The California Supreme Court issued a decision on April 30, 2018 in Dynamex Operations West Inc. v. Superior Court which significantly changed the standard for determining independent contractor versus employee status in California. The state’s business community is deeply troubled by this court decision and believes that the Legislature needs to urgently consider a bill to address this case.
As a result of the Dynamex decision, the California Supreme Court made the independent contractor test tougher under the Wage Orders, but potentially inconsistent with other laws (e.g., workers’ compensation, unemployment insurance, taxation). More importantly to the business community, the decision represents the overturning of nearly 30 years of precedent pursuant to the high court’s 1989 decision in SG Borello & Sons v. DIR, which businesses and workers have relied upon for all these years and that provides factors in determining proper classification.
With such a seismic shift in California’s employment law, it is the elected branch of government that should utilize the legislative process to create any new and far-reaching changes to the law, rather than an appellate court decision as was the case in Dynamex. If this decision is allowed to stay in effect, it will have the practical impact of severely limiting the use of independent contractors in the State of California.
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