IS THE
CONTRACTOR
CLOTHED…
…OR IS THE
CONTRACTOR
NAKED?
By Jonathan D. Massie, Esq
A
s many of us recall from our childhood, “The Emperor’s
New Clothes” is a tale written by Hans Christian
Andersen about two weavers who make new clothes for
the Emperor. The weavers convince the Emperor that his
new clothes are made of materials that may only be seen
by those who are of his class and have the sufficient sophistication
to appreciate the new threads. When in actuality, he is naked and no
one dares to tell him so - until a child cries out in the crowd that the
he really isn’t wearing anything at all. What does this tale have to do
with contractors?
Recently, in April of 2018, the California Supreme Court in Dynamex
Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, wrestled
with the question of whether an individual worker should be classified
as an employee or whether the worker is an independent contractor.
In this case (later a class action), two drivers sued Dynamex alleging
that Dynamex misclassified them as independent contractors and not
as employees of the company, as they argued they should have been
classified. The two drivers alleged violations of various laws that regulate
the transportation industry and also various sections of the California
State Labor Code. Finally, the drivers alleged that Dynamex engaged in
unfair and unlawful business practices under Business and Professions
Code section 17200.
Dynamex’s defense was straightforward and simple. Dynamex
noted that in 2004, the company adopted a new policy that changed
existing employees to independent contractors and had all drivers
sign an agreement stipulating that all drivers are independent
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SUMMER 2019
contractors and are not
employees. Based upon this
contractual relationship with the
drivers, Dynamex argued that the
drivers are properly classified as
independent contractors.
Without getting too deep into
the procedural weeds of this
case (which is quite complex),
the main issue that the California
Supreme Court reviewed was:
what is the proper test that Courts
must use in reviewing a dispute
in determining whether a worker
is an employee or independent
contractor? Formerly, California
Courts employed the “Totality of
the Circumstances” test to resolve
the issue of whether someone
is an employee or independent
contractor. One important factor
used in this test was determining