DYNAMEX OPERATIONS WEST v. S.C.

Amicus Curiae Brief of Service Employees International Union, United Food and Commercial Workers International Union, International Brotherhood of Teamsters

Cal.December 10, 2015

SUPREME COURT COPY SUPREME COURT Cry eemom Oy cme a Case No. S227732 DEL 4 0 705 IN THE SUPREME COURTOF CALIFORNIA ——FrankMcGuire Clerk DYNAMEX OPERATIONS WEST,INC. Defendant-Petitioner, Deputy v. THE SUPERIOR COURT OF LOS ANGELES COUNTY Respondent, CHARLESLEE,etal. Plaintiffs-Real Parties in Interest. On Review from a Decision by the Court of Appeal, Second Appeilate District, Division Seven, Case No. B249546 Superior Court of Los Angeles County, Case No. BC332016 Hon. Michael L. Stern APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND PROPOSED AMICUS CURIAE BRIEF OF SERVICE EMPLOYEES INTERNATIONAL UNION, UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AND INTERNATIONAL BROTHERHOOD OF TEAMSTERSIN SUPPORTOF PLAINTIFFS-REAL PARTIES IN INTEREST *MICHAEL RUBIN (SBN 80618) BARBARAJ. CHISHOLM(224656) P. CASEYPITTS (262463) Altshuler Berzon LLP 177 Post Street, Suite 300 / San Francisco, CA 94108 Service Employees International Tel.: (415) 421-7151 Union Fax: (415) 362-8064 mrubin@altber.com bchishol:n@altber.com epits@altber.com Counselfor Proposed Amici Curiae RECEIVED (Additional Counse: on Inside Cover) DEC 072015 CLERK SUPREME COURT Case No. §222732 IN THE SUPREME COURT OF CALIFORNIA DYNAMEX OPERATIONS WEST,INC. Defendant-Petitioner, Vv. THE SUPERIOR COURT OF LOS ANGELES COUNTY Respondent, CHARLESLEE,et al. Plaintiffs-Real Parties in Interest. On Review from a Decision by the Court of Appeal, Second Appellate District, Division Seven, Case No. B249546 Superior Court of Los Angeles County, Case No. BC332016 Hon. Michael L. Stern APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND PROPOSED AMICUS CURIAEBRIEF OF SERVICE EMPLOYEES INTERNATIONAL UNION, UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AND INTERNATIONAL BROTHERHOOD OF TEAMSTERSIN SUPPORT OF PLAINTIFFS-REAL PARTIES IN INTEREST JUDITH A. SCOTT *MICHAEL RUBIN (SBN 80618) Service Employees Intl. Union BARBARA J. CHISHOLM (224656) 1800 Massachusetts Ave., N.W. P. CASEY PITTS(262463) . Washington, D.C. 20036 Altshuler Berzon LLP Tel.: (202) 730-7455 177 Post Street, Suite 300 Counselfor ProposedAmicus Curiae San Francisco, CA 94108 Service Employees International Tel.: (415) 421-7151 Union Fax: (415) 362-8064 mrubin@altber.com bchisholm@altber.com cpitts@altber.com Counselfor ProposedAmici Curiae (Additional Counsel on Inside Cover) Additional Counsel for Proposed Amici Curiae NICHOLAS W. CLARK United Food and Commercial WorkersIntl. Union 1775 K Street, N.W. Washington, D.C. 20006 Tel.: (202) 223-3111 Counselfor Proposed Amicus Curiae United Food and Commercial Workers International Union BRADLEY T. RAYMOND Intl. Brotherhood of Teamsters 25 Louisiana Avenue, N.W. Washington, D.C. 20001 Tel.: (202) 624-7479 Counselfor Proposed Amicus Curiae International Brotherhood of Teamsters CERTIFICATE OF INTERESTED ENTITITES OR PERSONS Pursuant to Rule of Court 8.208, I herebycertify that no entity or person has an ownershipinterest of 10 perecnt or more in amici Service Employees International Union, United Food and Commercial Workers International Union, or International Brotherhood of Teamsters. I further certify that J am aware of nopersonor entity, not already made knownto the Justices bythe parties or other amici curiae, having a financial or other interestin the outcome of the proceedings that the Justices should consider in determining whetherto disqualify themselves, as defined in Rule 8.208(e)(2). Dated: December 7, 2015 By: TABLE OF CONTENTS TABLE OF AUTHORITIES....cccccccccccscsccsssssesscssesescssesesveseasssssessesceterceseece ili APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF......... it PROPOSED AMICUS CURIAE BRIEF OF SERVICE EMPLOYEES INTERNATIONAL UNION, UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AND INTERNATIONAL BROTHERHOOD OF TEAMSTERSIN SUPPORT OF PLAINTIFFS- REAL PARTIES IN INTEREST INTRODUCTIONocccccccecccecssscsesessssssecacstatassessessessssssesapetareececeeecees 1 ARGUMENTuoccccccccceeecscsesseccsescsssscstsavavevasaavavasstavscevevavereisetetececesc. 3 I. This Dispute Involves Questions of Statutory Interpretation Principles of Statutory Construction ......cccecccececcscsssesscssesesseee. 4. Il. Underthe Plain Languageof the Wage Orders andthis Court’s Decision in Martinez, the Same Definition of Employment Should Apply to All Wage Order Claims.........8 A. The IWC Wage Orders Define Employment............... 9 B. Martinez Applied the Wage Orders’ Definition of the “Employment Relationship”.........c.ccccceseccceseeee 1] C. This Court Should Reject Dynamex’s Request that Martinez Be Overruled or Narrowed ....cccccccccse0- 12 Il. The Labor Code Should Be Interpreted To Encompass the Same EmploymentRelationships Covered by the Wage OLers oo.eeccteseseetessesesessessssvsssssecsesvarsustsasassesrsesseseseves 20 IV. This Court Should Eliminate Any Confusion Surrounding Application of Martinez’s “Common Law”Test of Employment........eetree eseseneseneessesseneeeaesseseesseveteeadeeaeeaes 24 © CONCLUSION20 ceceecccsesseescsesesssscscssssttssecetasusssavatessavavesvetvessenesese. 28 CERTIFICATE OF WORD COUNT....ecccccccecsssssessescsessssteseeteseeeseeeece. 29 PROOF OF SERVICE wu... ceccccsccccscssscssssssssscsseversstessassssvassusssenseseseesecees 30 that Should Be Resolved by Applying the Plain Language of the Wage Orders and the Labor Code and Well-Established il TABLE OF AUTHORITIES iti Page(s) Cases Andrade v. Arby’s Restaurant Group, Inc. (N.D. Cal. Nov. 3, 2015) Case No. 15-cv-03175 NC, 2015 WL 6689475 ooieccssesescsescsscscsesessssssesessesesvevstatrasatstasststsvsveveeens 27 Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522 occcccecccecesscscscseevecstestecsevetesseseneeees 4,25, 26 Cal. Drive-In Rest. Ass’n v. Clark (1943) 22 Cal. 2d 287 ooecccccececssccecssesssscsestevssscseseessstsvsesaseavavevesevevevevece 5 - Carrillo v. Schneider Logistics Trans-Loading and Distribution, Inc. (C.D. Jan. 14, 2014) Case No. 2:11-cv-8557-CAS, ZOL4 WL 183965 oceeecccsccsesesesscssssescecsescsssessssectecssessseatstssssessecereeee 19 Curtis & Gartside Co. v. Pigg (1913) 39 Okla. 31, 134 PL 1125occcecccceceseescscsecscsvesesteveeecees 17 Dynamex Operations West, Inc. v. Super. Ct. (Ct. App. 2014) 179 CalRptr.3d 69 o.ccccccccccceccsesssescsseecsssesteesseseeveeees 4 Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th Looe ccccccccccccssccsesesseceveresscsecssessascsssveveveseees 20 Indus. Welfare Comm’nv. Super. Ct. (1980) 27 Cal.3d 690 occcceccscssecessscscsssssseeevsssesstatsecsesaterseses 1,5, 6,9 Laeng v. Workmen's Comp. Appeals Bd. (1972) 6 Cab.3d 770 oiceeceeccecssessesesesessssscscstsssevsvevsvsvssessssastssasacsssevsveveesees 6 Martinez v. Combs (2010) 49 Cal.4th 35 oocccccscececscscssssssveseveveceseesessassesaescsteseesspassim Mendiola v. CPS Sec. Sols., Inc. (2015) 60 Cal.4th 833 wcccccccccccscssescesscesscssessscstscsecssesessecee:‘1.DASSIM Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575 ooo cceccccsssesssssesssrsrsstsasstsssasssvsrsestesseteetescecccce, 6 Ochoa v. McDonald's Corp. (N.D. Cal. Sept. 25, 2015) _ F.Supp.3d_, Case No. 3:14-cv-02098-JD, 2015 WL 5654853 vocccccccccccecseccceceececccc. 27 Patterson v. Domino’s Pizza, LLC (2014) 60 Cal.4th 474 occ cccccccccssssssesecsesatstessstscsssssevssseteeeteceeecce 8,27 Ramirez v. Yosemite Water Co. (1999) 20 Cal4th 785 ooeccccccccccscccessssssecseseesteseaessressatesvevessetceseceecccc. 6,9 Real v. Driscoll Strawberry Associates, Inc. (9th Cir, 1979) 603 F.2d 748 oooccccccccccsessssesescscseessseseveteeseceseecccc. 16,17 Reynolds v. Bement (2005) 36 Cal.4th 1075 o.occeccccccscscssessssessestssestecsssssssestetepeeseeeseeseccc 0 S.G. Borello & Sons, Inc. v. Dep’t ofIndus. Relations (1989) 48 Cal.3d 341 oo cccccssssssssresessestseseavsrsessvessetereeteseeceee.passim Sara M. v. Super. Ct. (2005) 36 Cal4th 998 ooo. eccccceccccssecsesssesessessstsasavssssssssersssercevercess 14,22 Secretary ofLaborv. Lauritzen (7th Cir. 1987) 835 F.2d 1529 occccccccccsesessssesesssessseseseseveveteeceesececece. 8, 26 Vann v. Massage Envy Franchising LLC (S.D. Cal. Jan. 6, 2015) Case No. 13-CV-2221-BEN, 2OTS WL 74139 oicccecceeessssesssssesssstsuesstsrsaussessitassssassusseseiteseeseesseccee. 27 Constitutions, Statutes, Rules, and Regulations 29 U.S.C. §203 oocccccesscsssesnessssseseesssssscsrssussussussrsasstestssssesteateeseseseeeecececc 16 Cal. Const. Article XIV §1 o..ceecccccccccssssssssssssssstsseesesssessessestesvereeeeesceeeeccc. 5 California Rule of Court 8.520 ....cccccccccscssssssscesssssessssssssssessessesteeeeseeseeeeecec. 1 Labor Code §226.8 oo. eececcesesesssecssssscsssecessssesseasseressesssesaseecsesecececceesnecseeeceveseceseeues 23, 24 SLOeeseeseseseessssscscsvavssenessusasavasasevssesesevevsserececeveseeces, 3, 21, 24 §2802... eeesescesecsescsessstsssesnssussnsesssussssssssnsssearsasstssessssssessscavessescesespassim S335 Le eeeeecsescseecesessesstestenestsssssssescesssssvsausussssasussssussesssesseavsteseeteecescecceccec. 24 iv §3353 .ooecceecsseescsessssssesssssssssssssssssuevessssssessssisssaripssssisestiecesteseesttecceececce 24 Wage Order No. 9-200] .o.ccecccccccccsessessssestssvsreetecseeessssssscessesevareeseseespassim Workers’ Compensation Act, Labor Code §3200 et SOQ viveeeceeesseettseseespassim Other Authorities United States Department of Labor (Wage and Hour Division) Administrator’s Interpretation No. 2015-1 (July 15, 2015) oecceceesesescsceseessssssussusssevsuesesasataverssearesssessesveseseees 16 David Weil, The Fissured Workplace: Why Work Became So Badfor So Many and What Can Be Done To Improve It (Harvard 2014) oocccccccccscscscsssusscsesessstatisassssvassvevavstevsvereeeececesececee. 19 Restatement (Second) of Agency §220 vooviccccssscssssscscecesseeveseceecesececesececce. 25 APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF Pursuant to Rule 8.520(f) of the California Rules of Court, the Services Employees International Union (“SEIU”), the United Food and Commercial Workers International Union (“UFCW”), and the International Brotherhood of Teamsters (“IBT”), apply for leave to file the attached amicuscuriae brief in support of plaintiffs-real parties in interest. Interest ofthe Amici Curiae SEIU is one of the largest labor organizations in the world, representing two million working men and women,including 700,000 workers in California. Asset forth in SETU’s Constitution, an essential part of SEIU’s missionis to act as an “advocacy organization for working people.” UFCW represents more than 1.3 million workers, primarily in the retail, meatpacking, food processing, and poultry industries in the United States and Canada. Pursuant to its Constitution, UFCW acts “to advance and safeguard the full employment, economicsecurity, and social welfare of its members and of workers generally.” IBT represents the interests of 1.4 million membersin the United States and Canada, including workers in numerous occupationsin the private and public sector. The IBT’s Constitution includes amongits objectives “to advance the rights of workers, farmers, and consumers, and the security and welfare of all the people by political, educational, and other community activity.” Manyofthe workers represented by SEIU, UFCW,and IBT,as well as their family members, are employed in California in low-wage occupations suchas janitors, security guards, health care workers,retail workers, meatpackers, freight drivers, and warehouse workers. In these occupations, the California Labor Code and the Industrial Welfare Commission (“IWC”) Wage Ordersprovide crucial protections that improve the quality of their working lives, ensure they are paid a decent wage for their work, and prevent them from being forced to work under unlawful, unsafe, and otherwise adverse working conditions. This case presents important questions concerning the application of the Labor Code and the IWC’s Wage Orders to workers who contend they are “employees” but have been misclassified as “independent contractors.” SEIU, UFCW, and IBT havea stronginterest in ensuring thatthe protections of the Labor Code and the Wage Ordersare properly appliedtoall employment relationships in California workplaces, and are not eroded through businesses’ misclassification or implementation of novel workforce structures. | Reasons Why the ProposedAmicus Brief Will Assist the Court Plaintiffs-Real Parties in Interest’s Answer Brief demonstrates why the trial court’s class certification ruling was proper, regardless of which test is used to determine whetherplaintiff workersare “employees” or “independentcontractors” under the applicable provisions of the IWC Wage Orders and California Labor Code. The proposed amicusbrief, rather than focusing on the appropriateness ofclass certification, will instead address the broaderand ultimately moresignificant question raised by this case: how to determine a worker’s properclassification under those provisions,based on an analysis of the statutory and regulatory language and this Court’s precedents construing the terms“employ,” “employer,” and “employee.” Byplacing the immediate issues in this broader legal ' Noparty or counsel for a party authored the proposed amicus curiae brief in whole orin part or made a monetary contribution intendedto fundthe preparation ofthe brief. No person orentity made a monetary contribution intended to fund the preparation or submission of the proposed amicus curiaebrief, other than the amici curiae, their members, or their counsel in the pending appeal. context, amici seek to assist the Court in evaluating the potential implications ofits decision for workers throughout California. The proposed amicusbriefis attached. Conclusion Forthe foregoing reasons, this Court should grantthe application for leavetofile the proposed amicuscuriae brief of SEIU, UFCW,and IBT. Dated: December 7, 2015 By: # Michael Rubin MICHAEL RUBIN BARBARAJ. CHISHOLM P. CASEY PITTS Altshuler Berzon LLP JUDITH A. SCOTT Service Employees International Union NICHOLAS W. CLARK United Food and Commercial Workers International Union BRADLEY T. RAYMOND International Brotherhood of Teamsters Case No. §222732 IN THE SUPREME COURT OF CALIFORNIA DYNAMEX OPERATIONS WEST,INC. Defendant-Petitioner, vz THE SUPERIOR COURT OF LOS ANGELES COUNTY Respondent, CHARLESLEE,et al. Plaintiffs-Real Parties in Interest. On Review from a Decision by the Court of Appeal, Second Appellate District, Division Seven, Case No. B249546 Superior Court of Los Angeles County, Case No. BC332016 Hon. Michael L. Stern PROPOSED AMICUS CURIAE BRIEF OF SERVICE EMPLOYEES INTERNATIONAL UNION, UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AND INTERNATIONAL BROTHERHOOD OF TEAMSTERSIN SUPPORT OF PLAINTIFFS-REAL PARTIES IN INTEREST JUDITH A. SCOTT *MICHAEL RUBIN (SBN 80618) Service EmployeesIntl. Union BARBARA J. CHISHOLM (224656) 1800 Massachusetts Ave., N.W. P. CASEY PITTS(262463) Washington, D.C. 20036 Altshuler Berzon LLP Tel: (202) 730-7455 177 Post Street, Suite 300 Counselfor Amicus Curiae Service San Francisco, CA 94108 Employees International Union Tel.: (415) 421-7151 Fax: (415) 362-8064 mrubin@altber.com bchisholm@altber.com cpitts@altber.com Counselfor Amici Curiae (Additional Counsel Listed in Signature Block) INTRODUCTION This case provides the Court an opportunity to decide whichtests the California courts should use to determine whether workers claiming to be “employees” but classified as “independent contractors”are entitled to the legal protections of the Industrial Welfare Commission (“IWC”) Wage Orders and the California Labor Code. The Court’s ruling will affect workers throughout California by determining whois entitled to such fundamental workplace protections as the right to a minimum wage and overtime, the right to be reimbursed for reasonable business expenses, and the right to be provided meal periods andrest breaks. The question of which particular working relationships constitute “employment” for purposes of the Wage Orders and the Labor Code “is ultimately oneoflegislative intent.” See Martinez v. Combs (2010) 49 Cal.4th 35, 51. As this Court has repeatedly held, the Wage Orders and the Labor Code serve broad remedial purposes, “authorizing the regulation of wages, hours, and working conditions for the protection and benefit of employees.” Indus. Welfare Comm'n v. Super. Ct. (1980) 27 Cal.3d 690, 702. In light of those important remedial purposes, those provisions“are to be liberally construed with an eye to promoting [worker] protection.” Jd. The Court of Appeal properly concluded that the Wage Orders’ three alternative tests for identifying an “employmentrelationship,” whichthis Court acknowledged andapplied in Martinez, must be used to determine whether particular working relationships (including those at issue in this case) involve “employment”subject to and protected by the Wage Orders. Dynamex’s contrary argument — that the “common law”test should be used for resolving all independentcontractor-employeeclassification disputes — ignores the plain language of the Wage Orders. Moreover, adopting Dynamex’s position would require this Court to overrule Martinezitself, which emphasized that the purpose of the IWC’s broad definition of employment was to extend the Wage Orders’ substantive protections to “irregular working arrangementsthat f[a]ll outside the commonlaw,” and that limiting the Wage Orders’ reach to common law employment relationships “would substantially impair the [[WC’s] authority and the effectiveness of its Wage Orders.” Martinez, 49 Cal.4th at 65. There is no statutory or policy justification for creating a new set of rules for determining whether, or which, provisions of the Wage Orders and Labor Code govern the workplace relationships between a business and the workers it labels and treats as independentcontractors. To the contrary, as new workplace structures complicate many workers’ relationships with the businessesthat profit from their labor, it becomes increasingly importantto apply the Wage Orders’ broad definition of employment~ a definition that has withstoodthetest of time — to a// such relationships, no matter what label the affected business has placed on them. The threetests for determining employee status, which this Court addressed at length in Martinez, are based on and incorporate the specific language of the Wage Orders. Althoughthe definitions set forth in the Wage Ordersare not expressly repeated in the Labor Code provisions that parallel or expand upon the Wage Orders’ protections, the tests described by Martinez represent the 1WC’s best considered judgment about how to define employment in a mannerthatwill effectively promote the worker- protective purposes underlying a// minimum standards for wages, hours, and working conditions. Moreover, many of the Labor Codeprovisions setting such standards are so deeply intertwined with the Wage Orders’ comparable provisions that it would undermine the IWC’s purposesto applydifferent tests for determining employee status under the Wage Orders and under the Labor Code. For these reasons, the three tests for determining employeestatus under the Wage Orders,as described in Martinez and later cases, should apply to all claims arising under Labor Codeprovisionsthat establish minimum standards relating to wages, hours, and working conditions. ARGUMENT Dynamex’s petition presents a basic butcritical question about the meaning and scope of the Wage Order and Labor Code provisions establishing minimum standards for workers’ wages, hours, and working conditions: How should courts determine which workers are “employees” entitled to the rights and protections guaranteed bythose statutory provisions and which workersare “independent contractors” who have no such rights and must fend for themselves in negotiating wages, hours, and working conditions without such guaranteed protections? Thetrial court certified a class of delivery drivers whoalleged that petitioner Dynamex Operations West, Inc. had misclassified them as “independent contractors” and had deprived them ofvariousrights guaranteed to employees under the IWC Wage Orders and Labor Code.? Dynamex soughtinterlocutory appellate review ofthe trial court’s class certification ruling on the ground thatif the drivers’ status were adjudicated underthe “right to control”test of S.G. Borello & Sons, Inc. v. Dep't ofIndus. Relations (1989) 48 Cal.3d 341, rather than the threetests of employmentstatus under Martinez, adjudication would require individualized inquiries precluding class certification. The Court of Appeal concludedthat the trial court properly applied Martinez to claims that are * The specific provisionsat issue include Wage Order No. 9-2001, Cal. Code Reg.tit. 8, §11090, which governsthe transportation industry and entitles workers to overtime and reimbursement ofcertain business expenses; Labor Code §1194, requiring the payment of wages required by the Wage Orders, see Martinez, 49 Cal.4th at 56-57; and Labor Code §2802, which requires reimbursementofa broader rangeof business expenses than Wage Order No. 9-2001. within the scope of the applicable Wage Order, but that it should apply the Borello test, as interpreted by this Court in Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, to any reimbursementclaims under Labor Code §2802 that do not have specific, corresponding Wage Order counterparts. Dynamex Operations West, Inc. v. Super. Ct. (Ct. App. 2014) 179 Cal.Rptr.3d 69, 78-82. This Court must determine whether claims to enforce the Wage Orders’ protections brought by workersclassified as “independent contractors” should be evaluated using the IWC’s definitions of “employ,” “employer,” and “employee,” as the Court of Appeal held, or whether, as Dynamex urges, special definitions should apply in such misclassification cases. If this Court finds that plaintiffs have asserted claims for reimbursementthat are not encompassed by Wage Order No. 9-2001, but see AnswerBr. at 58, the Court must also decide whetherthe Legislature intended different rules to apply to Labor Code and Wage Orderclaims when the Labor Code provides greater workplace protection for wages, hours, or other working conditions than any counterpart provision in the Wage Orders. I. This Dispute Involves Questions of Statutory Interpretation that Should Be Resolved by Applying the Plain Language of the Wage Orders and the Labor Code and Well-Established Principles of Statutory Construction Dynamex’s briefs suggest that resolution of this case depends upon the relative merits and drawbacks of applying the different tests of employmentdiscussed in Borello and Martinez to disputes involving worker misclassification. But as both ofthose decisions recognized, determining whichtests the courts should use to evaluate whether a particular relationship between a worker and a business amounts to “employment” for purposes of California’s statutory laborprotectionsis a matter of statutory interpretation governed by well-established principles of statutory construction. See Martinez, 49 Cal.4th at 51; Borello, 48 Cal.3d at 351.3 First, the “fundamental task” when construing any Californiastatute “is to ascertain the intent of the lawmakersso as to effectuate [its] purpose.” Martinez, 49 Cal.4th at 51 (quotation omitted). The Wage Order and Labor Codeprovisionsat issue share a common purpose: To protect employees from adverse working conditions and to guarantee certain minimum workplace protections that the[WC and the Legislature have declared essential as a matter of California public policy. As Martinez explained, the Legislature’s creation of the IWC in 1913 waspart of “a wave of minimumwagelegislation that swept the nationin the second decade of the 20th century .... motivated by widespread public recognition of the low wages, long hours, and poor working conditions under which womenandchildren often labored.” Jd. at 53. To address those problems,the Legislature delegated to the IWC “broad authority to regulate the hours, wages and labor conditions of women and minors” — authority that has since been expanded to encompassall California workers, regardless of sex or age. Id. at 54-55. “[IJn fulfilling its broad statutory mandate,” the IWC exercises “quasi-legislative” authority that “necessarily and properly requires the commission’s exercise of a considerable degree of policy-making judgment and discretion.” Indus. Welfare Comm’n, 27 Cal.3d at 702; see also Cal. Const. art. XIV §] (Legislature may delegate“legislative, executive, and judicial powers”to IWC). “To ensure the IWC’s Wage Orders would be obeyed, the > “(TThe samerules of construction and interpretation which apply to statutes govern the construction and interpretation of rules and regulations of administrative agencies.” Cal. Drive-In Rest. Ass’n v. Clark (1943) 22 Cal. 2d 287, 292. Legislature included criminal, administrative and civil enforcement provisions in the original 1913 act... . [, mJore robust versions of [which] appearin today’s Labor Code.” Martinez, 49 Cal.4th at 56. The IWC issuedits first Wage Order in 1916, and eighteen Wage Orders,including the Wage Order whoseprovisionsare at issue in this appeal, are now in effect. Id. at 57.4 In light of the broad remedial purposes served by the provisions of the Labor Code and the Wage Ordersat issue, those provisions must be construed broadly “with an eye to promoting [worker] protection.” Martinez, 49 Cal.4th at 61; see also Mendiola v. CPS Sec. Sols., Inc. (2015) 60 Cal.4th 833, 840 (“Wage and hourlawsare to be construed so as to promote employee protection.”) (quotation omitted); Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 592 (same); Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794-95 (same); Indus. Welfare Comm’n, 27 Cal.3d at 702 (same). Any ambiguous language in the Wage Orders should be construed in favor of protecting workers, see, e.g., Mendiola, 60 Cal.4th at 840, while exceptions to coverage mustbe construed narrowly, see, e.g., Ramirez, 20 Cal.4th at 794-95, Second, cases applying different laws in different contexts (such as tort cases seeking to imposevicariousliability for injuries inflicted on third parties) providelittle meaningful guidancein determining the proper construction of remedial, worker-protective statutes like the Wage Orders and Labor Code. Martinez, 49 Cal.4th at 50 (distinguishing discussions of employmentin prior decisions that “concerned statutory schemes other than the wage laws”); see also Laeng v. Workmen’s Comp. Appeals Bd. (1972) 6 * As Martinez noted,all 16 industry-specific wage orders contain the same definitions of “employ,” “employee,” and “employer”at issue here. 49 Cal.4th at 59. Cal.3d 771, 777 (“[A]n ‘employment’relationship sufficient to bring the {Workers’ Compensation Act] into play cannot be determined simply from technical contractual or common law conceptions of employment but must instead beresolved byreferenceto the history and fundamental purposes underlying the [act].”). In Borello, this Court considered the distinction between employees and independent contractors for purposes of the Workers’ Compensation Act. The Court emphasized that the commonlaw distinction provided only minimal guidance for interpreting the Workers’ Compensation Act because that distinction had been developed “to limit one’s vicariousliability for the misconduct of a person renderingservice to him,” rather than to protect workers from industrial injuries. 48 Cal.3d at 350, 352. Given that Act’s very different history and purpose, this Court concluded that in that statutory context “the concept of ‘employment’. . . is not inherently limited by commonlawprinciples,” and instructed the lower courts to considerall “logically pertinent” factors, including not only state common law principles and the Restatement (Second) of Agency, but alsothe factors used by federal courts to determine employmentstatus underthe federal Fair Labor Standards Act (“FLSA”). /d. at 350-51, 354-55.> > It is not quite accurate to describe the Borello standard as the “commonlaw”test of employmentstatus, because the Court in Borello: relied upon the specific purposes and language of the Workers’ Compensation Act, expressly declinedto baseits standard solely upon the commonlaw definition of employment, and instructed lower courts to consider the FLSA factors in addition to the Restatement factors. Although the Borello standard wasbased in part on the commonlaw “right to control”test, it also reflects the unique language, history, and purpose of the Workers’ Compensation Act. It is therefore more accurate to characterize the Borello test as a statute-specific right-to-controltest. Asthis Court has recognized,it is particularly inappropriate to rely exclusively upon the traditional commonlaw standard for determining employmentstatus in the context of the Wage Orders and Labor Code. Martinez, 49 Cal.4th at 65. Thetraditional common lawdefinition of employment was developedto limit one contracting party’s vicarious liability for the acts of the other, as in Patterson v. Domino’s Pizza, LLC (2014) 60 Cal.4th 474,a case involving a franchisor’s liability for the tortious misconductof a franchisee’s employee. Yet the very purpose of the Wage Order and Labor Codeprovisions regulating wages, hours, and working conditionsis to invalidate workplace contracts that the IWC and Legislature declared contraryto public policy, such as contracts requiring an employee to work for less than the minimum wageornot be paid all wages when due. Cf Secretary ofLabor v. Lauritzen (7th Cir. 1987) 835 F.2d 1529, 1544-45 (Easterbrook, J., concurring) (explaining that “[t]he reasonsfor blocking vicariousliability at a particular point have nothing to do with the functions of the FLSA,” in part because “[t]he FLSA is designed to defeat rather than implement contractual arrangements”). Legal principles that were developed to protect and reinforce contractual agreements by limiting vicariousliability have little value in determining the properinterpretation of employee-protective statutes that establish certain minimum labor standards that businesses must satisfy regardless of any contrary contractual agreements. I. Under the Plain Language of the Wage Orders and this Court’s Decision in Martinez, the Same Definition of Employment Should Apply to All Wage Order Claims In Martinez, this Court held that the Wage Orders establish three separate tests for identifying employmentrelationships subject to the Wage Orders’ protections: To employ . . . under the JWC’s definition, has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to sufferor permit to work, or (c) to engage, thereby creating a common law employmentrelationship. 49 Cal.4th at 64 (emphasis in original). Martinez derived thesethree tests for defining “employ” from the plain language of the Wage Orders, and concluded that the IWC’s definition of the employmentrelationship was entitled to judicial deference. Jd. at 57-61. Dynamexasserts that the Courtshouldeither limit the Wage Orders’ definitions and this Court’s holding in Martinez to the “joint employer” context, or establish a special Wage Order definition of employmentthat applies only to independent contractor misclassification claims. But the language of the Wage Orders, logic, and public policyall dictate that those samethree tests should apply whenevera dispute arises concerning whether a particular worker is employed bya particular business for the purpose of the Wage Orders, including when that business contends that the workeris an independent contractor and not its employee. A. The IWC Wage Orders Define Employment Because the language of the Wage Orders provides the best evidence of the IWC’s intent, this Court’s analysis must begin with the Wage Orders’ words, “assigning them their usual and ordinary meanings, and construing them in context.” Martinez, 49 Cal.4th at 51 (quotation omitted). As “legislative regulations,” Mendiola, 60 Cal.4th at 838, the requirements of the Wage Orders “have the dignity of statutes,” Ramirez, 20 Cal.4th at 799, and judicial review should be limited to determining “whether the [[WC’s] action is arbitrary or entirely lacking in evidentiary support or whether the [IWC]has violated the procedure required by law.” Indus. Welfare Comm’n, 27 Cal.3d at 702. Dynamex arguesthat, for purposesof the Wage Orders, “employee” should be defined using the Borello “common law” right-to-control test only. See Opening Br. at 9-12. But the Wage Orders define “employee”as “any person employed by an employer” and thus incorporate the Orders’ detailed definitions of “employ” and “employer”: “Employ” means“to engage, suffer, or permit to work,” while “employer” means“any person ... whodirectly or indirectly, or through an agent or any otherperson, employs or exercises control over the wages, hours, or working conditions of any person.” These definitions of “employ” and “employer” were the specific focus of this Court’s analysis in Martinez, which relied upon those definitions to concludethat an “employmentrelationship”exists for purposes of the Wage Orders wherever a business exercises control over the wages, hours, or working conditions of a person, or suffers or permits that person to work, or engages the person to work. Martinez, 49 Cal.4th at 57- 60, 64. Underthe plain language of the Wage Orders, Martinez’s three tests for determining the existence of an “employmentrelationship” must be used to resolve disputes over whethera particular worker (or group of workers) is employed by a particular employer. That definition should be the same whetherthe worker asserts that s/he is an employeerather than an independent contractoror that s/he is an employee of multiple entities. In either instance the question is the same: Does an employmentrelationship exist between the parties? Nothingin the Wage Orders’ language suggests that a separate, preliminary analysis of an individual’s employmentstatus under the “right to control”test (or any other test) is required to determine whetherthe individual is employed for purposes of the Wage Orders.® ° Dynamexarguesthat in Martinez the Court applied the common law to determine whether one defendantin that case — a strawberry farmer (continued . . .) 10 B. Martinez Applied the Wage Orders’ Definition of the “Employment Relationship” Nordoes anything in Martinez limit the Court’s analysisto the joint employer context (which should not be surprising given that a joint employeris just an “employer” in circumstances where there may be more than one employer). Instead, the Court considered the employment relationship generally, without distinguishing among the various waysin which parties might dispute the existence of such a relationship. See, e.g., id. at 51 (question presented was how to “define the employment relationship”) (emphasis added); id. at 57 (considering “[h]ow the IWC [h]as [dJefined the [e]mployment [rjelationship”). The Court explained, for example, that the “suffer or permit” standard was intended to apply “even when no common law employmentrelationship existed,” and was intended to encompass“irregular working arrangements the proprietor of a business might otherwise disavow with impunity.” Jd. at 58: see also id. (“suffer or permit” standard does not require “a common law master and servant relationship”). Indeed, while the Court noted that the suffer-or-permit standard had been applied in circumstancesthat might now be characterized as joint employment,see, e.g., id. (discussing impositionofliability on manufacturer to “boy hired by his fatherto oil machinery”), Martinez also (. .. continued) who employed 180 agricultural workers, including plaintiffs — was employed by another defendant — a produce merchant through whom the farmer sold strawberries. 49 Cal.4th at 42, 73. But in making that determination, the Court did not consider whether thefirst defendant had any rights under the Wage Orders as against the second defendant, only whether the second defendant wasvicariously liable for the actions of the first — a question of agency properly resolved by applying the traditional commonlaw test of employment. In determining whether plaintiffs’ employment was covered by the Wage Orders, the Court properly applied the Orders’ three alternative tests of employment. 11 explained that the same suffer-or-permit standard prevented businesses from escapingliability by arguing that plaintiff “was not employed to do the work which causedthe injury, but that he did it of his own choice and at his own risk” -- in other words, by arguing that plaintiff was an independent contractor. Jd. In short, nothing in the language of the Wage Orders or Martinez limits the employmentrelationships governed by the Wage Orders to those that satisfy the commonlaw “right-to-control”test for distinguishing between independent contractors and employees. If a business has retained a worker undercircumstances that establish an employmentrelationship under Martinez, that workeris an employee for purposes of the Wage Orders, and should beentitled to the rights and protections established thereby. C. This Court Should Reject Dynamex’s Request that Martinez Be Overruled or Narrowed Martinez thusresolves the first question presented in this appeal — whether the Wage Orders’three tests for determining the existence of an employmentrelationship should be used to determine whether a workeris an employee rather than an independentcontractor whenconsidering claims arising under the Wage Orders. Dynamex’s argumentthat Borello’s right- to-control test alone should apply in those circumstancesis effectively a plea to overrule or drastically narrow Martinez. There is no reasonfor this Court to do either. Courts must accord the Wage Orders “extraordinary deference” “both in upholding their validity and in enforcing their specific terms.” Martinez, 49 Cal.4th at 61, 65. Dynamex’s argument, however, would “render the commission’s definitions effectively meaningless.” Jd. at 65. As this Court stated in Martinez, to refuse to enforce the Wage Orders’ plain language by applying only the commonlaw right-to-controltest 12 would prevent the 1WC fromachievingits statutorily assigned purposes, contrary to the Legislature’s intent in creating the IWC and the California voters’ intent in authorizing the delegation oflegislative, executive, and Judicial powers to the IWC. /d. Doing so would “endanger the commission’s ability to achieve its statutory purposes” and “substantially impair the commission’s authority and the effectivenessofits Wage Orders.” /d. at 65. There is no merit to Dynamex’s ahistorical suggestion that the IWC decades ago exceededthe scopeofits statutory or constitutional authority by regulating working relationships involving individuals who might not have been deemed “employees” at commonlaw. Opening Br. at 34-41. As the Court emphasized in Martinez, the IWC “has the powerto adoptrules to make the minimum wage effective by preventing evasion and subterfuge,” and this Court has “repeatedly upheld the commission’s exercise ofthis authority.” Martinez, 49 Cal.4th at 65 (quotation and alteration omitted). Whenthe Legislature created the IWC in 1913 and charged it with improving the working conditions to which many women and children in the workforce were subjected, it was widely understood that the IWC’sactions would only beeffectiveif they applied to both traditional common law employment andto “irregular working arrangements thatfell outside the commonlaw.” Jd. at 65; see alsoid. at 57-58 (discussing courts’ application of “suffer-or-permit” standard prior to creation of IWC and issuanceoffirst Wage Order). The first Wage Order issued by the IWC in 1916 included language specifically designed to reach such “irregular working arrangements.” See id. at 57-58. That language hascarried through into the current Wage Orders. Although the statutory and constitutional provisions relating to the IWC’s authority have been modified many times since 1916, neither the Legislature nor the people of California have ever soughtto limit the reach 13 of the IWC’s authority over such “irregular working arrangements.” See id. at 55 (describing 1973 amendments expanding scope of IWC’s authority). It makes no senseto revisit the !WC’s longstanding regulatory decisions now,years after those decisions were made and after decades ofJudicial enforcement and opportunities for the Legislature to change the law. See Sara M. v. Super. Ct. (2005) 36 Cal.4th 998, 1015 (“Because the Legislature hasspecifically directed the [agency] to promulgate theserules, Wwecan presumeit was awareof the administrative interpretation, which makes its acquiescenceall the moresignificant.”). Ultimately, the reason Dynamexasks this Court to apply some variant of the commonlawtest of employment is becauseit prefers that outcomeas a policy matter. According to Dynamex, the Martinez tests should not apply when evaluating a claim that a worker who has been labeled an independentcontractoris in fact an employee under the Wage Orders because: 1) that standard differs from the standard that purportedly applies to other Labor Codeclaims;2) the “suffer-or-permit” test sweeps too broadly; and/or3) the right-to-controltestis supposedly morefact- intensive and more flexible. None ofthese arguments, even if true, justifies ignoring the Wage Orders’ plain language, which requires the Martinez tests to be appliedto all “irregular” workforce arrangements, including those involving alleged independent contractors. The IWC’s carefully considered decisions cannot be rejected on the basis of mere policy disputes. As this Court recently reiterated, courts cannot “superimpose[their] own policy judgment upon[the IWC] in the absenceof anarbitrary decision.” Mendiola, 60 Cal.4th at 847-48 (quotation omitted) (secondalteration in original); see also Martinez, 49 Cal.4th at 61 (“[Judicial] review of the commission’s Wage Ordersis properly circumscribed.”) (quotation omitted). Becausethe three tests of employment under the Wage Orders reflect the }WC’s considered and 14 consistent judgment about howto achieveits intended goals, id. at 57-60, the IWC’s determinationis entitled to “extraordinary” deference. In any event, Dynamex’s critique of the IWC’s policy decisionsis meritless. Dynamex complainsthat if the Wage Ordertests must be used to determine which workers are “employees,” employers may haveto treat some workers as employees for some purposes but not others. But absent someindication that the Legislature intended different definitions to apply, there is no logical reason why the same definitions should not apply to all Labor Codeclaims involving minimum workplace standards for wages, hours, and working conditions. See infra SectionIII. Further, it is already the case that California employers must account for different definitions of “employee” underdifferent Statutes, including federal statutes such as Title VII, the FLSA, and the NLRA. Indeed, this Court in Martinez explained that one of the purposes of the 1WC’s broad definition of “employer” was“to distinguish state wage law from its federal analogue, the FLSA,”andto “provide employees with greater protection than federal law affords.” 49 Cal.4th at 60; see id. at 68 (“Courts must give the TWC’s Wage Orders independenteffect in orderto protect the commission’s delegated authority to enforce the state’s wage laws and, as appropriate, to provide greater protection to workers thanJederal law affords.”) (emphasis added). Similarly, this Court recognized in Mendiola that although “[fJederal regulations provide a level of employee protection that a state may not derogate.. . . Californiais free to offer greater protection,”and it reiterated that courts should not presumethat the [WC Wage Orders incorporate federal standards absent explicit languageto that effect. 60 Cal.4th at 843. Dynamexalsoasserts that the IWC’s threetests could not be used to analyze disputes over misclassification because one of those tests, suffer- or-permit, wouldeffectively eliminate independent contractors in 15 California. But Dynamex’s contention that workers can never be independent contractors under a suffer-or-permit standardis plainly mistaken, as decades of case law under the FLSA and manyotherfederal and state suffer-or-permit statutes make clear. For the past 80 years, the FLSA has provided that ““Te]mploy’ includesto suffer or permit to work.” 29 U.S.C. §203(g). That test has never been construed as prohibiting independentcontractor relationships; instead, federal courts consider a numberoffactors to determine whether purported independent contractors are employees under the FLSA. See, e.g., Real v. Driscoll Strawberry Associates, Inc. (9th Cir. 1979) 603 F.2d 748, 754(to distinguish employees from independent contractors, courts should consider right to control manner of work, worker’s opportunity for profit or loss depending upon managerialskill, worker’s investmentin equipmentor materials or employment of helpers, skill required to perform service, permanence of working relationship, and whether service performedis integral to business); see also Administrator’s Interpretation No. 2015-1 (“Dep’t of Labor Guidance”) (U.S. Department of Labor guidance regarding application of “suffer or permit”standard to workers classified as independentcontractors).’ Through that multifactor analysis, the federal courts determine whetherparticular workers “‘as a matter of economic reality are dependent upon the business to which they render service.”” Real, 603 F.2d at 754 (quoting Bartels v. Birmingham (1947) 332 U.S. 126, 130) (emphasis omitted); see also Dep’t of Labor Guidance, at 4 (independentcontractors are “workers with economic independence ’ Available at http://www.dol.gov/whd/workers/misclassification/AI- 2015_1.pdf. As noted above, Borello held that these FLSA factors are “logically pertinent” to determining whether a worker is an employee or independentcontractor “for purposes of workers’ compensation law.” 48 Cal.3d at 354-55 (citing Real, 603 F.2d at 754). 16 whoare operating a businessof their own,” while employeesare “workers whoare economically dependent on the employer’). To be sure, this Court held in Martinez that the Wage Orders do not entirely adopt the FLSA standardor its multifactor analysis. 49 Cal.4th at 66-68. Nonetheless, the federal courts’ application of the FLSA’s suffer- or-permit standard demonstrates that the comparable language in the Wage Orders need notinvalidate all independent contractor relationships. Instead, that standard (which developedin the child labor context for the purposeof reaching “irregular working arrangements,” well before the enactment of the FLSA, see Martinez, 49 Cal.4th at 65-66), extends liability only to working relationships in which workers are economically dependent uponthe business, Real, 603 F.2d at 754, and in whichthat business, through reasonable diligence, can prevent the unlawful work. See, e.g., Martinez, 49 Cal.4th at 70 (basis of liability under the suffer-or- permit standard “is the [proprietor’s] failure to perform the duty ofseeing to it that the prohibited condition does not exist”) (quotation omitted).8 Had the IWCintendedits suffer-or-permit standard to eliminate all independentcontractorrelationships in California, “one would expect the commission to have announcedit in the plainest termsafter vigorous debate.” Martinez, 49 Cal.4th at 70. Obviously, the IWC did not do so. * While someearly cases applying the suffer-or-permit standard failed to distinguish between suffering or permitting work generally and suffering or permitting unlawful work, see, e.g., Curtis & Gartside Co.v. Pigg (1913) 39 Okla. 31, 134 P. 1125, 1129 (suffer or permit standard “meansthat [proprietor] shall not employ by contract, nor shall he permit by acquiescence, nor suffer by a failure to hinder”), those decisions involved work that wasinherently unlawful(like employing children in prohibited industries), meaning there was nodistinction between the work and the legal violation. Those decisions also acknowledged that determining whetherthe proprietor “fully discharged his duty toward the [purported employee]” depended uponthe facts of each case, id. 17 Dynamex’s challengeto the potential scopeof the suffer-or-permit standard masksthe actual purposeofits argument: to persuadethe Court not to apply any of the three Wage Order/Martinez tests by mischaracterizing the scope of one of those tests. While it is plain for the reasonsstated above that Dynamex’s doomsday arguments are a mischaracterization, ultimately this Court need not determine the precise contours of the suffer-or-permit standard in this proceeding. Dynamex’s argumentis that thetrial court erred by applying the Wage Orders’ three tests, rather than the Borel/o right-to-control test alone. Dynamex has thereby waived any contention that the trial court misconstrued any one of the Martinez tests in certifying plaintiff drivers’ claims. For these reasons, and to be consistent with Martinez and the plain language of the Wage Orders, this Court should hold that the definitions of employmentprovided by the Wage Orders apply to Wage Order claims arising from the alleged misclassification of employees as independent contractors, and should defer ruling on the precise meaning and scope of the Wage Orders’ suffer-or-permit standard until a future casethat squarely presentsthat issue.° Finally, Dynamex argues thatits characterization of the Borello test is preferable because it permits “a factually-intensive and individualized ” Dynamexasserts that the “control over wages, hours, and working conditions” test of employment sweeps too broadly, Opening Br.at 20-21, butits argument is premised on the contention that an individual “exercises control” over wages, hours, and working conditions if he or she merely has “somesay.” regarding those matters, as where a homeowneraffects the hours worked by a plumberbyasking the plumberto arrive after 8 a.m. or as soon as possible, id. at 21. As with Dynamex’s portrayalofthe suffer- or-permit test, the control over wages,hours, and working conditionstest need notbe applied in the manner Dynamex proposes. See, e.g., Martinez, 49 Cal.4th at 75-77 (defendants’ actions in directing plaintiffs to correct mistake at worksite did not constitute “control” over working conditions). 18 assessment ofservice relations”and is thus more “flexible”— i.e. less likely to result in a finding of employmentstatus, particularly on a classwide basis — than the Martinez tests. Opening Br. at 16. Dynamex’s argumentignores the Wage Orders’ remedial, worker-protective purposes. As this Court emphasized in Martinez, those purposesare best served by applying a broad definition of employmentthat reaches “irregular working arrangements the proprietor of a business might otherwise disavow with impunity.” 49 Cal.4th at 58; see also id. at 59 (given IWC’s delegated authority over wages, hours, and working conditions,“[f]or the IWC to adopta definition of ‘employer’ that brings within its regulatory jurisdiction an entity that controls any oneofthese aspects of the employment relationship makes eminently good sense”). Applying the Wage Orders’ broad definition of the employment relationship is even more important now than whenthatdefinition wasfirst adopted. As Dynamex admits, “emerging business relationships”are currently “test[ing] the traditional notions of employment.” Opening Br.at 15-16. These businessrelationships include not only the widespread classification of workers as independent contractors, but also the growing use of the franchise model and laborservices contractors. See, €.g., Carrillo v. Schneider Logistics Trans-Loading and Distribution, Inc. (C.D. Jan. 14, 2014) No. 2:11-cv-8557-CAS (DTBx), 2014 WL 183965, at *1-*2 (describing Walmart’s practice of contracting with separate companyto operate its warehouses, which then subcontracts with labor services contractors to obtain workers to load and unload merchandise). These “emerging” business models have complicated andfractured the relationships among many workersandthe businessesthat are built around, depend upon,andprofit from their labor. See David Weil, The Fissured Workplace: Why Work Became So Badfor So Many and What Can Be Done To Improve It (Harvard 2014). In this context — just as in the 19 factories where children were working at the time of the IWC’s creation — applying a narrowerdefinition of employment than the I!WC’s would undermine the Wage Orders’ minimumstandardsfor wages, hours, and working conditions and exclude a significant portion of the workforce from those protections, without any legal or policy justification. IW. The Labor Code Should Be Interpreted To Encompass the Same EmploymentRelationships Covered by the Wage Orders The Wage Orderdefinitions do not by their terms apply to claims to enforce rights not encompassed by those Wage Orders. Nonetheless, those same definitions should govern all Labor Code claims based on provisions establishing statutory minimum standards for wages, hours, or working conditions — includingplaintiffs’ claims under §2802 to the extent they extend beyondplaintiffs’ Wage Order reimbursement claims — because the Wage Ordersreflect the considered judgmentof an expert agency regarding how the employmentrelationship should be defined to best effectuate the public policy goals served by suchprovisions, and becausethereis no reason to conclude that the Legislature intended similar claims arising under the Wage Orders and the Labor Codeto be subject to different standards. The Labor Codedoesnotitself provide definitions of “employer,” “employee,” or “employment” for purposesofits provisions establishing minimum standards for wages, hours, and working conditions. See, e.g., Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 10 (“[T]he Labor Code does not expressly define ‘employee’ for purposes of section 2802[.]”); Reynolds v. Bement (2005) 36 Cal.4th 1075, 1092 (Moreno,J., concurring) (acknowledging “lacuna in the Labor Code”), abrogated by Martinez, 49 Cal.4th 35. Instead, the Legislatureleft it to the courts to determine which working relationships constitute “employment” covered by those fundamentalprotections. 20 Anydefinition of employmentthat applies to claims arising under those Labor Codeprovisions must take into account the unique history and purposesof the applicable provisions. Borello, 48 Cal.3d at 351; see also Martinez, 49 Cal.4th at 52 (examining Labor Code §1194 “inits statutory and historical context”). In Borello, this Court foundit appropriate, given the particular statutory context of that case, to apply a variant of the commonlaw “right-of-control”test that gave additional weight to other factors, including those used to determine employmentstatus under the FLSA. 48 Cal.3d at 350-55. But while the Workers’ Compensation Act and the Labor Code provisions at issue here share the same general remedial purpose (suchthat their reachis “not inherently limited by common law principles,”id. at 351), the two statutes differ in important ways. In the context of workers’ compensation, for example, no agency or commission has been delegated broadlegislative, executive, and judicial authority comparable to the IWC’s authority; the IWCis, in manyrespects, sui generis. In addition, the Workers’ Compensation Act specifically exempts independentcontractors from coverage, see id. at 349, while there is no such express exemption from the Labor Code’s minimum standards. Thus, any such exemption is at most implicit and linked to the definition of “employees”protected by the statutory provisions. For these reasons, the Borello right-to-controltest alone is not the appropriate test for adjudicating claims arising under Labor Code §2802 or other Labor Codeprovisions establishing statutory minimum standards for wages, hours, and working conditions. Thebetter approach, which is more consistent with the intent and purposes underlying those Labor Code provisions, would beto apply the three definitions recognized in Martinez to all claims under Labor Code provisionsthat establish minimum standards for wages, hours, and working conditions. 21 The IWC exercised legislatively delegated investigatory and policy- making powers (which were broaderthan the California courts’ powerto construe and apply the commonlaw) in determining which working relationships must be characterized as employmentto ensure full enforcementofits minimum workplace standards. See Martinez, 49 Cal.4th at 54-55. Because the expert administrative body charged with enforcing many of the Labor Code’s most important provisions regarding wages, hours, and working conditions has already determined what definitions mosteffectively promote the purposesof those provisions, there is no reason for this Court to look elsewhere or to substitute its own judgmentin deciding whatdefinition of employmentbest reflects the “history and fundamental purposes”ofother comparable provisions of the Labor Code. Borello, 48 Cal.3d at 351 (quotation omitted). Applying the Wage Orders’ definition of “employment”is also fully consistent with the Legislature’s intent. There can be no doubtthe Legislature approves of the application of the IWC’s definitions as a general matter. The IWC’s current definition of employment has been included in the Wage Orders since 1947. The suffer-or-permit standard has been part of the Wage Orders since 1916. During that time, the California Legislature has enacted or modified most of the substantive provisions of the Labor Code governing wages, hours, and working conditions, including §2802, and hassignificantly broadened the scope of the IWC’s delegated authority. See, e.g., Martinez, 49 Cal.4th at 60-61 (describing 1973 amendments broadening IWC’sdelegated authority); Stats. 2000, ch. 990 (amending §2802). This Court can therefore presumethatthe Legislature was aware of the !WC’s definition of employment and recognizedthatit provides appropriate guidance in deciding which employment relationships should be subject to statutory protections relating to wages, hours, and working conditions. See, e.g., Sara M., 36 Cal.4th at 1015. 22 Moreover, there is no reason to concludethat the Legislature intended anydifferent definition of the employment relationship to apply to closely related claims arising under the Labor Code and the Wage Orders (such as claims seeking reimbursement for uniform maintenancecosts under a Wage Orderand for other necessary expenditures under §2802), as the Court would haveto find before it could conclude that only the Borello right-to-control test should apply to Labor Code misclassification claims. The far more reasonable conclusion is that the Legislature intended the same standard, established by the expert agencycreated for the specific purpose ofimproving wages, hours, and working conditions, to apply to both sets of claims. '° The Legislature’s recent enactment of Labor Code §226.8 is instructive in this regard. Section 226.8 makes it unlawful“for any person or employer to engage in. . . [w]illful misclassification of an individual as an independentcontractor.” Thestatute defines willful misclassification as “avoidihg employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.” Labor Code §226.8(i)(4). Three aspects of Section 226.8 provide particularly useful guidance. First, the statute does not define the terms “misclassification” and “‘misclassifying.” Instead, it assumes that courts will look elsewhere in the Labor Code (or Wage Orders) to determine whether a worker has been misclassified, before determining whether that misclassification was willful for purposes of §226.8. Second,the statutory language demonstrates the Legislature’s understanding that a worker is either misclassified under the Labor Codeor not. Nothing in §226.8 suggests that an employer can '° Asthe example of reimbursementfor business expenditures makes clear, in manycases the requirements of the Wage Orders are intertwined or overlap with the minimum standards established by the Labor Code. 23 escape liability for statutory penalties if it misclassifies employees under one provision of the Labor Code but not another. Thus, while the Court of Appealin this case distinguished plaintiffs’ “misclassification” under Labor Code §1194 and the Wage Orders from their “misclassification” under Labor Code §2802,the absence of any such distinction under §226.8 demonstrates the Legislature’s understanding that such distinctions are inappropriate: “Willful” misclassification is a stand-alone violationthat is unlawful no matter what form of “employee status” the defendant sought to “avoid.” Third, §226.8 was enacted in 2011, affer this Court issuedits decision in Martinez. At the time the Legislature enacted §226.8, it was undoubtedly awareof the definition of the employment relationship that this Court used in Martinez and intendedthat definition to apply inall cases seeking relief under §226.8. For these reasons as well, this Court should defer to the I!WC’s considered judgment and expertise, implement the Legislature’s recognition that the same definition of employment should apply to comparable provisionsof the Labor Code governing wages, hours, and working conditions, and hold that the IWC’s definition of the employment relationship applies to all claims arising under such Labor Code provisions.!! IV. This Court Should Eliminate Any Confusion Surrounding Application of Martinez’s “Common Law”Test of Employment Finally, this case presents the Court an opportunity to eliminate confusion amongcourts applying the Wage Orders’ definition of employmentby reaffirming that the “commonlaw”test of employment, "' For provisions of the Labor Code that include their own separate statutory definitions of the relevant terms, such as the Workers’ Compensation Act, see Labor Code §§3351, 3353, those particular definitions, rather than the IWC’s definitions, would apply. 24 when applied as one of the ]WC’sthree tests of employment, must reflect the particular remedial and worker-protective purposes of the Labor Code, which Dynamexitself recognizes. Opening Br.at 3 (“A paramount consideration in evaluating claimed independent contractorstatus . . . must be the remedial purposesserved by California’s employment-related statutes.”’). Last year, this Courtreiterated the core aspects of an employee- protective commonlaw “right-to-control”test in Ayala, 59 Cal.4th 522. Ayala explained that the “principal test” of employmentunderthat standard is “whether the person to whom serviceis rendered has the right to control the manner and meansof accomplishingthe result desired.” Jd. at 53] (quotation omitted). “Perhaps the strongest evidence of the right to control is whether the hirer can discharge the worker without cause.” Jd The Court emphasizedthatthe test should not be applied narrowly. Even if “a certain amount offreedom ofaction is inherentin the nature of the work,” the right-to-control test is satisfied if the hirer “retains all necessary control overits operations.” /d. (quotations omitted) (emphasisin original). The purported employer’s right to control need not be direct and immediate; it may instead be indirect and even “very attenuated,” as the Restatement (Second) of Agency (upon which Ayalarelied) explains. Rest. 2d Agency §220(1) emt, 4.2 | '? While the right to control the work “is the foremost consideration” underthe right-to-control test, Ayala explained that courts should also consider a “range of secondary indicia drawn from the Second and Third Restatements of Agency that mayin a given case evince an employment relationship,” such as “whether the one performing services is engaged in a distinct occupation or business,” “the kind of occupation, with reference to whether, in the locality, the work is usually done underthe direction of the principalor by a specialist without supervision,”“the length of time for whichthe services are to be performed,” and “whether or not the work is a (continued. ..) 25 Just as important, an employer’s obligations to its workers under the Labor Code should not belimited by the traditional commonlawtest for determining whether a master-servant relationship exists. As explained already, the commonJawdistinction between employees and independent contractors wasinitially developed to determine when a master-servant relationship exists for purposes of vicarious liability. Borello, 48 Cal.3d at 352 (“[T]he commonlaw tests were developed to define an employer’s liability for injuries caused by his employeef[.]”) (emphasisin original); Lauritzen, 835 F.2d at 1544 (Easterbrook,J., concurring). The purpose of that analysis was not to ensure that remedial statutory requirements were fully implemented, but to ensure that one party would notbe held vicariously liable for the tortious acts of another unless thefirst party could reasonably be held responsible for the second’s conduct. Jd. (“independent contractor doctrine”is “a branch oftort law, designed to identify whois answerable for a wrong(and therefore, indirectly, to determine who must take care to prevent injuries)”). Given the materially different purposes served by the commonlaw’s master-servantdistinction and the implied statutory distinction between employees and independentcontractors under the Labor Code,it is not appropriate to decide Labor Code claims based on a standard whose purposeis to determine when a masteris responsible for the wrongful actionsits servants. Nonetheless, because the right-to-control standardis often referred to as the “commonlaw” test of employment(including by Dynamexin this case andin this Court’s discussion of the third prong of the WC’s definition in Martinez), some courts havefailedto give proper weight to the (. . . continued) part of the regular businessofthe principal.” 59 Cal.4th at 532 (citation omitted). 26 distinct statutory contexts. For example, several courts have mistakenly relied uponthis Court’s decision in Patterson v. Domino’s Pizza, LLC (2014) 60 Cal.4th 474, whenapplying the Wage Orders’ threetests of employment.'? As this Court made clear in Borello, though, casesthat applytraditional commonlaw principles to determine whether one party should be vicariously liable for the acts of another (as Patterson did) are of little value in assessingthat party’s obligations under remedial, worker- protective legislation. Rather than applying such decisions directly to determine employmentstatus under the Labor Code, any application of the right-to-controltest in that statutory context must accountfor the unique history and purposes ofthe Wage Orders and the Labor Code. From Borello to the present, this Court has recognized thatthe factors that must be considered in determining employmentstatus differ based on context, and that any such determination must accountfor the statutory rights at issue rather than applying a monolithic “common law” test. To ensure the lowercourts faithfully apply these principles, this Court should reiterate that the right-to-control test, when applied as one ofthe Wage Orders’ three tests for finding employment, must be applied “with particular referenceto the history and fundamental purposesofthe statute” at issue, Borello, 48 Cal.3d at 351 (quotation omitted), and that cases involving different statutory schemes — especially those applying the ? See, e.g., Ochoa v. McDonald's Corp. (N.D.Cal. Sept. 25,2015) _ F.Supp.3d_, Case No. 3:14-cv-02098-JD, 2015 WL 5654853, at *4, *7 (relying upon Pattersonin applying “common law” test); Vann v. Massage Envy Franchising LLC (S.D. Cal. Jan. 6, 2015) Case No. 13—CV--2221— BEN (WVG), 2015 WL 74139 (relying upon Patterson in applying all three tests); see also Andrade v. Arby’s Restaurant Group, Inc. (N.D. Cal. Nov. 3, 2015) Case No. 15-cv-03175 NC, 2015 WL 6689475 (citing Patterson as establishing a uniquerule regarding franchisorliability under all California laws). 27 traditional and narrow commonlawtest for discerning master-servant relationships — offerlittle relevant guidance. CONCLUSION For the foregoing reasons, this Court should hold that the IWC’s definition of employmentappliesto all claims arising underthe Wage Orders, including those premised onthe alleged misclassification of employees and independent contractors, and that the same definition applies to claimsarising under the Labor Code’s other provisions establishing minimumstandards for wages, hours, and were conditions. Reseoh yfyish, ee Dated: December 7, 2015 By: afLiY ie MICHAL AN BARBARA J. CHISHOLM P. CASEY PITTS Altshuler Berzon LLP Counselfor Amici Curiae JUDITH A. SCOTT Service Employees Intl. Union Counselfor Amicus Curiae Service Employees International Union NICHOLAS W, CLARK United Food and Commercial Workers Intl. Union Counselfor Amicus Curiae United Food and Commercial Workers International Union BRADLEY T. RAYMOND Intl. Brotherhood of Teamsters Counselfor Amicus Curiae International Brotherhood of Teamsters 28 CERTIFICATE OF WORD COUNT Thereby certify pursuant to Rule 8.204(c)(1) of the California Rules of Court that the attached PROPOSED AMICUS CURIAE BRIEF OF SERVICE EMPLOYEES INTERNATIONAL UNION, UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONALUNION, AND INTERNATIONAL BROTHERHOOD OF TEAMSTERS IN SUPPORT OF PLAINTIFFS-REAL PARTIES IN INTERESTis proportionally spaced, has a typeface of 13 points or more, and contains 8,176 words, excluding the cover, the tables, the signature block, and this certificate. Counsel relies on the word count ofthe word-processing program usedto prepare this brief. DATED: December7, 2015 PROOF OF SERVICE CASE: Dynamex v. Superior Court CASE NO: Supreme Court Case No. $222732 Jam employedin the City and County of San Francisco, California. Tam over the age of eighteen years and not a party to the within action; my business address is 177 Post Street, Suite 300, San Francisco, California 94108. On December7, 2015, I served the following documents: APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF AND PROPOSED AMICUS CURIAE BRIEF OF SERVICE EMPLOYEES INTERNATIONAL UNION, UNITED FOOD AND COMMERCIAL WORKERSINTERNATIONAL UNION, AND INTERNATIONAL BROTHERHOOD OF TEAMSTERSIN SUPPORT OF PLAINTIFFS-REAL PARTIES IN INTEREST on the parties, through their attorneys ofrecord, by placing true copies thereof in sealed envelopes addressed as shown below for service as designated below: A. By U.S. First Class Mail: I am readily familiar with the practice of Altshuler Berzon LLP forthe collection and processing of correspondence for mailing with the United States Postal Service. I placed each such envelope, with first-class postage thereonfully prepaid, to be deposited in a recognized place of deposit of the U.S. Mail in San Francisco, California, for collection and mailing to the office of the addressee on the date shown herein. ADDRESSEE PARTY A Ellen M. Bronchetti, Esq. Dynamex Operations Sheppard Mullin West, Inc. Four Embarcadero Center, 17" | Defendant-Petitioner Floor San Francisco, CA 94111 30 ADDRESSEE PARTY Paul S. Cowie, Esq. Dynamex Operations Sheppard Mullin West,Inc. 379 Lytton Avenue Defendant-Petitioner Palo Alto, CA 94301-1479 Robert G. Hulteng, Esq. Dynamex Operations Phillip A. Simpkins, Esq. West, Inc. Littler Mendelson PC Defendant-Petitioner 650 California Street, 20" Floor San Francisco, CA 94108 A. Mark Pope, Esq. Charles Leeetal. Pope, Berger, Williams & Plaintiffs-Real Parties in Reynolds, LLP Interest 401 B Street, Suite 2000 San Diego, CA 92101 Kevin F. Ruf, Esq. Charles Leeetal. Glancy Prongay & Murray LLP _ piaintiffs-Real Parties in1925 Century Park East, #2100 Interest Los Angeles, CA 90067 Jon R, Williams, Esq. Charles Leeetal. Williams lagmin LLP Plaintiffs-Real Parties in666 State Street Interest San Diego, CA 92101 Clerk Respondent Los Angeles County Superior Court 111 North Hill Street Los Angeles, CA 90012 Clerk Appellate Court Court of Appeal Second Appellate District Division Seven Ronald Reagan State Building 300 S. Spring Street 2™ Floor, North Tower Los Angeles, CA 90013 31 I declare under penalty of perjury under the laws ofthe State of California that the foregoing is true and correct. Executed December7, 2015, at San Francisco, California. ‘ on _—. Ma i ud ee Kristina Sinclair o N b o