Wage Order—Not Borello—Applies in Independent Contractor Status Test Says California Court of Appeal

From JDSupra Business Advisor — PerkinsCoie writes — “The California Court of Appeal, Second District, issued an opinion on October 15, 2014, that considered whether the definition of “employee” from the Industrial Welfare Commission Wage Order No. 9 Wage Order or the common law test found in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 1989 Borello applied to the analysis of whether a putative employer properly classified courier and delivery service individuals as independent contractors.In Dynamex Operations West, Inc. v. The Superior Court of Los Angeles, — Cal. Rprt. 3d — 2014 WL 5173038 Cal. Ct. App. Oct. 15, 2014 certified for publication the court found that the trial court correctly allowed the plaintiffs to rely on the Wage Order No. 9 definition of “employees” in support of their class action wage claims and that, for claims outside the scope of the Wage Order, the Borello test applies….

In Dynamex, the Second Appellate District of California’s Court of Appeal reached the question the California Supreme Court avoided in Ayala: when should a court considering whether a worker is an “employee” under California law apply the Martinez/Wage Order test, and when should it apply the common law test from Borello. There, the court considered a motion to decertify a class of courier and delivery drivers who were classified by Dynamex as independent contractors, when it had once classified them as “employees.” Dynamex argued that the trial court improperly applied the Martinez test when it should have used the Borello test. According to Dynamex, if the Borello test applied, the class should be decertified because of the predominance of individualized issues the court must consider.

The Court of Appeal largely rejected Dynamex’s argument, holding that the trial court properly applied the Martinez test to all claims that fell within the scope of Wage Order No. 9, but that claims that were not encompassed by the Wage Order should be analyzed under the Borello test. By applying the Wage Order definition rather than the Borello test, it may be easier for independent contractors to allege that they are actually employees, not contractors, and to assert wage claims under the Wage Order.

Finally, the Dynamex court found that claims for reimbursement for rental or purchase of personal vehicles used in performing delivery services are outside the Wage Order and, for those claims, the applicable test is Borello….”

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