California EDD regulations don't govern independent contractor challenges

Newspaper carriers classified as independent contractors sued the McClatchy Company for unfair competition based on a failure to reimburse them for business expenses under Labor Code Section 2802. After a bench trial, the court ruled for the newspaper on grounds the carriers had satisfied the requirements of the Employment Development Department (EDD) regulations governing independent contractors. The California Court of Appeal recently reversed and sent the case back for a new trial, holding the Borello test, not the EDD regulations, should govern the analysis.

Newspaper carriers sue for misclassification, unfair competition

Newspapers carriers for the McClatchy-owned Fresno Bee were classified as independent contractors under written agreements with the company. The documents underscored their independent contractor status and their ability to perform the work without supervision and use their own supplies and materials.

McClatchy directed where the carriers were to deliver the papers, acceptable locations on subscribers' property, the condition the papers must be in, and prohibitions on adding anything to the delivery. The company had relied on Section 4304-6 of Title 22 of the California Code of Regulations in drafting the agreements and classifying the carriers.