Takeaway: California has some of the strictest wage payment legislation in the state and lately made it harder for businesses to treat employees as independent contractors. But even in California, an employer can prevent wage payment liability when it truthfully thinks that a worker was an unbiased contractor.
Walmart structured 10 photo shoots in San Francisco concerning July 2016 and August 2017 in which a women’s clothes model appeared by way of a talent administration company. The model worked for a full of 15 times during that time, in nonconsecutive increments of just one or two times. She was photographed and calculated at a casting assembly, and her info was passed on to a member of Walmart’s imaginative workforce.
Before every single photograph shoot, Walmart despatched guidelines to her concerning her clothing, hair, nails, makeup and general overall look. Walmart offered the garments the model was to put on for the shoots, which incorporated shoes, dresses, undergarments, swimwear and other objects. Onsite stylists, producers, photographers, and other staff members selected her outfits and advised her how to pose. Immediately after the shoots, the product returned the garments to Walmart.
Walmart experienced a contract with the talent company in which it agreed to pay out the agency a day-to-day flat amount for each day of modeling companies. This flat level included the pay back to the model as well as a fee to the talent agency. The contract essential the talent agency to deliver Walmart invoices for the perform, which were being payable within 30 times. The deal specified that the expertise company and its team ended up impartial contractors.
Inspite of the terms of this contract, the product claimed that Walmart must have paid her quickly after just about every photograph shoot ended, and filed a lawsuit in San Francisco Remarkable Courtroom, professing that Walmart violated the California Labor Code. She sought a lot more than $540,000 in waiting around-time penalties.
Walmart eliminated the scenario to federal courtroom primarily based on diversity of citizenship. It also submitted a 3rd-get together complaint in opposition to the expertise company. Walmart then moved for summary judgment. The district courtroom denied summary judgment on Walmart’s protection that the plaintiff was an independent contractor outdoors the safety of the pertinent Labor Code provisions, concluding that the plaintiff experienced elevated a triable dilemma of truth about regardless of whether she was an staff.
Nonetheless, the district courtroom granted summary judgment on Walmart’s defense that there was a good-faith dispute about whether the plaintiff was an unbiased contractor, reasoning that the quick duration of time she labored for Walmart and the truth that she experienced also worked for other organizations, among other factors, produced it objectively fair for Walmart to feel she was not an personnel.
The plaintiff appealed the selection to the 9th U.S. Circuit Court docket of Appeals. On enchantment, the plaintiff argued that Walmart was foreclosed from boosting a fantastic-faith protection centered on its misclassification of her standing as an independent contractor, and its admission that she was entitled to the wages at challenge, even though only disputing when they ended up thanks.
The 9th Circuit recounted new developments in California regulation limiting the classification of workers as impartial contractors. A 1989 California Supreme Court determination described impartial contractor standing based on no matter if the alleged employer experienced the correct to control the worker in the way and suggests of doing work. In 1996, the California Industrial Welfare Commission (IWC) expanded the circumstances in which work standing could utilize to a employee.
Commencing in 2010, the California Supreme Courtroom began reinterpreting the IWC regulations to make it harder for a worker to qualify as an independent contractor. It made the ABC take a look at, which involves that an unbiased contractor be (A) cost-free from command in the general performance of perform, (B) perform operate outside the normal course of the choosing entity’s business enterprise, and (C) be usually engaged in the trade or occupation done.
These selections applied to the IWC wage and hour rules, but not to wage payment needs. The California legislature enacted the ABC check into law in September 2019, which caused it to implement to the wage payment prerequisites, but that did not implement retroactively. Because the photograph shoots occurred in 2016 and 2017, the ABC check did not utilize to the promises towards Walmart.
Because the model worked only a quite quick interval of time for Walmart, and labored in the modeling trade, which is separate from Walmart’s common course of company, Walmart had a great-faith argument as to her contractor position. The 9th Circuit as a result upheld the dismissal of her promises.
Hill v. Walmart Inc., 9th Cir., No. 21-15180 (April 26, 2022).
Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.