The California Supreme Court’s April 2018 decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles completely changed the way in which an individual is classified as an independent contractor versus an employee in this state.
In this week’s edition of The Workplace podcast, California Chamber of Commerce President and CEO Allan Zaremberg and Executive Vice President Jennifer Barrera review what the decision means for California employers and independent contractors.
As they point out, without a legislative fix, the Dynamex decision could jeopardize work opportunities and income potential for millions of independent contractors.
Less Flexibility
“The decision has made it less flexible and more restrictive on the ability for individuals to freelance and work as independent contractors,” Barrera explains.
In Dynamex, the California Supreme Court abandoned a long-established balancing-of-factors test previously adopted by the court in a 1989 decision, S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (48 Cal.3d 341). This previous approach weighed multiple factors in their totality to account for the variety of California industries and professions, as well as diversity of California’s workers.
Under Dynamex, the court presumes that a worker is an employee unless the hiring entity establishes all three factors of a one-size-fits-all “ABC Test.”
Dynamex jeopardizes freedom of choice for individuals and pushes them into a traditional employment model that lacks flexibility.
“As the decision stands right now, that is the concern. This one decision, that was dealing with the transportation wage order is now going to be applicable to independent contractors working in virtually every industry in California,” Barrera explains.
Legislature Can Intervene
Zaremberg says that the Legislature has an opportunity to intervene and update California’s outdated labor laws to reflect a modern economy.
The Wage Orders that were at issue in the Dynamex decision haven’t been updated for over a decade; this was even before the smartphone was available, Barrera notes.
“Our laws have not reflected the modern economy and it certainly hasn’t reflected the growing desire of individuals to have flexibility in their work, and wanting to have that flexibility is a big issue,” she says.
The Dynamex decision is a great lesson about how the courts must deal with the facts in front of them. The Legislature is able to take testimony from all parties affected.
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