The United States Court of Appeals Second Circuit Finds Drivers’ Claims Should Not Have Been Dismissed Without A Trial In Light of Conflicting Evidence
An employee misclassification lawsuit filed by former and current delivery drivers against a transportation company, TXX, Inc., was dismissed by a federal district judge. This, however, was not the end of the case for TXX, Inc. The delivery drivers appealed the dismissal and the Second Circuit found that the lower court had improperly resolved issues of fact itself.
Where There Are Two Sides to the Story
As with a majority of IC lawsuits, the overarching issues were whether the individuals were in business for themselves and the degree of control exercised by the purported employer. Among other things, the district judge had found: (1) that plaintiffs have ultimate control over their routes, (2) that TXX exercised only limited control over drivers, (3) that many of TXX’s requirements for the drivers were dictated by the nature of its business or imposed by customers, rather than by TXX itself, and (4) that each bid was essentially a separate job.
As the evidence submitted supported two differing theories of the case, the Second Circuit found that the district court should not have dismissed the case. On the one hand, TXX had provided contracts with drivers through their business entities that said the drivers could reject assignments for any reason and perform services for other companies, were not required to work a certain number of hours, and could hire assistants or helpers to complete deliveries. TXX also submitted declarations from drivers stating that the drivers used vehicles of their own choosing, did not follow TXX rules, and had full discretion to take breaks and make personal stops. On the other hand, the plaintiffs had presented declarations asserting TXX required them to use vans with tinted windows, over a particular size and under a certain weight. Declarations submitted by plaintiffs further stated that they worked exclusively for TXX, could not share work without TXX approval, were reprimanded when they tried to take breaks, and received phone calls directing them to make deliveries in the afternoons and on weekends. In light of the conflicting evidence submitted by the parties, the Second Circuit found that there were factual disputes that needed to be decided at trial and could not be decided by the district judge. Now TXX has a long and costly road ahead of them preparing for trial.
What Your Company Can Do
As the TXX decision shows, even when non-party drivers are on your side attesting to the fact that your business does not exercise any control, this may not be enough to win the case without a trial. Companies need to anticipate that plaintiffs will put in their own evidence that contradicts what was submitted raising issues to be determined by a jury. Most often trials will be lengthy and costly.
David F. Jasinski, Esq., with the law firm Jasinski, P.C. who has extensive experience representing transportation companies is a proponent for utilizing the arbitration forum when dealing with independent contractor disputes. As stated by Mr. Jasinski: In jurisdictions that allow for them, companies should consider utilizing arbitration provisions. Arbitration controls your legal expenses and is a more efficient way to resolve disputes removing the emotions of the jurors. “
Laws vary significantly from state to state when determining whether workers can be compelled to arbitrate their wage and hour claims. Consultech is highly experienced in incorporating arbitration provisions into your business model. Our experts such as Mr. Jasinski can help you create an arbitration provision to help you minimize the risk of a costly misclassification lawsuit.