October 14, 2019

Distinguishing between Employees and Independent Contractors: Garcia v. Border Transportation Group, LLC

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The Plaintiff in the case of Garcia v. Border Transportation Group, LLC, California Court of Appeal Case No. D072521, was a taxi cab driver and rented his taxi from the Defendant, Border Transportation Group. Garcia drove his taxi cab in Calexico and obtained a permit from the city that allowed him to drive his taxi cab for the Defendant. After Garcia left the company, Garcia became a named Plaintiff in a putative class action against the Defendant. The claims against the Defendant included wrongful termination, unpaid wages, failure to provide minimum wage, failure to pay overtime, failure to provide wage statements, failure to provide meal and rest breaks, waiting time penalties, and unfair competition.

The Defendant filed a Motion for Summary Judgment; in deciding on the Motion the Judge used the Borello test for determining whether the members of the class were employees or independent contractors. According to the Borello test, which has been California’s gold standard tool used to distinguish between employees and independent contractors since 1989, the Defendant, or company, has the burden of depicting the workers as independent contractors. The primary test of Borello “is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.”[1] In other words, the Judge needs to establish the company’s ability to exercise control over the work details of the workers. Borello standardized multiple factors that need to be met:

(a) whether the one performing services is engaged in a distinct occupation or business

(b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision

(c) the skill required in the particular occupation

(d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work

(e) the length of time for which the services are to be performed

(f) the method of payment, whether by the time of by the job

(g) whether or not the work is a part of the regular business of the principal

(h) whether or not the parties believe they are creating the relationship of employer-employee

Through the application of Borello, the Trial Judge granted the Defendant’s Motion for Summary Judgment, by finding in favor of the Defendant’s treatment of the class members as independent contractors.

The Plaintiff class appealed the decision and while the appeal was pending in court, the California Supreme Court issued an opinion that changed the test used to distinguish employees from independent contractors. Dynamex Operations West, Inc. v. Superior Court produced the ABC test, which places the burden yet again on the company to prove an independent contractor relationship. Under the ABC test, a worker will only be considered an independent contractor if each criterion is met:

(a) that 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) that the worker performs work that is outside the usual course of the hiring entity’s business

(c) that the worker is customarily engaged in an independently established trade, occupation, or  business of the same nature as the work performed

By applying the ABC test, the appellate court decided that the Motion for Summary Judgment should have been denied as to the claims in the Complaint regarding the Wage Orders because part (c) was not met; the company could not prove that the workers were engaged in an independently established trade of the same nature as the work performed. However, the appellate court did not address the non-wage claims regarding wrongful termination, waiting time penalties, and unfair competition. This places workers, or plaintiffs, in a precarious position, where they can be classified as an independent contractor for certain claims and an employee for others based on conflicting tests.

Businesses must be cautious about treating workers as independent contractors because failure to satisfy any one of three criterion for independent contractor status means the worker must be given all applicable rights of an employee.

[1] https://law.justia.com/cases/california/supreme-court/3d/48/341.html