Does the California Supreme Court’s Independent Contractor “ABC” Test Apply to Joint Employment?
A few weeks after the California Supreme Court established the new “ABC” test in its decision in Dynamex Operations West v. Superior Court, a California Court of Appeal provided critical guidance in Curry v. Equilon Enterprises to help employers understand how to apply the ABC test to shared employees. The Curry court concluded that the high court’s policy reasons for the ABC test were uniquely relevant to the facts in Dynamex and the same policy reasons did not apply in the joint employer context.
Dynamex involved a class of individual delivery drivers who claimed the delivery company they worked for had misclassified them as independent contractors. In Curry, in contrast, the issue was whether an employee of a putative employer was jointly employed by a secondary entity that contracted with the employee’s primary employer. The Curry court observed, in the joint employer context, that the alleged employee is already considered an employee of the primary employer. Thus, the policy purpose for presuming the worker to be an employee and requiring the secondary employer to disprove the worker’s status as an employee is unnecessary because taxes are being paid and the worker has employment protections.
The appellate court case clarified, at least for the time being, one of the most important questions regarding the ABC test (i.e., whether an entity may still legitimately contract work out to another company if the services are part of the entity’s core business). The Curry decision is a welcome clarification for employers as it not only limits the applicability of the far-reaching ABC test but also enables employers to structure business relationships in a way that limits liability for another hiring entity’s employees.