Employee or Independent Contractor? The State of California Law in 2021

Determining whether a worker is an employee (EE) or an independent contractor (IC) under California law has become more complicated in recent years. However, in 2020 the California Legislature clarified that the ABC test (which is described more fully below) should be applied to all claims brought under either the California Labor Code or California’s wage orders.[1] The common law test, also referred to as the Borello test, is likely to govern all other claims.

The Borello Test

For many years, California courts seeking to determine whether a worker was an EE or an IC relied upon the common law test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello ). Under that test, “[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” Borello, 48 Cal.3d at 350.

Courts have noted that the strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because “[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent’s activities.” Malloy v. Fong (1951) 37 Cal.2d 356, 370.

Note that it is the right to control, and not the actual exercise of control that governs. Where there is a written contract, hat question can often be determined on a group-wide basis suitable for class certification. See Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 535.

In addition to the right to control, which is referred to as the principal test, there are a number of other secondary factors that courts may consider. These include: (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.

Courts applying the Borello test are supposed to weigh these factors in order to determine whether the hiring entity has met its burden of proving that the worker is an IC.[2] However, Borello can be difficult to apply in some cases. That is because in general, “the individual factors cannot be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations.” Borello, 48 Cal.3d at 350.

Dynamex and the ABC Test

California’s wage orders contain a definition of employment that is different than the Borello test. In 2010, the California Supreme Court recognized that definition in the case of Martinez v. Combs (2010) 49 Cal.4th 35, 65. There, the Court noted that to employ, under the wage orders had three alternative definitions:

(a) to exercise control over the wages, hours or working conditions, or

(b) to suffer or permit to work, or

(c) to engage, thereby creating a common law employment relationship.

After Martinez, it was not entirely clear under what circumstances the wage order definition applied. Fortunately, in 2018, the Calfornia Supreme Court issued Dynamex Operations W., Inc. v. Superior Court (2018) 4 Cal.5th 903. There, the Court held that when determining employer status under the wage orders, the wage order definition applied.

Furthermore, the Court held that when interpreting the suffer or permit prong of the test, courts should apply the “ABC test.” That test asks the following questions:

(a) Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract and in fact?

(b) Does the worker perform work that is outside the usual course of the hiring entity’s business?

(c) Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity?

If the answer to any of these questions is no, then the worker is an EE. If the hiring entity can prove that the answer to each of these questions is yes, then the worker is an IC.

Dynamex left open the question of whether the ABC test should apply to Labor Code claims that did not involved the wage orders. However, in 2019, the Legislature resolved that question with AB 5, later codified at Labor Code section 2750.3. That statute adopted the ABC test, but also enacted approximately 50 exemptions from the test.

In 2020, the Legislature repealed section 2750.3, and enacted Labor Code section 2775, et seq. Section 2775 is clear that the ABC test should be used to determine whether a worker is an EE or an IC for all claims brought under either the wage orders or the California Labor Code. It is also clear that ABC is the entire test, meaning that courts should not seek to apply either the “exercises control over the wages, hours or working conditions,” or the “engage, thereby creating a common law employment relationship” prongs of the wage order test.

The Legislature also enacted a series of exemptions from the ABC test, including the following:

If you have questions about whether you should be classified as an employee or an independent contractor, please feel free to contact the attorneys at Hunter Pyle Law (hunterpylelaw.com) for a free and confidential intake process. You can also call us at (510) 444-4400.

Footnotes

[1] California has 17 different wage orders that apply to different industries and occupations. The wage orders were initially developed by the Industrial Welfare Commission (IWC), but, since the IWC was defunded, are currently regulated by the Division of Labor Standards Enforcement (DLSE). The wage orders set forth many workplace rules and regulations, including minimum wage, overtime, meal and rest periods, and reporting-time pay. For information regarding which wage order applies to a particular employee, see http://www.dir.ca.gov/dlse/WhichIWCOrderClassifications.pdf.

[2] The party seeking to avoid liability as an employer has the burden of proving that workers whose services it has retained are ICs rather than Ees. See Cal. Labor Code §§ 3357, 5705(a).

Opposing Voter Suppression — The Battle for Georgia

I am writing this from the airport in Atlanta, where I have spent the past five days doing my best to help make sure that the Georgia Senate runoff elections were fair and that all votes were counted. The experience was both inspiring and chilling, so I am going to jot down some thoughts before the press of business and family in the “real world” re-consumes me.

First off, a disclosure: I believe very strongly that the voting process should be as easy as possible. In college (before the internet ruled our lives), I volunteered for a small organization that was trying to get the local city council to adopt a measure that would study, and, hopefully, implement a process by which voters could cast their ballots by telephone. That’s right: pick up the phone, enter your id, cast your vote, and, presto! You are done. No line, no worrying about signatures, no hassle. Despite our best efforts, and many long hours spent gathering signatures in the frigid Colorado winter, the effort failed. (Its leader, a fellow nicknamed “Evan from Heaven,” then went back to busking on the local pedestrian mall.) (more…)

Do California’s Wage and Hour Laws apply to Workers who live in other States or who travel outside of the State for work?

man sitting on gang chair with feet on luggage looking at airplane

California’s laws are among the best, if not the best, for workers in the United States. But do those laws apply to workers who live in other states? And how about workers who live and work in California, but also work in other states?

Oman v. Delta Air Lines and Ward v. United Airlines, two 2020 decisions from the California Supreme Court provide some guidance with respect to those questions. Because they build on an earlier case, Sullivan v. Oracle (2011) 51 Cal.4th 1191, 1201, we will start our analysis there. (more…)

Proving Unpaid Wages without Records: A Roadmap for Claims under California and Federal Law

Wage theft, or situations in which an employer fails to pay its employees for some or all of the wages of that they earned, has gotten more attention in recent years. (See, for example, https://www.kqed.org/news/11780059/were-being-robbed-california-employers-who-cheat-workers-often-not-held-accountable-by-state.) This post explores how workers battling wage theft can prevail even when there are no exact records showing how much they are owed.

In Minnesota, Wage Theft Will be a Felony | Workday Minnesota

(more…)

Can They Fire Me for Complaining About Coronavirus? Your Right to a Safe Workplace in California

Hunter Pyle Law has received a number of calls from workers who are being targeted for retaliation after complaining that their workplace was not safe during the COVID-19 pandemic. This post explores some of the California laws that protect such workers. In short, as explained below, workers in California who speak out against unsafe conditions in the workplace, including unsafe conditions related to wearing masks and/or not being allowed to work from home, may be protected by three different sections of the California Labor Code.

Cal. Labor Code section 6310

California Labor Code section 6310 makes it illegal to retaliate against employees who complain, either verbally or in writing, either to their employer or to the government about unsafe working conditions or work practices. This section would in theory protect workers who complain that it is unsafe to work without masks, for example, as well as workers who protest being forced to work at the office instead of from home during a pandemic.

In terms of remedies, section 6310(b) provides that any employee who prevails on a claim under section 6310 is entitled to reinstatement and back pay. Section 6310(c) goes further, providing that an employer may not retaliate against the family members of any person who has, or is perceived to have, engaged in any acts protected by section 6310

Cases interpreting section 6310 have clarified that this law applies to situations in which an employer makes an informal complaint to his or her supervisor. Initially, section 6310 was interpreted as being limited to formal complaints made by employees to the Division of Labor Law Enforcement. See Division of Labor Law Enforcement v. Sampson (1976) 64 Cal.App.3d 893. However, after the Sampson decision the Legislature amended section 6310 to add complaints made to employers.  (Stats. 1977, ch. 460, § 1, p. 1515, italics added.)

As a result, later decisions have recognized that oral and written complaints to employers are protected under section 6310.  See Cabesuela v. Browning-Ferris Industries of California, Inc. (1998) 68 Cal.App.4th 101, 109. Additionally, workers need not be right about their complaints as long as they have a good faith belief in them. See, e.g., Cabesuela, 68 Cal.App.4th at 109, in which the court agreed with the holding in  Hentzel v. Singer Co. (1982) 138 Cal.App.3d 290, 299-300 that, “… an employee is protected against discharge or discrimination for complaining in good faith about working conditions or practices which he reasonably believes to be unsafe.” (italics added, fn. omitted.) In other words, section 6310 protects employees from discharge for good faith complaints about working conditions which they believe to be unsafe, even if the employees are wrong.

Finally, workers are not limited to complaints that are based on OSHA standards or orders.  Hentzel, 138 Cal.App.3d at 299–300. Nor are they required to proceed before the Labor Commissioner.  Cabesuela, 8 Cal.App.4th at 109.  Rather, they have a direct right of action and can file their claims in court. Id.

Cal. Labor Code section 6311

Section 6311 protects workers who refuse to work because of unsafe conditions.  In order to fall within the protection of section 6311, a work action must meet the following requirements:

  1. The work must violate the Labor Code, including section 6400, or any occupational safety or health standard, or any safety order of the division or standards board; and
  2. The violation must create a real and apparent hazard to the employee or his or her fellow employees.

Section 6311 on its face applies only to discharges and layoffs.  The remedies provision specifies that an employee who is not paid because of his or her refusal to perform work “in the performance of which this code, any occupational safety or health standard or any safety order of the division or standards board will be violated and where the violation would create a real and apparent hazard to the employee or his or her fellow employees” has a right of action for wages for the time the employee is without work as a result of the layoff or discharge.

Cal. Labor Code section 1102.5

Finally, section 1102.5 may also protect workers who raise health and safety concerns.  Section 1102.5 is addressed in more detail in other posts on this blog, but the basic provisions are as follows:

First, subsection (a) provides that employers cannot take steps to prevent employees from disclosing information that the employees believe discloses the violation of a law, rule, or regulation. That subsection reads as follows:

(a) An employer, or any person acting on behalf of the employer, shall not make, adopt, or enforce any rule, regulation, or policy preventing an employee from disclosing information to a government or law enforcement agency, to a person with authority over the employee, or to another employee who has authority to investigate, discover, or correct the violation or noncompliance, or from providing information to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee’s job duties.

Next, subsection (b) prevents employers from retaliating against employees who “blow the whistle” by complaining about unlawful conduct in the workplace. It reads as follows:

(b) An employer, or any person acting on behalf of the employer, shall not retaliate against an employee for disclosing information, or because the employer believes that the employee disclosed or may disclose information, to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance, or for providing information to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee’s job duties.

Last, subsection (c), like Labor Code section 6311, protects workers who refuse to perform work that would result in the violation of a law, rule, or regulation. Unlike section 6311, it does not appear to be limited to discharge or layoff. Thus, a worker who is retaliated against but not actually fired may wish to consider bringing a claim under section 1102.5(c) instead of section 6311:

(c) An employer, or any person acting on behalf of the employer, shall not retaliate against an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.

If you have questions about your right to a safe and healthy workplace, or if you have been retaliated against for standing up for your rights at work, please feel free to contact the experienced attorneys at Hunter Pyle Law for a free and confidential initial intake process.  We can be reached at (510) 444-4400, or at inquires@hunterpylelaw.com.

Public Employee Whistleblowers Have Important Rights in California under Labor Code section 1102.5

Gear and Gavel

Public employees who are terminated after they blow the whistle on illegal conduct often have the opportunity to appeal their termination to some type of board or officer.  That entity in turn usually has the authority to either rule on their claims or to make a recommendation to a civil service agency regarding whether the termination should be upheld or not.  These proceedings hold out the promise of swift justice-a hearing and a decision by an impartial fact-finder in a relatively short amount of time. In practice, however, they rarely result in any type of reinstatement or fairness.

Public employees who make use of these appeals often find that when they try to bring their claims in court, where they have a better chance of getting a fair shake, the public entity argues that they are barred (“precluded”) from suing because they already had a hearing as part of the appeal process.  In other words, public entities try to block public employees from suing just because the public employees make use of the civil service appeal process (which, as described above, is rarely fair or impartial).

That was the case in Bahra v. City of San Bernardino (9th Cir. 2019) Case No. 18-55789.  Mr. Bahra, the plaintiff, worked as a social services practitioner for San Bernardino County in the Department of Children and Family Services (“CFS”).  He discovered that a particular foster home was abusing children, but that CFS’s database did not reflect that history because of a series or database mistakes.  He then reported these errors to his manager. (more…)

Meal Breaks and Rest Breaks: Guidance from the Second DCA

Gear and Gavel

Cacho v. Eurostar, Inc. (2019) 43 Cal.App.5th 885, provides some guidance regarding when courts will and will not certify class actions claiming failure to provide meal breaks and/or failure to authorize and permit rest breaks under California law.

(more…)

PAGA, Individual Claims, Public Entities, and Section 1102.5 Whistleblower Claims

Gear and Gavel

On September 8, 2019, the Court of Appeal for the Second Appellate District issued an important decision in the case of Hawkins v. City of Los Angeles (Case Nos. B279719, B282416).  That decision casts light on the following questions:  (1) Whether PAGA claims can be brought on behalf of an individual, as opposed to a group of aggrieved employees; (2) Whether PAGA claims can be brought against public entities; and (3) Whether attorneys’ fees are recoverable under Labor Code section 1102.5.

(more…)

Can California Workers Recover Waiting Time Penalties, Wage Statement Penalties, or Attorneys’ Fees for Meal and Rest Period Violations?

A recent decision from the Court of Appeal for the Second Appellate District in the case of Naranjo v. Spectrum Security Services, Inc. (September 26, 2019) Case No. B256232 addresses several unresolved questions pertaining to meal and rest periods in California.

First, the Court upheld the trial court’s ruling that Spectrum had not met the requirements for an on-duty meal period because, during part of the class period, it did not have a written agreement in which the employees were advised that the agreement could be revoked.  In reaching this conclusion the Court rejected Spectrum’s argument that it had substantially complied with the on-duty meal period requirements. (more…)

My Company Owes Me Wages.  Can I Sue My Boss Individually For Them?

Gear and Gavel

In California, employees can sue certain individuals for money that their employers owe them.  But a recent decision by the California Supreme Court limits the avenues for that type of recovery.

First, the good news:  California Labor Code section 558.1 allows “person[s] acting on behalf of an employer” to be held liable as the employer for violating any provision regulating minimum wages or hours and days of work in any of the Industrial Welfare Commission wage orders.  This section also applies to the following Labor Code sections:  203 (failure to pay wages due at the time of termination); 226 (failure to provide proper wage statements); 226.7 (failure to provide meal and rest breaks); 1193.6 (failure to pay minimum wage); 1194 (failure to pay minimum wage) and 2802 (failure to reimburse for business expenses). (more…)