The California Supreme Court decision virtually outlawing independent contractors still stands as written, following a recent legislative attempt to overturn it and court challenges.
During the previous session of the state legislature business interests united behind legislation to get around the most onerious portion of the high court ruling handed down last spring overturning historic contractor requirements (See article on Page 1).
Unlike earlier court decisions and legislation even in union-friendly states like New York, the California court held in May that a worker could not be considered an independent contractor if that person was in the same line of business as the company using his or her services.
Thus an owner-operator truck driver could not lease himself and his equipment to a trucking firm, but a plumber could be an independent contractor when performing repair work for a supermarket.
Since the Supreme Court decision, the California Court of Appeal ruling differentiated between a taxi driver’s Industrial Welfare Committee Wage Order claims and non-Wage Order claims.
This means that the new standard applies only to wage issues and that non-wage issues, such as reimbursement for expenses and workers’ comp, still come under the older, more expansive definition of who is a contractor.
Additionally, another state court ruled in a case involving exotic dancers that the Supreme Court decision could be applied retroactively. It held that employers are liable for years of possible wage and hour violations and are not protected by the previously legal standard.
In October the California Trucking Association and one of its member companies filed suit in federal district court to overturn the state Supreme Court decision. However, that approach is not expected to succeed because the federal courts generally leave it up to the states to decide such issues as the definitions of who is an employee or a contractor.