In Wage and Hour Lawsuit, Juul Denies Contract Canvassers Were Employees

Juul Labs seeks to have an action dismissed that was filed by three contract canvassers who allege the e-cigarette company violated California wage and hour labor laws in connection with their work on a campaign to overturn San Francisco’s e-cigarette ban.

Plaintiffs Maria de la Luz Bautista-Perez, Luz Perez Bautista, and Salvador Correa filed an action in the United States District Court for the Northern District of California, asserting that they were misclassified as independent contractors, even though they served as employees for Juul Labs and should have been entitled to federal, state, and local wage and hour law protections. The complaint raises claims under the Fair Labor Standards Act (FLSA) and California Labor Code.

According to the lawsuit, 450 contract canvassers were hired to support the “Yes on C” vaping campaign which would have overturned San Francisco’s e-cigarette ban, had it been successful. Juul Labs funded the campaign, according to the complaint, which was operated by a non-profit led by a Juul executive —The Coalition for Reasonable Vaping Regulation — in conjunction with Long Ying International, Inc., a campaign operating company.

Bautista-Perez, Bautista, and Correa claim they were “abruptly laid off” following the campaign’s shutdown and not given legally compliant pay statements. They also assert that they were not paid accrued wages in a timely manner, not reimbursed for travel time or expenses, and were not provided with legally required off-duty meal breaks or premium overtime pay.

Juul Labs Moves to Dismiss Complaint Filed by Contract Canvassers

Juul Labs asserted the contract canvassers weren’t hired as its employees, contending that Bautista-Perez, Bautista, and Correa were not under its direct hire and control, per California’s worker classification law. 

According to Juul Labs’ motion to dismiss, the Class Members were hired as independent contractors by a third-party political consultant, Long Ying International, Inc., also named in the action, to provide assistance with the “Yes on C” campaign. While Bautista-Perez, Bautista, and Correa acknowledge that they signed an independent contractor agreement with Long Ying, they contend that they worked as Juul Labs’ employees, with Juul Lab liable as either their “joint” or “client employer.”   

In its motion to dismiss, Juul Labs maintained that the e-cigarette company cannot be considered either an employer or a “joint employer” under the governing standard found in California case law, because Juul Labs “did not ‘engage’ the campaign workers to perform labor on its behalf,” or satisfy any of the other criteria specified in the relevant case law. 

Juul Labs also argued that the theory asserted in the complaint that the vaping company is a “client employer” should fail because Long Ying’s retention of the contract canvassers was not within Juul Lab’s “usual course of business” of producing e-cigarettes. Long Ying, with whom the workers signed their independent contractor agreements, was “engaged in the completely distinct business of providing ‘a full complement of public affairs and advocacy services,'” as stated in the motion to dismiss. 

Additionally, the e-cigarette company disputed claims made in the lawsuit that it was an “alter-ego” of the Coalition because the complaint did not adequately plead “unity of interest and ownership” between the two organizations.

What’s the Difference Between an Employee and Independent Contractor in California?

Both California and federal law have specific wage and hour protections in place for employees. However, independent contractors are exempt from the wage and hour laws that apply to employees. Unlike employees — who are under the control and supervision of an employer — independent contractors can choose when to work, for whom to work, and how much they make.

In California, employees have paid sick leave, meal break protections, and discrimination protection, while the same laws do not cover independent contractors.   

California has a stringent test to determine which workers are employees versus independent contractors. Unless three specific conditions are satisfied, a worker must be classified as an employee. Under the ABC test, a business can classify a worker as an independent contractor if they: 

• Are not controlled by the hiring company and are free from its direction when performing its work
• The work performed by the worker is “outside the usual course of the hiring entity’s business.”
• The worker is independently established in the trade or business 

Unless all three criteria are met, a worker cannot be classified as an independent contractor, under California law and have the same wage and hour benefits of an employee.  

What Can I Do If I Was Misclassified as an Independent Contractor?

Misclassification can cause workers to lose out on wage and hour protections, such as overtime pay, minimum wage, and other safeguards imposed by federal and state law. 

Those who were wrongfully misclassified as independent contractors when they should have been treated as employees may be able to join an FLSA collective action or assert state labor law claims in a lawsuit. Misclassified employees may be entitled to back pay, liquidated damages, attorney fees, and other damages under the FLSA, as well as damages under applicable state laws. An experienced attorney can discuss your specific rights and remedies.     

The Juul Labs Contract Canvassers Lawsuit is Bautista et al. v. Juul Labs, Inc. et al., Case No. 4:20-cv-01613-HSG in the United States District Court for the Northern District of California.

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