Court Says Dynamex “ABC” Test is Retroactive and Applies to PAGA Claims
Superior Court Judge rules “ABC” test can be applied retroactively!
In this two part article, I discuss two matters of major interest to all trucking companies in California. Specifically, the Retroactive application of the Dynamex “ABC” Test for Independent Contractorship and its application to PAGA Claims.
Dynamex Applied Retroactively To Dancers’ PAGA Suit.
“The court’s holding that the ABC test should be applied to determine employee status under the wage orders can only mean that that test also had to be applied to labor code claims seeking to enforce the wage order requirements,” the judge said. “The court concludes that Dynamex’s ABC test should be utilized to determine the employee/independent contractor issues in this case. The fact that the case is brought under PAGA does not compel a different result.”
The judge went on to note that, for purposes of gratuities, the labor code’s definition of who qualifies as an employee is different, “arguably broader,” than the definition found in the wage orders. As a result, Judge Claster held that “there is no basis to apply the Dynamex analysis in determining issues relating to the gratuities issue in this case.”
Shannon Liss-Riordan of Lichten & Liss-Riordan PC, who represents both the Imperial Showgirls dancers in Orange County and the driver in the Ninth Circuit case said that Judge Claster’s ruling is a good sign for clients like hers.
“The courts are not going to be receptive to these types of arguments, that Dynamex isn’t retroactive,” Liss-Riordan said. “I’m definitely bringing Judge Claster’s ruling to the attention of the Ninth Circuit and the district court in the Grubhub case.”
Why PAGA Claims can be so devastating.
The California labor Commissioner can institute investigations of trucking companies when the Labor and Workforce development agency refers a case following notification of a complaint filed through the Private Attorney Generals Act (PAGA). Investigators can audit a trucking company going back for approximately three years and look for wage, hour and labor law violations.
The labor Commissioner can issue huge citations for millions of dollars. The citations include minimum wage violations, liquidated damages violations, failure to pay overtime, failure to not provide final paychecks as required by law, not paying for rest breaks, not providing proper itemized wage statements, meal. break violations, not maintaining valid Worker’s Compensation insurance, not providing proper or accurate wage statements, and, of course, Misclassifying workers as independent contractors.
For example, A trucking company with 20 drivers could easily end up with a wage theft citation from the Labor Commissioners office for millions of dollars. I’ve seen a trucking company with a citation based on violations against one driver total over $100,000.00.
Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime and other labor law violations, and any payments owed and penalties due are calculated. Civil penalties collected are transferred to the State’s General Fund as required by law.
Here’s What The Labor Commissioner Says:
Worker misclassification is the practice of knowingly misclassifying an employee as an independent contractor. It deprives employees of minimum wage and overtime protections, as well as workers’ compensation coverage if injured on the job, and creates an unfair playing field for responsible employers who honor their lawful obligations to their employees. The Labor Commissioner’s Office enforces laws prohibiting the willful misclassification of workers.
When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid wages plus interest. If a worker quits, final wages are due within 72 hours of the notice. Waiting time penalties are imposed when the employer intentionally fails to pay all wages due to the employee at the time of separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.
The Division of Labor Standards Enforcement, or the Labor Commissioner’s Office, is the division within the Department of Industrial Relations (DIR) with wide-ranging enforcement responsibilities including adjudicating wage claims, inspecting workplaces for wage and hour violations, investigating retaliation complaints and educating the public on labor laws