The leading case that sets forth the standard in determining whether a worker is an employee or independent contractor was issued nearly three decades ago in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 54 Cal. Comp. Cases 80. This determination carries considerable significance as an employee is afforded certain benefits, such as disability and medical benefits, under California’s workers’ compensation system, if and when an injury is found to be compensable. An independent contractor, however, is not.

Since the Borello decision, many cases applied the standard adopted therein to different sets of facts. One in particular is the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court (2018) 83 Cal. Comp. Cases 817. Although the Court in Dynamex limited its decision to California wage orders, application of its more straight-forward test in workers’ compensation cases as compared to the more complex analysis described in Borello has been the subject of many debates.

The Dynamex Court lays out the “ABC” test in determining whether a worker is an employee or independent contractor. The “ABC” test is a three-part test to verify: (1) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; (2) that the worker performs work that is outside the usual course of the hiring entity’s business; and (3) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. Dynamex, 83 Cal. Comp. Cases 955-956.

Some will argue the application of the “ABC” test under the Dynamex decision would lead to more favorable results for workers than it would under the Borello decision as workers are more likely to be classified as employees, and thus entitled to labor law benefits. There is some merit to that given the less strenuous process in classifying workers under the Dynamex decision. This issue may well be addressed at the appellate level in a workers’ compensation context. In the meantime, it would be prudent to assert arguments under both decisions.