Independent Contractors vs. Employees: The Dynamex Case

Over the past twenty years, labor law in California has become increasingly worker-friendly. In response, many businesses have adjusted by reclassifying workers as independent contractors, as opposed to employees. However, the California Supreme Court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles reexamined and ultimately rejected the existing judicial standard for distinguishing contractors from employees. The Court introduced a new “ABC” test.

The new standard applies explicitly to claims that arise under wage orders issued by California’s Industrial Welfare Commission. The standard provides requirements for wages, hours and working conditions in various industries. It presumes workers to be employees and places the burden of showing otherwise on the employers. Employees have heavily regulated working conditions, hours, and wages. An employee classification makes the employer responsible for paying payroll taxes, unemployment insurance taxes and social security taxes, as well as social security, and worker’s compensation. Independent contractors don’t receive any of these benefits. The difference to a business’s bottom line can be stark, and misclassifications will likely result in heavy penalties.

The New Test

Under the newly adopted ABC test, a worker is deemed to be an employee for wage order purposes unless the employer shows:

(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;

(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.

Applying the Test: A Thought Experiment

Imagine a convenience store where the owner has hired a cashier to work the register and a plumber to fix pipes. Now let’s put each employee through the ABC test:

(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

The cashier answers directly to the owner in all facets of his job. The owner tells him how much he makes, when to arrive, and how he wants things done. The plumber, in contrast, has been hired to complete a task at the rate he charges. The owner doesn’t tell him how to do his work, the plumber exercises his own judgment in the performance of his task. Under the Dynamex test’s A-Prong this would indicate the cashier is an employee, while the plumber is a contractor. But all three prongs of the test must be satisfied in order for the standard to be reached. It’s still possible the plumber could be an employee. Let’s keep going….

(B) That the worker performs work that is outside the usual course of the hiring entity’s business

The usual course of business at a convenience store is to sell merchandise and that’s precisely what a cashier does. So again, the cashier is easily an employee under this prong. The plumber, on the other hand, fixes pipes, which has nothing to do with the store’s normal business. Once again, the plumber is looking like an independent contractor. But there’s still…

(C) That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed

This prong is simply asking whether the person doing the plumbing also independently engaged in the plumbing business? If the pipes at the store break and the owner brings in a plumber to fix them, that person is an independent contractor under this prong.

This example is very basic, but its purpose is merely to trace the shape of the Court’s new analysis of the relationship between worker and employer.

Already Changing Things

Dynamex is already starting to have reverberations in the courts. For example, Rushton Halbert vs. PRN Medical and Surgical Coverage LLC, a January 2019 decision made by Judge Michael P. Linfield of the Los Angeles Superior Court. The case hinged on whether the plaintiff, a physician’s assistant, was an employee or an independent contractor. Despite an earlier tentative decision that the defendant was an independent contractor, the judge abruptly reversed course and declared the defendant an employee, citing Dynamex.

Applying the test, the Court found that prong A wasn’t satisfied because the defendant clearly set plaintiff’s hours and wages. Prong B wasn’t met because the defendant’s business was about placing physician’s assistants in hospitals, precisely the activity the defendant was engaged in. Finally, defendant failed on prong C because, among other things, they had not provided any evidence plaintiff “had business cards, business licenses, business phones, or business locations” or had “received income from any party other than the hiring entity.”

Prior to Dynamex, the Court was going to go the other way with this decision. It’s just one example of how much is already changing.

Subsequent Opinion

Although there’s still much to be determined about when, and to whom, the ABC test applies, the Dynamex decision is starting to be unpacked by the lower courts. Notably, the California Court of Appeal recently ruled in Garcia v. Border Transportation Group, LLC that it doesn’t apply to cases not arising under a wage order. In such cases, the pre-Dynamex standard, known as the Borello Test, still applies.

Key Takeaway

The Dynamex decision will drastically remake the landscape for independent contractors in the California labor market. Businesses that rely heavily on independent contractors are going to have their work cut out for them in wage order cases (and whatever other disputes the courts eventually decide this standard applies in) and should seek qualified legal advice on how the Dynamex decision will affect their business.

A New Louisiana Law Could Undo Roe v. Wade and Decades of Choice. Is California next?

Between the White House shutdown, the Polar Vortex, and a sad year for Super Bowl commercials, you might have missed that a little case called Roe v. Wade could be overturned very soon. Yes, we do mean Roe v. Wade: the 1973 landmark case that legalized abortion and empowered women’s right to choose nationwide.

In the never-ending saga of What Will Trump Do Next to Women’s Reproductive Rights?, Act 620 is the latest law to appear before the Supreme Court of the United States (SCOTUS). Depending on how our conservative majority SCOTUS reacts, Act 620 could change the future of Roe v. Wade and women’s access to abortion and other reproductive health care nationwide.

Lucky for us in sunny California, we enjoy a plethora of state laws that codified the right to choose years ago. Even if SCOTUS and POTUS teamed up with Ultron himself to dismantle reproductive rights for women all over the U.S., they can’t just change California law. (More on that later.) But be forewarned: there are a multitude of other ways the federal government can restrict abortion access, patient rights, and reproductive health care practices, even in California. How? Let’s dive in.

What’s the big deal around Louisiana’s Act 620 anyways?

From Louisiana comes a new law called Act 620. This statute requires Louisiana doctors who perform abortions to have admission privileges at a hospital within 30 miles of their clinic.

Interestingly, Act 620 is almost word-for-word identical to a prior Texas statute. In a 2016 decision, SCOTUS struck the Texas statute down in a case called Whole Woman’s Health v Hellerstedt. At the time, they cited that it was an “undue burden” on the constitutional right to abortion access. Basically, it was an additional restriction that wouldn’t actually improve women’s health, and that’s a no-no.

But that was then. In 2016, Justice Anthony Kennedy was still around to be the swing vote to strike down this law. Today, Kennedy has been replaced by none other than Justice Brett Kavanaugh, known for his commitment to a conservative stance on abortion rights. Perhaps in anticipation of the new SCOTUS slate, the Fifth Circuit decided to uphold Act 620 in June Medical Services v. Gee. This time, the circuit concluded that it would create only minor burdens for women.

Why would a situation that was an undue burden before suddenly become only be a minor burden now? #ConservativeLogic

What’s going on with SCOTUS?

Thankfully, challengers to Act 620 asked SCOTUS to stay the law while they appealed the Fifth Circuit decision in June Medical Services. By a 5-4 margin, SCOTUS accepted, which means that Act 620 is now temporarily blocked.

While the stay is a temporary victory for women’s reproductive rights in Louisiana, SCOTUS’ next big decision to make is whether to hear the appeal. Should SCOTUS decide not to take the case, the stay ends immediately, and Act 620 goes into effect. What does that mean for Louisiana? Oh, just that a third of the state’s abortion clinics will close. According to Slate, only one doctor who performs abortion services in the state has admission privileges to a hospital. Per CNN, about 10,000 women seek an abortion in Louisiana every year.

It doesn’t take a genius to do the math and figure out that’s not sustainable.

Should SCOTUS take on the case, will it follow precedent from Whole Women’s Health and strike down the Louisiana law? Or will it reverse itself, and in the process potentially overturn decades of reproductive health care protections set from Roe v. Wade?

With a conservative majority, it’s entirely possible that SCOTUS would rule to uphold Louisiana’s law. What this means more broadly speaking: it would signal that the states are free to ignore Whole Woman’s Health and pass stricter laws for abortion clinics.

More importantly, it would signal that SCOTUS is no longer enforcing Roe v. Wade, leaving it up to the states to decide what to do with all of those women seeking medical options.

What this could mean for California

As mentioned earlier, California was one of the first states in the country to legalize abortion. In a 1972 ballot initiative, California ensured the right to privacy in its constitution.

California is also one of nine states with laws that have codified a woman’s right to choose. The Reproductive Privacy Act, passed in 2002 by the state Legislature, gave California residents “the fundamental right” to an abortion, and to “choose or refuse birth control.”

As far as California rights to reproductive health care go, we’re in a pretty good place. Overturning Roe v. Wade can’t just magically change California law.

However, there are other ways the conservative SCOTUS could change abortion access, even in our state. In an article with KQED, Crystal Strait, CEO of Planned Parenthood Affiliates of California, shared a few hypothetical ways SCOTUS could restrict patient rights in California.

For example, President Trump has in the past proposed “gag rules” for clinics that accept federal Title X funds. If SCOTUS upholds these rules, doctors could be restricted from sharing medical options with their patients.

In Daniel Corona v. White Memorial Medical Center, a Los Angeles case, the court ruled that it’s not medical malpractice to not tell a patient her medical options for abortion, if the fetus is viable and if the issues that come up during the pregnancy were not lethal. Assuming more restrictive gag laws, suppose the doctor did find that the fetus was viable and that the pregnancy had issues that could be lethal? Under Daniel Corona, it would seem that the doctor is obliged to share medical options. But under gag rules, would it be medical malpractice to not advise her on her options? Or would it simply be following the law?

As another example, SCOTUS could legally redefine the meaning and scope of abortion. Even with health care services in California intact, additional rules and regulations could make it more difficult for women to seek out reproductive health care.

We’ll be watching to see how SCOTUS weighs in on Roe v. Wade over the coming months.

New Era for California

Talent agencies have collaborated with lawmakers to expand California legislation in hopes of protecting its artists and models.

Hollywood glamour always comes with a price. First, the need to look beautiful, according to unrealistic standards, and second, the need to keep silent. The entertainment industry is a grueling environment to work in. Artists have remained silent about sexual harassment and fashion models have been forced to compromise their health to keep their job.

A key player in the fight for change has been Assemblymember Marc Levine, who introduced the Talent Protections Act, a bill designed to protect the physical and mental health of artists and models in the entertainment industry. Advocates of this bill included the Academy of Eating Disorders, the Eating Disorders Coalition, and the Model Alliance, specializing in research and policy-making concerning people employed in the fashion industry. On September 30, 2018, the former governor of California, Edmund G. Brown, Jr. approved Levine’s bill, enacting Assembly Bill No. 2338.

Specifically, the law requires talent agencies to provide educational materials on sexual harassment prevention and retaliation, including resources on nutrition and eating disorders, to their artists and models within 90 days of being retained. Such materials must also be provided to the parent or legal guardian of a minor. The parent or guardian must also complete training concerning those topics. The new law further requires that the educational materials be in the language the artist or model understands and talent agencies are to keep a record for three years, confirming that they have abided by the rules.

The law does not stop there. Talent agencies are to ensure that the educational materials were made available and presented in the appropriate language. They must also request and retain a minor’s entertainment work permit. Alas, failure to comply with its requirements will result in a not-so-severe civil penalty of $100 for each violation. The California Labor Commissioner maintains the discretion to not penalize the talent agency if lack of adherence was due to a clerical error or inadvertence upon completion of a thorough investigation.

How will this change affect the legal community?

One of the prominent kickstarters of exposing sexual harassment allegations was the Me Too Movement. The term was coined by Tarana Burke in 2006 to support women and girls of color who were victims of sexual violence. This significant movement was rekindled approximately 10 years later when accusations against the entertainment mogul Harvey Weinstein came to light. Both criminal and civil cases began to surface concerning harassment allegations in the entertainment industry.

It is questionable whether Levine’s bill will help deter, or possibly further, sexual harassment litigation. On the one hand, individuals are being educated about what sexual harassment entails and are potentially forewarned against it. On the other hand, it is allowing victims to speak up and expose any wrongdoing.

What does this mean for California?

It means that we are progressing into an era of no more silence. No more fear of retaliation. An era where working professionals in the fashion industry would be following healthy guidelines and not falling down the path of anorexia. Minors will be better protected during their most tender years as entertainers. Now, talent agencies bear more responsibility in safeguarding the mental and physical health of their artists and models.

Legal Analytics: California’s Law Enforcement Officer Misconduct Litigation

Over the past ten years, we’ve been bombarded with news of law enforcement officer and police officer misconduct.  And it seems, it may be getting worse.  Headlines related to excessive force, sexual harassment, and even wrongful death perpetrated by law enforcement officers seem to fill our headlines on a near daily basis.  In an attempt to counteract this trend and bring greater transparency to this issue, California passed a law giving greater access to reports of officer misconduct which went into effect in early January 2019.

We all remember it, on March 2, 1991, four police officers viciously attacked Rodney King. While the officers kicked him and hit him with batons, the abuse of power was caught on video by bystanders. Despite this documentary evidence, the 4 officers involved in the beating were found not-guilty, demonstrating the cognitive dissonance between violent abuses of power, and our understanding of the criminal justice system. The absence of appropriate safeguards and the lack of retribution for the officers involved exposed a societal inability to process what we saw in the highly publicized video.

Nearly 28 years after the Rodney King incident, we regularly see video of officer misconduct. Proliferation of mobile phones containing high end camera and video software have inundated us with evidence. Even more recently, officers wearing “body cams” record the experience from their point of view. Public viewing of use of force has drastically increased as a result of video, body cams and related technology.

Until the beginning of this year however, the public had no right to view disciplinary records of officers accused of wrongdoing. Only in litigation, through a Pitchess motion, would the public discover an officers’ history of misconduct. As a result of this limited access, the public would have no way to confirm whether a specific accusation was the first time a specific officer had been reported, or whether this officer had a long history of similar instances of misconduct.

All of this changed when SB 1421 went into effect. It requires California law enforcement agencies to produce records of officer misconduct. SB 1421 amended Penal Code section 832.7 “to allow disclosure of records related to officer use of force or confirmed instances of officer sexual assault or dishonesty via a Public Records Act request.”

Naturally, in line with the effective date of this new law, litigation abounds. Officer unions and agencies have filed restraining orders and lawsuits to determine if SB 1421 has retroactive application. The California Supreme Court has already been asked to weigh in. For now, they’ve declined to provide guidance and refused to enjoin enforcement of the revised law. As such, officer disciplinary records are currently discoverable. It will take some time to see how matters move through the lower courts to understand how this retroactivity issue, will be resolved.

What does “abuse of power” litigation have to do with legal analytics?

The passing of SB 1421 will certainly have an impact on litigation against law enforcement agencies. Accusations  of excessive force, sexual assault, and dishonesty now have greater transparency and records which may make these claims easier to prove are now accessible. Making such records more easily discoverable improves public accountability and transparency — a necessity if trust in our justice system is to be rebuilt. Where police personnel have too many excessive force complaints or accusations of dishonesty, an officer may find themselves looking for alternate forms of employment as the department now faces greater exposure related to these claims.

Litigation analytics and related trend data will not only lead to greater ‘abuse of power’ litigation claims, but will also assist  with the successful prosecution of such cases. For example, those who bring excessive force or wrongful death actions now have the ability to review all litigation surrounding an officer. In the last 2 years, more than 24 matters  involving “officer misconduct” have been filed in Los Angeles County alone.

If you’re filing a Pitchess motion in CA state court, it may be helpful to see the 42 other instances where this issue has been addressed in Los Angeles County and how each of the judges have ruled on the related motions. Understanding your judge’s tendencies, rational and preferred case law related to Pitchess motions will help you better craft your argument. For instance, Hon. Dennis J. Landin had this issue arise in at least 6 different matters last year.

Combining SB 1421 with legal analytics will drastically improve a lawyer’s performance in cases of officer misconduct… which may in turn start to change some officer and police department behavior. There is no doubt that SB 1421 is going to open the floods gates of officer discipline information. Legal analytics will be necessary to assist in curating the data for relevant litigation and bringing forth necessary societal change.