A couple of recent panel decisions demonstrate that the California Supreme Court’s new independent contractor/employer test in the 2018 Dynamex v. Superior Court decision does not apply to the California workers’ compensation system.
The WCAB issued three panel decisions in late 2018 that declined to rely upon the state Supreme Court’s decision in Dynamex. In the April 2018 Dynamex decision, the court adopted a three-part test known as the “ABC Test” to determine whether a worker is an independent contractor or an employee.
Those of us in the workers’ compensation system feared that this test would cause uncertainty by suddenly replacing the multi-factor test set forth by the 1989 state Supreme Court decision in S.G. Borello & Sons, Inc. v. Dept. of Ind. Relations 19 (1989) 48 Cal.3d 341 [54 Cal.Comp.Cases 80].
However, the most recent panel decisions clarify that Dynamex does not replace the Borello test, because the Dynamex factors only apply to wage orders in wage and hour disputes. The case that features the most detailed statement on this clarification is Perkins v. Don L. Knox, et al (2018 Cal. Wrk. Comp. P.D. LEXIS 490.) In that panel decision, WCAB Chairwoman Katherine Zalewski wrote, “Since the Dynamex court did not overturn the Borello standard for determining an applicant’s employment status with respect to the requirement of providing workers’ compensation benefits, and expressly limited the application of the ABC test to the determination of employment status with regard to wage orders, we conclude that the Borello standard applies here.” Fellow WCAB commissioners Jose Razo and Deidra Lowe concurred with Zalewski’s opinion.
The Dynamex decision made a brief appearance in two other panel decisions as well. In Martinez v. TFR Management Group 2018 Cal. Wrk. Comp. P.D. LEXIS 285, the WCAB explained that the Dynamex decision only “clarifies the standard for determining whether workers in California should be classified as employees or independent contractors for purposes of Industrial Welfare Commission (IWC) wage orders.”
In Gonzalez v. South Green Transportation 2018 Cal. Wrk. Comp. P.D. LEXIS 479, the WCAB chose to adopt a trial judge’s decision, with the exception for the judge’s discussion of the Dynamex case. In other words, the WCAB declined to adopt the trial judge’s discussion of Dynamex, presumably because these WCAB commissioners are of the opinion that Dynamex does not apply to workers’ compensation cases.
THE ABC AND BORELLO TESTS
Thanks to these recent panel decisions, it appears that Borello is still good law and that we should be objecting to any attempt to use the “ABC test” from Dynamex. Let’s take a look at the factors in each test.
In Dynamex, the justices concluded that a business is presumably a worker’s employer unless the business can disprove all three of the following criteria, which they called the “ABC test”:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work;
- The worker performs work that is outside the usual course of the hiring entity’s business;
- The worker is customarily engaged in an independently established trade, occupation, or business.
By comparison, the Borello case focuses on whether the alleged employer has the right to control the manner and means of the plaintiff’s work. Borello also called for consideration of eight secondary factors to determine whether a worker is an employee or an independent contractor
- whether one performing services is engaged in a distinct occupation or business
- 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
- the skill required in the particular occupation
- whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work length of time services provided
- the method of payment, whether by the time or by the job
- whether or not the work is a part of the regular business of the principal
- whether or not the parties believe they are creating the relationship of employer-employee.
To recap, these recent panel decisions suggest that Borello remains good law, and judges should be using the Borello test to determine whether a worker is an employee of the defendant.
IT AIN’T OVER YET: WATCH THE LEGISLATURE
New California Gov. Gavin Newsom indicated in pre-election interviews that he was interested in legislation clarifying the independent contractor/employee relationship. Meanwhile, employer lobbyists are pushing for legislation addressing the Dynamex decision and clarifying what it applies to.
What does that mean exactly? Well, it’s a bit too early to identify any specifics, other than lawmakers’ intent to push back on misclassification of workers.
However, that mix of factors could result in some new legislation on the independent contractor/employment test. And if there is new legislation, that could require additional interpretation from California courts.
So we will be keeping an eye on the Legislature to see if there are any changes to the test in 2019.
Got a legal question regarding Dynamex, Borello or any other workers’ compensation related matters? Feel free to contact John P. Kamin. Mr. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Tarzana location, where he heads the firm’s Sports Law Division and watches the recent legislative efforts. Mr. Kamin previously worked as a journalist, where he reported on work-related injuries in all 50 states. Feel free to contact John at firstname.lastname@example.org or at (818) 654-0411.
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