California Supreme Court Makes It Harder for Employers to Classify Workers as Independent Contractors
Today, Elizabeth brings us an important article related to a recent California Supreme Court decision affecting the classification of workers between employees and independent contractors. This has long been a hotbed of litigation the rules get trickier everyday.
As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.
Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to estate planning, please contact me to setup a date and time.
California Supreme Court Makes It Harder for Employers to Classify Workers as Independent Contractors
By: P. Elizabeth Helms, Esq.
In the potentially landmark decision of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (Cal. Sup. Ct. Apr. 30, 2018), the California Supreme Court unanimously announced a new test for determining whether a worker is an employee or an independent contractor.
The case involved truck drivers for Dynamex, a nationwide same-day delivery service operating in California. In 2004, to save money, the company converted its drivers from employees to independent contractors. The drivers performed essentially the same duties they performed when they were classified as employees as they did when they were reclassified as independent contractors.
Dynamex required its drivers to provide their own trucks and pay their own expenses, including fuel and maintenance costs. The drivers were allowed to set their own schedules, but Dynamex controlled the number and nature of deliveries assigned to the drivers. The drivers were free to reject any assigned delivery. The drivers were required to purchase Dynamex shirts to wear when making deliveries for Dynamex. A driver was permitted to make deliveries for other delivery companies, including the driver’s own delivery business, though the driver could not divert any delivery order he received from Dynamex to a competitor.
The case was brought by a driver on behalf of himself and other Dynamex drivers, claiming that he had been improperly classified as an independent contractor. He sought, among other things, overtime pay.
In determining that the drivers were employees, the Court rejected the multi-factor test that focused on the hiring entity’s right to control the worker. Instead, the Court adopted a standard that presumes a worker to be an employee, entitled to overtime pay and meal and rest breaks. A worker is considered an independent contractor only if the hiring entity meets each part of the newly adopted “ABC” test: (A) The worker is free from the type and degree of control and direction the hiring entity typically exercises over its employees; and (B) The worker performs work outside the scope of the hiring entity’s business, and whose work therefore would not ordinarily be viewed by others as working in the hiring entity’s business; and (C) The worker is customarily engaged in an independently established trade, occupation, or business, taking such steps as incorporating his business, getting a business or trade license or advertising.
Failing any one of the three parts of this test will preclude an entity from treating a worker as an independent contractor rather than an employee.
The potential impact of this case is huge. Companies such as Uber could be severely impacted. For example, a court may question whether driving can be separated from Uber’s core business. Much will depend on how that business is defined: Does Uber provide a transportation network, as Uber asserts, or just transportation?
This case is an indication that the Court was looking to cast a wide net to deem a greater number of workers to be ’employees’ rather than contractors.
The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters. Elizabeth has a strong background in employment law and has spent the last several years helping businesses navigate California’s complex employment law structures. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com or email Elizabeth at earias@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
Today, Elizabeth brings us an important article related to a recent California Supreme Court decision affecting the classification of workers between employees and independent contractors. This has long been a hotbed of litigation the rules get trickier everyday.
As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.
Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to estate planning, please contact me to setup a date and time.
California Supreme Court Makes It Harder for Employers to Classify Workers as Independent Contractors
By: P. Elizabeth Helms, Esq.
In the potentially landmark decision of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (Cal. Sup. Ct. Apr. 30, 2018), the California Supreme Court unanimously announced a new test for determining whether a worker is an employee or an independent contractor.
The case involved truck drivers for Dynamex, a nationwide same-day delivery service operating in California. In 2004, to save money, the company converted its drivers from employees to independent contractors. The drivers performed essentially the same duties they performed when they were classified as employees as they did when they were reclassified as independent contractors.
Dynamex required its drivers to provide their own trucks and pay their own expenses, including fuel and maintenance costs. The drivers were allowed to set their own schedules, but Dynamex controlled the number and nature of deliveries assigned to the drivers. The drivers were free to reject any assigned delivery. The drivers were required to purchase Dynamex shirts to wear when making deliveries for Dynamex. A driver was permitted to make deliveries for other delivery companies, including the driver’s own delivery business, though the driver could not divert any delivery order he received from Dynamex to a competitor.
The case was brought by a driver on behalf of himself and other Dynamex drivers, claiming that he had been improperly classified as an independent contractor. He sought, among other things, overtime pay.
In determining that the drivers were employees, the Court rejected the multi-factor test that focused on the hiring entity’s right to control the worker. Instead, the Court adopted a standard that presumes a worker to be an employee, entitled to overtime pay and meal and rest breaks. A worker is considered an independent contractor only if the hiring entity meets each part of the newly adopted “ABC” test: (A) The worker is free from the type and degree of control and direction the hiring entity typically exercises over its employees; and (B) The worker performs work outside the scope of the hiring entity’s business, and whose work therefore would not ordinarily be viewed by others as working in the hiring entity’s business; and (C) The worker is customarily engaged in an independently established trade, occupation, or business, taking such steps as incorporating his business, getting a business or trade license or advertising.
Failing any one of the three parts of this test will preclude an entity from treating a worker as an independent contractor rather than an employee.
The potential impact of this case is huge. Companies such as Uber could be severely impacted. For example, a court may question whether driving can be separated from Uber’s core business. Much will depend on how that business is defined: Does Uber provide a transportation network, as Uber asserts, or just transportation?
This case is an indication that the Court was looking to cast a wide net to deem a greater number of workers to be ’employees’ rather than contractors.
The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters. Elizabeth has a strong background in employment law and has spent the last several years helping businesses navigate California’s complex employment law structures. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com or email Elizabeth at earias@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.