay, holiday pay, and severance wages; it also alleged that Affinity had charged drivers for workers compensation insurance premiums. The lower court had found that the drivers had been properly classified as independent contractors, but the Ninth Circuit disagreed. The decision did not create new law; it merely applied well-established California law to the undisputed facts.

As noted below in the "Analysis and Takeaways," this is yet another case where misclassification occurred because of what appears to have been inadequate structuring, documentation, and implementation of the independent contractor relationship. Businesses using independent contractors need not only understand how to structure an independent contractor relationship in light of the applicable state and federal laws, but also how to record the relationship in a state-of-the-art fashion and put it into practice on a day-to-day basis without creating the seeds for a class action lawsuit or regulatory audit.

The Applicable Law

The Ninth Circuit set forth the governing law in California that the "right to control work details is the most important or most significant consideration." In determining which work details are important, the Court stated that the key are those details that relate to control over "the manner and means of accomplishing the result." The Court also noted that under California law, there are "secondary" factors that can be relevant to whether the worker is an independent contractor, including whether the work is a distinct occupation; whether the work is specialized and done without the supervision of another; the skill required; who supplies the tools and place of work; the duration of the relationship; the method of payment; whether the work is part of the regular business of the principal; and the intent of the parties.

For those familiar with the common law test for independent contractor status, such as the test used by the IRS, the test under California law is similar in many respects. It is rather different, however, from those state laws that have statutory tests, such as what is commonly called an "ABC" test of three factors, all of which must be proven to establish independent contractor status. Thus, California law is, relatively speaking, a less challenging test for independent contractor status than many other states. But, despite the less restrictive test that Affinity was required to meet in this case, the Ninth Circuit concluded that the drivers were misclassified because Affinity "had the right to control the details of the drivers' work." The specifics of such control are listed below.

Affinity's Control Over the Drivers' Work

The Ninth Circuit found that Affinity controlled the following aspects of the drivers' work:

  • their rates,
  • their schedules,
  • their routes,
  • their days off,
  • their equipment, including the trucks, tools, and mobile phones,
  • the helpers used by the drivers,
  • their uniforms, and
  • their personal appearance.

In addition, the Court found that Affinity closely supervised and monitored the drivers; required them to adhere to a "Procedures Manual"; and had the right to terminate the relationship on 60 days' notice without cause.

While every driver operated as a separate business entity, the Court found that Affinity told the drivers they needed a fictitious business name, a business license, and a commercial business checking account, and even prepared the paperwork for the drivers, leaving only blank spaces for their signatures. The Court found that "these businesses were in name only."

Each driver was required to sign an Independent Truckman's Agreement and an Equipment Lease Agreement, the terms of which were evidently not subject to bargaining. The Court noted that even though the drivers leased their trucks from Affinity, the company allowed other drivers to use their trucks to make deliveries on days the drivers were not operating their trucks themselves. Even worse, the drivers who had leased the vehicles were not compensated for such use.

The Court also found that the drivers did not own any of their equipment or tools (not even their cell phones), were "essentially paid by a regular rate of pay," performed a service that was at "the core of Affinity's regular business," and often worked with Affinity for many years.

Analysis and Takeaways  

Class action cases involving drivers who deliver commercial goods have proliferated in recent years, and most cases have reached results similar to the ruling in Affinity or have settled for millions of dollars payable to the drivers and their counsel.  See, for example, our prior blog post on 3Pdelivery, our blog post dealing with XPO/Pacer Cartage and Bimbo Bakeries, our blog post on American Eagle Express (AEX Group), and  our many blog posts on FedEx Ground.

Meanwhile. states have begun to legislate new independent contractor tests for delivery and other types of truck drivers.  Most notably, New York recently enacted the Commercial Goods Transportation Industry Fair Play Act, which imposes a new legal challenge for companies that retain independent contractors to transport commercial goods in that state using vehicles with a gross vehicle weight rating of more than 10,000 pounds.  As set forth in a number of prior blog posts, such companies must meet a three-part ABC test or an 11-part separate business entity test.  Few transportation and delivery companies operating in New York or other states can meet either of those tests without considerable restructuring and re-documentation, which has taken the authors of this blog post months to create a workable model to maximize compliance.

Remarkably, few companies in this industry have seen fit to structure, document, and implement an independent contractor relationship that offers maximum protection from judicial scrutiny in class action cases or by regulatory agencies seeking to enforce the types of tests now applicable in New York and other states.  Oftentimes, the companies themselves have created an abundance of documentary evidence that is then used against them, as was the situation in the Affinity case. Further, many companies are under a mistaken impression that rulings in administrative cases such as unemployment or workers' compensation proceedings provide a defense to a new class action lawsuit, but judges may choose to give little if any credence to prior determinations not only by regulatory agencies but also by courts in other states – especially if the record at an earlier judicial or administrative proceeding differs from the evidence submitted in a new lawsuit.

Companies that have been seeking to enhance their level of independent contractor  compliance under an array of different laws at the state and federal level have found IC DiagnosticsTM to be a useful process to minimize the risks of independent contractor misclassification liability. This process uses proprietary tools to diagnose a company's level of independent contractor compliance and provides a methodology to restructure, re-document, and re-implement independent contractor relationships in a state-of-the-art manner, consistent with applicable laws and nuances of the industry. By proceeding in this fashion, companies can obtain the benefits of an independent contractor business model while diminishing the potential of spending hundreds of thousands of dollars in legal fees and millions of dollars in settlement costs to defend class action lawsuits that can usually be avoided.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Lisa B. Petkun
Andrew J. Rudolph
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.