California Supreme Court Will Review Independent Contractor Test

Feb 5 2015 - Independent Contractor - Gail Cecchettini Whaley

The California Supreme Court will decide what test should be applied when workers bring class action lawsuits alleging that wage-and-hour violations occurred because they were improperly classified as independent contractors.

In most situations, an employer’s right to control the details of an individual’s work, appearance, job duties, work schedule and other details dictates whether the worker is an employee or an independent contractor.

If your company controls the details and the worker does not have meaningful discretion in how he/she completes the work, it has generally been the rule that the worker will be found to be an employee and not an independent contractor. The right to control is the “common law” test, according to the California Supreme Court’s decision in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989).

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.

The case, Dynamex Operations West, Inc. v. Superior Court, 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.

The California Supreme Court agreed to review this lower court decision 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?

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

CalChamber members can visit the HR Library’s Independent Contractors section for more information on the difference between independent contractors and employees.

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