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Effects of the Dynamex Decision

A recent Los Angeles Times article — “Are you an employee or a contractor? Carpenters, strippers and dog walkers now face that question” — explores the ramifications for workers and businesses of the California Supreme Court’s adoption of the ABC test for employee status in the Dynamex decision. That April 2018 decision declared that, for purposes of the California wage orders, California courts should apply the ABC test:

Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (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.

The decision was widely viewed at the time as expanding the number of workers who should be classified as employees. Since the Dynamex decision, the Court of Appeal has applied the test to overturn a lower court decision that found a taxi cab driver who leased his cab from the cab’s owner was an independent contractor. See Garcia v. Border Transportation Group, LLC (2018) 28 Cal.App.5th 558 (2018).

According to the Los Angeles Times, many employers have in fact begun reclassifying those who work for them as employees. The result has not been a happy one for at least some of those workers. A barber in Ladera Ranch reported that her weekly pay dropped by $300 when her shop owner switched to a $15 hourly wage to cover the costs of payroll taxes and mandatory sick leave. Stormy Daniels wrote an op ed piece for the Los Angeles Times pointing out the advantages of independent contractor status for strippers, and calling for legislation to allow them to choose.

Competing lobbying campaigns in Sacramento. Workers groups are trying to make the ABC test part of the California Labor Code. Assemblywoman Lorena Gonzalez has introduced AB 5 to accomplish that goal. The California Chamber of Commerce has established the “I’m Independent Coalition” to urge legislation allowing workers to choose their status.