CalChamber Urges State High Court to Review Independent Contractor Test

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CalChamberInCourtThe California Chamber of Commerce has filed a letter brief with the California Supreme Court urging it to review and decide what test should be applied in class action lawsuits alleging that wage-and-hour violations occurred because workers were improperly classified as independent contractors.

The court agreed earlier this month to review Dynamex Operations West, Inc. v. Superior Court. The case involved a class action lawsuit brought by delivery drivers who alleged they were misclassified as independent contractors and that the misclassification resulted in unlawful denial of overtime and other wage-and-hour violations.

Multi-Factor Test

For years, determining whether a worker is an independent contractor or an employee has been governed by the multi-factor test found in S.G Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

This test focused on whether the person to whom service has been rendered has the right to control the manner and means of accomplishing the desired result. Businesses and individuals have relied on this test as they agreed to their business relationships.

Appellate Court Decision

Last year, however, a California appellate court issued an opinion allowing workers in a class action lawsuit to rely on a Wage Order’s expansive definitions of “employer” and “employee” to bolster their claim that they were misclassified as independent contractors. The Wage Order test is much easier for a worker to meet than the right to control test.

CalChamber is concerned that the appellate court’s opinion creates uncertainty as to whether any independent contracting arrangement could be created.

California is one of the most challenging places in which to run a business, CalChamber’s letter brief states. California businesses face innumerable compliance requirements set forth in, at times, confusing and ambiguous regulations and statutes.

CalChamber urged the Supreme Court to review this case because allowing the Court of Appeal opinion to stand will inject one more layer of uncertainty.

Supreme Court Review

The California Supreme Court agreed to review the lower court decision in Dynamex and to specifically decide the following issue:

• In a wage-and-hour class action involving claims that the plaintiffs were misclassified as independent contractors, may a class be certified based on the Industrial Welfare Commission definition of employee? Or should the common law right to control test for distinguishing between employees and independent contractors apply?

CalChamber plans to file an amicus brief.

Staff Contact: Erika Frank

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Erika Frank
About Erika Frank
Erika Frank, vice president, legal affairs, and general counsel, joined CalChamber in April 2004 as a policy advocate and general counsel, leveraging her 10 years of legal, governmental and legislative experience. Named vice president of legal affairs in 2009, she is CalChamber's subject matter expert on California and federal employment law. She oversees and contributes to CalChamber's labor law and human resources compliance publications; co-produces and presents webinars and seminars; and heads the Labor Law Helpline. She holds a B.A. in political science from the University of California, Santa Barbara, and earned her J.D. from the McGeorge School of Law, University of the Pacific.