To determine the drivers’ status, the Court adopted the ABC test, where a company must satisfy three factors:
• 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.
The Court determined that this A factor is broader and more inclusive than the traditional common law right to control test. Specifically, if the carrier retains just the right to control the driver, that is enough to establish control over the driver.
• B - the worker performs work that is outside the usual course of the hiring entity’s business.
The Court ruled that the driver needs to work in his or her own independent business and not be viewed by others as working in the company’s business. Because Dynamex’s entire business consisted of delivery service, the drivers who made those deliveries were considered to be within the usual course of Dynamex’s business.
• 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 Court determined that the driver must be seen as independently deciding to go into business for himself or herself. To satisfy this factor the drivers would need to take steps to establish an independent business through incorporation or offering their services to the public, which they did not. The Court also found that just because the carrier does not prohibit the drivers from engaging in such activities, that is not sufficient to satisfy this factor.
To make this awful situation worse, the California legislature has passed Assembly Bill No. 5 (AB5), which puts into law the ABC test established by the Court in Dynamex case. That bill was signed by the governor on September 18, 2019. This law is an awful development for carriers who use independent contractor drivers in California.
By Mark Hunt, Partner in Charge of King & Ballow’s Independent Contractor/Distribution area of practice. Since starting with the firm in 1983, he has designed, implemented and defended independent contractor systems for companies across the country and in a number of industries, including those involved in trucking. Connect with him at
mhunt@kingballow.com.
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