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By: Curt Graham
The issue of worker classification (i.e., whether a worker is considered an “employee” or not) was recently addressed in a Ninth Circuit Court of Appeals decision involving Costco. On October 29, 2021, the Court issued a decision affirming summary judgment in favor of the retailer in a wage and hour dispute involving the question of whether Costco should be held liable as a “joint employer” under the California Labor Code. The worker in Sigrid R. Williams v. Costco Wholesale Corporation participated in “road show” events, selling suppliers’ products inside Costco stores. However, she was hired and paid by an independent staffing agency. One of the primary questions to be answered in the case was whether the work of selling suppliers’ products at these events fell within Costco’s usual course of business. The Court found it did not.
According to the Court, the road show events “operat[ed] through a different economic model than Costco’s other lines of business” and were discrete events accounting for no more than 0.5% of Costco’s warehouse sales. Moreover, Costco did not exercise sufficient control over the worker. It was the staffing company that made the work schedule, provided training, and set sales targets. The fact that Costco may have set a dress code or had certain policies applying to the worker was not sufficient to establish employment by Costco. Finally, the Court rejected the plaintiff’s claim that Costco “permitted” the claimed wage and hour violation because the “suffer-or-permit” standard was not met in this instance.
As in all worker classification disputes, the Court closely examined the facts and circumstances of the job in question to resolve the “joint employer” issue. This decision serves as an important reminder that courts routinely look beyond labels the parties give themselves when it comes to determining who is an employer and who is an employee.