Narayan v. EGL, INC. ( 2010 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MOHIT NARAYAN; HANNAH RAHAWI; 
and THOMAS HEATH,
No. 07-16487
Plaintiffs-Appellants,
v.  D.C. No.
CV-05-04181-RMW
EGL, INC.; EAGLE FREIGHT SYSTEMS,
OPINION
INC.; and DOES 1-10,
Defendants-Appellees.

Appeal from the United States District Court
for the Northern District of California
Ronald M. Whyte, United States District Judge, Presiding
Argued and Submitted
November 4, 2009—San Francisco, California
Filed July 13, 2010
Before: Michael Daly Hawkins and Sidney R. Thomas,
Circuit Judges, and Edward R. Korman,* District Judge.
Opinion by Judge Korman
*The Honorable Edward R. Korman, Senior United States District
Judge for the Eastern District of New York, sitting by designation.
10069
10072 NARAYAN v. EGL, INC.
COUNSEL
Stacey Leyton (argued) and Michael Rubin (briefed),
Altshuler Berzon, LLP, San Francisco, California, for the
plaintiffs-appellants.
R. Ted Cruz (argued), Morgan, Lewis & Bockius, LLP, Hous-
ton, Texas, and Y. Anna Suh (briefed), Hunton & Williams
LLP, San Francisco, California, for the defendants-appellees.
Robert R. Roginson, Division of Labor Standards Enforce-
ment, Department of Industrial Relations, State of California,
NARAYAN v. EGL, INC. 10073
San Francisco, California, Amicus Curiae in support of the
plaintiffs-appellants.
Matthew Goldberg, The Legal Aid Society — Employment
Law Center, San Francisco, California, and Cynthia Rice,
California Rural Legal Assistance Foundation, Sacramento,
California, Amici Curiae in support of the plaintiffs-
appellants.
OPINION
KORMAN, District Judge:
The California Labor Code (“Labor Code”) confers certain
benefits on employees that it does not afford independent con-
tractors. Of particular relevance here are the provisions that,
inter alia, require employers to pay overtime compensation,
Cal. Lab. Code §§ 510 & 1194, prohibit employers from mak-
ing certain improper deductions from wages, Cal. Lab. Code
§ 221, reimburse employees for necessary business expenses,
Cal. Lab. Code § 2802, and provide off-duty meal periods,
Cal. Lab. Code §§ 226.7 & 512. These provisions are part of
a broad regulatory policy defining the obligations that “ ‘the
law places on an employer without regard to the substance of
its contractual obligations to its employee.’ ” Nedlloyd Lines
B.V. v. Super. Ct., 834 P.2d 1148, 1153 (Cal. 1992) (quoting
Foley v. Interactive Data Corp., 765 P.2d 373, 394 (Cal.
1988)). As Judge Easterbrook observed in a closely analogous
context, statutes enacted to confer special benefits on workers
are “designed to defeat rather than implement contractual
arrangements.” Sec’y of Labor v. Lauritzen, 835 F.2d 1529,
1545 (7th Cir. 1987) (Easterbook, J., concurring).
This appeal from a judgment of the United States District
Court for the Northern District of California granting the
motion of an employer for summary judgment dismissing
10074 NARAYAN v. EGL, INC.
claims for benefits under the Labor Code principally presents
the issue whether, assuming the existence of an employer-
employee relationship in California, the employer may avoid
its obligations under the Labor Code by inserting a clause in
an employer-drafted pre-printed form contract in which: (1)
the employee acknowledges that he is an independent contrac-
tor and (2) agrees that the contract would be interpreted in
accordance with the laws of another jurisdiction where such
an agreement is generally enforceable.
BACKGROUND
EGL, the employer, is a global transportation, supply chain
management and information services company incorporated
under the laws of Texas and headquartered in Texas.1 EGL’s
services include, inter alia, “air and ocean freight forwarding,
customs brokerage, [and] local pickup and delivery service.”
EGL operates through a network of over 400 facilities located
in over 100 countries. One of the many aspects of EGL’s
business is domestic delivery services. Such services may be
provided either as part of EGL’s freight-forwarding opera-
tions or for customers requiring local pick-up and delivery
services.
Mohit Narayan, Hanna Rahawi and Thomas Heath (the
“Drivers”) were residents of California who were engaged to
provide freight pick-up and delivery services for EGL in Cali-
fornia. All three Drivers signed agreements with EGL for
“Leased Equipment and Independent Contractor Services”
(the “Agreements”). The Agreements provided that the “in-
tention of the parties is to . . . create a vendor/vendee relation-
ship between Contractor and [EGL],” and acknowledged that
“[n]either Contractor nor any of its employees or agents shall
be considered to be employees of” EGL. The terms of the
1
The complaint was originally filed against EGL and Eagle Freight Ser-
vices, a subsidiary of EGL. After the district court entered final judgment
in this case, EGL was purchased by CEVA Logistics U.S. Holdings, Inc.
NARAYAN v. EGL, INC. 10075
Agreements provide, inter alia, that the Drivers “shall exer-
cise independent discretion and judgment to determine the
method, manner and means of performance of its contractual
obligations,” although EGL retained the right to “issue rea-
sonable and lawful instructions regarding the results to be
accomplished.”
Notwithstanding the terms of the Agreements, the Drivers
filed a complaint in California against EGL and one of its
subsidiaries, Eagle Freight Services (collectively, “EGL”),
alleging that they were EGL employees who were deprived of
benefits conferred upon them by the Labor Code. They sought
money damages for unpaid overtime wages, business
expenses, meal compensation and unlawful deductions from
wages as well as other relief, including statutory penalties.
After the case was removed pursuant to 28 U.S.C. § 1332,
EGL moved for summary judgment arguing that, under the
terms of the Agreements, the Drivers were not employees.
Instead they were independent contractors who were not enti-
tled to the benefits conferred upon employees by the Labor
Code. Relying on a choice-of-law clause in the Agreements,
the district court held that the law of Texas applied, and that
declarations in the Agreements that the Drivers were indepen-
dent contractors rather than employees, compelled the holding
that they were independent contractors as a matter of law.
Moreover, although California does not regard such declara-
tions as controlling, and applies a multi-factor analysis in
which the intent of the parties is one of over a dozen and a
half factors, the district court held, without undertaking any
analysis of the relevant factors, that the result would be the
same under California law. Narayan v. EGL, Inc., No. CV-05-
04181-RMW, 2007 WL 2021809, at *9 n.12 (N.D. Cal. July
10, 2007). Consequently, the district court granted EGL’s
motion for summary judgment.
10076 NARAYAN v. EGL, INC.
DISCUSSION
I. Choice-of-Law
EGL argues that the choice-of-law clause in the Agree-
ments, which provides that the contracts “shall be interpreted
under the laws of the State of Texas,” applies to the current
dispute. The district court agreed. We review questions
regarding choice of law de novo. Paulsen v. CNF Inc., 559
F.3d 1061, 1072 (9th Cir. 2009).
[1] To determine the applicable substantive law, a federal
court sitting in diversity applies the choice-of-law rules of the
forum. Fields v. Legacy Health Sys., 413 F.3d 943, 950 (9th
Cir. 2005). California, the forum state, ordinarily examines
the scope of a choice-of-law provision in a contract under the
law designated in that contract. Wash. Mut. Bank, FA v.
Super. Ct., 15 P.3d 1071, 1078 n.3 (Cal. 2001). In this case,
that is Texas law.
[2] Under Texas law, similarly narrow choice-of-law
clauses, providing under what law an agreement “shall be
interpreted and enforced,” apply only to the interpretation and
enforcement of the contract itself; they do not “encompass all
disputes between the parties.” Stier v. Reading & Bates Corp.,
992 S.W.2d 423, 433 (Tex. 1999); accord Benchmark Elecs.,
Inc. v. J.M. Huber Corp., 343 F.3d 719, 727 (5th Cir. 2003)
(calling similar provision “narrow”). They govern claims that
“rise or fall on the interpret[ation] and enforce[ment] of any
contractual provision.” Stier, 992 S.W.2d at 434 (internal quo-
tations omitted) (alterations in original); see also Busse v.
Pac. Cattle Feeding Fund # 1, Ltd., 896 S.W.2d 807, 812-13
(Tex. App. 1995) (“The rights, obligations, and cause of
action do not arise from the contracts but from the Deceptive
Trade Practices Act, the Texas Securities Act, and the com-
mon law.”).
The Drivers’ claims involve entitlement to benefits under
the California Labor Code. Whether the Drivers are entitled
NARAYAN v. EGL, INC. 10077
to those benefits depends on whether they are employees of
EGL, which in turn depends on the definition that the other-
wise governing law—not the parties—gives to the term “em-
ployee.” While the contracts will likely be used as evidence
to prove or disprove the statutory claims, the claims do not
arise out of the contract, involve the interpretation of any con-
tract terms, or otherwise require there to be a contract. See
S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 769
P.2d 399, 403-07 (Cal. 1989) (listing over one dozen factors
“logically pertinent to the inherently difficult determination
whether a provider of service is an employee or an excluded
independent contractor”).
[3] CBS Corp. v. FCC, 535 F.3d 167 (3d Cir. 2008),
vacated on other grounds, 129 S. Ct. 2176 (2009), is instruc-
tive. There, the Third Circuit held that federal rather than New
York law governed the question of whether performers were
independent contractors or employees despite the presence of
a choice-of-law clause in a contract defining performers as
“independent contractors” because the claims arose under a
federal regulatory scheme, and “defining the boundaries of
permissible vicarious liability under that scheme is . . . a fed-
eral matter.” Id. at 190-92. Similarly here, appellants claims
arose under the Labor Code, a California regulatory scheme,
and consequently, California law should apply to define the
boundaries of liability under that scheme.
II. Propriety of Summary Judgment Under California
Law
Although the district judge applied Texas law to determine
that the Drivers were independent contractors as a matter of
law, he observed in a conclusory footnote that “[t]he result
would be no different if California law governed.” Narayan,
2007 WL 2021809, at *9 n.12. This conclusion is erroneous.
We review a district court’s grant of summary judgment de
novo. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996).
In doing so, we determine, “viewing the evidence in the light
10078 NARAYAN v. EGL, INC.
most favorable to the nonmoving party, whether genuine
issues of material fact exist and whether the district court cor-
rectly applied the relevant substantive law.” Id. Summary
judgment is not appropriate if a reasonable jury viewing the
summary judgment record could find by a preponderance of
the evidence that the plaintiff is entitled to a favorable verdict.
Davis v. Team Elec. Co., 520 F.3d 1080, 1089 (9th Cir. 2008).
“Credibility determinations, the weighing of the evidence, and
the drawing of legitimate inferences from facts are jury func-
tions, not those of a judge . . . The evidence of the nonmovant
is to be believed, and all justifiable inferences are to be drawn
in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986). “A ‘justifiable inference’ is not necessarily the
most likely inference or the most persuastive inference.
Rather, ‘an inference as to another material fact may be drawn
in favor of the nonmoving party . . . if it is ‘rational’ or ‘rea-
sonable.’ ” United Steel Workers of Am. v. Phelps Dodge
Corp., 865 F.2d 1539, 1542 (9th Cir. 1989) (internal citation
omitted).
[4] There are two special circumstances that are relevant to
the application of this standard here. First, under California
law, once a plaintiff comes forward with evidence that he pro-
vided services for an employer, the employee has established
a prima facie case that the relationship was one of employ-
er/employee. Robinson v. George, 105 P.2d 914, 917 (Cal.
1940). As the Supreme Court of California has held, “[t]he
rule . . . is that the fact that one is performing work and labor
for another is prima facie evidence of employment and such
person is presumed to be a servant in the absence of evidence
to the contrary.” Id. at 916; see also Cristler v. Express Mes-
senger Sys., Inc., 171 Cal. App. 4th 72, 83 (Ct. App. 2009).
Once the employee establishes a prima facie case, the burden
shifts to the employer, which may prove, if it can, that the
presumed employee was an independent contractor. Cristler,
171 Cal. App. 4th at 84 (approving a jury instruction that
“[t]he Defendant has the obligation to prove that the Plaintiffs
were independent contractors”); Bemis v. People, 240 P.2d
NARAYAN v. EGL, INC. 10079
638, 644 (Cal. Ct. App. 1952) (“It is also the law that, gener-
ally speaking, the burden of proof is on the party attacking the
employment relationship.”).
[5] The Drivers here have established a prima facie case.
This means that, in order to prevail on its motion for summary
judgment, drawing all justifiable inferences from the uncon-
troverted evidence, EGL would have to establish that a jury
would be compelled to find that it had established by a pre-
ponderance of the evidence that the Drivers were independent
contractors. This hurdle is particularly difficult for EGL to
overcome in light of the second special consideration in this
case, namely, the multi-faceted test that applies in resolving
the issue whether the Drivers are employees.
[6] The Supreme Court of California has enumerated a
number of indicia of an employment relationship, the most
important of which is the “right to discharge at will, without
cause.” Borello, 769 P.2d at 404 (quoting Tieberg v. Unem-
ployment Ins. App. Bd., 471 P.2d 975, 979 (Cal. 1970)).
Borello endorsed other factors derived from the Restatement
(Second) of Agency that may point to an employment rela-
tionship:
(a) whether the one performing services is engaged
in a distinct occupation or business; (b) the kind of
occupation, with reference to whether, in the local-
ity, the work is usually done under the direction of
the principal or by a specialist without supervision;
(c) the skill required in the particular occupation; (d)
whether the principal or the worker supplies the
instrumentalities, tools, and the place of work for the
person doing the work; (e) the length of time for
which the services are to be performed; (f) the
method of payment, whether by the time or by the
job; (g) whether or not the work is a part of the regu-
lar business of the principal; and (h) whether or not
10080 NARAYAN v. EGL, INC.
the parties believe they are creating the relationship
of employer-employee.
Id. at 404. Borello also approvingly cited five factors adopted
by cases in other jurisdictions. These include:
(1) the alleged employee’s opportunity for profit or
loss depending on his managerial skill; (2) the
alleged employee’s investment in equipment or
materials required for his task, or his employment of
helpers; (3) whether the service rendered requires a
special skill; (4) the degree of permanence of the
working relationship; and (5) whether the service
rendered is an integral part of the alleged employer’s
business.
Id. at 407. Moreover, it characterized as “helpful” the stan-
dards set forth in Labor Code Section 2750.50, id., which pro-
vide “extensive guidelines for determining whether one who
operates under a required contractor’s license is an indepen-
dent contractor or employee.” Id. at 404 n.5.
All factors were held to be “logically pertinent to the inher-
ently difficult determination whether a provider of service is
an employee or an excluded independent contractor.” Id. at
407. Nevertheless, “the individual factors cannot be applied
mechanically as separate tests; they are intertwined and their
weight depends on particular combinations.” Id. at 404 (inter-
nal citation and quotations omitted). “We must assess and
weigh all of the incidents of the relationship with the under-
standing that no one factor is decisive, and that it is the rare
case where the various factors will point with unanimity in
one direction or the other.” NLRB v. Friendly Cab Co., 512
F.3d 1090, 1097 (9th Cir. 2007) (internal citation and quota-
tions omitted).
[7] Judge Easterbrook has keenly observed in a case under
the Fair Labor Standards Act that:
NARAYAN v. EGL, INC. 10081
[i]f we are to have multiple factors, we should also
have a trial. A fact-bound approach calling for the
balancing of incommensurables, an approach in
which no ascertainable legal rule determines a
unique outcome, is one in which the trier of fact
plays the principal part. That there is a legal overlay
to the factual question does not affect the role of the
trier of fact.
Sec’y of Labor v. Lauritzen, 835 F.2d 1529, 1542 (7th Cir.
1987) (Easterbook, J., concurring) (internal citations omitted).
Under these circumstances, “we cannot readily say . . . that
the ‘ultimate conclusion as to whether the workers are
employees or independent contractors’ is one of law. The
drawing of inferences from subordinate to ‘ultimate’ facts is
a task for the trier of fact—if, under the governing legal rule,
the inferences are subject to legitimate dispute.” Id. at 1543.
[8] The inferences here are subject to legitimate dispute.
The delivery services provided by the EGL drivers were an
essential part of the regular business of EGL. Indeed, EGL’s
instructional video shown to the drivers advises them that “as
an [EGL] pickup and delivery driver, you have the key role
in the shipping process . . . The [EGL pickup and delivery]
driver is the eyes of a dispatcher. You can identify shipments
that are potential claims before they are put into our system
and you ensure our customers’ freight is protected by using
proper loading work method techniques.” More than that,
“[y]ou are a vital source for shipping leads and competitor
information at the actual shipping points, and you are a source
of traffic and road condition information for dispatch and
other [EGL] drivers to be able to avoid unnecessary delays on
critical shipments.” The video goes on to describe the drivers
as “our company’s largest sales force,” because “[t]hrough
your interactions with the customer, you communicate
[EGL’s] commitment to excellence.” Indeed, the video
acknowledges that “for our company to continue to grow,
10082 NARAYAN v. EGL, INC.
every [EGL] driver must understand the critical importance of
the job they do.”
Consequently, EGL’s Safety and Compliance Manual and
Drivers’ Handbook instructed the EGL drivers on, inter alia,
how to conduct themselves when receiving assignments and
packages, responding to customer complaints and handling
damaged freight. The drivers used EGL-supplied forms,
received company memoranda and attended meetings on
company policies. The Handbook also provided guidelines on
how to communicate with EGL’s dispatch, instructing drivers
to notify the dispatcher before leaving EGL’s facility dock, to
contact the dispatcher after each delivery stop to report that
the delivery was completed, and to immediately report any
traffic delays. Indeed, the EGL drivers were told that
“[c]ommunicating with dispatch is the single most important
aspect of the services drivers are paid for. It is not enough to
get the freight picked up or delivered. To be competitive in
today’s market, the team must be able to identify at a
moment’s notice exactly where a shipment is in the course of
transit.” The EGL drivers were also instructed “never [to]
wait at a stop without notifying the dispatcher first” and “al-
low[ing the] dispatcher to make the service decisions.” Simi-
larly, EGL’s drivers were told that, if they cannot find a
pickup or delivery site, “Don’t ride around for 15 or 30 min-
utes, radio in and ask for help!”
Moreover, there was evidence that EGL’s drivers were
ordered to report to the EGL station at a set time each
morning—whether or not packages were available to be deliv-
ered. Indeed, one of EGL’s dispatchers testified that one of
the plaintiff Drivers was subject to disciplinary action for
showing up late. Similarly, the record indicates that the driv-
ers had to submit advance notice of vacation days. The plain-
tiff Drivers also submitted evidence that, although their
contracts purportedly gave them the right to pick and choose
assignments, in practice, EGL presented them with batches of
deliveries that they generally had to accept as an all-or-
NARAYAN v. EGL, INC. 10083
nothing proposition. In some circumstances, standard operat-
ing procedure agreements between EGL and many of its cus-
tomers determined the manner in which drivers made
deliveries. Moreover, the plaintiff Drivers drove exclusively
for EGL during their period of employment, and there is at
least a material issue of fact as to whether they could have
driven for other delivery companies because EGL required
them to affix EGL logos to their trucks, which the plaintiff
Drivers allege could not practically be covered up.
[9] The record also shows that EGL controlled many other
details of their drivers’ performance. EGL regulated their
drivers’ appearance—requiring them to wear EGL-branded
shirts, safety boots and an EGL identification card. Although
their drivers owned their own trucks or vans as noted above,
EGL required that they affix EGL logos to the outside of their
vehicles. This requirement was “established due to govern-
ment regulations, customer requests, and for security pur-
poses.” EGL imposed requirements on their drivers’ vehicles
—in particular, that they be painted white and less than five
years old, although EGL disputes whether these requirements
were enforced. This requirement was imposed to meet “the
industry standard, the DOT regulation, and . . . customer’s
requirements.”
EGL’s drivers supplied some of the equipment used to
deliver packages (e.g., hand trucks, lift gates, etc.), but EGL
provided other supplies such as EGL-branded boxes and
packing tape to their drivers for package pick-ups. While
EGL’s drivers retained the right to employ others to assist in
performing their contractual obligations, EGL required all
helpers to be approved by it. The same rule applied to passen-
gers. This requirement was imposed “to safeguard EGL
employees, contractors, . . . customers, and the general public
from unsafe and unlawful actions” by a helper or passenger.
Nonetheless, none of the plaintiff Drivers hired helpers to per-
form their duties for EGL.
10084 NARAYAN v. EGL, INC.
[10] Significantly, the contracts signed by the plaintiff
Drivers contained automatic renewal clauses and could be ter-
minated by either party upon thirty-days notice or upon
breach of the agreement. Such an agreement is a substantial
indicator of an at-will employment relationship. See Estrada
v. FedEx Ground Package Sys., Inc., 154 Cal. App. 4th 1, 6,
11 (Ct. App. 2007) (agreement providing for termination with
thirty-day notice is evidence of at-will employment); Gonza-
lez v. Workers’ Comp. App. Bd., 46 Cal. App. 4th 1584, 1593
(Ct. App. 1996) (contract with two-week notice termination
provision constituted at-will employment where contract pro-
vided no consequences for employers’ failure to give notice);
Antelope Valley Press v. Poizner, 162 Cal. App. 4th 839, 854
(Ct. App. 2008) (termination with thirty-day notice require-
ment “clearly” gives employer the right to discharge at-will
without cause). But see State Comp. Ins. Fund v. Brown, 32
Cal. App. 4th 188, 203 (Ct. App. 1995) (termination provision
with fourteen-day notice requirement was “consistent either
with an employment-at-will relationship or parties in a contin-
uing contractual relationship”). This is not all.
Moreover, the occupation that the plaintiff Drivers were
engaged in did not require a high level of skill. Drivers were
not required to possess any special license beyond a normal
driver’s license, and no skills beyond the ability to drive.
Estrada, 154 Cal. App. 4th at 12; JKH Enters., Inc. v. Dep’t
of Indus. Relations, 142 Cal. App. 4th 1046, 1064 (Ct. App.
2006) (courier service drivers did not require a high level of
skill); cf. Brown, 32 Cal. App. 4th at 202-03 (commercial
truck drivers require “abilities beyond those possessed by a
general laborer (or, indeed, possessors of ordinary driver’s
licenses)”); Gonzalez, 46 Cal. App. 4th at 1592 (distinguish-
ing between truckers in Brown, who require a special driver’s
license and must learn special driving skills, from individuals
who deliver newspapers in cars).
[11] Finally, the length and indefinite nature of the plain-
tiff Drivers’ tenure with EGL also point toward an employ-
NARAYAN v. EGL, INC. 10085
ment relationship. Here, the plaintiff Drivers worked at EGL
for several years, and their Agreements were automatically
renewed. This was not a circumstance where a contractor was
hired to perform a specific task for a defined period of time.
There was no contemplated end to the service relationship at
the time that the plaintiff Drivers began working for EGL.
The district court, as we have previously observed, did not
apply the relevant factors identified by the Supreme Court of
California to the facts in this case. The only reference to fac-
tors that were arguably relevant were addressed in the context
of distinguishing a California case that found an employee-
employer relationship in closely analogous circumstances. See
Air Couriers Int’l v. Employ. Dev. Dep’t, 150 Cal. App. 4th
923 (Ct. App. 2007). Thus, the district judge observed that “in
Air Couriers, the drivers did not have written contracts, as
here, expressly acknowledging that they were independent
contractors. Further, in Air Couriers, the drivers drove regular
routes, worked regular schedules, and were paid on regularly
scheduled paydays.” Narayan, 2007 WL 2021809, at *9 n.12.
By contrast, he found that the instant case was distinguishable
because “the drivers were not required to work regular sched-
ules, were paid on a per job basis, and determined their own
routes.” Id. These distinctions are neither dispositive nor the
subject of factual disputes suitable for resolution by summary
judgment.
[12] The fact that the Drivers here had contracts “expressly
acknowledging that they were independent contractors” is
simply not significant under California’s test of employment.
Borello, 769 P.2d at 403 (“The label placed by the parties on
their relationship is not dispositive, and subterfuges are not
countenanced.”) Moreover, there is an issue of fact over
whether the plaintiff Drivers were required to work regular
schedules. Contrary to the district judge’s suggestion, they
were paid on a regular basis, although their salary was based
on a percentage of each delivery. Nevertheless, the fact that
their salary was determined in this way is equally consistent
10086 NARAYAN v. EGL, INC.
with an employee relationship, particularly where other indi-
cia of employment are present. Ali v. L.A. Focus Publ’n, 112
Cal. App. 4th 1477, 1485 (Ct. App. 2003) (that reporter was
paid by the article is indicative of an independent contractor
relationship, but that fact alone is not dispositive if other indi-
cia of employment are present); Toyota Motor Sales U.S.A.,
Inc. v. Super. Ct., 220 Cal. App. 3d 864, 877 (Ct. App. 1990)
(the fact that worker was paid on a commission basis is con-
sistent with employee status).
Similarly, setting aside evidence that the plaintiff Drivers
did not, as a practical matter, determine their own routes, the
ability to determine a driving route is “simply a freedom
inherent in the nature of the work and not determinitive of the
employment relation.” Toyota, 220 Cal. App. 3d at 876; see
also Home Interior & Gifts, Inc. v. Veliz, 695 S.W.2d 35, 40-
41 (Tex. App. 1985) (finding employee-employer relationship
although drivers generally determined how to get to their des-
tinations). These cases simply reflect the common-sense rule
that, “[i]f an employment relationship exists, the fact that a
certain amount of freedom is allowed or is inherent in the
nature of the work involved does not change the character of
the relationship, particularly where the employer has general
supervision and control.” Air Couriers, 150 Cal. App. 4th at
934 (quoting Grant v. Woods, 71 Cal. App. 3d 647, 653 (Ct.
App. 1977)).
[13] Ultimately, under California’s multi-faceted test of
employment, there existed at the very least sufficient indicia
of an employment relationship between the plaintiff Drivers
and EGL such that a reasonable jury could find the existence
of such a relationship. Indeed, although it plays no role in our
decision to deny summary judgment, it is not without signifi-
cance that, applying comparable factors to those that we apply
here, the Internal Revenue Service (at EGL’s request) and the
Employment Development Department of California (at
Narayan’s request) have determined that Narayan was an
employee for federal tax purposes (applying federal law) and
NARAYAN v. EGL, INC. 10087
California Unemployment or Disability Insurance (applying
California law), respectively.
CONCLUSION
The judgment of the district court granting EGL’s motion
for summary judgment is REVERSED and REMANDED.