CBS Sacramento

How A California Supreme Court Ruling Changed Independent Contractors

September 7, 2018

SACRAMENTO (CBS13) — A ruling by the California Supreme Court changed the way independent contractors are classified in California, making it much more difficult for employers to put employees under that label.

Dynamex Operations West v Superior Court of Los Angeles dates back to 2004 when Dynamex changed the status of its delivery drivers from employees to independent contractors. The employees filed suit when they say their work didn’t really change or justify the reclassification.

The California Supreme Court ruling in April changed the way independent contractors are classified.

The biggest hurdle in the case is that there is no set definition of what an “independent contractor” is in California law. As a result, it’s relied on interpretations and previous court ruling. Until the April 2018 ruling, the state relied on a previous California Supreme Court decision S.G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989).

The Borello case established that there was “strong evidence in support of an employment relationship is the right to discharge at will without cause.” More factors were considered, but not all of them had to be met to determine whether a worker was an independent contractor or an employee, or as stated by the court: “Generally, … the individual factors cannot be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations.”

(a) whether the one performing services is engaged in a distinct occupation or business;

(b) 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; (

c) the skill required in the particular occupation;

(d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;

(e) the length of time for which the services are to be performed;

(f) the method of payment, whether by the time or by the job;

(g) whether or not the work is a part of the regular business of the principal; and

(h) whether or not the parties believe they are creating the relationship of employer-employee.

The April 2018 court ruling now says workers are assumed to be employees unless all three of these factors can be proven:

(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

This story originally appeared on CBS Sacramento on Sept. 7, 2018.