Almost six months ago, the California Supreme Court issued its decision in Dynamex, which dramatically altered the landscape pertaining to the classification of California workers as either employees or independent contractors. This past Monday, the California Court of Appeal issued one of the first decisions interpreting that seminal case.
In Dynamex, the California Supreme Court issued a new, employee-friendly test for determining whether a worker is properly classified as an employee or independent contractor for the purposes of claims brought under California’s wage order – the “ABC” test. Under the ABC test, the burden is on the hiring entity to establish that the worker is an independent contractor. In order to satisfy this burden, the hiring entity must establish all of the following: (1) that the worker is free from the control and direction of the hiring entity in connection with the performance of work; (2) that the worker performs work that is outside the usual course of the hiring entity’s business; and (3) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
One of the many questions left open by Dynamex was whether California courts would apply this test to all claims brought by workers under California law, or only to claims brought under California’s wage orders. In Jesus Garcia v. Border Transportation Group, LLC, the Court of Appeal for the Fourth Appellate District determined that Dynamex only applied to claims brought under California’s wage orders, e.g., claims pertaining to minimum wages, maximum hours, and certain other basic working conditions. For this reason, the Court in Garcia denied Plaintiff’s efforts to apply the ABC test to his non-wage order claims.
Garcia also provided some clarification as to the third factor of the ABC test: whether the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. Specifically, the Court determined that the relevant analysis is whether the worker has actually engaged in an independently established business, rather than whether the worker could engage in such business.
Both California employers and courts are still dealing with the ramifications of the Dynamex decision. We will keep you up to date as more decisions come in.
In my blog post from May 1, I cover the Dynamex Operations West, Inc. v. Lee decision by the California Supreme Court.