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Dynamex Does Not Actually Apply to Workers’ Compensation… or Does It?
By Scott Darling
For those who somehow have not heard, the California Supreme Court issued a decision in 2018 that significantly impacted the age-old debate of who is an employee and who is an independent contractor.
In Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal. 5th 903, the California Supreme Court established what has been referred to as the “ABC Test” for deciding whether a person is an employee or independent contractor. In doing so, the Court went away from what has been the standard of the industry, which has commonly been referred to as the “Borello factors” established by the California Supreme Court in the 1989 case S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (1989) 48 Cal. 3d 341.
Under the previously established Borello case the primary factor is whether the person to whom services are rendered has the right to control the manner and means of accomplishing the result desired. There are also nine additional factors to consider, with no one factor being conclusive on its own:
These factors have been used to determine whether or not an injured worker is an employee for which the employer is liable for workers’ compensation benefits or is deemed an independent contractor.
The Dynamex case involved a corporation (Dynamex) which operates as a delivery service, using various methods, for which they utilized individual drivers to conduct business. Initially, Dynamex drivers were considered employees. However, in 2004, the company changed them to be independent contractors. In the lawsuit, two delivery drivers sued on their own behalf and on behalf of a class of other similarly situated drivers. The complaint alleged that Dynamex had misclassified its delivery drivers as independent contractors rather than employees. The drivers claimed that Dynamex’s alleged misclassification of its drivers as independent contractors led to Dynamex’s violation of the provisions of Industrial Welfare Commission wage order No. 9, the applicable state wage order governing the transportation industry, as well as various sections of the Labor Code, resulting in Dynamex’s engaging in unfair and unlawful business practices under Business and Professions Code section 17200.
In Dynamex, the California Supreme Court established a whole new test, under which they ruled that the plaintiffs in the Dynamex case were indeed employees and not independent contractors as Dynamex had tried to argue.
In creating the test, the Court looked at the Borello Factors and fashioned a scaled down version which appears to center around the initial factor. The “ABC Test”, as it has become known as, states a person is an independent contractor to whom a wage order does not apply if:
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