From Mondaq, Christopher Wilkinson, Alexandra Stathopoulos and Carolina Garcia discuss a recent case in which the Ninth Circuit Court of Appeals said that the ABC test adopted by the California Supreme Court in Dynamex applied retroactively. They note that the court discussed prong B of the ABC test and suggested that the franchisees did not meet prong B. They write:
The panel remanded the case to decide the merits, but not before providing the district court with guidance as to “prong B” of the ABC test requiring independent contractors to perform work outside of the hiring entity’s usual business. In dicta, the panel suggested that the unit franchisees did not meet prong B of the ABC test and performed work within Jan-Pro’s usual business. This is significant because it suggests franchisors could be held liable for Wage Order claims brought by or against their franchisees. This decision may cause confusion for California franchisors because it seems to conflict with what a California appellate court recently found in another post-Dynamex case, Curry v. Equilon Enterprises, LLC. In Curry, the court in examining prong B of the ABC test庸ound that Shell was not in the business of owning gas stations, but rather in the business of owning fuel and real estate. Notably, Curry is distinguishable because, in that case, the parties stipulated that the agreement between Shell and the entities that ran Shell’s service stations was not a franchise agreement. Moreover, the focus of Curry‘s discussion of Dynamex was whether Dynamex should be applied at all in the joint employer context. Despite these differences, these opinions seem to create conflicting authority for franchisors seeking guidance.
In Curry v. Equilon Enterprises, LLC, the California Court of Appeals said that an oil company that owned a gas station was not in the business of operating the gas station. The court said:
The seventh factor is whether the work is part of the principal’s regular business. “ARS operated approximately 15 gas stations San Diego County and employed over 100 people at those stations.” Given this undisputed fact, it can reasonably be inferred that Curry’s management of two gas stations was part of ARS’s regular business because ARS’s business involved operating gas stations.
Shell owned approximately 365 fueling stations in California. There is nothing indicating Shell employed people at the gas stations. Thus, Curry’s work at the fueling station was not part of Shell’s business. In other words, Shell was not in the business of operating fueling stations—it was in the business of owning real estate and fuel.
Curry contends “Shell was and is in the business of selling its motor fuel at facilities which it owns. . . . ARS merely provided the station employees and made sure that they performed their tasks in the manner in which Shell dictated.” Curry’s argument is problematic. If ARS supplied the employees and supervised the employees’ work, then ARS was in the business of operating the station, and Shell was in the business of owning the station.
For example, if the owner of an apartment complex hires a property management company, and that property management company hires an on-site manager for the complex, the owner is not engaged in the business of property management. Rather, the owner is in the business of owning real estate, while the property management company is in the business of managing properties. Shell’s contract with ARS did not put Shell in the business of operating fuel stations.