Are Franchisors 'Employers'?

Dynamex Operations West Inc. v. Superior Court

In another delivery driver case, which followed the California Supreme Court's decision in Ayala v. Antelope Valley, 59 Cal.4th 522 (2014) (discussed in Part One), the court of appeal was again asked to review a class certification ruling. The plaintiffs in Dynamex Operations West Inc. v. Superior Court, 230 Cal.App.4th 718 (2014), were originally hired as employees, but were later converted into independent contractors, allegedly performing all of the same tasks. The court in Dynamex held that a potentially broader California Industrial Welfare Commission Wage Order test for employment governed the wage claims (unpaid overtime, failure to pay minimum wage) being raised by the plaintiffs, whereas the Ayala “right to control” test governed the non-wage claims being asserted. Dynamex, 230 Cal.App.4th at 733. The Industrial Welfare Commission Wage Order test had been previously discussed by the California Supreme Court in a joint employer setting in Martinez v. Combs , 49 Cal.4th 35 (2010). Specifically, the Martinez court held that “employ” means: “(a) to exercise control over the wages, hours, or working conditions, or (b) to suffer to permit to work, or (c) to engage, thereby creating a common law employment relationship.” Id. at 65. The Dynamex court rejected the argument that the holding in Martinez “should be limited to determining whether an entity is a joint employer.” Dynamex, 230 Cal.App.4th at 733 n. 14.