An ongoing legal fight across California regarding the classification of independent contractor truck drivers finally came to a conclusion in May of 2018 when the California Supreme Court settled the issue, or so they thought. The state of California is now facing a lawsuit citing the state’s high court ruling as unconstitutional. Riverside employment law attorneys have watched this fight work through the court system and recognize that it is far from over.
Dynamex Case
Dynamex is a delivery service operation that employs full-time delivery drivers and in addition, they also hire independent contractor drivers to deliver goods. Some of those drivers brought a claim against Dynamax alleging that they were misclassified as independent contractors in violation of California’s wage-order law. Several similar cases have made their way into the California courts as well.
Dynamex Ruling And The Independent Contractor Test
The California Supreme Court issued a ruling in Dynamex Operations West Inc. vs. The Superior Court of Los Angeles County adopted a three-part ABC test to interpret California’s wage-order rules. This test was used to determine whether or not drivers were independent contractors or company employees.
- The hiring business does not control or direct the worker’s service performance;
- The work performed is outside the usual course of business for the hirer; and
- The worker operates as an independent enterprise from the hiring entity.
The most difficult part of this test is part B as hiring independent drivers is not outside the usual course of business for trucking or delivery companies who have truck driver employees. As a result of this ruling, several trucking groups are suing the state of California.
Challenges To The Ruling
Pending challenges to the application of the three-part test argue that the state’s wage-order ABC test is unconstitutional because it violates the Supremacy Clause and the Commerce Clause as follows:
- The ruling violates the United States Constitution Supremacy Clause as it conflicts with the Federal Aviation Administration Authorization Act. This Act prohibits states from enacting laws that affect a motor carrier’s prices, routes, and services.
- The ruling violates the United States Constitution Commerce Clause because it imposes impermissible burdens and limitations on interstate commerce by effectively eliminating the possibility for California trucking groups to hire independent contractor drivers.
Effects Of Classification
When drivers are classified as independent contractors, they are responsible for paying FICA and social security taxes themselves. When they are classified as employees, it becomes more costly for employers. Employers are then required to pay taxes, federal social security, and employee benefits. Employers are also required to comply with federal and state wage and hour laws.
As Riverside employment law attorneys know, misclassification of employees as independent contractors in order to save an employer some money is prohibited and comes with significant penalties to the employer. If you believe you have been misclassified as an independent contractor or your rights have been violated in another way at work, contact our employment law experts at Rager & Yoon – Employment Lawyers to schedule a consultation.