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The Common Law Definition of Employee Applies to Retaliation Claims Under Labor Code Section 1102.5(b).

Author: Reece Román

September 11, 2019 10:00am

Following the California Supreme Court’s landmark ruling in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, there has been some uncertainty regarding classification of employees versus independent contractors in cases not involving California Wage Orders, which impose obligations relating to basic working conditions such as meal and rest breaks. In the recent case Bennett v. Rancho California Water Dist., the Fourth District, Division 3, held that the common law definition of employee applies to retaliation claims brought under Labor Code section 1102.5(b). (Bennett v. Rancho California Water Dist. (2019) 35 Cal.App. 5th 908, 911.)

In Bennett, plaintiff entered into a “Professional Services Agreement” with defendant to “fulfil the IT Help Desk Services position.” (Bennett, supra, 35 Cal.App. 5th 908, 912.) Defendant classified plaintiff as an independent contractor. (Id.) After conducting some independent research, plaintiff notified defendant that he believed he had been misclassified, and he asked to be reclassified as an employee. (Id.) Shortly thereafter, defendant notified plaintiff his agreement was terminated. (Id. at 913.) Plaintiff brought suit alleging retaliatory employment termination in violation of Labor Code section 1102.5(b). (Id. at 912.)

Prior to the liability phase of trial, the trial court granted plaintiff’s motion in limine to exclude evidence plaintiff was anything other than an employee. (Id. at 915.) The trial court granted the motion, finding an administrative law judge’s prior ruling finding plaintiff was an employee for retirement benefit purposes precluded defendant from offering contrary evidence under the doctrine of collateral estoppel. (Id. at 915-916.)

Following a verdict in favor of plaintiff, defendant filed motions for new trial and JNOV arguing the trial court’s application of collateral estoppel was error, and that the evidence at trial established plaintiff was not an employee. (Id. at 918.) Both motions were denied. (Id.) Defendant appealed. (Id.)

The Court of Appeal found the doctrine of collateral estoppel does not apply when a party obtains a favorable finding based on a lesser burden of proof in the prior proceeding than the party would bear in the subsequent proceeding. (Id. at 918-920.)

The Bennett court then considered whether the evidence was sufficient to support a finding plaintiff was defendant’s employee. (Id. at 923.) Plaintiff argued under Dynamex, “all [plaintiff] had to do to satisfy the first element of his section 1102.5 claim was to demonstrate that he had provided services to the [defendant]. (Id. at 921.) The burden then shifted to the defendant to prove that plaintiff was an independent contractor. (Id.) Defendant argued the statutory definition of employee found at Labor Code section 1106 applied. (Id. at 923-927.) The Bennett court disagreed, finding the common law definition of employee applies to claims under section 1102.5(b).

The ruling appears consistent with a post-Dynamex trend limiting Dynamex to cases involving California Wage Orders. The common law definition will continue to prevail in retaliation claims brought under section 1102.5(b).

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