California Court Of Appeal Clarifies Application Of The ABC Test For Independent Contractors 

California

 

From MondaqThalia S. Rofos and William C. Sung discuss the recent case which limited the application of the stringent ABC test for classifying workers in California to non-wage order claims. Thalia and William write:

In Garcia v. Border Transportation Group, LLP, the California Court of Appeal clarified that the ABC Test only replaced theBorello Test as applied to wage and hour claims brought under the Industrial Welfare Commission (IWC) Wage Order. The more forgiving multi-factor Borello Test is still the applicable standard in non-wage and hour claims to determine whether a worker is an independent contractor or employee. Furthermore, the Garcia court clarified that the third prong of the ABC Test is only satisfied if the worker is actively engaged in an independent business, not if the worker could have engaged in an independent business or was permitted to engage in an independent business.

Garcia v. Border Transportation Group, LLP

The plaintiff in Garcia worked as a taxi driver for Border Transportation Group, LLP (BTG) and was classified as an independent contractor. The plaintiff filed suit against BTG and individual defendants for the following claims: (1) Wrongful Termination in Violation of Public Policy; (2) Unpaid Wages; (3) Failure to Pay Minimum Wage; (4) Failure to Pay Overtime; (5) Failure to Provide Meal and Rest Breaks; (6) Failure to Furnish Accurate Wage Statements; (7) Waiting Time Penalties; and (8) Unfair Competition (UCL).

Initially, the trial court granted the defendants’ motion for summary judgment, holding that all of the plaintiff’s causes of action necessarily failed, as the plaintiff was an independent contractor under the Borello Test. The plaintiff appealed the trial court’s ruling.

After briefing on the plaintiff’s appeal was complete, but before the appellate court ruled on the appeal, the California Supreme Court issued its ruling in Dynamex which held that the ABC Test should be used instead of the Borello Test in certain instances. The Garcia court reversed the trial court’s order, holding that summary adjudication was appropriate only as to the plaintiff’s non-wage order claims, but proper as to his wage order claims.

The Garcia court held that the Dynamex ruling was meant to clarify the meaning of the “suffer or permit to work” language specifically contained within the wage order, without deciding what standard applied to classification under non-wage order claims. As a result, the Dynamex decision did not reject Borello outright. Thus, the Garcia court only applied the ABC Test to the following five wage order claims contained within the plaintiff’s eight causes of action: unpaid wages, failure to pay minimum wage, failure to provide meal and rest periods, and failure to furnish itemized wage statements. The Garcia court found that, under the ABC Test, the plaintiff was deemed an employee for the purpose of these five claims. Summary adjudication was upheld for the remaining three causes of action, as Plaintiff was deemed an independent contractor when weighing the 11 Borello factors.

Read the full story at California Court Of Appeal Clarifies Application Of The ABC Test For Independent Contractors – Employment and HR – United States

In Garcia, the following were the claims:

(1) Wrongful Termination in Violation of Public Policy. This was not wage order claim and the ABC test does not apply.

(2) Unpaid Wages.This is a wage order claim.

(3) Failure to Pay Minimum Wage. This is a wage order claim

(4) Failure to Pay Overtime. This is usually a wage order claim but in this case, the worker was a taxi driver and the wage order overtime regulations do not apply to taxi drivers.

(5) Failure to Provide Meal and Rest Breaks. This is a wage order claim.

(6) Failure to Furnish Accurate Wage Statements. This is a wage order claim.

(7) Waiting Time Penalties. This is not a wage order claim and the ABC test does not apply.

(8) Unfair Competition (UCL). Unfair competition claims may or may not be a wage order claim depending whether the underlying facts amounts were a wage order claim.

In most cases, the greatest liability is going to be a wage order claim.

 

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