Beaumont Tashjian Law Blog

Friday, June 1, 2018

Employee or Independent Contractor? - How the Dynamex Decision May Impact Associations

The California Supreme Court issued a monumental decision in Dynamex Operations West, Inc. v. Superior Court in late April of this year. The seminal ruling will make it more difficult for employers to classify their workers as independent contractors instead of employees. For managers and board members of associations, this could mean readdressing whether or not workers of associations should be considered employees instead of independent contractors. 

Dynamex is a nationwide delivery service that offers same day pickup and delivery services to the public and to large businesses. Prior to 2004, Dynamex classified its delivery drivers as employees of the company. After 2004 though, Dynamex made all delivery drivers independent contractors as a cost savings measure. An independent contractor that worked solely for Dynamex sued on his behalf and other similarly situated Dynamex delivery drivers on the basis that the drivers should be considered employees of Dynamex.

The court in Dynamex implemented a new test called the “ABC” test to determine whether a worker is considered an employee or an independent contractor. The ABC test presumes all workers to be employees, but this presumption may be rebutted if each of three conditions are met:

(a) that 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 such work and in fact;

(b) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(c) that 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 court found the Dynamex delivery drivers should be considered employees of Dynamex based on this test.

Associations and boards should take preemptive measures in addressing whether workers that are classified as independent contractors should be reclassified as employees of the association. Associations should consult with their legal counsel to review the relationship under the ABC test and determine whether any workers should be reclassified, as each case will be different and fact intensive.


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