by Michelle R. Ferber and Julie Ann Giammona

After months of uncertainty, finally, an Appellate Court has spoken with regard to the application of Dynamex to cases involving claims other than alleged wage order violations. In Garcia v. Border Transportation Group, the court concluded that the Dynamex ABC test, which determines independent contractor status, only applies to claims arising from alleged wage order violations.

FACTS: The worker was a taxi-cab driver for Border Transportation Group (“BTG”) who alleged that BTG owed him unpaid wages, failed to provided rest and meal periods, and failed to provide accurate wage statements. The employee also alleged wrongful termination and waiting time penalties, neither of which arose directly under a wage order.

HOLDING:  The trial court initially granted summary judgement to BTG, applying the long-standing Borello test to determine that the worker should be classified as an independent contractor. The worker appealed, and in the interim, the Supreme Court issued its decision in Dynamex, providing the worker with the more favorable ABC test. In applying the ABC standard, the Court of Appeal stated that the ABC test was never intended to apply to all claims arising from an employment relationship. The court noted that Borello is alive and well in many areas, including the worker’s compensation arena. Accordingly, the Appellate Court upheld the trial court’s grant of summary judgment only insofar as it applied to claims other than those arising from wage order violations, such as wrongful termination and waiting time penalties. As to the wage order claims, the court determined that the worker was an employee under the ABC test, thus reversed that portion of the summary judgment order.

Most notably, the court engaged in a lengthy footnote discussion regarding the retroactive application of Dynamex.  In declining to reach a conclusion regarding retroactivity, since, admittedly, the issue was not before the court, the Garcia court observed the following: (1) generally speaking, most judicial decisions apply retroactively; (2) the Dynamex court specifically rejected a request to apply its ruling prospectively; and (3) the Dynamex holding is no more surprising than other cases that have customarily been held retroactive. As Ferber Law reported last month, an Orange County Superior Court judge has already applied Dynamex retroactively, and we fully expect that trend to continue for the reasons cited by the Garcia court above.

IMPLICATIONS:  Garcia brings welcome relief to employers in that it limits the presumption of employee status that the Dynamex ABC test hoisted on employers solely to those claims arising under wage orders. Garcia makes clear that the Borello standard still applies to all other claims arising from the employment relationship, and thus may result, in some cases, of a finding of independent contractor status.  As always, such a determination is fact specific and will vary from case to case.  If you have questions regarding the classification of your employees, please call one of our attorneys here at Ferber Law who can provide you with expert legal advice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.