In Dynamex v. Superior Court, ___ Cal.App.4th ___ (October 15, 2014), the California Court of Appeal (Second Appellate District, Division Seven) affirmed the order of the Los Angeles County Superior Court (Judge Stern) denying defendant’s motion to decertify a class action brought on behalf of employees who were misclassified as independent contractors and claimed unpaid wages.
Plaintiffs were employed as delivery drivers for defendant employer. As such, they delivered packages, letters and parcels to defendant’s customers. Prior to 2004 defendant had classified its California drivers as employees and compensated them accordingly. In 2004, however, defendant converted the status of all drivers from employees to independent contractors. Plaintiffs then filed a class action lawsuit in April 2005 on behalf of themselves and approximately 1,800 other drivers, alleging that, as a practical matter, the drivers continued to perform the same tasks as they had when classified as employees, with no substantive changes to the means of performing their work or the degree of control exercised by defendant. As a consequence, they argued defendant violated California law by, among other things, failing to pay overtime wages.
Initially, the trial court denied class certification, but this was reversed by the appellate court. Subsequently, the trial court certified the proposed class in 2011. Defendant then moved to decertify the class but the trial court refused. Accordingly, in June 2013, defendant petitioned the Court of Appeal for a writ of mandate directing the trial court to vacate its ruling denying the motion to decertify the class. In its petition, defendant argued that the trial court had improperly adopted the definition of “employee” found in the state’s Wage Orders to ascertain the status of class members, rather than the common law test for distinguishing between employees and independent contractors. According to defendant, if the trial court had used the common law test, rather than the Wage Order standard, the class would have to be decertified because the predominance of individual issues relevant to that test would make it infeasible to litigate the plaintiffs’ claims as a class action.
The appellate court refused to decertify the class, finding that the trial court correctly allowed plaintiffs to rely on the definition of an employment relationship found in the applicable wage order, at least for those claims “falling within the scope of the wage order,” such as plaintiffs’ claim for unpaid overtime wages in violation of Labor Code Section 1194. For those claims falling outside the wage order, however, the trial court should have relied on the common law definition of employee. The court noted that the principal aspect of an employment relationship under the common law test is “whether the person to whom service is rendered (i.e. the alleged employer) has the right to control the manner and means of accomplishing the result desired.” Under the wage orders, however, an employment relationship is established if the defendant (a) exercises “control over the wages, hours or working conditions” of the plaintiffs, or (b) “suffers or permits” the plaintiffs to work, or (c) creates “a common law employment relationship.” Thus, the appellate court determined that common law test should apply to plaintiffs’ claims for unpaid expense reimbursements under Labor Code Section 2802, but all other claims – including Plaintiff’s unfair business practices claim – would be subject to the wage order definition.