Dynamex Codified: What it Means for the Future of Workers' Compensation

• Jurisdiction: California,United States
• Citation: Vol. 32 No. 3
• Publication year: 2019
• Author: Jason Marcus, Esq. Sacramento, California
• topic: Labor Law,Employment Law,Workers Compensation

Dynamex Codified: What It Means for the Future of Workers' Compensation

Jason Marcus, Esq. Sacramento, California

On September 18, 2019, Governor Gavin Newsom signed Assembly Bill 5 (Gonzalez), codifying the California Supreme Court's 2018 decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 and the "ABC" test the Court used to determine whether the workers in Dynamex were properly classified as employees or independent contractors. AB 5 makes the ABC test part of the Labor Code (along with other areas of the law), which raises the question of how this new test will impact California's workers' compensation system.

This article addresses that question and other potential ramifications of AB 5. First, however, a bit of history is needed.

The Dynamex Decision

Readers are directed to Volume 32, No. 1, of the Workers' Compensation Quarterly, where Mr. Kaufmann and Ms. Olmedo wrote a thorough article discussing the Dynamex decision and its impact on the workers' compensation system ("Why the Dynamex Decision Is Important for Injured Workers Regardless of Whether the 'ABC' Test Applies to Workers' Compensation").

To briefly recap Dynamex, the Supreme Court established a three-part ABC test to determine employment status for all claims concerning employer obligations under Industrial Welfare Commission (IWC) wage orders. The Court held that in order to lawfully classify a worker as an independent contractor not covered by wage orders, the hiring entity must prove each of the three parts of the ABC test. The Court did not extend the ABC test to workers' compensation matters or other areas of the law, beyond IWC wage orders.

The Workers' Compensation Appeals Board has largely been unwilling to extend the ABC test to workers' compensation claims (see Perkins v. Don L. Knox, 2018 Cal.Wrk.Comp. P.D. LEXIS 490 (Board panel decision); Martinez v. TFR Management Group, 2018 Cal.Wrk.Comp. P.D. LEXIS 285 (Board panel decision)). With the signing of AB 5, however, the WCAB is likely to conclude that the ABC test does now apply to workers' compensation cases.

Assembly Bill 5

Assembly Bill 5, authored by San Diego Assemblywoman Lorena Gonzalez, was introduced in late 2018 in response to the Dynamex decision. The bill's stated purpose was to codify the Dynamex decision and to remedy the harm to workers misclassified as independent contractors, as clearly set forth in the bill's legislative findings. Section 1(e) of the bill reads:

It is

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