Dynamex Operations West, Inc. v. Superior Court, a California Supreme Court Case, dramatically shifts the standard for employees and independent contractors in California. Before Dynamex, courts determined worker classification on the multi-factor test from the S. G. Borello & Sons, Inc. v Dept. of Industrial Relations decision, a balancing test of multiple factors such as the method of payment, length of service, required skills, etc. This new standard, called the “ABC” Test, is a stricter standard that drastically narrows the options for when a worker can be called an independent contractor.
This “ABC Test” requires that a worker can be called an independent contractor if:
“(A)  the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; 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 of the same nature as the work performed.”
McGeorge alum Chris Micheli suggests that what makes this new paradigm so problematic is that it was “created by the Court with a limited set of facts before it and not by the Legislature and Governor who would utilize a public process of enacting legislation.”
With the amount of uncertainty surrounding the implications of the Dynamex decision, Micheli suggests a solution:
“The Legislature should adopt a bill in August …in order to “suspend” the Court’s decision for at least a year to allow the Legislature, our elected branch of government, to consider the implications of this case. This will allow the Legislature and Governor, after hearings and due consideration of the implications of such a drastic change in the law, to determine what is the best approach for all Californians.”
Business groups are intensely lobbying the Governor and Legislature to suspend the decision like Micheli suggests. However, labor unions and organizations are also lobbying the Legislature and Governor to leave the ruling be, stating that the decision will benefit employees by preventing companies from taking advantage of the independent contractor loophole.
Whether the decision is suspended or not, everyone is on unsteady ground. The full impacts of the decision are yet to be seen.