It was only 8 months ago that the California Supreme Court announced its bombshell ruling in Dynamex Operations West, Inc. v. Superior Court and announced the new test for determining when a worker was an employee or independent contractor. This new test was dubbed the “ABC Test” because, for a worker to properly considered an independent contractor, the hiring business now had to prove three different elements (A, B, and C):
(A) That the worker is free from the control and direction of the hiring business in connection with the performance of the work; AND
(B) That the worker performs work that is outside the usual course of the hiring entity’s business; AND
(C) That the worker is customarily engaged in an independently established trade, occupation or business when performing work for the hiring business.
The Dynamex decision created an earthquake in the business community because the new “ABC Test” made it virtually impossible for businesses to legally classify their workers as independent contractors. The new (B) and (C) prongs of the test, in particular, were going to be very difficult, if not impossible, for businesses to prove. I blogged about Dynamex previously and discussed these issues here.
But, Dynamex was a case about wage-and-hour violations. It concerned whether a worker is an employee or contractor for purposes of assessing whether violations of the relevant California Wage Order had occurred. As a result, when the Court announced its new “ABC Test,” the Court explicitly left open the question of whether its new text applied to other types of employment law claims – like sexual harassment, wrongful termination, retaliation, and unfair competition claims. Employees can bring these types of claims against employers in California, while independent contractors cannot.
So, after Dynamex, what’s the test for determining if a worker is an employee (who can bring these claims) or an independent contractor (who cannot)? Two recent published cases give us some preliminary answers.
Duffey v. Tinder Heart Home Care Agency (Jan. 2019)
On January 11, 2019, in Duffey v. Tinder Heart Home Care Agency, LLC, the Court held that Dynamex was limited only to claims brought under the California Wage Orders. Because the plaintiff in Duffey was a domestic caregiver who was covered by California’s “Domestic Worker Bill of Rights,” or DWBR, her claims for failure to pay overtime originated under the DWBR and not the Wage Orders. The agency defended itself by arguing that the plaintiff had no right to overtime, under the DWBR or elsewhere, because she was an independent contractor and not an employee. Not surprisingly, the plaintiff claimed she was an employee under the ABC Test and, therefore, she was entitled to overtime protection.
The Duffey Court rejected the plaintiff’s argument that she was an employee under the “ABC Test.” Instead, the Duffey Court ruled that the proper analysis of whether the caregiver was an employee or independent contractor depended upon an analysis under Martinez v. Combs, 49 Cal. 4th 35 (2010) (which looks at who controls the wages, hours, or working conditions) and the “common law test” from S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989) (which looks at numerous factors designed to determine who controls the means and methods of the work).
Garcia v. Border Transportation Group (Oct. 2018)
A similar result was reached by a different court back on October 22, 2018. In that case, Garcia v. Border Transportation Group, LLC, the Court again specifically ruled that the Dynamex “ABC Test” was limited to claims under the Wage Orders only. The plaintiff in Garcia was a taxi driver for the defendant company. He sued for a variety of wage-and-hour violations, but also for unfair competition, wrongful termination, and other non-Wage Order claims. For those non-Wage Order claims, the Garcia court ruled that the “common law test” from S.G. Borello & Sons (cited above) was the relevant test. The Court stated:
“There is no reason to apply the ABC test categorically to every working relationship, particularly when Borello appears to remain the standard for worker’s compensation. Although both parties suggest Dynamex has some application to Garcia’s case, neither identifies a basis to apply Dynamex to non-wage-order claims. We conclude Borello furnishes the proper standard as to those claims.”
Thus, we now have two different courts who, months apart, have held that the watershed “ABC Test” from Dynamex is limited only to Wage Order claims. This has California employers rejoicing, if perhaps only momentarily, until further clarification arrives. Stay tuned!
You can read the opinion in Duffey here.
You can read the opinion in Garcia here.