Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 19 III. Independent Contractor Classification In 2018, the California Supreme Court issued its long-awaited opinion in Dynamex Operations West, Inc. v. Superior Court,83 reinventing the law by adopting a new test for whether a worker is properly classified as an independent contractor under the Wage Orders. The California Legislature quickly moved to codify this decision in 2019, enacting AB 5. Dynamex and AB 5 administered a double whammy to companies in a wide variety of industries that traditionally engaged a contract workforce. These companies have had to re-evaluate these engagements. A. Dynamex Decision Dynamex resolved an appeal of an order certifying a class of contractor delivery drivers who drove for a package delivery company84 and who claimed that they were employees for purposes of California’s Wage Orders. Dynamex departed from the longstanding tests applied by California courts and administrative agencies, and adopted the “ABC test” for independent contractor status. In so holding, Dynamex significantly limited the types of workers who qualify as independent contractors under California’s Wage Orders. Prior to Dynamex, California courts had applied the common-law Borello test, a flexible test that utilized nine f actors to determine the alleged employer’s right to control the “manner and means” of the worker’s work. S.G. Borello & Sons, Inc. v Dep’t of Industrial Relations.85 These “Borello” factors include: • whether the person performing services is engaged in an occupation or business distinct from that of the principal; • whether the work is a part of the regular business of the principal or alleged employer; • whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work; • the alleged employee's investment in the equipment or materials required by the task and the employment of helpers; • whether the service rendered requires a special skill; • 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; 83 4 Cal. 5th 903 (2018). 84 Dynamex Operations West provided same-day delivery and pick up services for retail entities, including Home Depot and Office Depot. 85 48 Cal. 3d 341 (1989).
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