Ayala v. Antelope Valley Press Newspapers, Inc.

Ayala v. Antelope Valley Press, Inc., 59 Cal.4th 522 (June 30, 2014) ("Ayala") was a clear victory for workers who are wrongly classified as independent contractors. In particular, Ayala held that such cases should be certified as class actions when there is common evidence of a hirer's policies and practices with respect to how it treats its workers. Ayala's impact, however, is not limited to just independent contractor cases. Ayala supports the argument that class certification is warranted in any type of misclassification case (such as those involving exemptions) where there is common evidence of a defendant's policies and practices, even if their impact is not uniform.

There are several holdings in Ayala that are of critical importance to attorneys in independent contractor misclassification cases and in employment class actions in general.

Ayala Held that Cases Should Be Certified Where There Is Some Evidence of Right to Control, And Held that Individual Variations as to How the Right to Control Is Actually Exercised Is Irrelevant

In Ayala the California Supreme Court addressed the question of whether a case where newspaper carriers alleged that they were wrongfully classified as independent contractors should be tried as a class action. The Court found that the trial court's denial of class certification was an abuse of discretion as it was based on the trial court's findings that there were variations in how some of the carriers actually performed their jobs and, therefore, common issues did not predominate. In criticizing the trial court, Ayala reaffirmed the decision in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341, 350 (1989) ("Borello") that "[w]hether a common law employer-employee relationship exists turns foremost on the degree of a hirer's right to control ..." and that, "what matters under the common law is not how much control a hirer exercises, but how much control the hirer retains the right to exercise." The predominance analysis then becomes: "Is [defendant's] right of control over its carriers, whether great or small, sufficiently uniform to permit class wide assessment?" Ayala explained that the trial court "lost sight of this question" by focusing on "considerable variation in the degree to which [defendant] exercised control over its carriers and finding that "the putative class as a whole was not subject to pervasive control ..." Ayala then noted that, "[w]hether [defendant] varied in how it exercised control does not answer whether there were variations in its underlying right to exercise that control that could not be managed by the trial court." Id. The fact "[t]hat a hirer chooses not to wield power does not prove it lacks power."

Thus, Ayala made clear that common evidence of the right to control, such as a form contract signed by all class members, will satisfy the predominance requirement and warrants the resolution of independent contractor misclassification cases on a class wide basis.

Ayala Dramatically Limited Any Argument that Variation with Respect to the Common Law Secondary Factors Precludes Class Certification

Ayala also addressed the common law's so called "secondary factors" that Borello and other decisions have looked to with respect to the independent contractor versus employee determination. Specifically, Ayala rejected the argument that variations with respect to the secondary factors preclude class certification. Instead, Ayala held that courts "may" consider the secondary factors, but do not have to. If a trial court does consider them, Ayala "caution[ed] that courts assessing these secondary factors should take care to correctly identify the relevant considerations." Ayala also held that some of the secondary factors were of "inordinate importance" when compared to the others, namely, the hirer's right to fire at will and the basic level of skill called for by the job. These secondary factors are likely very easy to show on a class-wide basis. The Court further recognized that variations in other secondary factors "may be of no consequence if they involve minor parts of the overall calculus and common proof is available of key factors such as control, the skill involved, and the right to terminate at will ...."

In sum, Ayala represents a tremendous victory for plaintiffs in independent contractor versus employee misclassification cases. The Court made clear that these are the types of cases that are ideally suited for class wide adjudication and the holding will serve as a valuable precedent in protecting the rights of California's workers.

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