Monday, 20 April 2015 00:00

Lawsuit Filed Against G&C Auto Body Cites Unfair Business Practices, G&C Responds ‘No Merit'

Seven California auto body repair technicians have filed a lawsuit against G & C Autobody, a medium-sized MSO based in Santa Rosa, CA. The plaintiffs claim they were misclassified as independent contractors by the company and allege a violation of the California wage and hour laws, unfair competition and unfair business practices.

Joseph Lippard and Vaughn Medeiros filed the original complaint in the Superior Court of California County of Sonoma on March 17. They both worked at G & C as automotive technicians at the company’s Santa Rosa location.

Since then, an additional five former G & C workers have joined the case, all alleging they were misclassified as independent contractors: Phil Bill, Jeff Edwards, Luis Mata, Jose Sanchez and Scott Steiner.    

According to the complaint, “Unlawful and unfair business practices included the failure to pay earned wages including overtime wages; the imposition of paycheck deductions and paybacks to Defendant from its workers for routine and ordinary business expenses for its automotive technicians’ shop space, equipment and other overhead costs.”    

“The case is essentially challenging G&C’s long-standing practice of misclassifying all of their autotechs, the guys who do the body repair work and painting, as independent contractors under the law,” said Jeffrey Beeson of Beeson Terhorst in Santa Rosa, CA, who is the lead attorney for the plaintiffs. “Our position is that they should be classified as employees.”    

When they were hired, Beeson said his plaintiffs were told they could set up their own businesses; however, their lawyer said there was nothing closely resembling an independent business.

“All of the economic realties of the plaintiff’s working relationship with G & C and their continued, ongoing dependence on G & C Auto Body as their sole source of income, demonstrated an employment relationship,” said Beeson.    

According to the complaint, the plaintiffs only provided automotive repairs for G&C customers, had virtually no contact with them and had no customers of their own.    

“This is completely contrary to G&C Auto Body’s fiction that plaintiffs ‘ran their own business.’ They had no customers other than those of G&C Auto Body and when they brought in a customer, G&C Auto Body made the assignment of the work, set the labor rate and amount to be charged and collected the payment from that customer. In short all customers were G&C Auto Body customers,” the lawsuit states.  

"In addition, Beeson said the shop purchased and supplied all of the parts, materials and supplies used in their work, determined which part would be installed on a customer’s car and controlled the details on how the work was performed and when it was completed.    

“Even though G&C required the plaintiffs pay weekly ‘rent’ for their work stall, G & C prohibited the plaintiffs from performing work for customers other than G & C customers at their workspace at the G & C shop,” said Beeson.  

The plaintiffs allege that “G&C Auto Body created an elaborate fiction in order to convince the employees they were independent contractors.”    

Although Lippard and Medeiros acknowledge signing documents saying they were independent contractors, they say they were in fact standardized forms used by the defendant when hiring auto body repair technicians.    

“…these statements were belied by actual practice,” the complaint states. “In fact, these statements were but thin veneers designed to gain advantage over the worker and gain a significant competitive advantage over other auto body repair shops.”    

Beeson said that as far as they have determined, G & C is the only repair facility in the area that classifies their technicians and painters as independent contractors. Founded by Gene Crozat in 1972, the family-owned and operated business has nine auto repair facilities in Northern California; Fairfield, Novato, Petaluma, Rohnert Park, San Rafael, Santa Rosa, Ukiah, Vacaville and Windsor.

“No one else does it like G & C and its practices are contrary to industry practice,” he said.

The plaintiffs claim that the “Defendant intentionally and unlawfully misclassified its automotive repair technicians performing auto body repairs as independent contractors to evade its obligations under California’s employment laws.”    

According to California Labor Code, any person rendering services for another is an employee. Labor Code 3351 states that an employee is “every person in the service of an employer under any appointment or contract of hire or apprenticeship, expressed or implied, oral or written, whether lawfully or unlawfully employed.”    

Beeson said that by classifying them as independent contractors, the company did not have to take out paycheck deductions, pay business expenses, social security, payroll taxes, Medicare or cover them under workers compensation for any job injuries. They also did not have to pay for overtime, breaks or anything else California law requires of an employer.    

The plaintiffs said they were required to pay for all of their own mandatory I-CAR training, their own tools and any helpers G & C required they hire, supervise and train.

“G & C frequently then hired away these so-called ‘helpers’ after they were trained by the plaintiffs and made them G & C employees or contractors, thereby saving all the hiring and training costs,” said Beeson.    

He said that by not having to pay overtime, there were enormous cost-savings for G & C, in the millions of dollars. Scott Steiner, the largest producer at the Santa Rosa shop, worked between 3,393-3,575 hours per year – all for G & C. He and the other plaintiffs averaged 65-70 hours per week, Monday-Saturday, including holidays, 52 weeks a year.    

“Many worked after suffering on-the-job injuries for which there was no workers’ compensation coverage,” said Beeson.

For example, Lippard injured his leg at work and continued working while in a wheelchair.

“One G & C manager then told him if he got injured again he would be fired,” said Beeson. “If they had been paid overtime pay as the law required, they would have earned substantially more income.”    

Beeson said, “The pay appeared great on the surface because lump sums were paid with no tax withheld. Yet once plaintiffs stepped back and looked at their excessive work hours and did some calculations they realized if they had been treated as employees, their compensation and employment conditions would have been significantly enhanced.”    

Beeson also said they were never paid for all of their hours worked and “G & C regularly dumped work assignments on the techs for which they got no pay at all.”    

He said many were left with large tax liabilities they did not anticipate or understand. He said Lippard never had take home pay of $350,000 (see accompanying sidebar).   

“This gives them a huge competitive advantage over other auto body shops and we allege in our case we think it’s an unfair business practice in California to engage in these kinds of tactics,” said Beeson, who has covered labor law for 33 years. “We’re seeking to have our clients be given all of the wages and overtime pay, premiums for meal breaks, rest breaks that they weren’t given for four years, which is the statute of limitations,” he said. “We’re seeking to have them classified as employees and then G&C to pay them the money they would have been paid if they had been classified as employees.”  

According to the complaint, G&C employed approximately 50 workers in 2012 that it classified as independent contractors. There were between 15-20 automotive technicians at its Santa Rosa location, some as independent contractors and others as employees.    

Beeson said that over the years the company has arbitrarily changed its classification of automotive technicians from employees to independent contractors and independent contractors to employee status with no changes in their job duties, work location or working conditions.

“For example, Medeiros was at one time categorized as an employee and then was re-categorized as an independent contractor with no change in his essential work duties,” said the complaint.

“Bigger shops like G&C are taking over the mom and pop smaller shops. This is all part of it. They save millions of dollars by not having to pay all of the compliance requirements for employment law that all of their competitors do,” said Beeson. “They should be treated as employees and given all of the protections of employees under California law.”    

The case is set for trial September 15, 2015. Autobody News will continue to report on its developments.

 

To read G&C Attorney Daniel Beck's Response to Charges, click here.

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