Myers v. Reno Cab Co.

492 P.3d 545

Jeff MYERS, Individually and on Behalf of Others Similarly Situated, Appellant,

v.RENO CAB COMPANY, INC., Respondent.

Arthur Shatz and Richard Frantis, Individually and on Behalf of Others Similarly Situated, Appellants,

v.Roy L. Street, Individually and D/B/A Capital Cab, Respondent.

No. 80448

No. 80449

Supreme Court of Nevada.

FILED JULY 29, 2021

Leon Greenberg Professional Corporation and Leon M. Greenberg, Las Vegas, for Appellants.

Simons Hall Johnston PC and Mark G. Simons, Reno, for Respondents.

BEFORE THE SUPREME COURT, EN BANC.

OPINION

By the Court, STIGLICH, J.:

The central issue in these consolidated cases is a familiar one: are the appellants "employees" or "independent contractors," and how do we tell?¹ The answer will depend on the legal context. To say that a worker is an "employee" for the purpose of a particular law usually means that the worker falls within that law's scope of coverage. But different laws may have different scopes of coverage, and so the same worker may be an "independent contractor" as concerns one law and an "employee" as concerns another.

In this opinion, we clarify that employee status for purposes of the Minimum Wage Amendment to the Nevada Constitution (MWA) is determined only by the "economic realities" test, but employee status for purposes of statutory waiting time penalties for late-paid wages may be affected by the presumption set forth in NRS 608.0155. We reaffirm that a contractual recitation that a worker is not an employee is not conclusive under either test. Finally, employee status for the purposes of either the MWA or NRS Chapter 608 is not affected by the Nevada Transportation Authority's (NTA) approval of a taxi lease under NRS 706.473. Because the district court held that the NTA's approval of appellants’ leases foreclosed further inquiry into their employee status, we reverse and remand.

BACKGROUND

The respondents are taxicab companies that lease taxicabs to the appellant drivers under agreements approved by the NTA, pursuant to NRS 706.473.² Each agreement contains the following language:

RELATIONSHIP. Neither Party is the partner, joint venture, agent, or representatives of the other Party. LESSEE is an independent contractor. LEASING COMPANY and LESSEE acknowledge and agree that there does not exist between them the relationship of employer and employee, principal and agent, or master and servant, either express or implied, but that the relationship of the parties is strictly that of lessor and lessee, the LESSEE being free from interference or control on the part of LEASING COMPANY.

Each lease agreement requires the driver to operate the taxicab for at least three days per week, unless the driver obtains approval for an alternate schedule. On any day that the driver operates the taxicab, the driver must pay to the leasing company a nominal fee of 5 or 10 dollars, plus one-half of the driver's "total book" (i.e., gross receipts) for the day, plus gas and administrative fees. The lease agreement states that drivers have the option, but are not required, to use the companies’ dispatch service to acquire passengers.

The drivers sued in 2015, alleging that their take-home pay was often less than the minimum hourly wage required by the MWA. The MWA only applies to "employees." Nev. Const. art. 15, § 16. The drivers alleged that, notwithstanding the recital in the lease agreement that they were independent contractors, they were in fact employees under the "economic realities" test we elucidated the previous year in Terry v. Sapphire Gentlemen's Club, 130 Nev. 879, 336 P.3d 951 (2014). Although Terry involved the statutory right to a minimum wage, see id . at 881, 336 P.3d at 953 ; see also NRS 608.250, the drivers argued that the same test should apply to their MWA claims. In addition, the drivers alleged that they were not paid all the wages they were owed at the time of separation, entitling them to waiting time penalties under NRS 608.040.

The cab companies moved for summary judgment, arguing that the drivers were independent contractors, not employees, for the purposes of the minimum wage laws. The district court initially denied the motion, finding that disputed issues of material fact prevented summary judgment. But it later granted the cab companies’ renewed motion. It relied solely on the fact that the drivers held NTA-approved taxicab leases, reasoning that when the NTA approves a lease pursuant to NRS 706.473, it confirms that the parties to the lease have entered a "statutorily created independent contractor relationship." See Yellow Cab of Reno, Inc. v. Second Judicial Dist. Court, 127 Nev. 583, 592, 262 P.3d 699, 704 (2011). In the district court's view, a worker who is an independent contractor under NRS 706.473 is not an employee for any purpose, and thus the protections afforded to "employees" by the MWA and by NRS Chapter 608 did not apply. The drivers appealed, and this court has consolidated these appeals.

DISCUSSION

The drivers stated two claims: one claim for unpaid minimum wages under the MWA, and one claim for waiting time penalties under NRS 608.040. The drivers are entitled to assert each claim only if they are "employees" under the relevant law. We first consider whether the statement in the drivers’ leases that they are independent contractors is conclusive as to employee status under these laws. Second, we consider whether the NTA's approval of the drivers’ leases under NRS 706.473 is conclusive as to employee status under these laws. Finally, having held in Doe Dancer I v. La Fuente, Inc., 137 Nev. Adv. Op. 3, 481 P.3d 860 (2021), that NRS 608.0155 does not govern employment status with respect to constitutional MWA claims, we consider whether that statute applies to NRS Chapter 608 claims that are derivative of an underlying constitutional violation.

Standard of review

"This court reviews a district court's grant of summary judgment de novo." Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005). The proper legal test for employee status under the MWA and NRS Chapter 608 is a question of law, which we also review de novo. See Doe Dancer , 137 Nev. Adv. Op. 3, 481 P.3d at 866. When the facts are undisputed, the existence of an employment relationship under a given test is a question of law that can be resolved at summary judgment. See Terry, 130 Nev. at 889, 336 P.3d at 958. But where material facts are genuinely disputed, summary judgment should be denied. See Jaramillo v. Ramos, 136 Nev. 134, 139, 460 P.3d 460, 465 (2020) (reversing summary judgment where genuine issue of material fact existed).

A contractual disavowal of an employment relationship is not conclusive

We dispose of the cab companies’ simplest argument first. They contend that the recitation in the lease agreement that "LESSEE is an independent contractor" is conclusive evidence that the drivers are in fact independent contractors for MWA and NRS Chapter 608 purposes, and thus no application of any other test is necessary. As the district court correctly recognized, that argument is squarely foreclosed by our caselaw. Terry, 130 Nev. at 882, 336 P.3d at 954 ("Particularly where, as here, remedial statutes are in play, a putative employer's self-interested disclaimers of any intent to hire cannot control the realities of an employment relationship."); see also Doe Dancer, 137 Nev. Adv. Op. 3, 481 P.3d at 865, 868-70 (concluding that dancers were employees under the MWA despite contract specifically disavowing any employment relationship—in all capitals, no less).

We note that employment relationships are by no means unique in their dependence on facts beyond the original contract. Cf. Shaw v. Delta Airlines, Inc., 798 F. Supp. 1453, 1455 (D. Nev. 1992) (noting that whether the parties call their relationship a partnership, or believe it to be so, is "immaterial" in determining whether they are in fact partners). A dispute over whether a worker is an employee covered by remedial legislation cannot be resolved by the contract's statement to the contrary, any more than a dispute over whether a worker was paid can be resolved by the contract's statement that the worker will be paid every Friday. Just as a business may fail to in fact pay its workers on time, a business may fail to in fact treat its workers as independent contractors. The facts as proven in court control a worker's actual status.³

In the face of this authority, the cab companies point only to Kaldi v. Farmers Insurance Exchange, 117 Nev. 273, 21 P.3d 16 (2001). There, we relied on a contract provision to find that no employment relationship existed. Id. at 278-79, 21 P.3d at 19-20. However, Kaldi was not concerned with any "remedial statute" or constitutional provision, cf. Terry, 130 Nev. at 882, 336 P.3d at 954, but only with an alleged contractual right to be free from termination except for good cause. See Kaldi , 117 Nev. at 279 & n.4, 21 P.3d at 20 & n.4 (citing D'Angelo v. Gardner , 107 Nev. 704, 712, 819 P.2d 206, 211-12 (1991), which discussed "contractual rights of continued employment" in context of tortious bad-faith discharge). Of course, if a plaintiff seeks to enforce a right given by the contract, then the contract's language will be highly relevant. If the drivers’ claims here were similar to those in Kaldi, then Kaldi might well be controlling. But the claims are dissimilar. The drivers here seek to enforce a right that—if they are employees under the appropriate tests—is guaranteed to them by law, not by the contract. To the extent Kaldi might be misread as suggesting that a contractual recitation is dispositive of a worker's status under remedial employment laws, it serves as an example of the risk of confusion caused by using the terms "employee" or "employment relationship" without specifying the legal context.

Thus, we reaffirm that a worker is not necessarily an independent contractor solely because a contract says so. Instead, the court must determine...