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Attempt to stay harmful California Supreme Court decision on independent contractors falls short

Attempt to stay harmful California Supreme Court decision on independent contractors falls short

An effort to persuade legislators to put a hold on a recent decision of the California Supreme Court, (Dynamex Operations West, Inc. v. Superior Court) that makes it more difficult for businesses to classify their workers as independent contractors fell short before the Legislature adjourned for the year.

The move involved a Chamber of Commerce led coalition of nearly every business group in California, including CNPA, to stay the decision until 2020. The proposed delay would have allowed the legislature to work with all stakeholders affected by the decision with the hope of drafting legislation that would be less draconian than the court’s decision.

At the end of the day it was the intense opposition of organized labor groups that stymied the coalition’s attempt to provide some relief.

The ruling at issue was handed down in a class-action lawsuit against Dynamex, a package and document delivery company. The suit alleged that Dynamex misclassified its delivery drivers as independent contractors rather than employees.

To classify someone as an independent contractor, the court said, businesses must comply with the new “ABC test” that demonstrates the worker: 1.) is free from the control and direction of the employer; 2.) performs work that is outside the principal’s core business; and 3.) customarily engages in “an independently established trade, occupation or business.”

According to the opinion, a worker may be denied the status of employee “only if the worker is the type of traditional independent contractor – such as an independent plumber or electrician – who would not reasonably have been viewed as working in the hiring business,” the court said.

Nearly every business sector in the state is struggling to determine how to mitigate potential liability under the ABC test for the use of independent contractors in their specific operations.