Joint-Employer Doctrine: Pre-Dynamex Control Test Still the Proper Test
In 2018, the California Supreme Court upended years of settled law with respect to the question of classifying workers as “employees” or “independent contractors” in its decision in Dynamex Operations W., Inc. v. Superior Court, 4 Cal. 5th 903 (Cal. Supreme Court 2018). Prior to Dynamex, the main test for determining the proper worker classification was the “control test.” This control test examined various facts related to how much control an employer exercised over the worker. The more control, the more likely the worker should be/should have been classified as an “employee.” Among the factors considered were:
- Did the employer set/require certain working hours or was the employee free to set his/her own hours?
- Did the employer mandate the place where the work was done?
- Did the employer require certain clothing or uniforms (beyond safety clothing)?
- Did the employer require the use of certain equipment?
- Who provided the equipment?
- Was the worker allowed or encouraged or expected to do similar work for many different “employers”?
- Who hired the worker?
- Who had control over discipline?
- Who could fire the worker?
- And more
The Dynamex case overturned the control test and held that the new test would be called the ABC test. The ABC test retains much of the control test as part “A” and adds two additional tests. An employer must satisfy all three tests for a worker to be properly and legally classified as an “independent contractor.” Part “B” is about whether the work being performed is within the “core business” or “usual business” of the employer. If “yes,” then the worker is an “employee.” Part “C” is about whether the worker is in an industry that is typically seen as independent with its own licensure (such as a plumber). If the worker does not generally have his/her own licensure, then the worker is an “employee.”
One question left open by Dynamex was whether the old control test remained valid for other areas of employment law here in the Golden State. A recent decision from the California Court of Appeal answered that question in the affirmative holding that the old control test still governs in the context of determining whether a joint employer situation exists. This is good news for San Diego and California employers. See Henderson v. Equilion Enterprises, LLC, Case No. A151626 (Cal. App. 1st Dist. October 8, 2019). In that case, the plaintiff, Billy R. Henderson, worked for a local gas station that was part of the Shell Oil Company franchise system (“Shell”). In 2010, Henderson was employed as the station manager of several Shell-owned gasoline stations operated by Danville Petroleum, Inc. (“Danville”). In his lawsuit, he claimed he worked overtime and missed off-duty meal and rest breaks without receiving compensation. He further claimed that, while he had been hired by Danville, Shell was liable for these wage and labor law violations because Shell was a “joint employer” with Danville. Henderson claimed that Shell was his joint employer because Shell directly and indirectly controlled his wages, hours, or working conditions.
At the trial level, the case was dismissed on summary judgment in favor of Shell. Shell was held not to be a joint employer under the facts of the case. Shell did not exercise sufficient control over the Danville employees under the control test. However, on appeal, Henderson argued that the control test was no longer valid for cases involving the joint employer doctrine. Instead, Henderson argued that the ABC test from Dynamex now was applicable. Under the Dynamex test, he was an employee of Shell.
The court of appeals rejected the argument. Essentially, Dynamex was not applicable in cases where the joint employer doctrine is alleged. Parts B and C of the ABC test do not have a place when deciding if employers are joint or not. Dismissal of the case was affirmed.
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For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard has been named a “Rising Star” for four years running by SuperLawyers.com. Mr. Leonard’s law practice is focused on corporate, securities, contract, and intellectual property law for businesses in the San Diego metro area. Like us on Facebook.