California Courts of Appeal
California courts are beginning to grapple with the reach of Dynamex, and its implications for the distinction between employees and independent contractors. In this case, the appellate court determined that the ABC standard described in Dynamex applies only to claims covered under the IWC Wage Orders, while the Borello standard applies otherwiseGARCIA v. BORDER TRANSPORTATION GROUP, LLC
PLAINTIFF GARCIA RENTED HIS TAXI FROM DEFENDANT BORDER TRANSPORTATION GROUP
Plaintiff Garcia was a taxi cab driver. He rented his taxi from Defendant Border Transportation Group (“BTG”), and also purchased optional dispatch services from them.
Operating in Calexico, Plaintiff Garcia obtained a taxi permit from the city, which allowed him to work only for Defendant BTG. If he wanted to work for a different company, he would have to obtain a different permit from the city.
PLAINTIFF GARCIA SUED FOR VARIOUS ALLEGED WAGE-AND-HOUR VIOLATIONS
Upon stopping his work with Defendant BTG (the facts regarding how that came about were disputed), Plaintiff Garcia became a named plaintiff in a putative class action against Defendant BTG. Garcia and the putative class alleged wrongful termination in violation of public policy as well as various wage and hour claims, including unpaid wages, failure to pay minimum wage, failure to pay overtime, failure to provide wage statements, failure to provide meal and rest breaks, waiting time penalties, and unfair competition.
THE TRIAL COURT GRANTED SUMMARY JUDGMENT
In deciding Defendant BTG’s motion for summary judgment, the trial court used the Borello test for determining if the workers were independent contractors or employees. Under Borello, the company bears the burden of demonstrating that the worker is an independent contractor, and the most important factor is the company’s ability to exercise control, whether actually used or not. That is not the only factor, however. Borello goes on to detail
(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; and (h) whether or not the parties believe they are creating the relationship of employer-employee.
Applying Borello, the trial court granted summary judgment, finding that the factors weighed in favor of Defendant BTG’s assertion of an independent contractor relationship.
DYNAMEX APPLIED TO THE WAGE ORDER CLAIMS
There was little dispute that the Supreme Court’s decision in Dynamex applied to the claims arising under the wage orders. In Dynamex, the court approved the ABC test for determining whether a worker was an independent contractor or an employee. In that test (detailed in the April 2018 edition of the CELA Bulletin), as in Borello, workers are presumed to be employees, and the burden is on the defendant company to prove any asserted independent contractor relationship. Moreover, under Dynamex, a worker will be found to be an independent contractor only if all of the following criteria are met:
(a) that 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.
THE CLASS OF WORKERS WERE EMPLOYEES FOR THE WAGE ORDER CLAIMS UNDER DYNAMEX
Applying Dynamex’s ABC test, the Garcia court determined that summary judgment should have been denied as to those claims arising under the wage order. The court pointed out the significance of the phrase used in part (C): “independently established.” Citing cases both from California and out of state, the Garcia court explained that this meant that the worker, to qualify as an independent contractor, had to have established a separate business of that worker’s own volition, and had to ply that trade in a manner traditionally thought of as an ongoing enterprise. The fact that the putative class members could have worked elsewhere was not relevant; the question was whether they did, and actively got business elsewhere. Not so here, where Garcia and the putative class could not even have worked for a different company without obtaining a separate license.
THE PLAINTIFFS WAIVED THEIR NON-WAGE ORDER CLAIMS
The court did not have occasion to apply the Borello test to the non-wage order claims, because it determined that the plaintiffs waived their appeal as to those causes of action by not fully developing their argument.
CONCLUSION
The first published case to interpret Dynamex has limited it to claims arising under the IWC Wage Orders. Dynamex didn’t reject the ABC test for claims outside the wage orders; it expressly did not consider the issue. The result in Garcia does not seem congruent with the strong statement Dynamex makes about the importance of timely payment of wages in California public policy, even those wages and remedies not contemplated by the wage orders. Don’t be surprised when a different appellate court comes to a different conclusion, and the Supreme Court takes the issue up again.
Fourth Dist., Div. 1, Filed 10/23/18. Opinion by Judge Dato.
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