ABC Independent Contractor Test Limited to Certain Claims

In Garcia v. Border Transportation Group, LLC, the California Court of Appeal limited application of the ABC independent contractor test to wage order claims in a ruling likely to benefit employers.

Background: Plaintiff worked as a taxi cab driver for Border Transportation Group (BTG) from 2009 to 2014.

In 2015, Plaintiff sued BTG for various wage and hour claims. Some of these claims arose from the transportation industry wage order (Wage Order 9), such as unpaid wages. Other claims, such as wrongful termination, stemmed from the Labor Code.

BTG moved for summary judgment claiming Plaintiff’s claims failed because he was an independent contractor, not an employee. The trial court agreed with BTG that Plaintiff was an independent contractor and used the Borello standard, which examines various factors that indicate the employer’s control over the worker.

After Plaintiff appealed, the California Supreme Court decided Dynamex, which adopted the ABC test to determine whether a worker is classified as an employee or an independent contractor. The ABC test is more favorable to employees than the Borello standard, and makes it easier to establish “employee” status.  Therefore, on appeal, Plaintiff claimed that he was an “employee” under the ABC test and for that reason, his claims should be revived.

Analysis and Holding: The Court of Appeal first noted that the ABC test was not intended to be used for all claims regarding whether a worker should be classified as an employee or an independent contractor. For example, the court noted that the wage orders regulate very basic working conditions and thus deserve the broadest definition of employment. The court also stated that there is no need to apply the ABC test to every working relationship since Borello still remains the standard in many areas, such as workers’ compensation. Thus, the court held that the ABC test governed Plaintiff’s claims arising under the wage order. However, the court also held that Borello governed the claims not arising from the wage order.

Significance: The decision may ultimately benefit employers by limiting the application of the ABC test. The ABC test presumes employee status. Thus, the continued application of Borello in some employment claims may lead to more findings of independent contractor status than under the ABC test. However, employers must still remain aware of the ABC test due to its applicability to wage order claims.

If you have questions over whether your workers are employees or independent contractors, or whether the ABC test applies, please contact the attorneys at Palmer Kazanjian Wohl Hodson LLP.