Subscribe to our email list to receive bulletins as well as invitations to our latest seminars and workshops.Join Our Email List
Dynamex or Borello: Prepare Your Umbrella for Both Storms
In the California workers’ compensation system, a compensable work injury must arise out of employment, and “any person rendering service to another, other than as an independent contractor, or unless expressly excluded . . . is presumed to be an employee” (Labor Code Section 3357). A non-employee, or independent contractor, is generally ineligible to recover workers’ compensation benefits for a work-related injury. Rebutting the employment relationship is thus a crucial threshold issue impacting the workers’ compensation claimant and defendant alike, and of particular relevance when a worker is hired for a short-term task such as repairing or remodeling the hirer’s building, transporting goods, or catering a social event.
The defendant has the burden to rebut the presumption of employment under Labor Code Section 3357 and to prove an employment relationship did not exist – challenging enough under the current multi-factor test in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989), 48 Cal.3d 341, 54 Cal. Comp. Cases 80. But if the workers’ compensation system ultimately adopts the abbreviated, three-element “ABC” test from the California Supreme Court’s wage order decision in Dynamex Operations West, Inc. v. Superior Court (2018), 4 Cal. 5th 903, 83 Cal. Comp. Cases 817, the presumption may become more difficult to rebut. Conciseness is attractive; but Dynamex on early analysis requires far less careful weighing of interlocking factors proffered by defendants to rebut the presumption of employment relationship. Thus, more than ever, marshalling the necessary evidence – before litigation even begins — is key. The Dynamex ABC test is as follows:
(A) the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact;
(B) the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
The Borello elements, more complex, emphasize whether the employer exercised control over the work, but also which party had ability to fire without cause, whether the worker was engaged in a distinct occupation or business, whether the work is typically done in that locality under direction by the principal or without supervision by a specialist, the skill level required, who supplies the instruments, tools and workplace, how long it would take the worker to provide the services, whether payment is made by time or by the job, whether the type of job is the same as the hirer’s reasonable business, and whether the parties believe they are creating an employer-employee relationship. With fewer elements for a trier of fact to consider, a potential “employer” has less space to develop a rebuttal.
Given the two standards above, selected items to maintain in a file when hiring a worker for a short-term assignment should, therefore, include:
- A memorandum identifying the parties’ understanding of why the “worker” is being hired, the nature and expected duration of the work, the extent of supervision, the payment method, and which party controls the hours, materials, and tools of the work
- Identification of the worker’s independent business, such as a construction firm
- All invoices and payment records
- A log of interactions with the worker during the course of the job
- Clear, written notice to the worker of the procedure to be followed in reporting a work-related injury, following procedures under state law
Whether the Dynamex or the Borello test ultimately prevails, much of the same documentation can assist in building a defense to on-the-job injuries and the potential for workers’ compensation litigation, as can competent legal assistance from experienced practitioners in the field.
The firm of Mullen & Filippi is ready to assist in these efforts at any time.
Written by Debra A. Robins, Esq., Feb. 2019