San Diego accuses Campbell’s Company of worker misclassification
The case illuminates how authorities are enforcing California’s strict ABC independent
contractor test
Anyone who opens a can of Campbell’s soup labeled “Cream of Mushroom” knows what’s inside will match the label.
Late last month, San Diego City Attorney Heather Ferbert filed a lawsuit in San Diego Superior Court alleging that Campbell’s mislabels some of its workers.
At issue is whether Campbell’s, through its wholly owned snack producing subsidiaries Snyder’s-Lance and Pepperidge Farm, misclassifies as independent contractors hundreds of workers who distribute its products directly to retail stores and thereby violates California’s unfair competition law.
The case illuminates how authorities are enforcing California’s strict ABC independent contractor test, codified at Labor Code section 2775.
Core allegations
The complaint alleges that manufacturers use a “direct-store-delivery” (DSD) model to get valuable retail shelf space. A manufacturer “enters contracts with retailers to stock, rotate, and otherwise merchandise products directly on the retail shelves rather than going through a central distribution hub.” The complaint refers to individual workers who help execute this model as “distributors” and says Campbell’s makes these workers sign agreements that mischaracterize them as independent contractors.
By misclassifying these workers as independent contractors, says the complaint, Campbell’s deprives them of the bundle of rights employees enjoy, including minimum wage, overtime, expense reimbursement and sick pay. Campbell’s and its co-defendants also allegedly thereby “evade state and federal employment taxes, workers compensation coverage, and take unfair advantage over law abiding competitors.”
To avoid liability, Campbell’s must prove its relationship with the distributors meets all three parts of the ABC test. The complaint alleges Campbell’s can’t satisfy any part of the test.
Click here to read the full article written by SCMV Shareholder Dan Eaton and published in The San Diego Union-Tribune.