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California’s Division of Labor Standards Enforcement Says Dynamex Applies Broadly

As many San Diego employers know, in April 2018, the California Supreme Court changed the test for when a worker is to be classified as an “employee” or an “independent contractor.” The new test is called the “ABC test” and essentially makes most workers “employees” here in the Golden State. The default position is that a worker is an “employee.” To classify a worker as an “independent contractor,” the employer must show three things:

  • That the employer does not exercise control over the worker,
  • The worker is not engaged in work that is part of the core business of the employer, and
  • That the worker is doing work that is an “independently established trade, occupation, or business” (like a plumber)

The case that established the new test was Dynamex Operations West v. Superior Court, 4 Cal.5th 903 (Cal. Supreme Court 2018). Even though Dynamex established a very big change in California employment law, the case itself was narrowly decided applying only to certain Wage Orders at issue in that case.

In the meantime, the California Division of Labor Standards Enforcement (“DLSE”) has been considering the case and its implications. The DLSE is the California agency directly responsible for enforcing Wage Orders and the California Labor Code as the Code applies to Wage Orders. After about a year of deliberation, on May 3, 2019, the DLSE issued an Opinion Letter stating the DLSE’s position that Dynamex should — and would henceforth — apply broadly to all Wage Orders and to the DLSE’s enforcement of the Labor Code. See Opinion Letter here. The DLSE stated its position that Dynamex would specifically apply to all of the following employer obligations:

  • Overtime
  • Minimum wages
  • Reporting requirements (such as time and pay)
  • Recordkeeping (including itemized pay stub obligations)
  • Business expense reimbursement for cash shortages, breakage, or loss of equipment
  • Business expense reimbursement for required uniforms, tools, and equipment
  • Meal periods
  • Rest periods

What is the Practical Effect?

The practical effect of this Opinion Letter is to put employers on notice that a worker, classified as an “employee,” is entitled to all of the rights provided to employees under the Wage Orders and Labor Code.

What is the Legal Effect?

From a legal standpoint, the Opinion Letter states how the DLSE will be enforcing the Wage Orders in administrative proceedings. Furthermore, while DLSE Opinion Letters are not considered “law” in the same way that a statute or a case decision is considered law, courts have routinely given deference to Opinion Letters issued by the DLSE.

Call San Diego Corporate Law Today

For more information, call corporate attorney Michael Leonard, Esq., of San Diego Corporate Law.  Mr. Leonard has been named as “Best of the Bar” by the San Diego Business Journal for the last four years. Mr. Leonard has extensive experience in drafting employee policies, employee handbooks, employment contracts, and all other contracts and agreements necessary for running your business. Mr. Leonard can be reached at (858) 483-9200 or via email. Like us on Facebook.

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