Dynamex Operations W., Inc. v. Superior Court of L. A. Cnty.
232 Cal. Rptr. 3d 1
| Cal. | 2018Background
- Dynamex converted its California delivery drivers from employee to independent-contractor status in 2004; drivers filed a class action alleging wage-order and Labor Code violations based on misclassification.
- The certified class was limited to individual drivers who personally performed Dynamex deliveries, did not employ others, and did not work concurrently for other delivery services or their own delivery customers.
- Trial court certified the class relying on the three alternative definitions of “employ” in IWC wage orders as described in Martinez: (a) control over wages/hours/working conditions, (b) "suffer or permit to work," and (c) common-law employment (Borello).
- Court of Appeal affirmed certification as to wage-order claims (applying wage-order definitions) but held Borello applies to non-wage-order claims (e.g., indemnity under Lab. Code §2802).
- Supreme Court granted review limited to whether the wage-order “suffer or permit to work” definition can be used to decide employee v. independent-contractor status for wage-order obligations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether wage-order definitions (including “suffer or permit to work”) govern the employee/IC question for wage-order claims | Martinez’s three alternative definitions apply to determine coverage; workers are covered if they meet any alternative | Only Borello (common-law multifactor test) should determine employee v. IC status; Martinez definitions limited to joint‑employer context | The Court held the wage-order "suffer or permit to work" definition applies to the employee/IC inquiry for wage-order claims and may be interpreted by reference to an "ABC" formulation. |
| Proper test under the wage-order "suffer or permit" standard | Use wage-order history and purpose to reach broadly protective coverage; class certification appropriate under that standard | It would be overbroad or create conflict with Borello; DLSE practice supports Borello | The Court adopts the ABC test to give content to "suffer or permit": employer must prove (A) worker free from control, (B) work outside usual course of hiring entity’s business, (C) worker engaged in an independent established trade. |
| Burden of proof on IC designation | Workers presume employees under wage orders | Employers should bear burden to prove IC status | Court places burden on hiring entity to establish all three ABC elements to show IC status under wage orders. |
| Whether class certification was proper here under the ABC/suffer-or-permit standard | Plaintiffs: classwide issues (esp. part B and C) predominate for Dynamex drivers | Dynamex: individualized inquiries (control, payment terms) defeat predominance | Court upheld certification for wage-order claims: part B (drivers perform work in the delivery company’s usual course) and part C (class excluded drivers who ran independent businesses) are amenable to classwide proof, so certification stands. |
Key Cases Cited
- Martinez v. Combs, 49 Cal.4th 35 (Cal. 2010) (interpreting IWC wage-order definitions to include three alternatives: control; suffer/permit; common-law employment)
- S. G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (Cal. 1989) (multifactor common-law test and emphasis on statutory purpose in employee/IC analysis)
- Rutherford Food Corp. v. McComb, 331 U.S. 722 (U.S. 1947) (early discussion of breadth of "suffer or permit" principle under federal law)
- Ayala v. Antelope Valley Newspapers, Inc., 59 Cal.4th 522 (Cal. 2014) (application of Borello in wage-hour class context; reserved question on wage‑order tests)
- Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318 (U.S. 1992) (federal common-law/agency-focused test for employee status; cited for contrast with wage-order approach)