Arnold v. Mutual of Omaha Insurance
135 Cal. Rptr. 3d 213
Cal. Ct. App.2011Background
- Arnold worked as a nonexclusive insurance agent for Mutual as an independent contractor; contract identified her as independent contractor, not an employee, with commission-based pay and possible termination with or without cause.
- Arnold filed a January 25, 2010 complaint on her behalf and a class alleging unpaid expenses under Labor Code sections 2800 and 2802, wages under sections 201–203, and UCL violations.
- Mutual moved for summary judgment arguing Arnold’s claims depend on her status as an employee under the common law test, not a statutory definition, and that undisputed facts showed independent contractor status.
- Arnold was licensed as an independent agent and contracted with Mutual in 2006; she handled applications, client service, and commissions, with 1099 tax treatment.
- Mutual’s Concord office did not supervise Arnold; training was voluntary; agents paid for workspace; Arnold owed Mutual about $2,288 in expenses at termination.
- The trial court granted summary judgment, ruling the common law Borello test applied and Arnold was an independent contractor; Arnold appealed arguing statutory definitions should apply and that triable issues existed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Borello common law test applies to determine employee status under Labor Code sections 202/2802. | Arnold argues section 2750 defines employee more broadly, thus supplanting Borello. | Mutual argues there is no clear statutory definition in 2750 to replace Borello for these sections. | Borello applies; statutory definition does not clearly supplant common law. |
| Whether Arnold is an employee under Borello based on the record, creating triable issues of material fact. | Opposing evidence suggests control and supervision by Mutual; facts may show employee status. | Evidence shows Arnold exercised independent judgment, owned tools, paid own expenses, and the relationship was independent contractor. | No triable issues; record supports independent contractor status. |
Key Cases Cited
- Borello & Smith v. Dept. of Industrial Relations, 48 Cal.3d 341 (Cal. 1989) (principal test of employment with multiple factors; not mechanical; control central but not sole determinant)
- Estrada v. FedEx Ground Package System, Inc., 154 Cal.App.4th 1 (Cal. App. 4th Dist. 2007) (appellate court applied Borello factors when statutory definition unclear)
- Randolph v. Budget Rent-A-Car, 97 F.3d 319 (9th Cir. 1996) (viewed section 2750 with, and not instead of, common law employment test)
- Varisco v. Gateway Science & Engineering, Inc., 166 Cal.App.4th 1099 (Cal. App. 4th Dist. 2008) (independent contractor factors; at-will termination not determinative)