The California Supreme Court Clarifies Rights of Employees Misclassified as “Independent Contractors”

The California Supreme Court issued a unanimous 82-page decision in Dynamex Operations West, Inc. v. Superior Court, Case No. S222732, that clarified how California courts should determine whether a worker is an “independent contractor” or an “employee.” Altshuler Berzon LLP participated in briefing and oral argument before the California Supreme Court. The Court’s ruling will affect hundreds of thousands of California workers in the gig economy as well as traditional workplaces, and will broadly extend the protections of the California Labor Code and wage orders to these workers.

Before the Supreme Court’s decision, the California courts used an unpredictable, multi-factor test to distinguish between employees and independent contractors. In Dynamex, the Court instead adopted a greatly simplified, three-pronged “ABC” test for determining whether companies “suffered or permitted” the work or working conditions at issue. Under that test, a worker is presumed to be an employee unless the employer can establish all three of the following requirements: (A) 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) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business. This standard will make it substantially more difficult for businesses to misclassify as “independent contractors” the workers who provide the business’s core services, and should result in a far greater number of workers enjoying the benefits accorded by law to employees.

Altshuler Berzon LLP attorneys submitted amicus curiae briefs in the case on behalf of three labor unions, and Altshuler Berzon LLP partner Michael Rubin presented oral argument before the California Supreme Court on behalf of all plaintiff-side amici.

To read the California Supreme Court’s decision, click here.