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Federal law doesn’t pre-empt a California assay that is acclimated to actuate whether workers are advisers or absolute contractors beneath accompaniment law, the 9th U.S. Circuit Cloister of Appeals afresh disqualified in California Trucking Affiliation v. Su. Thus, the California activity abettor could administer a state-law accepted to barter drivers who claimed that they were misclassified as absolute contractors.

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The activity abettor acclimated an earlier assay to appraise the abeyant application relationship, rather than California’s new ABC test, but the cloister said that was allowed. Altered tests may be acclimated depending on the attributes of a claim.

The Trucking Case

Members of the California Trucking Affiliation are motor-carrier companies that carrying items throughout the accompaniment and appoint in artery commerce. To booty freight, associates use either aggregation drivers (who are classified as employees) or owner-operators (who are classified as absolute contractors).

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Owner-operators use their own trucks, pay their own costs and accept ascendancy over how to accomplish the job. Nevertheless, they claimed that they were misclassified as absolute contractors and were break denied allowances that are afforded to advisers beneath accompaniment law.

[SHRM members-only resource: California Activity and Application Law Overview]

The activity abettor analyzed the case beneath the accepted developed in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (Cal. 1989), which primarily looks at who controls the work. The assay additionally evaluates assorted accessory factors, such as whether workers accumulation their own tools, how continued casework are performed and whether the hiring business supervises the work. The factors are evaluated in their absoluteness with no one agency actuality determinative.

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The trucking affiliation argued that the Borello assay was pre-empted by the Federal Aviation Administration Authorization Act, which regulates motor carrying and especially pre-empts some accompaniment regulations accompanying to “rates, routes or services.” But the 9th Circuit said that the Borello assay is a activity accepted that about applies beyond industries in an breadth of law that is about absolute by the states and that the drivers’ affirmation is not absolutely accompanying to motor-carrier prices, routes or services.  

Thus, the cloister begin that the activity abettor could assay the drivers’ affirmation beneath the Borello standard.

Multiple Tests

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Employers may be abashed by the cardinal because it doesn’t absorb the acrimonious new ABC assay that the accompaniment aerial cloister adopted this year in Dynamex Operations West v. Superior Court. Rather, the activity abettor acclimated the Borello test, which has been replaced in some circumstances.

The 9th Circuit acclaimed that the ABC assay doesn’t administer to all claims. “Dynamex did not acceptation to alter the Borello accepted in every instance area a artisan charge be classified as either an absolute architect or an agent for purposes of administration California’s activity protections,” the cloister said.

The accompaniment aerial cloister adopted the new ABC assay for the bound purpose of interpreting California’s wage-order rules, explained Stacey Chiu, an advocate with Kaufman Dolowich & Voluck in San Francisco. This includes claims for absent meal and blow break and contributed overtime wages. 

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The Borello assay still can administer for added purposes, such as workers’ advantage claims, abomination claims for blameworthy abortion in abuse of accessible action and California Activity Code violations.

In the future, however, California administration can apprehend to be confronted with the Dynamex assay far added generally than the Borello test, said Jason Barsanti, an advocate with Cozen O’Connor in San Diego. The drivers in the trucking case didn’t adjure the allowance orders, he noted, but it is acceptable that, activity forward, plaintiffs’ attorneys will advance wage-order violations for which the added acrimonious ABC assay will be applied.

The New ABC Test

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In Dynamex, commitment drivers asserted classwide claims that they were misclassified as absolute contractors and, as a result, the aggregation abandoned accoutrement of the California Industrial Welfare Commission’s allowance adjustment No. 9, which governs the busline industry.

In that case, the California Supreme Cloister adopted a three-factor assay to actuate whether workers are advisers or absolute contractors beneath the state’s allowance orders. Beneath the new analysis, all three of the afterward factors charge be met for a artisan to be appropriately classified as an absolute contractor:

Employers should be acquainted that individuals, including those compensated as absolute contractors, are accepted to be advisers of the hiring article beneath California’s allowance orders, Chiu said. The accountability is now on administration to appearance that all three of the ABC assay altitude can be met. “This is a aerial burden,” she noted.

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However, added federal and accompaniment law tests are still applicative alfresco the ambience of California’s allowance orders. For example, altered tests are acclimated to actuate application cachet beneath the Agent Retirement Income Security Act and the Internal Revenue Code.

“The capital takeaway is that artisan allocation is not atramentous and white,” Chiu said. 

The basal band for businesses that accept workers accomplish casework for the company’s account in California is that they charge to anxiously appraise the accord if it’s not a accepted employer-employee arrangement, Barsanti said. The abeyant penalties for declining to appropriately allocate a artisan can be actual costly, he added. “This is addition case in California area an ounce of blockage is account a batter of cure, and it makes faculty to seek admonition to assay independent-contractor-related behavior and practices.” 

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