## Facts

- Dynamex Operations West, Inc. provided same-day pickup and delivery services to customers throughout California.
- Before 2004, Dynamex classified its California delivery drivers as employees; in 2004, it reclassified them as independent contractors.
- Dynamex obtained customers, set delivery fees, and determined driver pay per delivery; customers had no direct relationship with drivers.
- Drivers used their own vehicles, paid transportation costs, and were responsible for taxes and workers’ compensation insurance; they generally could choose when to work within Dynamex’s dispatch system.
- In 2005, driver Charles Lee filed a putative class action alleging misclassification and resulting violations of IWC wage orders and related wage-and-hour obligations.
- The trial court certified, for wage-order claims, a class limited to drivers who used their own vehicles and who did not employ other drivers, deliver for other delivery companies, or have their own customers.

## Issues

1. What standard governs whether a worker is an employee or independent contractor for purposes of the IWC wage orders’ definition of “employ” (“to engage, suffer, or permit to work”).
2. Whether the hiring entity must satisfy a structured “ABC test,” rather than relying solely on a common-law multifactor analysis, to establish independent contractor status under the wage orders.
3. Whether common issues predominate such that class certification is appropriate for wage-order claims challenging a uniform independent-contractor classification.

## Decision

- The California Supreme Court held that, for IWC wage-order claims, workers are presumed to be employees and the hiring entity bears the burden to prove independent contractor status.
- The Court adopted the ABC test for interpreting the wage orders’ “suffer or permit to work” definition of “employ.”
- The hiring entity must prove all three prongs: (A) freedom from control in contract and fact, (B) work outside the usual course of the hiring entity’s business, and (C) customary engagement in an independently established business of the same nature.
- The Court affirmed the judgment upholding class certification of the drivers’ wage-order claims, concluding that the classification issues under the ABC framework were suitable for common proof given Dynamex’s business model and uniform contracting policy.

## Legal Principles

- For IWC wage-order purposes, “employ” includes “to engage, suffer, or permit to work,” a broad standard intended to prevent evasion of wage-and-hour protections through irregular work arrangements.
- In wage-order cases, the hiring entity must affirmatively establish independent contractor status; employee status is the default classification.
- The ABC test governs wage-order employee status:
  - (A) the worker is free from the hiring entity’s control and direction in performing the work (contractually and in practice);
  - (B) the worker performs work outside the usual course of the hiring entity’s business; and
  - (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature.
- Prong B focuses on whether the worker performs services central to the hiring entity’s business versus ancillary, specialized services.
- Prong C requires evidence that the worker maintains an independent business (not merely the ability to do so), such as a separate client base or other indicia of ongoing independent operations.
- A structured standard may be used to advance the wage orders’ protective purpose by reducing uncertainty and limiting misclassification that undermines labor protections and fair competition.

## Conclusion

The court ruled that, for California wage-order claims, workers are presumed to be employees and a company seeking to classify them as independent contractors must satisfy the ABC test; applying that framework, the court upheld class certification challenging Dynamex’s uniform contractor classification of its delivery drivers.


Dynamex Operations W., Inc. v. Superior Court, 4 Cal. 5th 903, 416 P.3d 1 (Cal. 2018)