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Dynamex Operations West, Inc. v. Superior Court

Filed 4/30/18 IN THE SUPREME COURT OF CALIFORNIA DYNAMEX OPERATIONS WEST, INC., ) Petitioner, ) ) S222732 v. ) ) Ct.App. 2/7 B249546 THE SUPERIOR COURT OF ) LOS ANGELES COUNTY, ) Los Angeles County Respondent; ) Super Ct. No. BC332016 ) CHARLES LEE et al., ) Real Parties in Interest. ) ____________________________________) Under both California and federal law, the question whether an individual worker should properly be classified as an employee or, instead, as an independent contractor has considerable significance for workers, businesses, and the public generally.1 On the one hand, if a worker should properly be classified as an employee, the hiring business bears the responsibility of paying federal Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, providing worker’s compensation insurance, and, most relevant for the 1 See United States Department of Labor, Commission on the Future of Worker-Management Relations (1994) page 64 [“The single most important factor in determining which workers are covered by employment and labor statutes is the way the line is drawn between employees and independent contractors”] <> (as of Apr. 30, 2018). 1 present case, complying with numerous state and federal statutes and regulations governing the wages, hours, and working conditions of employees. The worker then obtains the protection of the applicable labor laws and regulations. On the other hand, if a worker should properly be classified as an independent contractor, the business does not bear any of those costs or responsibilities, the worker obtains none of the numerous labor law benefits, and the public may be required under applicable laws to assume additional financial burdens with respect to such workers and their families. Although in some circumstances classification as an independent contractor may be advantageous to workers as well as to businesses, the risk that workers who should be treated as employees may be improperly misclassified as independent contractors is significant in light of the potentially substantial economic incentives that a business may have in mischaracterizing some workers as independent contractors. Such incentives include the unfair competitive advantage the business may obtain over competitors that properly classify similar workers as employees and that thereby assume the fiscal and other responsibilities and burdens that an employer owes to its employees. In recent years, the relevant regulatory agencies of both the federal and state governments have declared that the misclassification of workers as independent contractors rather than employees is a very serious problem, depriving federal and state governments of billions of dollars in tax revenue and millions of workers of the labor law protections to which they are entitled.2 2 See United States Department of Labor, Wage & Hour Division, Misclassification of Employees as Independent Contractors <> (as of Apr. 30, 2018); California Department of Industrial Relations, Worker Misclassification <> (as of Apr. 30, 2018); (footnote continued on next page) 2 The issue in this case relates to the resolution of the employee or independent contractor question in one specific context. Here we must decide what standard applies, under California …
Original document
Source: California Supreme Court