We recently wrote about a major California Supreme Court case called Dynamex Operations West, Inc. v. Superior Court that on April 30 adopted the new "ABC Test" for determining whether a worker is an independent contractor or an employee. Dynamex answered this question for purposes of interpreting a state wage order that governs wage-and-hour requirements in the transportation industry.
Wage orders are state Industrial Welfare Commission regulations that apply to employers in specific industries and establish requirements for working conditions, hours and wages for employees.
On May 29, a California Court of Appeal in the Fourth District issued a modified opinion in Curry v. Equilon Enterprises, LLC that interpreted the wage order that applies to employers in the "mercantile industry," including the gas station where the plaintiff works as a manager. Curry lends guidance regarding whether the ABC Test applies in the joint employer context.
The Curry issues
Curry works at a gas station as an employee of ARS, a company that leases the premises and equipment from Defendant Equilon Enterprises, LLC, which does business as Shell Oil Products US ("Shell"). Shell and ARS have an extensive operating agreement creating a relationship similar to one typical of a franchise.
Curry sued Shell alleging that Shell also is her employer, and therefore also subject to wage order requirements benefiting the conditions of her employment, specifically overtime, payment for missed breaks and unfair business practices. She pointed to the operating agreement that requires that ARS perform certain tasks that benefit Shell in its operation of the station, which ARS in turn requires its employees to perform to satisfy those contractual requirements.
Shell is not a joint employer
The Court of Appeal agreed with the lower court's grant of summary judgment to Shell because it did not jointly employ Curry. The Curry court looked to the well-established Martinez test to answer the question of whether Shell is a joint employer.
Martinez established a test to determine whether someone is employed. The test is based on definitions of employer and employ from the wage order that applies to the gas station. If any one of these definitions apply to a hiring entity-worker relationship, the worker is employed:
- To exercise control over wages, hours or working conditions
- To suffer or permit to work
- To engage
The court analyzed these definitions extensively in the context of Curry's role at the gas station and concluded that none were met. The control, direction and role of ARS are those of an employer, but Shell does not exercise any of these in significant enough ways to be Curry's employer. Even though Shell, through the operating agreement, requires ARS to perform certain tasks, ARS controls the how, when and who.
What about the Dynamex ABC test?
The Plaintiff in Curry argued that the correct test is that set forth recently in Dynamex-The "ABC" Test-not Curry.
The Curry court reasoned that that the Dynamex court likely did not intend for the ABC test to apply outside of the context of examining whether or not a worker was misclassified as an independent contractor because of the different policy concerns over that question, as opposed to those concerns at issue in the joint employer context.
However, despite its commentary that the ABC Test likely did not apply, the Court analyzed the undisputed facts and determined that, even under the ABC Test, Shell was not Curry's joint employer.
This case illustrates the complexity of California state employment laws. An employer in the state must know whether a wage order applies to them and which one applies to its industry as well as which legal tests to apply to determine the nature of relationships with workers. The answers direct the employer's wage-and-hour and other legal responsibilities.
Our law firm regularly advises Northern California employers on how to navigate these important employment law considerations.
(The Curry case is available on Westlaw at 23 Cal. App. 5th 289.)