Lately, there have been a lot of cases throughout the nation asking courts to differentiate between the worker classifications of an employee and a contractor. In a wave of cases, most courts used a factor test to side with workers who were wrongfully classified as independent contractors so that employers could avoid paying certain benefits owed to employees. However, a California Court of Appeal recently complicated what was starting to look like a straight forward analysis on the determination of whether a worker is an independent contractor or an employee.
In Dynamex v. Superior Court, the California Court of Appeal basically held that the test for determining whether a worker is an independent contractor or employee status depends on what wage and hour violation is being alleged. According to the court, if an employer allegedly violated an applicable wage order, then that order’s definitions of “employer” and “employ” should determine the worker’s classification. In the absence of a wage order, then the aforementioned multi-factor “control” test applies.
The control test is derived from the case Borello & Sons, Inc. v. Dep’t of Industrial Relations, and it mainly looks at how much control an employer has over the “manner and means” by which work is accomplished. This test has been the principle foundation for determining whether a worker is an employee or independent contractor, at least until the Court of Appeal through this extra wrench in.
In addition to adding more considerations into the employee classification determination process,the Court of Appeal also made it easier for a class to be certified for class action purposes. Because the wage order definitions of “employ” and “employer” are easier to prove than the factors of the control test, more people will be able to come forward and show they are part of a class of misclassified independent contractors.
California employers should be careful when deciding whether to classify workers as independent contractors or employees. It is highly recommended to work with an experience labor law attorney when drafting job requirements and employee agreements.