Dynamex Case ABC Test to Determine Independent Contractor Status Applies Only to Wage Order Claims

Category: Private Education Matters
Date: Dec 28, 2018 02:10 PM

Jesus Garcia worked for Border Transporation Group (BTG) as a cab driver.  He leased his vehicle permit from the company, as well as paid for the radio dispatch service.  His agreement stated he was an independent contractor and not an employee of BTG.  After he left BTG he sued for various wage and hour violations, including unpaid wages, failure to pay overtime, failure to provide meal and rest breaks, failure to furnish wage statements, waiting time penalties, and wrongful termination in violation of public policy.  BTG moved for summary judgment, arguing that as an independent contractor he could not bring these claims. The trial court agreed, and Garcia appealed.

During the time the appeal was ongoing, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court, which established a new ABC test to determine whether someone was an employee or contractor.  This new test was different from the long-standing analysis described in the prior Borello case. 

The court here held that the new ABC test in Dynamex only applies to claims raised under the IWC Wage Orders and not statutory claims. The court noted that Dynamex did not reject Borello or purport to replace it in every instance. Therefore, Garcia’s wage order-based claims (unpaid wages, failure to pay minimum wage, failure to provide meal and rest breaks, failure to furnish itemized wage statements, and the unfair competition claims based on those) would be analyzed under Dynamex’s ABC test.

Under the ABC test, the employer must demonstrate all three factors are met.  The court here discussed the third factor, which requires that the individual in question is customarily engaged in an independent business of the same nature as the work performed.  BTG attempted to argue that since Garcia had the right to perform cab-driving work independently or for others, the third factor was met.  However, the court disagreed, holding that the ruling in Dynamex indicated that the individual not only could be engaged but also actually is engaged in such trade or business.  The Borello standard would be used to analyze the non-wage order causes of action, such as wrongful termination in violation of public policy or waiting time penalties.

Here, Garcia did not drive for anyone other than BTG and did not establish his services as an independent business or trade.  As a result, BTG could not establish all three prongs of the ABC test and Garcia’s claims could proceed. 

Garcia v. Border Transportation Group, LLC (2018) –Cal.Rptr.3d--, 2018 WL 5118546.

Note:

This clarification of the Dynamex ruling is important.  Private schools and colleges should make sure that independent contractors are properly classified as such.  The burden is on the employer to prove someone is not an employee.

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