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January 2019

More Workers Ruled Potential Employees, Not Independent Contractors

California courts have again put their thumb on the scale on the employee side of independent contractors and employees. In Duffey v. Tender Heart Home Care Agency, the court of appeal ruled that an in-home caregiver could be an employee entitled to overtime where the placement agency, not the caregiver, negotiated rates with the client and thereby exercise control over the caregiver’s wages. The court overturned a trial court summary adjudication, and did so even though the contract between the caregiver and the agency described their relationship as “independent contractor” and specifically allowed the caregiver to negotiate rates with the client.

The decision is centered on a specific statute, California’s Domestic Workers Bill of Rights (Lab. Code, §§ 11450 et seq.), so it's most direct precedential effect is with respect to such workers. The decision is, however, part of a larger trend. It relies heavily on two recent California Supreme Court decisions: Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, which famously adopted a strict new “ABC” test for independent contractors under wage orders, and Martinez v. Combs (2010) 49 Cal.4th 35, which held that one who exercises “control of wages, hours, or working conditions” is an employer. Duffey applied the Martinez test, emphasizing that control over any of the three is enough, because the domestic worker statute uses the same language.

In Duffey, control over working conditions was not at issue, and the court found that because the caregiver could reject any assignment, there was no control over her hours.

The court emphasized the need to determine the question under the specific statute, and rejected the trial court’s exclusive reliance on the traditional “common law” test set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. The Duffey court then nevertheless found that the caregiver had established a triable issue of fact even under Borello’s independent contractor-friendly test, again because of the agency’s control over wages.  

The decision is not yet final. It is subject to petition for rehearing or review by the California Supreme Court, and will likely be the subject of letters urging de-publication so it cannot be cited in California courts.

Appellate

Don Willenburg



Appellate
Employment Law