Daily Blast May 2, 2018

On Monday, the California Supreme Court issued a unanimous opinion in Dynamex Operations West, Inc. v. Superior Court, which addressed the standard to determine whether workers should be classified as employees or independent contractors for purposes of California wage orders. (Slip opn., p. 77.) As the court said in the opening sentence, this standard “has considerable significance for workers, business, and the public generally.”

Under the new standard announced by the court, the burden is on the hiring entity to establish that the worker is an independent contractor under the “ABC test.” (Id. at pp. 65-66.) To meet the ABC test, the hiring entity must establish each of the following elements:

(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;

(B) That the worker performs work that is outside the usual course of the hiring entity’s business;

(C) That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

(Slip opn., p. 66.)

This standard weighs heavily in favor of employee status. As the Court noted, “failure to prove any one of these three prerequisites will be sufficient in itself to establish that the worker is an included employee, rather than an excluded independent contractor, for purposes of the wage order.” (Slip opn., p. 77.)

While the decision arose out of disputes under California’s Industrial Welfare Commission orders, its implications for other areas of the law could be widespread.