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02 January 2019
A California appellate court has ruled that the California Supreme Court's recent decision in Dynamex Operations West, Inc v Superior Court, which established a new test for determining whether to classify workers as independent contractors, is limited to claims under the Industrial Welfare Commission's wage orders. In Garcia v Border Transportation Group, LLC, the plaintiff taxi driver sued the defendant taxi company alleging various wage and hour claims under the California Labour Code and California's Industrial Welfare Commission (IWC) Wage Order 9. The trial court dismissed the plaintiff's claims, concluding that the plaintiff was an independent contractor who simply leased a taxi from the defendant.
On appeal, the California Court of Appeal for the Fourth Appellate District applied the Dynamex test to the wage order claims and held that the plaintiff's wage order-based claims should not be dismissed because the plaintiff worked exclusively for the defendant taxi company and therefore was not "customarily engaged in an independently established trade, occupation, or business". However, the Court of Appeal also held that Dynamex applies only to claims based on the IWC wage orders, which use a broad definition of 'employ' and are intended to extend protections to "the widest class of workers". Other wage and hour claims are still governed by the California Supreme Court's 1989 decision in SG Borello & Sons, Inc v Department of Industrial Relations, which adopted a multi-factor test that focuses on whether the putative employer had the "right to control" the employee. The Court of Appeal thus upheld the trial court's dismissal of the plaintiff's Labour Code-based claims under Borello, holding that the plaintiff had not demonstrated that the defendant exercised control over its work.
After the California Supreme Court's employee-friendly decision in Dynamex, there has been some uncertainty about whether the Dynamex test applies to Labour Code claims as well as wage order claims. The Court of Appeal's decision in Garcia suggests that Dynamex may have a more limited impact than employers initially feared.
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