Court Denies Class Certification in Independent Contractor Misclassification Case

Topics: Class Actions, Court Decisions, Wage & Hour Issues

This week a California court held that class certification was properly denied in a wage and hour case alleging an employer misclassified its employees as independent contractors and failed to pay overtime or provide meal and rest breaks.  The defendants in the case were newspaper publishers who hired workers as independent contractors to insert advertisements into newspapers and to bag and deliver newspapers to customers.   The lawsuit alleged that the defendants intentionally misclassified the workers as independent contractors to avoid wage and hour obligations to these workers, including payment of overtime, provision of meal and rest breaks, and indemnification for business expenses.  The workers sought to have the case certified as a class action, but the trial court denied the motion on the grounds that the class was not sufficiently ascertainable and individualized issues predominated over common issues.  The workers appealed the ruling, but were unsuccessful on appeal.  In affirming the ruling of the trial court, the appellate court agreed that the class was not ascertainable and that substantial evidence supported the trial court's finding that individual issues predominated.  On the ascertainability issue, the evidence showed that the defendant newspapers had contracts with some 5,000 entities to do the stuffing and delivery work, but those entities themselves subcontracted with various other individuals to do the work and the defendant employers had no records from which the universe of workers (or size of proposed class) could be ascertained.  In trying to save class certification, the plaintiffs argued that the class definition could be revised to limit the class to the 5,000 workers who were identifiable based on the defendants' records.  The appellate court agreed with this point, but held that class certification was still improper based on the predominance of individual issues.  More specifically, the court held that the plaintiffs had not presented sufficient evidence to demonstrate that a uniform policy or practice existed with respect to entitlement to or failure to provide overtime or meal and rest breaks.  Additionally, the court held that the trial court was within its discretion in finding that indivdiual issues predominated on whether the workers were properly classified as independent contractors as opposed to employees.  The case is Sotelo v. Medianews Group, Inc.