Trial Court Must Reconsider Whether Newspaper Carriers Are Contractors

By Joanne Deschenaux November 18, 2021
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Newspaper

A trial court erred when it ruled that newspaper home-delivery carriers were not employees of The Fresno Bee newspaper but rather were independent contractors and thus not entitled to reimbursement of mileage expenses, a California appeals court ruled.

The appellate court, however, after discussing at length the proper test to be used in determining employee/independent contractor status in this case, did not decide the carriers' status. Instead, it sent the case back to the trial court to reconsider using the correct standards.

The carriers signed contracts with The Fresno Bee to provide newspaper home-delivery services. The contracts identified the carriers as independent contractors, stating that they were to use their own vehicles, set their own hours and purchase their own supplies. The contracts also said that the carriers were not subject to the newspaper's rules and regulations for employees and were free to work for other companies.

The carriers filed a class-action lawsuit against the Bee, alleging, among other claims, failure to reimburse mileage expenses. The trial court concluded that the carriers were properly classified as independent contractors, rather than employees, and thus were not entitled to the reimbursement they sought. The carriers appealed.

The appellate court first noted that the trial court erred in basing its decision on Employment Development Department (EDD) regulations, which contain factors to be considered in determining whether newspaper carriers are employees or independent contractors for the purpose of the Unemployment Insurance Code. These regulations are inapplicable to the carriers' claim for reimbursement of expenses, the appeals court said. 

The appellate court then ruled that, even though the law governing independent contractor and employee status has changed significantly since the trial in this case, a test known as the Borello test is still the correct test to use here. The appeals court sent the claim back to the lower court for a redetermination of the carriers' status using the Borello factors. 

The Borello Test and Subsequent Changes

The Borello test, derived from the California Supreme Court's 1989 decision in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations, primarily considers whether the hiring entity or the worker controls the work in determining whether the worker is an employee or an independent contractor, the appeals court said. The test also examines several secondary factors, including:

  • Whether the individual performing the services is engaged in a distinct occupation or business.
  • Whether the worker supplies his or her own tools.
  • The method of payment, whether by the time or by the job.
  • For how long services are performed.

All factors are to be considered, with no one factor being determinative, the court said.

The appellate court then went on to note that both the high court and the Legislature have recently departed from the Borello test for distinguishing between employees and independent contractors in certain circumstances.

In Dynamex Operations West Inc. v. Superior Court, the California Supreme Court in 2018 established a new standard for determining whether a company is the "employer" for purposes of the California Wage Orders, which govern minimum wages, overtime payments, and required meal and rest breaks, but do not apply to claims for reimbursement of expenses, the court said.  

Under this new standard, known as the "ABC test," a worker is considered an employee under the wage orders unless the hiring entity establishes all three of these prongs:

  1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of such work and in fact.
  2. The worker performs work that is outside the usual course of the hiring entity's business.
  3. The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

Since Dynamex, courts have declined to extend the ABC test outside the context of wage orders and related claims. Dynamex therefore does not provide a basis for applying the ABC test to the carriers' claims for reimbursement of expenses in this case, the court said.

Since Dynamex was decided, the California Legislature enacted Assembly Bill (AB) No. 5, which broadened the Dynamex decision to apply the ABC test to employment-related claims other than those arising under the wage orders, the court continued.

However, the court said, the Legislature also passed a law specifically excluding newspaper carriers from AB 5's ABC test. So, the court said, for newspaper carriers, determination of employee or independent contractor status is still to be governed by Borello.

The exception for newspaper carriers currently expires on Jan. 1, 2022, unless extended by the Legislature.  

Becerra v. The McClatchy Co., Calif. Ct. App., No. F074680 (Sept. 30, 2021).

Professional Pointer: In addition to newspaper carriers, a number of jobs have been excluded from AB 5's ABC test, including doctors, lawyers, architects and accountants. The Borello test still applies to jobs that are not covered by the ABC test.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md. 

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