Posted on May 23rd, 2019
Below is a complete transcript of this video.
What’s going on fellow entrepreneurs. It’s John Fagerholm again from Metal Law Group, and doing another video on the Dynamex case because just the sheer number of calls that I get about what they should do.
And I guess a lot of the payroll companies are now advising everybody to go and make everybody an employee instead of an independent contractor, even if the previous law allowed them to be independent contractors.
So it’s causing a lot of confusion, and I thought the better way to do it, instead of, again, reiterating everything about Dynamex, I thought I would introduce one of our wonderful associates that’s done plenty of work related to the Dynamex case.
She litigates a lot of cases, especially trucking cases, and Dynamex was a new case law that came out of trucking cases, and not only is it affecting trucking, but it’s basically affecting everything in California right now.
So let me introduce Daniella Restrepo.
How are you Daniella?
I’m good.
John:
All right. So, Daniella, I’ve made a few videos now on Dynamex and it’s the new ABC test that’s … Well, Dynamex is creating problems, but it’s not the ABC test that’s creating problems, it’s the B portion of that, in my opinion, because the A and the C is basically what independent contractors were, how they were classified in the past anyway.
So the B is that if they’re providing a service or a product that’s similar to the service or product you provide, then they’re considered employees, even if it just doesn’t make any sense for them to be employees.
So, for example, in the trucking industry, it can be an independent truck driver with his own truck that you pay sometimes to even occasionally deliver or pick up some of your overflow.
But because you’re a trucking company, thus selling your trucking services to a third party, if you engage a third party in any way and that’s what he’s providing, he’s automatically your employee according to Dynamex. So it’s creating a lot of problems.
Just in general, what have you seen in the types of cases that you’re handling?
And it doesn’t have to be trucking either. Or questions that you’re getting. Just give me your thoughts on Dynamex.
Daniella:
Well, I agree with what you’re saying. That’s definitely the problem with Dynamex is the part of the business, that they can’t be involved in the same business. And obviously there’s a lot of industries that it just makes more sense to hire them as independent contractors because it’s a job here or there.
It’s not necessarily a job that they’re out performing constantly. So it would make sense to hire them just for that specific job as independent contractors, but if it’s the same business, then Dynamex comes in and that’s a problem.
So specifically for the trucking industry, anyone that is a driver would be a problem to hire as an independent contractor. Anyone who is a carrier would be a problem to hire as a … Even if they are a company, and if they have, like you said, they’re own trucks or they’re own business, they’re own clients, then it would be a problem because they would be part of that item that Dynamex is saying it’s the same business.
Yeah. So it’s fairly nonsensical, and especially because I think it actually hurts the public, right?
So with Dynamex, what are you going to do with Uber, you know? I guess Uber could argue that it’s just a platform that provides a place for people that want to drive to connect with people that need a ride, but that’s not what California is saying.
And California’s been after Uber for years, right? So the solution for Uber is self-driving cars. Don’t need people to drive for them anymore, which hurts everybody.
So what are your thoughts on outside of just truck driving, how Dynamex is affecting your cases. Or I guess there was a question the other day about whether it’s retroactive.
I don’t know if we even found the answer to that yet, because it’s such a new case, and it hasn’t been litigated yet, and there’s so much left to do before we really find out what the effects of Dynamex is going to be.
Yeah. Correct. Well, what we’ve seen is that the newer cases have taken Dynamex obviously as a base.
So it is getting way more complicated to have any independent contractor. Whether it’s retroactive or not, it’s a decision, right? It’s a ruling of the courts.
So it’s an interpretation of what the case law had already set. It’s just a new interpretation that makes it way broader than what the old interpretation was.
And obviously a lot of companies that had independent contractors based on the old interpretation are not going to be able to have those independent contractors now because of these new interpretations.
Which, of course, hurts them a lot. Economically it hurts them a lot. Economically it hurts the independent contractors a lot.
If there’s a business, a company, a small company that was being hired by another company doing the same business, as independent contractors they can’t do that anymore.
So basically that person would have to shut down their business and become an employee of another company just because they share the same industry, which doesn’t really make much sense.
Yeah. And then the employers that were using independent contractors have to hire everybody as an employee, and then whatever you pay an employee, add 30% to it.
You know that’s basically what a W-2 employees with the insurance, and the tax, and everything that goes to it. So a lot of them aren’t going to be able to afford to even do that.
So I’ve been noticing that there are a lot more demand letters now using Dynamex. I’ve even seen it quoted saying, “Hey. So there’s a lot more opportunity for these shakedown attorneys to file lawsuits or make demands.”
But labor law goes back three years, so from what you’ve seen, is it going to be retroactive? Do you think it’s going to be retroactive, or do you think it’s from the time of the ruling forward?
No, I think it will be retroactive.
So, basically everybody out there that uses independent contractors potentially has a three-year liability from-
Yeah.
… from the time that they … Well, they have three-year liability with everybody they’re using as an independent contractor, basically.
Correct. Yeah, exactly. Who doesn’t fit that category.
Yeah. From the point that they … Until they convert them to a W-2, or they stop using their services, they have from that point going back three years liability.
Correct.
Ah, that’s rough.
Yeah, and the problem is that … I mean under these category, the people that qualify as independent contractors are very, very narrow, right? It would be a plumber.
It would be like someone that comes and does something really random, install cameras maybe for surveillance. But no one else.
Yeah, something that doesn’t have anything to do with your business.
So we’ve had to change the way we do things here also, because there are times that I have a client, and then there’s a very specific issue, like for example, in the context of litigation we may file a bankruptcy.
Well we don’t really do bankruptcy, so I have to hire that out or find an attorney for them to do bankruptcy. And the people that we normally send them to, the people we normally refer bankruptcies to, you know other things, we just pay them out of our accounts.
Say, “Hey. Do this bankruptcy for us.” But now we can’t even do that, because even though this is a completely separate bankruptcy firm, because they’re providing legal services automatically, they become our employee if we do it that way.
So what we have to do then is get our client to hire them separately to do it, separate from us, which is not a bad thing, but it just makes it more difficult and is an extra step, but whatever. So even in the context of that, that’s a problem.
All right, everybody. That’s all for today. I hope we confused you enough where you’ll look up the Dynamex case and look up the rules.
And I’ll give Daniella an outro.
While don’t you do it in Spanish, Daniella? Daniella is actually an attorney from Columbia that’s licensed here in California, so she does most of our Spanish.
So give them a nice little outro if you don’t mind.
Yeah. [Spanish 00:09:11]. Gracias!
Thanks, everybody.
