California Supreme Court Grants Review in Independent Contractor Misclassification Case
Last week the California Supreme Court granted the employer’s petition for review in Dynamex v. Superior Court, an independent contractor misclassification case in which the Court of Appeal held that the test for independent contractor versus employee status depends on whether the employee is alleging a violation of wage order provision or not. If alleging a violation of a wage order (e.g. failure to pay required overtime, failure to reimburse expenses specified in the applicable wage order), then the definitions of “employ” and “employer” in the wage order apply to determine whether a worker is an “employee” or an independent contractor. Of course, the wage orders generally define these terms extremely broadly to include anyone “suffered or permitted to work.” Under that definition, it is difficult to conceive how any worker would not qualify as an “employee” rather than an independent contractor. Application of these definitions also makes it much easier to obtain class certification in a case challenging misclassification of a group of workers.
The Dynamex decision is contrary to the well-established multi-factor framework courts traditionally have used to analyze employee versus independent contractor status. That test, known as the Borello test, focuses primarily on the extent to which the employer has a right to control the details of the work. It also considers factors, including but not limited to whether the employer or the worker pays for tools and equipment, whether the worker has a right to hire others to assist with the work, the length of the worker’s service, whether the work is unique or is part of the employer’s regular course of business, and whether the worker performs work for other entities as well or is restricted to working only for the employer. This multi-factor test provides for a fairer assessment than the wage order definitions and in many cases makes class certification inappropriate because application of the factors varies from worker to worker.
Employers with independent contractors will want to monitor this case as it develops before the California Supreme Court. For more information, see our prior post on the Dynamex case here.