Will the 2018 California Supreme Court decision in Dynamex actually have less impact on California workers’ comp than some might have believed?

Julius Young

Dynamex Operations West Inc. v. Superior Court adopted a simpler but more broad definition of employment status, but arose only in the context of litigation over California wage orders.

However, there has been widespread speculation that the Dynamex “ABC test” might eventually replace the earlier Borello test of employment set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations.

But in the near term this appears unlikely to happen. Two recent court decisions explicitly refuse to extend Dynamex beyond the wage order context. Let’s look at those cases.

The recent Workers' Compensation Appeals Board panel decision in Perkins v. Knox is notable. In Perkins, the issue in the workers’ comp case was whether a laborer was an employee or independent contractor.

The trial judge did an analysis under both Dynamex and Borello. Under Dynamex, the laborer was found by the judge to be an employee. Under Borello, the judge noted the answer was not clear and might require further development of the record on three of the eight Borello factors.

On reconsideration, the WCAB panel reversed the finding of the trial judge, noting that:

“Since the Dynamex court did not overturn the Borello standard for determining an applicant’s employment status with respect to the requirement of providing workers’ compensation benefits, and expressly limited the application of the ABC test to the determination of employment status with regard for wage orders, we conclude that the Borello standard applies here.”

The WCAB returned the case to the judge for more development of the record on Borello factors.

Also notable is Jesus Cuitlahuoc Garcia v. Border Transportation Group, a 2018 case out of the California Court of Appeal 4th District Division 1.

Garcia v. Border Transportation arose out of litigation over employment-related disputes in the Calexico taxi industry. The case is not a “workers' comp” case, but rather involved Garcia’s causes of action for wrongful termination, failure to pay minimum wages, overtime claims, meal and rest break violation claims, waiting time penalties, failure to provide accurate wage statements, and unfair competition claims.

However, it has implications for determination of employment in a workers’ comp context.

The defendant in Garcia filed for summary judgment, asserting that the Borello standard applied. The Court of Appeal noted that the question in the case was whether Dynamex applied to none, some or all of Garcia’s claims.

The Court of Appeal in Garcia held that Dynamex applied to his claims based only on violation of California wage orders.

The interesting language in the Garcia opinion from a workers’ comp standpoint is the court’s assertion that:

“There is no reason to apply the ABC test categorically to every working relationship, particularly where Borello appears to remain the standard for workers’ compensation.”

The takeaway seems to be that both the WCAB panel in Perkins and the Court of Appeal in Garcia are viewing Dynamex as limited to its circumstances.

This continues to create an anomaly in the law where employment may be found under some laws/regulations (wage orders) but not under others. The Garcia court indicates that the Borello test would determine employment for the overtime claims, the wrongful termination cause of action, waiting time penalty claims and some of the unfair competition claims.

This sort of legal toggling between Borello and Dynamex is going to cause confusion for some employers, and it is no wonder that there is pressure by some for the Legislature to act on a comprehensive overhaul to define the employment relationship.

In the meantime, it seems that the WCAB is likely to follow the Borello test until instructed otherwise by the appellate courts.

Julius Young is a claimants' attorney for the Boxer & Gerson law firm in Oakland. This column was reprinted with his permission from his blog, www.workerscompzone.com.