If you engage independent contractors, you may include a “choice of law” clause in your contracts, designating which state’s laws will apply should a dispute arise. But that doesn’t mean courts will always agree to the jurisdiction you prefer.
Affinity Logistics, a California trucking firm incorporated in Georgia, selected Georgia law to resolve disputes. Truck drivers from California filed a class-action suit against the firm, claiming that they were actually employees and therefore entitled to overtime and benefits.
The firm sought to move the case to Georgia courts based on the contract language. The drivers moved to have the case decided under California law. Ultimately, the 9th Circuit Court of Appeals sided with the drivers.
The court found that California’s employee protections created a strong public-policy argument for deciding the case under California law.
It also found that the drivers entered into the agreement in California and worked in California. The only connection to Georgia was Affinity’s decision to incorporate there.
The court did not decide whether the drivers were employees or independent contractors. Instead, it remanded the case to a lower court to decide the issue under California law. California law generally presumes a worker to be an employee unless the employer has strong evidence to prove the worker’s independent status.
This case shows that employers may not simply shop for a state with sympathetic laws for work largely performed in California. Always consult your attorney before designating a worker as an independent contractor.