Case finds Dynamex Independent Contractor Test only applies to claims under wage orders
Wage orders are issued by the California Industrial Welfare Commission and regulate wages, hours and working conditions, specifically as to minimum wage and maximum hours. Wage Order 16 applies to construction and drilling industries.
The new case is Garcia v. Border Transportation Group, LLC (2018) 28 Cal.App.5th 558 (Garcia), which was decided by the California Court of Appeal in October. Jesus Garcia was a taxicab driver with Border Transportation Group for some time. A year after he stopped working for Border Transportation, he sued the company for wage and hour violations.
The trial court determined he Garcia was an independent contractor and so could not win on his claims of wage and hour violation. However, during the time that the case went up on appeal, the Dynamex case was decided by the California Supreme Court, which adopted a three-part “ABC test” for determining whether someone was an employee or an independent contractor.
Dynamex and Borello
The ABC Test, which must be met before someone can be classified as an independent contractor is:
(A) the worker is free from the control and direction of the hiring company in connection with the performance of the work, both under the contract for the performance of the work and in fact
(B) the worker performs work that is outside the usual course of the hiring company’s business
(C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
The Garcia court looked at the case of S.G. Borello & Sons, Inc. v. Department of Industrial Relations, (1989) 48 Cal.3d 341, in which the court gave the following criteria it called “secondary indicia” to review whether a worker is an independent contractor:
(a) whether the one performing services is engaged in a distinct occupation or business
(b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision
(c) the skill required in the particular occupation
(d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work
(e) the length of time for which the services are to be performed
(f) the method of payment, whether by the time or by the job
(g) whether or not the work is a part of the regular business of the principal
(h) whether or not the parties believe they are creating the relationship of employer-employee.
Garcia made it clear that Dynamex only applies to wage-order claims and the Borello test still applies to all other claims. Garcia explained that Dynamex applied the ‘suffer or permit to work’ standard contained in the wage order without deciding what standard applied to non-wage order claims, such as claims for expense reimbursement (e.g., for fuel or toll road fees).
The court in Garcia explained:[Dynamex] did not reject Borello, which articulated a multifactor test for determining employment status under the Worker’s Compensation Act. Nor did it address the appellate court’s ruling that ‘insofar as the causes of action in the complaint . . . are not governed by the wage order’ and predicated solely on the Labor Code, ‘the Borello standard is the applicable standard for determining whether a worker is properly considered an employee or an independent contractor.’
So, in Garcia, the court decided Dynamex did not apply because the claims were non-wage order claims and applied the Borello test.
This means it’s definitely more difficult to classify someone as an independent contractor, but that so long as it’s not a claim under the wage orders for minimum wages, maximum hours and working conditions, Dynamex will not apply and the old Borello standard is still the law.
By Mahyar A. Ghassemian, Ghassemian Law Group