On Monday, the Ninth Circuit vacated a judgment for Grubhub, Inc. and against a former food delivery driver, Raef Lawson, who claimed that he was misclassified as an independent contractor when he performed food delivery services. Lawson had asserted claims for minimum wage, overtime, and expense reimbursement.
This article originally appeared in Healthcare News on August 6, 2019.
The California Supreme Court’s 2018 landmark decision, Dynamex Operations West, Inc. v. Superior Court (Dynamex), redefines the employment relationship between entities and workers in California and creates one of the most stringent standards in the United States for classifying workers as independent contractors.
Applying the changes introduced by Dynamex can present significant complications in many industries. This is especially true for the health care industry due to California’s prohibition of corporate practice of medicine (CPOM) and its associated rules. For example, the state requires hospitals to have physicians available during all hours of hospital operation, while, at the same time, generally prohibiting hospitals from hiring physicians directly.
Due to these complexities, many California health care entities may benefit from examining the potentially sweeping impacts of this new interpretation of the law and determining near- and long-term methods for making necessary changes to their hiring and retention policies. Following is an in-depth overview of the potential implications for health care employers and how those in the health care industry will likely need to respond. Continue Reading Unintended Consequences: Dynamex and California Health Care Employers
Last year, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a landmark decision that dramatically increased the risk of misclassifying individuals as independent contractors. As previously reported, although Dynamex replaced the longstanding Borello standard with the “ABC” test, it also left two critical questions unaddressed. First, Dynamex did not address whether the ABC test applies retroactively. Second, Dynamex did not decide whether its scope was limited to coverage under the Industrial Wage Commission’s (“IWC”) Wage Orders or if its holding generally applied to the Labor Code as a whole. In the last five days, both questions have been answered.
On May 2, 2019, the Ninth Circuit found that Dynamex applies retroactively under California law in Vazquez v. Jan-Pro Franchising International, Inc., the most notable decision to date regarding Dynamex’s retroactivity. Shortly thereafter, on May 3, 2019, the Division of Labor Standards Enforcement (“DLSE”), California’s wage and hour enforcement agency, issued a letter opining the ABC test applies to both the IWC Wage Orders and any Labor Code provisions that enforce requirements set forth in the Wage Orders. Although neither the Ninth Circuit nor the DLSE can authoritatively interpret California law, these developments indicate that Dynamex’s scope—which governs hundreds of thousands of independent contractor relationships throughout the state—has continued to expand its already extensive reach. Continue Reading The Future of Independent Contractors: Ninth Circuit Applies Dynamex Retroactively and the DLSE Issues Opinion Letter Expanding Its Scope
In Jesus Cuitlahuac Garcia v. Border Transportation Group, LLC, et al, the California Court of Appeal, Fourth Appellate District has held that the ABC test set forth in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) applies only to causes of action brought under wage orders.
Plaintiff Garcia was a taxicab driver for several years with Border Transportation Group (“BTG”). In 2015, a year after ceasing work for BTG, he sued BTG and two individual defendants for various wage and hour violations. Continue Reading California Court of Appeal Affirms That Dynamex’s ABC Independent Contract Test Is Limited To Claims Arising Under Wage Orders
On Monday, April 30, 2018, the California Supreme Court issued a landmark decision in the matter of Dynamex Operations West, Inc. v. Superior Court of Los Angeles. In a voluminous, 82-page decision, the California Supreme Court reinterpreted and ultimately rejected the Borello test for determining whether workers should be classified as either employees or independent contractors for the purposes of the wage orders adopted by California’s Industrial Welfare Commission (“IWC”) in favor of a worker-friendly standard that may upend the existing independent contractor labor market.
In particular, the Court embraced a standard presuming that all workers are employees instead of contractors, and placed the burden on any entity classifying an individual as an independent contractor of establishing that such classification is proper under the newly adopted “ABC test” which will be discussed in further detail below. Continue Reading The Dynamex Decision: The California Supreme Court Restricts Use of Independent Contractors
In a recent opinion in Hill v. Walmart Inc., the Ninth Circuit affirmed summary judgment in favor of Walmart on Hill’s claim for waiting time penalties under Labor Code section 203, finding there was a good-faith dispute about whether Hill was properly classified as an independent contractor of Walmart. Continue Reading Good Faith Dispute Over Employment Relationship Allows Walmart to Escape Waiting Time Penalties
As reported here and here, California recently enacted new legislation – Assembly Bill 5 – that expanded the scope of an “employee” under state law. Beginning January 1, 2020, the answer to whether a person providing services in California is an independent contractor (as opposed to an employee) under the California Labor Code, the Industrial Welfare Commission (“IWC”) Wage Orders, and the California Unemployment Insurance Code, will generally depend on whether they satisfy all three prongs of the so-called ABC Test:
- The worker must be free from the control and direction of the hirer in connection with the performance of the work.
- The worker must perform work outside the “usual course” of the hirer’s business.
- The worker must be customarily engaged in an independent established trade, occupation, or business of the same nature as the work performed.
There are a myriad of occupational and industry exemptions to the application of the ABC Test, many of which are highlighted here.
Having tightened independent contractor classification standards, the next big target for the state legislature may be joint employer liability.
On September 13, 2019, the California Senate and Assembly unanimously passed an amendment to the California Consumer Privacy Act (“CCPA”) that places onerous obligations on employers and entitles employees to statutory damages for data breaches. The landmark measure—AB 25—awaits Governor Newsom’s signature (or veto). Regardless of whether AB 25 is signed into law, CCPA applies to employee data and employers have until January 1, 2020 to comply. This article explores how the California Consumer Privacy Act impacts existing employee privacy rights and how employers can begin to develop a holistic privacy compliance program.
On September 18 2019, Governor Gavin Newsom signed into law AB-5, which codified the California Supreme Court’s Dynamex v. Superior Court decision. In Dynamex, the California Supreme Court adopted the so-called “ABC” test to determine coverage under the Industrial Welfare Commission (“IWC”) Wage Orders. AB-5 expands the application of the ABC test to the entire California Labor Code and will take effect on January 1, 2020.
Continue Reading It’s Official: Newsom Expands The Definition of “Employee” Under California Law
Following the launch of the so-called “MeToo” movement, the California Legislature (controlled by a Democratic supermajority) has aggressively churned out new bills that further strengthen the ability for workers to sue their employers and increase the already-significant regulatory burden on these companies. This fall, the California Legislature is geared to send three significant bills to Governor Gavin Newsom that all California employers should carefully follow. Continue Reading Three Major Workplace Bills to Land on Gov. Gavin Newsom’s Desk