Let's Just Be 'Friends

• Author: Anthony R. McClure
• Pages: 22-23

Published in Litigation News Volume 46, Number 1, Fall 2020. © 2 020 by the American Bar A ssociation. Repro duced with permissi on. All rights reser ved. This informati on or any portion the reof may not be copie d or disseminated in any form

or by any means or stored i n an electronic database o r retrieval syst em without the expr ess written co nsent of the American B ar Association.

Presumed

Employees until

Proven Independent

Contractors

By Nhan T. Ho, Litigation Ne ws

Contributing Editor

The enactme nt of Assembly Bill 5

(AB-5) by the Califo rnia legislature

augments the f orce and eect of

the “ABC” test adopted i n Dynamex

Operations West v. Supe rior Court,

which placed a he avier burden on

employers to demo nstrate that a

worker is an indep endent contractor.

ABA Section of Liti gation leader s say

the new law has many imp lications

for employers, b ut its future is also

questionable.

Before Dynamex and AB-5, the

test in S.G. B orello & Sons, Inc. v.

Department o f Industrial Relations de-

termined how a Ca lifornia worker was

classif‌ied. I t focused on whether the

hirer could “control the manner and

means of accomp lishing the result

desired .”

In April 2018 , the California

Supreme Cour t decided Dynamex and

adopted the “ABC” test i n determin-

ing whether a worker w as an employ-

ee or indepen dent contractor under

the California w age orders (cover-

ing employers’ obligations respect-

ing pay and working co nditions for

employees). The ABC test p rovides

that a worker is an emp loyee unless

the hirer can prove: (A) the ab sence

of the hirer’s control a nd direction re-

garding the worker ’s service; (B) the

performed wo rk is outside the usual

course of the hirer ’s business; and (C)

the worker is customa rily engaged in

an independent trade that provides

similar serv ices to others.

In September 2019, the California

legislature en acted AB-5, which codi-

f‌ies and expands Dynamex’s ABC test,

but also retains th e multifactor Borello

test for numerou s potential employ-

ment scenarios.

Section of Litiga tion leaders agree

that employers pref er to classify

workers as independent contractors.

The biggest rea son is cost savings.

Specif‌ical ly, “it is widely estimate d

that hiring individuals as employees

adds between 2 0 to 30 percent to

labor costs on a ccount of Social

Security and M edicare taxes, unem-

ployment and disability insurance, sick

leave, min imum wage and overt ime

requirements, workers’ compensation,

and increased l itigation liability,” de-

tails David E. Gever tz, Atlanta, GA, co-

chair of the Sec tion’s Employment &

Labor Relatio ns Law Committee.

However, “independent contractors

recognize some of the se savings as

well in the form of high er pay and/or

lower taxes,” Gever tz adds. Both em-

ployers and workers “ may also value

the reduced paperwork, hours/assign-

ment f‌lexibility, an d general informali-

ty of these arran gements,” he notes.

AB-5 may bring mo re clarity. “The

concept is that peo ple who do the

work or provide the ser vice that

is at the core of a busine ss should

be treated as employees,” explains

Loren Kieve, San Fran cisco, CA, co-

chair of the Sec tion’s Judicial Intern

Opportunity Program. However, “AB-5

introduces a few comp lications,” in-

cluding speci al applications in the

franchise bu siness context and joint

employer liability, Gevertz remarks.

Notwithstanding AB-5, “where pos-

sible, compan ies will undoubtedly look

to see if they can maint ain their ex-

isting independent contractor rela-

tionships as bon a f‌ide business-to-

business contracting relationships,”

Gevertz obser ves. Employers can con-

sider rechara cterizing the nature of

the workers’ ser vices to meet the re-

quirements of th e ABC test, suggests

Gevertz. If mai ntaining the indepen-

dent contractor re lationship is di-

cult, “employers will likely reassess

which of its workers it s hould make

part-time employees a nd/or subject

to intermittent sche dules to reduce

the labor cost im pact of this new law,”

predic ts Gevertz.

Shortly afte r AB-5 was enacted,

a group of gig workers in troduced a

statewide ballot measure for the up-

coming electi on to ensure they can

continue working a s independent con-

tractors with f‌lexib le hours.

Further develop ments are likely.

On November 20, 2 019, the California

Supreme Cour t agreed to decide

whether Dynamex applies retroactive-

ly, a question certif‌i ed from the U.S.

Court of Appe als for the Ninth Circuit

in Vazquez v. Jan-Pro Franchising

International, Inc. “There are goo d

reasons to believe that t he California

Supreme Cour t will ultimately f‌ind in

favor of retroactive appl ication, espe-

cially given the lan guage in Dynamex

suggesting tha t the decision mere-

ly clarif‌ied existi ng law as opposed

to departing fro m it,” Gevertz opines.

However, what role AB-5 plays in

this decision “re mains unseen,” he

concludes.

Let’s Just Be

“Friends”

By Anthony R. Mc Clure, Litigation

News Tea m Edit or

The Florida Sup reme Court has held

a Facebook “fri endship” with counsel

is not grounds for d isqualif‌ication.

The 4–3 decision i n Law Oces of

Herssein & He rssein, P.A. v. United

Services Automobile Association

departs fro m standing Florida prec-

edent and high lights the lack of uni-

form guidance o n the issue of socia l

media relationships with judges.

The plainti law f‌ir m moved to dis-

qualify the tri al judge because an at-

torney appearin g “on behalf of a po-

tential witness an d potential party

in the pending li tigation” was listed

as a “friend ” on the judge’s personal

Facebook page. The trial judge denied

the motion.

The plainti then petitioned

Florida’s Third Dis trict Court of

Appeal for a writ of p rohibition to dis-

qualify the tri al judge. The appel-

late court deni ed the petition, hold-

ing that “the me re fact that a judge

is a Facebook ‘fr iend’ with a lawyer

for a potential par ty or witness, with-

out more, does n ot provide a basis for

a well-ground ed fear that the judge

cannot be imp artial or that the judge

is under the inf‌l uence of the Facebook

‘frie nd.’”

The appellate court recognized

that Florida’s Four th District Court

of Appeal had al ready “held that re-

cusal was requir ed when a judge

was a Facebook ‘f riend’ with the

prosecutor.”

The Florida Sup reme Court af-

f‌irmed the Third D istrict’s holding that

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