Business & Real Estate

Judge rules Bee carriers are employees, not independent contractors

In a tentative decision, a judge has granted employee status to an estimated 5,000 Sacramento Bee newspaper carriers who filed a class-action lawsuit against the company and are seeking mileage reimbursements.

The Bee sought in a trial earlier this year to have the carriers classified as independent contractors, but Sacramento Superior Court Judge Gerrit W. Wood rejected the newspaper’s arguments in his tentative decision to resolve the first phase of the case.

If the company does not persuade the judge to reconsider his ruling, the trial will move to the next phase to determine if the carriers incurred mileage costs, and if so, how much.

“We are pleased with the court’s decision,” plaintiffs lawyer Daniel J. Callahan said in an interview Friday. “We believe the court got it correct. His ruling is consistent with the rulings of other courts.”

In a prepared statement, Callahan said, “It is an industry practice to misclassify newspaper carriers as independent contractors so the newspaper can avoid paying the taxes and other employee benefits associated with their being an employee.”

Callahan’s firm secured a $39 million settlement in a similar case against the Orange County Register filed in 2004, the lawyer said in a news release. In 2009, his firm brought a suit by carriers against the San Diego Union-Tribune and claimed a $10 million win in trial court, but that award is on appeal, the news release said.

Sacramento Bee Publisher Cheryl Dell called Wood’s tentative decision “bewildering.” She said the paper intends to contest it with the judge and to file an appeal “if necessary.” The newspaper, Dell said in a prepared statement, wanted the case heard by a jury but that plaintiff lawyers prevailed in a pretrial ruling before a different judge “to deny The Bee this right.”

“The Bee is extremely disappointed in the decision and strongly believes that the individual newspaper carriers were properly classified as independent contractors,” Dell said. “Our classification of carriers as independent contractors is in full compliance with the regulations issued directly to the newspaper industry by the state of California.”

Dell said the case “is not about the newspaper carriers; it is about lining the pockets of class-action plaintiff lawyers.”

Callahan countered, “What it’s really about is The Bee violating federal and state law by misclassifying its drivers.”

In his tentative decision, Wood found The Bee was an employer of the carriers because it “had the right to exercise pervasive control of the manner and means of the class members’ work.”

The carriers “had little or no right to negotiate the terms” of the contracts they signed with the company, the judge wrote. They were told how to deliver the paper and were managed, trained and supervised by The Bee, Wood said.

Among other factors that went into his decision, Wood found that The Bee had the right to terminate its contracts with the carriers “at will”; the carriers had “no professional skills, education or training” that would reflect the status of “a specialized independent contractor”; carriers worked on no “specific project for a specific finite time” inherent in traditional independent contractor relationships; newspaper delivery was “an integral part” of the company’s business; and the carriers’ paychecks contained deductions for items such as rubber-band purchases, complaint penalties and workers’ compensation premiums.

The lawsuit with six named plaintiffs covered carriers who worked for The Sacramento Bee from 2005 through 2009. The plaintiffs’ attorneys did not call any of their clients to testify, though The Bee called dozens of newspaper carriers to the witness stand “and their testimony was overwhelmingly consistent with the independent contractor status,” according to Dell.

“We chose to present our evidence from the top down,” plaintiffs’ attorney Michael J. Sachs said in an interview during the trial.

In their original action, the plaintiffs accused The Bee of not consistently paying the carriers minimum wage or giving them enough time for meal and rest breaks. An earlier judge on the case refused to certify those claims for class-action status, and the plaintiff lawyers dropped them from the lawsuit.

Callahan said Friday he will ask Wood to “augment” the damages phase of the trial to include carriers’ payments for supplies and insurance, as well as for mileage costs.