CACI 2705 Affirmative Defense to Labor Code, Unemployment Insurance Code, and Wage Order Violations—Plaintiff Was Not Defendant’s Employee (Lab. Code, § 2775)

California Civil Jury Instructions CACI

2705 Affirmative Defense to Labor Code, Unemployment Insurance Code, and Wage Order Violations—Plaintiff Was Not Defendant’s Employee (Lab. Code, § 2775)

[Name of defendant] claims that [he/she/nonbinary pronoun/it] is not liable for [specify violation(s) of the Labor Code, the Unemployment Insurance Code, and/or wage order(s), e.g., failure to pay minimum wage] because [name of plaintiff] was not [his/her/nonbinary pronoun/its] employee, but rather an independent contractor. To establish this defense, [name of defendant] must prove all of the following:

a.That [name of plaintiff] is under the terms of the contract and in fact free from the control and direction of [name of defendant] in connection with the performance of the work that [name of plaintiff] was hired to do;

b.That [name of plaintiff] performs work for [name of defendant] that is outside the usual course of [name of defendant]’s business; and

c.That [name of plaintiff] is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed for [name of defendant].

Directions for Use

This instruction may be needed if there is a dispute as to whether the defendant was the plaintiff’s employer for purposes of a claim covered by the Labor Code, the Unemployment Insurance Code, or a California wage order. (Lab. Code, § 2775; see Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, 913–914, & fn. 3 [232 Cal.Rptr.3d 1, 416 P.3d 1].) The defendant has the burden to prove independent contractor status. (Lab. Code, § 2775(b)(1); Dynamex, supra, 4 Cal.5th at p. 916.) This instruction may not be appropriate if the defendant claims independent contractor status based on Proposition 22 (Bus. & Prof. Code, § 7451) or one of the many exceptions listed in Labor Code sections 2776–2784. For an instruction on employment status under the Borello test, see CACI No. 3704, Existence of “Employee” Status Disputed.

The rule on employment status has been that if there are disputed facts, it’s for the jury to decide whether one is an employee or an independent contractor. (Espejo v. The Copley Press, Inc. (2017) 13 Cal.App.5th 329, 342 [221 Cal.Rptr.3d 1].) However, on undisputed facts, the court may decide that the relationship is employment as a matter of law. (Dynamex, supra, 4 Cal.5th at p. 963.) The court may address the three factors in any order when making this determination, and if the defendant’s undisputed facts fail to prove any one of them, the inquiry ends; the plaintiff is an employee as a matter of law and the question does not reach the jury.

If, however, there is no failure of proof as to any of the three factors without resolution of disputed facts, the determination of whether the plaintiff was defendant’s employee should be resolved by the jury using this instruction. If the court concludes based on undisputed facts that the defendant has proved one or more of the three factors, that factor (or factors) should be removed from the jury’s consideration and the jury should only consider whether the employer has proven those factors that cannot be determined without further factfinding.

Sources and Authority

Worker Status: Employees. Labor Code section 2775.

“The ABC test presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business demonstrates that the worker in question satisfies each of three conditions: (a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.” (Dynamex, supra, 4 Cal.5th at pp. 955–956.)

“A business that hires any individual to provide services to it can always be said to knowingly ‘suffer or permit’ such an individual to work for the business. A literal application of the suffer or permit to work standard, therefore, would bring within its reach even those individuals hired by a business—including unquestionably independent plumbers, electricians, architects, sole practitioner attorneys, and the like—who provide only occasional services unrelated to a company’s primary line of business and who have traditionally been viewed as working in their own independent business.” (Dynamex, supra, 4 Cal.5th at pp. 948–949.)

“A multifactor standard—like the economic reality standard or the Borello standard—that calls for consideration of all potentially relevant factual distinctions in different employment arrangements on a case-by-case, totality-of-the-circumstances basis has its advantages. A number of state courts, administrative agencies and academic commentators have observed, however, that such a wide-ranging and flexible test for evaluating whether a worker should be considered an employee or an independent contractor has significant disadvantages, particularly when applied in the wage and hour context.” (Dynamex, supra, 4 Cal.5th at p. 954.)

“Thus, on the one hand, when a retail store hires an outside plumber to repair a leak in a bathroom on its premises or hires an outside electrician to install a new electrical line, the services of the plumber or electrician are not part of the store’s usual course of business and the store would not reasonably be seen as having suffered or permitted the plumber or electrician to provide services to it as an employee. On the other hand, when a clothing manufacturing company hires work-at-home seamstresses to make dresses from cloth and patterns supplied by the company that will thereafter be sold by the company, or when a bakery hires cake decorators to work on a regular basis on its custom-designed cakes, the workers are part of the hiring entity’s usual business operation and the hiring business can reasonably be viewed as having suffered or permitted the workers to provide services as employees. In the latter settings, the workers’ role within the hiring entity’s usual business operations is more like that of an employee than that of an independent contractor.” (Dynamex, supra, 4 Cal.5th at pp. 959–960, internal citations omitted.)

“A company that labels as independent contractors a class of workers who are not engaged in an independently established business in order to enable the company to obtain the economic advantages that flow from avoiding the financial obligations that a wage order imposes on employers unquestionably violates the fundamental purposes of the wage order. The fact that a company has not prohibited or prevented a worker from engaging in such a business is not sufficient to establish that the worker has independently made the decision to go into business for himself or herself.” (Dynamex, supra, 4 Cal.5th at p. 962.)

“The trial court’s determination of employee or independent contractor status is one of fact if it depends upon the resolution of disputed evidence or inferences and, as such, must be affirmed on appeal if supported by substantial evidence. The question is one of law only if the evidence is undisputed. ‘The label placed by the parties on their relationship is not dispositive, and subterfuges are not countenanced.’ ” (Espejo, supra, 13 Cal.App.5th at pp. 342–343.)

“It bears emphasis that in order to establish that a worker is an independent contractor under the ABC standard, the hiring entity is required to establish the existence of each of the three parts of the ABC standard. Furthermore, inasmuch as a hiring entity’s failure to satisfy any one of the three parts itself establishes that the worker should be treated as an employee for purposes of the wage order, a court is free to consider the separate parts of the ABC standard in whatever order it chooses. Because in many cases it may be easier and clearer for a court to determine whether or not part B or part C of the ABC standard has been satisfied than for the court to resolve questions regarding the nature or degree of a worker’s freedom from the hiring entity’s control for purposes of part A of the standard, the significant advantages of the ABC standard—in terms of increased clarity and consistency—will often be best served by first considering one or both of the latter two parts of the standard in resolving the employee or independent contractor question.” (Dynamex, supra, 4 Cal.5th at p. 963, italics added.)

“An entity that controls the business enterprise may be an employer even if it did not ‘directly hire, fire or supervise’ the employees. Multiple entities may be employers where they ‘control different aspects of the employment relationship.’ ‘This occurs, for example, when one entity (such as a temporary employment agency) hires and pays a worker, and another entity supervises the work.’ ‘Supervision of the work, in the specific sense of exercising control over how services are performed, is properly viewed as one of the “working conditions” … .’ ” (Castaneda v. Ensign Group, Inc. (2014) 229 Cal.App.4th 1015, 1019 [177 Cal.Rptr.3d 581].)

Secondary Sources

3 Witkin, Summary of California Law (11th ed. 2017) Agency and Employment, § 29A
Chin et al., California Practice Guide: Employment Litigation, Ch. 11-B, Coverage and Exemptions—In General, ¶ 11:115 et seq. (The Rutter Group)
Wilcox, California Employment Law, Ch. 250, Employment Law: Wage and Hour Disputes, § 250.13 (Matthew Bender)
21 California Forms of Pleading and Practice, Ch. 1, Overview of Wage and Hour Laws, § 1.04 (Matthew Bender)