Workers’ compensation, wage disputes subject to different tests

Some months ago, a decision by the California Supreme court had the labor community sit up and take note. The plaintiff accused a transportation company of wage and hour violations stemming from his service of driving his own truck for the defendant and his classifications as an independent contractor. The court based its ultimate decision on the Dynamex ABC test rather than the Borello Test, which is a multifactor test used to determine employment status for workers’ compensation purposes and all matters unrelated to wage orders.

Under Borello, the employment relationship is tested in so far as the person who renders the service is subject to the control of the person for whom the service is provided with relation to the means and manner in which desired result is achieved. The existence of an employment relationship might be evident if the worker can be discharged at will and without cause. In this case, the court found that the complaints were wage-order related and, therefore, subject to the ABC test.

The ABC test checks to establish the following three things: (A) The hiring entity does not control and direct the worker in the performance of his or her tasks, (B) the work performed is not within the usual course of the hiring entity’s business, and (C) the worker customarily performs work as an independent agent similar to the tasks required of him or her by the hiring entity. If A, B and C can be established, there can be no presumption that the worker is an employee. In this case, the court also analyzed the plaintiff’s actions to develop an independent business and market the services to potential customers and other members of the public.

The court noted that using the ABC test in this case was not a rejection of Borello, which comes into play for non-wage-related claims. The Supreme Court of California underscored the importance of making a distinction between independent contractors and employees, particularly as there are significant economic advantages for businesses to classify workers as independent. This case shows the high level of complexity that can be involved in determining if an individual should be classified as an employee or independent contractor. California workers who face issues related to eligibility for workers’ compensation or wage and hour violations can get answers and support from experienced legal counsel.