LOS ANGELES--(BUSINESS WIRE)--Glancy Prongay & Murray LLP (“GPM”) announces that its partner Kevin Ruf has helped achieve a monumental shift in the way independent contractors are defined in California – with significant implications for the “gig economy” and beyond. In its April 30, 2018 opinion in Lee v. Dynamex, Inc. (in which Ruf gave real parties’ oral argument), the California Supreme Court adopted the three-pronged “ABC” test for determining whether a worker should be classified as an independent contractor for claims arising under California’s wage orders. This is the first new test for independent contractor status in California in nearly 30 years.
Under the “ABC” test, there is a presumption that individuals are employees and the hiring entity bears the burden to establish that the worker is an independent contractor by showing each of the following: (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work, and in fact; and (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
This ruling is expected to have wide-ranging effects on worker protections in California. Experts believe that this decision will expand the number of workers eligible for minimum wage, rest breaks and other benefits provided under California law. This ruling may also change whether Uber and Lyft drivers, as well as other gig workers, can continue to be classified as independent contractors.
The Supreme Court’s decision stems from litigation commenced in 2005 in the California Superior Court before Judge Michael Stern. Plaintiff, a Dynamex driver classified as independent contractor, alleged that Dynamex improperly classified its drivers as independent contractors instead of employees, depriving those drivers of the protections provided by the California Labor Code and applicable wage order.
The trial court certified the class of Dynamex drivers relying on definitions of “employ” and “employer” set forth in the applicable California wage order discussed in the California Supreme Court case Martinez v. Combs (2010) 49 Cal. 4th 35,64. Dynamex appealed the certification decision to the California Court of Appeals, arguing that the definition of “employee” as set forth in the Martinez case was limited to a joint employer context. The Court of Appeals (in which Ruf also gave the oral argument) disagreed, concluding that the wage order definitions discussed in Martinez applied to determining whether the worker was an employee or independent contractor for purposes of qualification under the wage order. Dynamex appealed this decision to the California Supreme Court.
The California Supreme Court unanimously affirmed the Court of Appeals ruling, concluding that the wage order’s definition must be interpreted broadly, but not literally. The Court held that “in determining whether, under the suffer or permit to work definition, a worker is properly considered the type of independent contractor to whom the wage order does not apply, it is appropriate to look to a standard, commonly referred to as the ‘ABC’ test.” In his oral argument, Ruf suggested that many independent contractors – who work without the protections of the labor laws, which apply only to employees – are “modern-day serfs.” In its opinion, the California Supreme Court acknowledged that the “misclassification of workers as independent contractors is a very serious problem.” The Supreme Court’s adoption of the “ABC” test is clearly intended to address this problem and should help even the playing field for California workers.
Plaintiffs-Appellees in the Dynamex action are represented by Kevin F. Ruf, a partner in the Los Angeles office of GPM, as well as co-counsel Mark Pope of Pope Berger Williams & Reynolds.
The California Supreme Court’s unanimous decision can be accessed here: http://www.courts.ca.gov/opinions/documents/S222732.PDF
Additional analysis of the California Supreme Court’s decision can be found in the articles below.
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If you wish to learn more about this action, or if you have any questions concerning this announcement, please contact Kevin Ruf, Esquire, of GPM, 1925 Century Park East, Suite 2100, Los Angeles California 90067 at 310-201-9150, Toll-Free at 888-773-9224, by email to firstname.lastname@example.org, or visit our website at www.glancylaw.com.
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