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California Appellate Court Holds Decreasing Overtime Pay by Changing Workdays is not a Violation of the FLSA – Las Vegas Employment Law Attorney Andre Lagomarsino

Hireem Elijahjuan, Dave Van Huynh, Julio Hernandez, and James Love were hired as owner-operator truck delivery drivers by Michael Campbell Associates Ltd. Upon hire, Michael Campbell had all truck delivery drivers sign one of the company’s standard Independent Contractor Agreement – the “Broker/Carrier Agreement” or “Transportation Agreement.” Under both IC Agreements, truck delivery drivers were classified solely as independent contractors. The agreements, which included extensive provisions regarding how compensation for truck delivery drivers would be paid, also contained a clause requiring all disputes between the truck delivery drivers and Michael Campbell to be settled through arbitration.

Along with other truck delivery drivers, Elijahjuan, Van Huynh, and Hernandez sued Michael Campbell claiming they were actually employees and not independent contractors, and as such were entitled to wage and hour benefits under the California Labor Code and the Fair Labor Standards Act (FLSA). Michael Campbell moved to compel arbitration of the dispute and the trial court granted the company its motion. The trial court also refused to certify the truck delivery drivers as a class on the ground that the in signing the IC Agreement, neither the truck delivery drivers nor Michael Campbell had agreed to classwide arbitration. The trial court ordered individual arbitration for each dispute. The truck delivery drivers appealed.

California Labor law, like federal law, requires disputes to be settled by arbitration if the arbitration clause in a contract is clear and explicit. The appellate court then found the arbitration clause in the “Broker/Carrier Agreement” and “Transportation Agreement” to be clear and explicit. However, because the truck delivery drivers’ statutory rights were “distinct” from their contractual rights under the Agreements, the dispute did not concern the application or interpretation of the Agreements but rather whether the truck delivery drivers could enforce their rights under the California Labor Code, the California Court of Appeals held the dispute over whether the truck delivery drivers were independent contractors or employees fell outside the mandatory arbitration clauses in the IC Agreements. The trial court’s order ordering arbitration was reversed. Elijahjuan v. Superior Court, No. B234794 (Cal. Ct. App. Oct. 17, 2012).

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