Barajas v. Ortiz-Nance CA5 ( 2021 )

Filed 9/30/21 Barajas v. Ortiz-Nance CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
NORMA BARAJAS,
F079179
Plaintiff and Appellant,
(Super. Ct. No. VCU272718)
v.
EDWYN ORTIZ-NANCE et al., OPINION
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Tulare County. Bret D.
Hillman, Judge.
Law Office of Peter Sean Bradley and Peter Sean Bradley for Plaintiff and
Appellant.
Michael L. Schulte; Farley Law Firm, Michael L. Farley, and Joseph Beery for
Defendants and Respondents.
-ooOoo-
Dr. Norma Barajas (plaintiff) holds a Ph.D. in educational psychology. Several
years after obtaining her doctorate, plaintiff endeavored to become a licensed clinical
psychologist. The licensure requirements included 3,000 hours of providing direct
mental health services to patients. To satisfy this requirement, plaintiff entered into
contractual agreements with Edwyn Ortiz-Nance, Psy.D. (Dr. Ortiz-Nance), and
Synchrony of Visalia, Inc. (Synchrony) (collectively, defendants).
Plaintiff registered with the state as a psychological assistant, which allowed her to
treat patients in a clinical setting under Dr. Ortiz-Nance’s supervision. In this context,
“supervision” does not mean direct observation of the assistant’s treatment of patients.
Under her arrangements with defendants, plaintiff was entitled to 50 to 70 percent of the
revenue generated by her services. She accrued 3,600 hours of qualifying experience
over a three-year period, but her earnings totaled less than $14,000. Put differently, she
was ultimately paid less than $4 per hour. Plaintiff contends she also worked additional
hours that did not count toward her licensure requirements and for which she received no
compensation.
After parting ways with defendants, plaintiff successfully filed a claim with the
California Department of Industrial Relations, Division of Labor Standards Enforcement
(DLSE) and was awarded over $72,000. Defendants challenged the award in the Tulare
Superior Court. The superior court found the parties did not have an employer/employee
relationship, and it ruled against plaintiff on all claims. This appeal is taken from a
judgment entered in favor of defendants.
The trial court relied on federal decisional authority to determine the legal nature
of the parties’ relationships. However, plaintiff’s claims were made under California
law. She correctly argues those claims are governed by California Supreme Court
precedent. We reverse the judgment and remand for further proceedings, which shall
include the trial court’s analysis of the claims under the controlling legal standards.
FACTUAL AND PROCEDURAL BACKGROUND
Procedural History
According to the judgment, plaintiff filed a claim with the DLSE on March 31,
2017, regarding her work with Dr. Ortiz-Nance. The claim “was converted to a formal
complaint on August 1, 2017,” at which point Synchrony was named as an additional
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defendant. The record on appeal omits the complaint and contains no documents from
the DLSE proceedings. The judgment states plaintiff “sought compensation for unpaid
contractual wages, unpaid minimum wages, liquidated damages, California Labor Code
§260 damages, waiting time penalties, unreimbursed business expenses, and attorney’s
fees.”1
In January 2018, the Labor Commissioner ruled for plaintiff and awarded her
$72,377. Defendants, acting pursuant to Labor Code section 98.2, posted a bond and
appealed the decision to the Tulare Superior Court. Plaintiff later pleaded additional
claims alleging (1) entitlement to restitution for unspecified violations of Business and
Professions Code section 17200 (also known as the unfair competition law or UCL); (2)
penalties under Labor Code section 226 for failure to provide itemized pay statements;
and (3) penalties for failure to maintain records as required by Labor Code section 1174.2
A six-day bench trial was conducted in March 2019. The trial court admitted 35
exhibits and heard testimony from six witnesses, including plaintiff and Dr. Ortiz-Nance.
Following the presentation of evidence, the parties were ordered to submit closing briefs.
Prior to the filing deadline, the trial court “withdr[ew] its request for supplemental
briefing” and issued a written tentative decision. The tentative decision was incorporated
1The partieshave elected to proceed with appellant’s and respondents’ appendices in lieu
of a clerk’s transcript. (Cal. Rules of Court, rule 8.124.) The appendices primarily consist of
exhibits from a bench trial in the superior court. The record further omits pleadings, trial briefs,
and other materials that would have helped this court to understand the exact legal basis for each
of plaintiff’s claims and the parties’ respective theories of the case.
2Although statutorily described as “an appeal to the superior court,” proceedings under
Labor Code section 98.2 are de novo. (Id., subd. (a).) “The decision of the commissioner is
‘entitled to no weight whatsoever, and the proceedings are truly “a trial anew in the fullest
sense.”’” (Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 942, 948.) Trial courts have
discretion to hear “additional related wage claims in the de novo trial that were not first
considered by the Labor Commissioner.” (Murphy v. Kenneth Cole Productions, Inc. (2007) 40
Cal.4th 1094, 1116.) “‘The decision of the trial court, after de novo hearing, is subject to a
conventional appeal to an appropriate appellate court.’” (Ibid., quoting Post, supra, at p. 948.)
3.
by reference into the final judgment, which was entered in April 2019. This timely
appeal followed, but the appellate briefing was not completed until March 2021.
Trial Evidence
In 2006, plaintiff received a Ph.D. in educational psychology from a midwestern
university. Plaintiff testified her training was in “research and statistics” but not clinical
work, i.e., “not the actual treatment and assessment” of patients. In 2011, she began
taking steps toward becoming a licensed clinical psychologist in California. Plaintiff
enrolled in a “respecialization program” at Alliant International University (Alliant) in
Fresno, taking courses in “forensic and clinical psychology.”
While attending Alliant, plaintiff became acquainted with Dr. Ortiz-Nance in his
capacity as the school’s practicum “placement officer.” Dr. Ortiz-Nance also worked in
private practice at offices in Fresno and Visalia. A practicum is “a course of study
designed especially for the preparation of teachers and clinicians that involves the
supervised practical application of previously studied theory.” (Merriam-Webster Dict.
Online [as of Sept. 29,
2021].) Dr. Ortiz-Nance supervised plaintiff as part of a practicum in 2011, but her
practicum work is not at issue in this case.
In late 2011, plaintiff discovered she did not need to attend Alliant in order to
become a licensed clinician. She testified to withdrawing from the university prior to
2012 and getting “reimbursed for the practicum course.” Around the same general time
period, Dr. Ortiz-Nance offered plaintiff a job.
As generally explained in witness testimony, the Psychology Licensing Law (Bus.
& Prof. Code, § 2900 et seq.) requires prospective licensees to have “at least two years
[of] supervised professional experience [(SPE)] under the direction of a licensed
psychologist.” (Id., § 2914, subd. (d)(1); Brown v. County of Los Angeles (2012) 203
Cal.App.4th 1529, 1540.) The regulations of the California Board of Psychology (CBP)
provide: “One year of SPE shall be defined as 1500 hours. At least one year of SPE
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shall be completed postdoctorally. … If both years of SPE (3000 hours) are completed
postdoctorally, they shall be completed within a sixty (60) month period.” (Cal. Code
Regs., tit. 16, § 1387, subd. (a).)
One of several ways to meet the SPE requirement is to register with the CBP as a
“psychological assistant” and work under the supervision of a licensed psychologist.
(Bus. & Prof. Code, § 2913; Cal. Code Regs., tit. 16, § 1387, subd. (a)(2)(D).) The
registration must be renewed annually. (Bus. & Prof. Code, § 2913, subd. (a).) CBP
regulations use the term “trainee” in reference to both predoctoral and postdoctoral
psychological assistants. (Cal. Code Regs., tit. 16, § 1387.) “Trainees shall be provided
with supervision for 10% of the total time worked each week. At least one hour per week
shall be face-to-face, direct, individual supervision with the primary supervisor.” (Id.,
subd. (b)(4).)
By 2012, the parties had filed the necessary paperwork with the CBP for plaintiff
to become registered as Dr. Ortiz-Nance’s psychological assistant. The documents
included a preprinted CBP form entitled “Application to Employ A Psychological
Assistant (Pursuant to Section 2913 of the Business and Professions Code).” (Some
capitalization omitted.) The form included sections requiring identification of the
“employer” and “supervisor.” Dr. Ortiz-Nance’s contact information and signature was
provided in both of those sections, and he also signed the last page of the form in a space
requesting the “Signature of Employer.” The significance of the form’s reference to
Business and Professions Code section 2913 is discussed post.
Another section of the application asked for a description of “the supervision to be
provided to the psychological assistant.” Dr. Ortiz-Nance wrote, “Supervision will be
weekly for two hours (minimum). One hour weekly of direct face to face and one (or
more) hour(s) weekly in clinical staff meeting. Additional supervision may be provided
for special circumstances ….”
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Plaintiff and Dr. Ortiz-Nance also submitted to the CBP a form entitled,
“Supervision Agreement for Supervised Professional Experience.” (Boldface and some
capitalization omitted.) This document indicated plaintiff would be working at two
locations: “(1) Synchrony … [and] (2) E.W. Ortiz-Nance, Psy.D. Psychological Services
@ The Centre for Harmony ….”
Synchrony is a nonprofit corporation operating out of a commercial location in
Visalia. According to defense witnesses, it is a “referral agency,” i.e., it refers people
seeking psychological treatment to clinicians who work in its offices. Some of the
clinicians are licensed and others are unlicensed trainees working under supervision,
which basically means they have regular meetings with a licensed supervisor to discuss
their caseload; their documentation (e.g., reports, correspondence) is subject to review
and approval. Dr. Ortiz-Nance explained, “[I]f a trainee is in with a patient, that door is
closed. … I cannot just go in and say, what’s going on here. There is a level of
confidentiality. I only know what they represent either in their progress notes or what
they tell me during supervision.”
Defense witnesses testified Synchrony is also a “teaching clinic.” However,
Synchrony views all clinicians who work there—licensed or unlicensed—as “revenue
generators.” As one witness explained, Synchrony’s operating budget is dependent upon
the revenue generated by the clinicians:
“So when clinicians come in, whether licensed, whatever they’re at,
because we’re a nonprof[it] there has to be a way of being able to keep our
doors open. And that is the discussion they have at the beginning before
they sign on to come on with us is that it costs money to have lights, to
have front office staff, to bill out. There is an expense to that. We are a
business. And so if clinicians didn’t match that, our business would fail.
We wouldn’t be there. We wouldn’t be able to keep our doors open.”
Synchrony maintains that no one who treats patients at its facility is an employee.
It employs only a small number of “front office staff” who provide administrative
support, e.g., patient scheduling and billing. Although Dr. Ortiz-Nance has at times
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identified himself as Synchrony’s “Director of Clinical Training” and used similar
variations of that title, defense witnesses testified he was neither an employee of the
corporation nor part of its governing board.
At trial, plaintiff’s counsel indicated all claims were based on work performed
during the years 2013, 2014, and 2015. However, plaintiff did rely on a written “Agency
Agreement” for “Post-doctoral/Non-licensed psychologists” dated June 1, 2012.
(Boldface and some capitalization omitted.) The contract was entered into between
plaintiff, Synchrony, and Dr. Ortiz-Nance in his stated capacity as “Director of Clinical
Training” and Synchrony’s “designee.” Plaintiff agreed to provide, “on behalf of and/or
at the direction of [Synchrony],” a range of specified “therapeutic services/duties to
[Synchrony’s] clients by assignment of those clients (as agreed upon) to [plaintiff].”
The agency agreement further stated: “As compensation for the services to be
rendered by [Synchrony] under this agreement[,] [plaintiff] and [Synchrony] agree to a
50% ([plaintiff]) 50% ([Synchrony]) division of income for each client seen or billable
incident.” The defense argued this wording meant plaintiff had agreed to compensate
Synchrony for services it provided to her, e.g., patient referrals and billing. Dr. Ortiz-
Nance testified the “division of income” language meant the parties were only entitled to
a percentage of the money collected from the patient and/or the patient’s insurance
provider, not the amount billed.
At Synchrony, insured patients were billed $110 per hour and uninsured patients
were billed on a sliding scale of approximately $20–$40 per hour. A Form W-2 Wage
and Tax Statement issued by Synchrony to plaintiff for the year 2013 indicated plaintiff
was paid $9,886 (rounded) for her work during the relevant time period. Plaintiff
testified she stopped treating patients at Synchrony in December 2013.
During 2014 and 2015 (and allegedly in 2013 as well), plaintiff treated patients at
the Centre For Harmony (Harmony) in Fresno. Harmony is a commercial building
reportedly owned by a church. The church leases office space to a variety of health and
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wellness practitioners. For example, according to the testimony, “at one point there was
an acupuncturist there, a shaman there, a craniosacral therapist there.”
Dr. Ortiz-Nance leased an office at Harmony and ran his private practice from
there in person on days when he was not working at Synchrony. There was conflicting
testimony as to whether he also leased a second office at Harmony during the relevant
time period. According to the defense, the leased space allowed for only one clinician at
a time and was used by different people on different days.
The number of hours plaintiff claimed to have worked at Harmony was disputed.
Likewise, whereas plaintiff claimed the patients she treated at Harmony were assigned to
her by Dr. Ortiz-Nance, the defense argued plaintiff independently developed her own
clientele. Plaintiff did her own billing at Harmony, which differed from the procedures at
Synchrony. As summarized in the judgment, “there were significant evidentiary disputes
about what hours she worked, where she worked those hours, if the hours kept [i.e.,
documented] were accurate, if she received improper compensation for work done by
others, if copays were properly accounted for and whether clients were improperly
billed.”
Plaintiff and Dr. Ortiz-Nance had a written revenue-sharing agreement that was
similar to her arrangement with Synchrony. The main difference was the split. Plaintiff
was entitled to 70 percent of the revenue generated by her work at Harmony; the
remaining 30 percent went to Dr. Ortiz-Nance. Dr. Ortiz-Nance provided plaintiff with
earning statements for 2014 and 2015 using IRS Form 1099-MISC, which indicated her
“Nonemployee compensation” for those years was $1,302 and $2,296 (rounded),
respectively. Plaintiff claimed to have worked approximately 580 hours at Harmony in
2014 and 300 hours in 2015, spending most of that time treating insured patients who
were billed $130 per hour/visit.
In July 2015, Dr. Ortiz-Nance signed a CBP “Verification of Experience Form”
attesting plaintiff had completed 3,600 SPE hours between February 6, 2012, and the
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completion date of January 30, 2015. (Some capitalization omitted.) The record does not
clearly explain why the form was signed nearly six months after the completion date.
Plaintiff claimed she continued seeing patients at Harmony through July 2015 despite
having completed her SPE hours and receiving only paltry compensation. She testified it
was because she “liked working with the patients” and “needed the structure” in her life.
In approximately July or August 2015, plaintiff took a new job working as a
psychological assistant for a third party not involved in this case. According to her
testimony, the position paid a fixed rate of $45 per hour (i.e., regardless of any shortfalls
in the amounts collected from patients and/or their insurance providers). At trial in
March 2019, plaintiff described her current occupation as that of “an unlicensed clinical
psychologist.”
Trial Court’s Findings and Conclusions
Plaintiff argued the issue of whether she was an employee of Dr. Ortiz-Nance
and/or Synchrony was governed by the California Supreme Court’s opinion in Dynamex
Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex). Defense
counsel urged the trial court to instead apply a seven-factor test used by federal courts in
cases such as Benjamin v. B & H Educ., Inc. (9th Cir. 2017) 877 F.3d 1139 (Benjamin).
In the alternative, defendants argued “that even under the Dynamex test plaintiff [was]
not an employee.”
The trial court relied exclusively on federal case law, and Benjamin in particular.
It also discussed Schumann v. Collier Anesthesia, P.A. (11th Cir. 2015) 803 F.3d 1199and briefly mentioned Solis v. Laurelbrook Sanitarium & Sch., Inc. (6th Cir. 2011) 642
F.3d 518. In the following excerpt from its written decision, the trial court made findings
relative to the “primary beneficiary test” described in Benjamin, supra, 877 F.3d at pages
1143–1146. The trial court used italics to identify the seven factors.
“1. The extent to which the intern and the employer clearly
understand that there is no expectation of compensation. Any promise of
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compensation, express or implied, suggests that the intern is an employee—
and vice versa.
“Here, there was an agreement for compensation. Although the
parties had significant disputes about what should have been paid, this court
cannot find based on the evidence presented at trial, that [plaintiff] was paid
less than the agreed amount for her services.
“2. The extent to which the internship provides training that would
be similar to that which would be given in an educational environment,
including the clinical and other hands-on training provided by educational
institutions.
“The program in the case at bar was by definition a clinical program,
allowing for direct supervision, group supervisions, and direct patient
contact, both in individual and group settings. It was a mandatory part of
the educational process to become a licensed psychologist.
“3. The extent to which the internship is tied to the intern’s formal
education program by integrated coursework or the receipt of academic
credit.
“Again, [plaintiff] could not sit for her licensing examination
without 3000 SPE hours. Although many interns and practicum students
worked in the clinic as part of their course work, here the CBP had
determined that, as the holder of a doctoral degree, [plaintiff] needed no
additional coursework, but was required to complete the SPE hours.
“4. The extent to which the internship accommodates the intern’s
academic commitments by corresponding to the academic calendar.
“As noted above, [plaintiff] had completed her coursework as a post-
doc, so she was not tied to an academic year, but it certainly accommodated
her academic commitments as it fulfilled the last requirement before the
licensing exam.
“5. The extent to which the internship’s duration is limited to the
period in which the internship provides the intern with beneficial learning.
“Here, the internship commenced to allow [plaintiff] to complete her
SPE hours, and she resigned within weeks of documenting the necessary
hours and submitting them to the CBP. No one disputed the value of the
training or experience obtained by [plaintiff], or that it allowed her to
transition from a background in educational psychology, which she testified
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had little similarity to clinical practice, into a clinical setting where she
continues to work to this day.
“6. The extent to which the intern’s work complements, rather than
displaces, the work of paid employees while providing significant
educational benefits to the intern.
“There was no evidence produced of [plaintiff] displacing any other
workers. In fact, Synchrony was described as ‘a teaching clinic’
throughout the trial and there was evidence that practicum students and
interns worked there regularly. Although other professionals worked in the
clinic, the constraints discussed were related to a shortage of office space at
both Synchrony and [Harmony], not that employees were being displaced.
Dr. Ortiz-Nance had no employees at [Harmony] and the employees at
Synchrony were office staff rather than clinical practitioners. To the extent
[plaintiff] performed administrative tasks, it did not displace other
employees.
“7. The extent to which the intern and the employer understand that
the internship is conducted without entitlement to a paid job at the
conclusion of the internship.
“There was no evidence produced at trial that [plaintiff] expected to
work at Synchrony or [Harmony] after completing her SPE hours. In fact,
she had sought and obtained more remunerative employment elsewhere,
which began the month after she left [Harmony].”3
The trial court further stated: “[T]he Benjamin court concluded that in making
such determinations the court should follow the federal Fair Labor Standards Act to
determine the ‘primary beneficiary’ of the labor relationship. This court finds that
[plaintiff] was the primary beneficiary of the relationship ….” The trial court’s final
analysis of the worker classification issue was as follows: “Considering the relevant case
law, the evidence and the factors noted above, the court concludes that [plaintiff] was not
an employee of Synchrony or Dr. Ortiz-Nance. The court finds she was paid
3The trial court’s ruling says “the month after she left Synchrony,” but it was undisputed
plaintiff ceased working at Synchrony in 2013. She testified to starting her new psychological
assistant job in 2015, within weeks of discontinuing her work at Harmony.
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appropriately for the services as agreed between the parties and is not entitled to
additional compensation.”
DISCUSSION
A trial court errs by failing to apply the correct legal standard governing an issue
under its consideration. (Fox Factory, Inc. v. Superior Court (2017) 11 Cal.App.5th 197,
207.) “[S]election of the applicable law” is a legal issue subject to de novo review.
(Apex LLC v. Sharing World, Inc. (2012) 206 Cal.App.4th 999, 1009.) We must
ultimately determine whether plaintiff’s claims are governed by the federal authorities
upon which the trial court relied.
“California law governing wages, hours, and working conditions is embodied, to a
large extent, in Labor Code section 1171 et seq. and the regulations (wage orders)
promulgated by the Industrial Welfare Commission (IWC). The Fair Labor Standards
Act of 1938 (FLSA; 29 U.S.C. § 201 et seq.) is the federal counterpart.” (United Parcel
Service Wage & Hour Cases (2010) 190 Cal.App.4th 1001, 1009, fn. omitted.) “The
FLSA does not preempt state law and ‘explicitly permits greater employee protection
under state law.’ [Citation.] In many respects, California law provides broader
protection of employee rights, and in such instances, California law controls.” (Id. at p.
1010; accord, Alvarado v. Dart Container Corp. of California (2018) 4 Cal.5th 542, 554
[“state law is controlling to the extent it is more protective of workers than federal law”].)
“California wage orders are intended to provide broader protection than that
accorded workers under the federal standard.” (Dynamex, supra, 4 Cal.5th at p. 956.) As
such, “wage orders issued by the IWC ‘do not incorporate the federal definition of
employment’ under the FLSA.” (Futrell v. Payday California, Inc. (2010) 190
Cal.App.4th 1419, 1423, quoting Martinez v. Combs (2010) 49 Cal.4th 35, 52, 66–68.)
“Today 18 wage orders are in effect, 16 covering specific industries and occupations, one
covering all employees not covered by an industry or occupation order, and a general
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minimum wage order amending all others to conform to the amount of the minimum
wage currently set by statute.” (Martinez, at p. 57, fns. omitted.)
The legal basis for each of plaintiff’s claims is not entirely clear from the record,
but some claims are necessarily based on alleged violations of one or more IWC wage
orders. We know this because the judgment refers to a claim for “unpaid minimum
wages,” and certain documents show plaintiff’s reliance upon Labor Code section 1194.4
“[A] claim under [Labor Code] section 1194 is in reality a claim under the applicable
wage order and thus subject to the order’s definitional provisions.” (Martinez v. Combs,
supra, 49 Cal.4th at p. 63.)
In Dynamex, the California Supreme Court announced a new legal standard (“the
ABC test”) for determining whether workers are employees for purposes of claims based
on IWC wage orders. (Dynamex, supra, 4 Cal.5th at pp. 956–957.) “The ABC test
presumptively considers all workers to be employees, and permits workers to be
classified as independent contractors only if the hiring business demonstrates that the
worker in question satisfies each of three conditions: (a) that the worker is free from the
control and direction of the hirer in connection with the performance of the work, both
under the contract for the performance of the work and in fact; and (b) that the worker
performs work that is outside the usual course of the hiring entity’s business; and (c) that
the worker is customarily engaged in an independently established trade, occupation, or
business of the same nature as that involved in the work performed.” (Id. at pp. 955–
956.)
In Vazquez v. Jan-Pro Franchising Internat., Inc. (2021) 10 Cal.5th 944, the
California Supreme Court held “the standard set forth in Dynamex applies retroactively—
4Labor Code section 1194, subdivision (a) provides: “Notwithstanding any agreement to
work for a lesser wage, any employee receiving less than the legal minimum wage or the legal
overtime compensation applicable to the employee is entitled to recover in a civil action the
unpaid balance of the full amount of this minimum wage or overtime compensation, including
interest thereon, reasonable attorney’s fees, and costs of suit.”
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that is, to all cases not yet final as of the date [its] decision in Dynamex became final.”
(Vazquez, at p. 948.) The opinion notes the issue in Dynamex was “what standard applies
in determining whether, for purposes of the obligations imposed by California’s wage
orders, a worker should be considered an employee who is covered and protected by the
applicable wage order or, instead, an independent contractor to whom the wage order’s
obligations and protections do not apply.” (Id. at pp. 949–950.) The Dynamex opinion
was issued in April 2018, i.e., after the filing of plaintiff’s claims and prior to the trial.
Before Dynamex, the prevailing standard under California law was a multifactor
test set forth in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (1989) 48
Cal.3d 341 (Borello), which “applied common law analysis of the critical issue of control
of the purported employees’ work.” (Messenger Courier Assn. of Americas v. California
Unemployment Ins. Appeals Bd. (2009) 175 Cal.App.4th 1074, 1081; see Dynamex,
supra, 4 Cal.5th at p. 929 [stating Borello had “come to be viewed as the seminal
California decision on this subject”].) As noted in Garcia v. Border Transportation
Group, LLC (2018) 28 Cal.App.5th 558 (Garcia), “‘Dynamex did not purport to replace
the Borello standard in every instance where a worker must be classified as either an
independent contractor or an employee for purposes of enforcing California’s labor
protections.’ [Citation.] To the contrary, the Supreme Court recognized that different
standards could apply to different statutory claims.”5 (Garcia, at p. 570.)
5As further explained in Garcia, the Dynamex case also involved “non-wage-order
claims, such as claims for reimbursement of [expenditures] under Labor Code section 2802”
(Garcia, supra, 28 Cal.App.5th at p. 571), but the California Supreme Court did not decide what
standard governs claims based upon “statutory obligations that do not derive directly from the
applicable wage order” (Dynamex, supra, 4 Cal.5th at p. 942). “It did not reject Borello, … [n]or
did it address the appellate court’s ruling that ‘insofar as the causes of action in the complaint …
are not governed by the wage order’ and predicated solely on the Labor Code, ‘the Borello
standard is the applicable standard for determining whether a worker is properly considered an
employee or an independent contractor.’” (Garcia, supra, at p. 571, quoting Dynamex, at p.
915.)
14.
In the immediate wake of the Dynamex decision, “several Courts of Appeal
decided that the Borello standard rather than the ABC test should apply to claims under
the Labor Code that are not based upon wage order violations.” (Parada v. East Coast
Transport Inc. (2021) 62 Cal.App.5th 692, 699, fn. 2.) In Garcia, for example, the
appellate court concluded most of the plaintiff’s causes of action were governed by
Dynamex but held the “test articulated in Borello” applied to certain claims that “[did] not
arise under the [applicable] wage order.” (Garcia, supra, 28 Cal.App.5th at pp. 571–
572.) Similarly, in Gonzales v. San Gabriel Transit, Inc. (2019) 40 Cal.App.5th 1131,
the appellate court held “the ABC test applies to Labor Code claims which are either
rooted in one or more wage orders, or predicated on conduct alleged to have violated a
wage order. As to Labor Code claims that are not either rooted in one or more wage
orders, or predicated on conduct alleged to have violated a wage order, the Borello test
remains appropriate.” (Id. at p. 1157.)
Effective September 4, 2020, by enactment of Labor Code section 2775, the ABC
test articulated in Dynamex applies to all claims under the Labor Code and
Unemployment Insurance Code, and “for the purposes of wage orders of the Industrial
Welfare Commission.” (Lab. Code, § 2775, subd. (b)(1); Stats. 2020, ch. 38, § 2.)
“[Labor Code s]ection 2775 does not constitute a change in, but is declaratory of, existing
law with regard to wage orders of the Industrial Welfare Commission and violations of
[the Labor Code] relating to wage orders.” (Lab. Code, § 2785, subd. (a), italics added.)
Pursuant to provisions enacted in Labor Code sections 2776 through 2784,
numerous exceptions provide for application of the Borello test rather than the Dynamex
test to determine whether a person providing labor or services for remuneration should be
classified as an employee or an independent contractor. “Insofar as the application of
Sections 2776 to Section 2784 would relieve an employer from liability, those sections
shall apply retroactively to existing claims and actions to the maximum extent permitted
by law.” (Lab. Code, § 2785, subd. (b).) “Except as provided in subdivisions (a) and (b)
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of [Labor Code section 2785],” the new statutes “apply to work performed on or after
January 1, 2020.” (Id., subd. (c).)
The federal “primary beneficiary test” relied upon by the trial court does not apply
to this case. (See further discussion, post.) Although it appears Dynamex applies to most
of plaintiff’s claims, the incomplete record suggests it is possible one or more claims may
be governed by Borello. For example, the tentative decision and judgment both
confusingly indicate plaintiff sought damages under Labor Code section 260, which is a
nonexistent statute. It would appear there was a distinct claim based on a Labor Code
statute, but it could not have been section 260.
Even if we were certain all of plaintiff’s claims are governed by Dynamex, the trial
court made limited factual findings tailored to an inapplicable legal standard. In
analogous situations, given the “highly factual” nature of worker classification disputes,
appellate courts have reversed and ordered further proceedings on remand. (Parada v.
East Coast Transport Inc., supra, 62 Cal.App.5th at p. 703; see ibid. [“we conclude that
the best course is to permit the trial court to consider in the first instance whether
[a]ppellants were independent contractors under the ABC test”]; Gonzales v. San Gabriel
Transit, Inc., supra, 40 Cal.App.5th at p. 1160 [“We remand this action to the trial court
to conduct further proceedings as necessary to consider these issues, recognizing that the
parties’ arguments … were not framed with the ABC test in mind, and they may have
proceeded on a different evidentiary record”].) We take the same approach here.
“On remand, the trial court shall: (1) evaluate which alleged Labor
Code claims enforce wage order requirements, and which do not; (2) as to
the Labor Code claims that enforce wage order requirements, apply the
ABC test as set forth in Dynamex …; (3) as to [claims not based upon or
related to the enforcement of wage order requirements, or any claims
subject to the provisions of Labor Code sections 2776 through 2784], apply
the Borello test …; [and] (4) as to the derivative claim under [Business and
Professions Code] section 17200, apply the ABC or Borello test as
appropriate for the underlying alleged unlawful business practice.”
(Gonzales v. San Gabriel Transit, Inc., supra, 40 Cal.App.5th at p. 1141.)
16.
Although plaintiff reportedly “sought compensation for unpaid contractual
wages,” the record does not identify the contracts at issue or the theories of relief upon
which she relied. Multiple written agreements were discussed at trial, some of which are
not included in the record. The disposition is not meant to suggest any express or implied
factual findings regarding the parties’ contractual performance were erroneous. We
express no opinion as to who should prevail on any cause of action.
In her opening brief, plaintiff requested a retrial. In her reply brief, she contends
“[the] judgment must be reversed for further proceedings.” Although a full retrial is
unwarranted, the trial court is not precluded from conducting further evidentiary
proceedings as may be necessary to make supplemental findings. For guidance on
remand, we now address in greater detail the parties’ legal contentions and the applicable
law.
A. Federal Cases
The trial court relied on three federal appellate decisions. In their briefing,
defendants additionally cite Walling v. Portland Terminal Co. (1947) 330 U.S. 148(Portland Terminal) and Glatt v. Fox Searchlight Pictures, Inc. (2d Cir. 2016) 811 F.3d
528. We discuss these cases in chronological order.
In Portland Terminal, a railroad company had for many years “given a course of
practical training to prospective yard brakemen.” (Portland Terminal, supra, 330 U.S. at
p. 149.) Completion of the course, “the average length of which [was] seven or eight
days,” was a prerequisite to obtaining employment with the company but such
employment was not guaranteed. (Ibid.) Notwithstanding a special wartime policy
authorizing a “retroactive allowance of $4 per day” for certain groups, trainees received
no payment for their participation in the course. (Id. at p. 150.)
The United States Department of Labor alleged FLSA violations, including failure
to pay minimum wages. (Portland Terminal, supra, 330 U.S. at p. 149.) The United
17.
States Supreme Court ruled in favor of the railroad, concluding the FLSA’s definitions of
“‘employ’” and of “‘employee’” were not so broad “as to make a person whose work
serves only his own interest an employee of another person who gives him aid and
instruction.” (Portland Terminal, at p. 152.) The opinion noted the FLSA “covers
trainees, beginners, apprentices, or learners if they are employed to work for an employer
for compensation” (Portland Terminal, at p. 151), but there were no findings “that the
railroad ever undertook to pay, or the trainees ever expected to receive, any remuneration
for the training period other than the contingent allowance” (id. at p. 150).
In Solis v. Laurelbrook Sanitarium & Sch., Inc., supra, 642 F.3d 518 (Solis), the
defendant owned and operated a religious boarding school and a “50-bed intermediate-
care nursing home.” (Id. at p. 520.) The school’s curriculum had a “practical training
component” that required students to work at the nursing home without receiving
financial compensation. (Id. at pp. 520–521.) The lawsuit arose from an investigation
into possible violations of the child labor provisions of the FLSA. (Solis, at p. 519.)
The issue before the United States Court of Appeals for the Sixth Circuit was
“whether the district court erred in concluding that [the] students … [were] not
employees under the FLSA.” (Solis, supra, 642 F.3d at p. 521.) Relying on Portland
Terminal, the Sixth Circuit concluded “that a primary benefit test provides a helpful
framework for discerning employee status in learning or training situations. By focusing
on the benefits flowing to each party, the test readily captures the distinction the FLSA
attempts to make between trainees and employees.” (Solis, at p. 529.)
The Solis opinion holds, in relevant part, “that the proper approach for determining
whether an employment relationship exists in the context of a training or learning
situation is to ascertain which party derives the primary benefit from the relationship.
Factors such as whether the relationship displaces paid employees and whether there is
educational value derived from the relationship are relevant considerations that can guide
the inquiry.” (Solis, supra, 642 F.3d at p. 529.)
18.
In Glatt v. Fox Searchlight Pictures, Inc., supra, 811 F.3d 528 (Glatt), the
plaintiffs had worked as unpaid interns in various departments of a film production
company. The plaintiffs alleged violations of the FLSA and New York Labor Law
(NYLL) based on the company’s failure “to pay them as employees during their
internships as required by the FLSA’s and NYLL’s minimum wage and overtime
provisions.” (Id. at pp. 531–532.) Because the FLSA and NYLL “define ‘employee’ in
nearly identical terms,” the United States Court of Appeals for the Second Circuit
“construe[d] the NYLL definition as the same in substance as the definition in the
FLSA.” (Glatt, at p. 534.)
The “specific issue” in Glatt was, “[W]hen is an unpaid intern entitled to
compensation as an employee under the FLSA?” (Glatt, supra, 811 F.3d at p. 535.)
Relying on cases such as Portland Terminal and Solis, the Second Circuit compiled a
“list of nonexhaustive factors to aid courts” in determining “whether the intern or the
employer is the primary beneficiary of the relationship.” (Glatt, supra, at p. 536.)
Because the opinion established a “new legal standard,” the matter was remanded for
further proceedings. (Id. at p. 539.) The enumerated factors, referred to as “the primary
beneficiary test,” were as follows:
“1. The extent to which the intern and the employer clearly
understand that there is no expectation of compensation. Any promise of
compensation, express or implied, suggests that the intern is an employee—
and vice versa.
“2. The extent to which the internship provides training that would
be similar to that which would be given in an educational environment,
including the clinical and other hands-on training provided by educational
institutions.
“3. The extent to which the internship is tied to the intern’s formal
education program by integrated coursework or the receipt of academic
credit.
19.
“4. The extent to which the internship accommodates the intern’s
academic commitments by corresponding to the academic calendar.
“5. The extent to which the internship’s duration is limited to the
period in which the internship provides the intern with beneficial learning.
“6. The extent to which the intern’s work complements, rather than
displaces, the work of paid employees while providing significant
educational benefits to the intern.
“7. The extent to which the intern and the employer understand that
the internship is conducted without entitlement to a paid job at the
conclusion of the internship.” (Glatt, supra, 811 F.3d at pp. 536–537.)
In Schumann v. Collier Anesthesia, P.A., supra, 803 F.3d 1199 (Schumann), the
plaintiffs were “former student registered nurse anesthetists … who attended a master’s
degree program at Wolford College, LLC, with the goal of becoming certified registered
nurse anesthetists.” (Id. at p. 1202, fns. omitted.) The defendants owned Wolford
College, LLC, and also held ownership interests in “Collier Anesthesia, P.A., a Florida
corporation that provides anesthesia services.” (Id. at p. 1203.) “During the course of
their study, the [plaintiffs] participated in a clinical curriculum, which, under Florida law,
was a prerequisite to obtaining their master’s degrees.” (Id. at p. 1202.)
The Schumann plaintiffs “obtained some, if not all, of their clinical education at
facilities where Collier Anesthesia practices anesthesiology. But the [plaintiffs] viewed
their clinical efforts as more than just education; they filed suit alleging that they served
as ‘employees’ of [the defendants] for purposes of the FLSA and that [the defendants]
unlawfully failed to compensate them with wages and overtime pay.” (Schumann, supra,
803 F.3d at p. 1204.) The United States Court of Appeals for the Eleventh Circuit
considered whether the district court had properly awarded the defendants summary
judgment. The Eleventh Circuit adopted Glatt’s primary beneficiary test, concluded the
district court had used the wrong standard to evaluate the evidence, and remanded the
case without deciding the question of whether plaintiffs “were ‘employees’ for purposes
of the FLSA.” (Schumann, at p. 1215; see id. at pp. 1211–1215.)
20.
This historical background brings us to Benjamin, i.e., the opinion primarily relied
upon by defendants and the trial court. There, the plaintiffs were “students of
cosmetology and hair design at schools in California and Nevada operated by defendant
B&H Education, Inc., under the name of Marinello Schools of Beauty.” (Benjamin,
supra, 877 F.3d at p. 1141.) Marinello Schools of Beauty [Marinello] “offers discounted
cosmetology services to the public through salons staffed by vocational students who do
not receive compensation.” (Id. at p. 1142.) Under California and Nevada regulations,
before applicants could take the cosmetology licensing exam, they had to “take part in
hundreds of hours of classroom instruction, including observing demonstrations, and
practical training that includes performing services on a person or mannequin.” (Ibid.)
The plaintiffs’ unpaid work in the salons, characterized in the opinion as “clinical
experience,” counted toward the number of hours of practical training required by the
California Board of Barbering and Cosmetology. (Ibid., citing Cal. Code Regs., tit. 16,
§§ 950.2, 928, subd. (a).)
The Benjamin defendants were alleged to have “exploited the [p]laintiffs for their
unpaid labor … by not paying them for their work in Marinello’s salons, by leaving them
unsupervised in the salon, and by requiring them to perform services that they already
could do as opposed to services that they needed to learn for the licensing exams.”
(Benjamin, supra, 877 F.3d at p. 1142.) The students claimed they were employees
within the meaning of the FLSA and under state law and thus entitled to compensation.
They appealed a summary judgment ruling in favor of the defendants to the United States
Court of Appeals for the Ninth Circuit. (Benjamin, at p. 1141.)
The Ninth Circuit framed the issue in terms of whether the plaintiffs “should be
treated as employees rather than students.” (Benjamin, supra, 877 F.3d at p. 1143.)
Following a discussion of cases that included Portland Terminal, Solis, Glatt, and
Schumann, it concluded Glatt’s primary beneficiary test is “the most appropriate test for
deciding whether students should be regarded as employees under the FLSA.”
21.
(Benjamin, at p. 1147.) As for the causes of action under California law, which were
described in general terms as including claims for “minimum and overtime wages” (id. at
p. 1142), the Ninth Circuit assumed the California Supreme Court would also analyze the
issue using a test “similar to the FLSA primary beneficiary test” (id. at p. 1150).
In reaching its conclusion regarding California law, the Ninth Circuit emphasized
the fact the plaintiffs were students of the defendant school. California’s pre-Dynamex
case law, which had applied variations of the common law “control test,” was rejected as
being unhelpful “in the educational context, where the school is in charge.” (Benjamin,
supra, 877 F.3d at p. 1149.) The opinion says that “schools typically exercise significant
control over their students, but that does not make them employers,” and concludes “the
California Supreme Court would have no reason to look to the wage order definition of
employer to determine whether these plaintiffs are students or employees.” (Ibid.)
A key distinction between this case and Portland Terminal, Solis, Glatt,
Schumann, and Benjamin is here plaintiff was not an unpaid intern or trainee. She was a
paid postdoctoral trainee who was no longer in school and had written agreements with
defendants specifying the terms of payment for her services. It is undisputed she was
paid for the work. The fact she was not a student and her claims did not allege an
employment relationship with a school in which she was enrolled further distinguishes
Solis, Schumann, and Benjamin. The question of what standard applies under California
law to determine the worker classification of an unpaid student intern/trainee is not
presented in this case and we express no opinion on that issue.
More importantly, Benjamin predates Dynamex. The California Supreme Court
has explained, “In Dynamex, this court was faced with a question of first impression:
What standard applies under California law in determining whether workers should be
classified as employees or independent contractors for purposes of the obligations
imposed by California’s wage orders? In addressing that question, we concluded that
under one of the definitions of ‘employ’ set forth in all California wage orders—namely,
22.
to ‘suffer or permit to work’—any worker who performs work for a business is presumed
to be an employee who falls within the protections afforded by a wage order.” (Vazquez
v. Jan-Pro Franchising Internat., Inc., supra, 10 Cal.5th at p. 948, italics added.)
Furthermore, the Ninth Circuit had no occasion to consider the legislative
mandates of California’s Psychology Licensing Law. The Benjamin plaintiffs were
unpaid cosmetology students, and California permits such individuals to “work as an
unpaid extern in an establishment participating in the educational program of the school.”
(Bus. & Prof. Code, § 7395.1, subd. (a).) During the time period at issue, the Psychology
Licensing Law did not allow prospective licensees to work as psychological assistants
outside the context of an employer/employee relationship.
Former section 2913 of the Business and Professions Code permitted a
psychological assistant to be “employed by a licensed psychologist” or other qualified
party (id., former subd. (a)), but it declared, “No psychological assistant may provide
psychological services to the public for a fee, monetary or otherwise, except as an
employee of a licensed psychologist, licensed physician, contract clinic, psychological
corporation, or medical corporation.” (Id., former subd. (d), italics added; see Stats.
1989, ch. 888, § 3; Stats. 2015, ch. 529, § 2.) Accordingly, the CBP form the parties
submitted as part of plaintiff’s registration as Dr. Ortiz-Nance’s psychological assistant
was entitled, “Application to Employ A Psychological Assistant (Pursuant to Section
2913 of the Business and Professions Code).” Given the state law requirement of an
employer/employee relationship, the federal primary beneficiary test—which is designed
to distinguish unpaid student interns and trainees from employees under the FLSA—has
little practical relevance or utility in this case.
Defendants argue “California looks to the federal Portland Terminal opinion, and
its progeny such as Benjamin, to guide its analysis of whether employment status should
be conferred upon a trainee.” We are unable to locate a single published or unpublished
California appellate court opinion citing Benjamin, Schumann, or Solis, or even
23.
mentioning the primary beneficiary test. There is one published case in which Portland
Terminal and Glatt are discussed. In Kao v. Holiday (2017) 12 Cal.App.5th 947, the
plaintiff asserted claims under both the FLSA and California law. (Kao, at pp. 951, 953.)
The Kao opinion cites to Portland Terminal and Glatt while discussing the FLSA’s
definition of an employee. (Kao, at pp. 955–956.) Incidentally, Kao concluded the fact
the plaintiff was paid for his services indicated he was an employee. (Ibid.)
B. The Borello and Dynamex Tests
“Under the common law, ‘“[t]he principal test of an employment relationship is
whether the person to whom service is rendered has the right to control the manner and
means of accomplishing the result desired ….”’” (Ayala v. Antelope Valley Newspapers,
Inc. (2014) 59 Cal.4th 522, 531.) “[W]hat matters under the common law is not how
much control a hirer exercises, but how much control the hirer retains the right to
exercise.” (Id. at p. 533.) “Perhaps the strongest evidence of the right to control is
whether the hirer can discharge the worker without cause, because ‘[t]he power of the
principal to terminate the services of the agent gives him the means of controlling the
agent’s activities.’” (Id. at p. 531.)
In Borello, the California Supreme Court approved the consideration of secondary
factors, “derived principally from the Restatement Second of Agency” (Borello, supra,
48 Cal.3d at p. 351), which “supplement the central inquiry into the right of control”
(Ayala v. Antelope Valley Newspapers, Inc., supra, 59 Cal.4th at p. 538). Those factors
include “(a) whether the one performing services is engaged in a distinct occupation or
business; (b) the kind of occupation, with reference to whether, in the locality, the work is
usually done under the direction of the principal or by a specialist without supervision;
(c) the skill required in the particular occupation; (d) whether the principal or the worker
supplies the instrumentalities, tools, and the place of work for the person doing the work;
(e) the length of time for which the services are to be performed; (f) the method of
24.
payment, whether by the time or by the job; (g) whether or not the work is a part of the
regular business of the principal; and (h) whether or not the parties believe they are
creating the relationship of employer-employee.” (Borello, supra, at p. 351.)
The Borello test “calls for consideration of all potentially relevant factual
distinctions in different employment arrangements on a case-by-case, totality-of-the-
circumstances basis.” (Dynamex, supra, 4 Cal.5th at p. 954.) It focuses “on the intended
scope and purposes of the particular statutory provision or provisions at issue. In other
words, Borello calls for application of a statutory purpose standard that considers the
control of details and other potentially relevant factors … in order to determine which
classification (employee or independent contractor) best effectuates the underlying
legislative intent and objective of the statutory scheme at issue.” (Id. at p. 934.)
The Dynamex standard eschews the “multifactor, all the circumstances” approach
in favor of “a simpler, more structured test for distinguishing between employees and
independent contractors” in the wage and hour context. (Dynamex, supra, 4 Cal.5th at p.
955.) The burden is placed “on the hiring entity to establish that the worker is an
independent contractor who was not intended to be included within the wage order’s
coverage.” (Id. at p. 957.) To satisfy this burden, one must “establish each of the three
factors embodied in the ABC test—namely (A) that the worker is free from the control
and direction of the hiring entity in connection with the performance of the work, both
under the contract for the performance of the work and in fact; and (B) that the worker
performs work that is outside the usual course of the hiring entity’s business; and (C) that
the worker is customarily engaged in an independently established trade, occupation, or
business of the same nature as the work performed.” (Ibid.)
With regard to part A, “depending on the nature of the work and overall
arrangement between the parties, a business need not control the precise manner or
details of the work in order to be found to have maintained the necessary control that an
employer ordinarily possesses over its employees, but does not possess over a genuine
25.
independent contractor.” (Dynamex, supra, 4 Cal.5th at p. 958.) “The hiring entity must
establish that the worker is free of such control.” (Ibid.)
Part B reflects “that one principal objective of the suffer or permit to work
standard [in IWC wage orders] is to bring within the ‘employee’ category all individuals
who can reasonably be viewed as working ‘in [the hiring entity’s] business’ [citation],
that is, all individuals who are reasonably viewed as providing services to the business in
a role comparable to that of an employee ….” (Dynamex, supra, 4 Cal.5th at p. 959.)
“[A] focus on the nature of the workers’ role within a hiring entity’s usual business
operation also aligns with the additional purpose of wage orders to protect companies that
in good faith comply with a wage order’s obligations against those competitors in the
same industry or line of business that resort to cost saving worker classifications ….”
(Id. at p. 960.) “Competing businesses that hire workers who perform the same or
comparable duties within the entities’ usual business operations should be treated
similarly for purposes of the wage order.” (Id. at p. 961.)
“[I]n order to satisfy part C of the ABC test, the hiring entity must prove that the
worker is customarily engaged in an independently established trade, occupation, or
business.” (Dynamex, supra, 4 Cal.5th at p. 963.) “Such an individual generally takes
the usual steps to establish and promote his or her independent business …. When a
worker has not independently decided to engage in an independently established business
but instead is simply designated an independent contractor by the unilateral action of a
hiring entity, there is a substantial risk that the hiring business is attempting to evade the
demands of an applicable wage order through misclassification.” (Id. at p. 962.)
C. Labor Code Section 2783
Defendants contend, without substantive argument, that “Dynamex has been
specifically exempted from applying to the profession of Psychology” by Labor Code
26.
section 2783. They selectively quote part of the statute while omitting other key
language. The relevant statutory text is as follows:
“[Labor Code s]ection 2775 and the holding in Dynamex do not
apply to the following occupations as defined in the paragraphs below, and
instead, the determination of employee or independent contractor status for
individuals in those occupations shall be governed by Borello: [¶] … [¶]
“(b) A physician and surgeon, dentist, podiatrist, psychologist, or
veterinarian licensed by the State of California pursuant to Division 2
(commencing with Section 500) of the Business and Professions Code,
performing professional or medical services provided to or by a health care
entity, including an entity organized as a sole proprietorship, partnership, or
professional corporation as defined in Section 13401 of the Corporations
Code.” (Lab. Code, § 2783, italics added.)
The plain language of the statute limits the exception to “licensed” psychologists.
“‘Licensed psychologist’ means an individual to whom a license has been issued pursuant
to the provisions of [Chapter 6.6 of Division 2 of the Business and Professions Code],
which license is in force and has not been suspended or revoked.” (Bus. & Prof. Code,
§ 2902, subd. (a).) It is undisputed plaintiff was not a licensed psychologist. She was a
psychological assistant, which by definition is a person who is not a licensed
psychologist. (Id., § 2913.) No further discussion is required. (See Estill v. County of
Shasta (2018) 25 Cal.App.5th 702, 712 [“We are not required to examine undeveloped
claims”].)
D. Business and Professions Code, Former Section 2913
As previously discussed, at the time plaintiff was registered as Dr. Ortiz-Nance’s
psychological assistant, former section 2913 of the Business and Professions Code
(former section 2913) stated, in relevant part, “No psychological assistant may provide
psychological services to the public for a fee, monetary or otherwise, except as an
employee of a licensed psychologist, licensed physician, contract clinic, psychological
corporation, or medical corporation.” (Id., subd. (d), italics added.)
27.
Effective January 1, 2016, the phrase “for a fee, monetary or otherwise” was
deleted. (Stats. 2015, ch. 529, § 2.) The provision thus read: “No psychological
assistant may provide psychological services to the public except as an employee of a
licensed psychologist, licensed physician, contract clinic, psychological corporation, or
medical corporation.” (Ibid.) As of January 1, 2017, the statute has been amended to
remove all language confining work as a psychological assistant to an
employer/employee relationship. (Stats. 2016, ch. 484, § 2.)
Defendants argue the 2017 amendment proves former section 2913 was
“outdated” at the time of the underlying events and, therefore, the statutory requirements
are not probative of whether plaintiff was defendants’ employee. However, defendants
do not argue the statutory changes are retroactive, and there is nothing to indicate such a
legislative intent. (See Californians for Disability Rights v. Mervyn’s, LLC (2006) 39
Cal.4th 223, 230 [noting “the presumption that statutes operate prospectively absent a
clear indication the voters or the Legislature intended otherwise”]; accord, City of Long
Beach v. Department of Industrial Relations (2004) 34 Cal.4th 942, 953; see Evangelatos
v. Superior Court (1988) 44 Cal.3d 1188, 1210, fn. 15 [“the rationale for the Estrada
ruling [In re Estrada (1965) 63 Cal.2d 740] bears little relationship to the determination
of the retroactivity of most nonpenal statutes”].) Therefore, defendants’ arguments are
not persuasive.
On the other hand, the fact former section 2913 required the professional
relationship between Dr. Ortiz-Nance and plaintiff to be one of employer/employee does
not mean such a relationship automatically existed. Plaintiff’s own evidence illustrates
this point. In January 2014, the parties submitted a required form to the CBP to renew
plaintiff’s registration as Dr. Ortiz-Nance’s psychological assistant. Plaintiff and Dr.
Ortiz-Nance both signed directly below a section entitled “Employer/Employee
Disclosure,” which read (in relevant part):
28.
“In lieu of submitting documentary evidence of the employer/employee
relationship, we do hereby certify that this relationship is that of
employer/employee as required by the Laws and Regulations Relating to
the Practice of Psychology. We declare under penalty of perjury under the
laws of the State of California that the information provided on this form is
true and correct.”
The parties’ certification would not have been necessary if the requirements of
former section 2913 meant plaintiff was Dr. Ortiz-Nance’s employee as a matter of law.
The label parties assign to themselves “is not dispositive and will be ignored if their
actual conduct establishes a different relationship.” (Estrada v. FedEx Ground Package
System, Inc. (2007) 154 Cal.App.4th 1, 10–11.) By the same token, Dr. Ortiz-Nance’s
use of IRS Form 1099-MISC to characterize plaintiff’s earnings as “Nonemployee
compensation” does not prove she was an independent contractor. “[A] business cannot
unilaterally determine a worker’s status simply by assigning the worker the label
‘independent contractor’ or by requiring the worker, as a condition of hiring, to enter into
a contract that designates the worker an independent contractor.” (Dynamex, supra, 4
Cal.5th at p. 962.)
DISPOSITION
The judgment is reversed and the matter is remanded for further proceedings
consistent with this opinion. Plaintiff shall recover her costs on appeal.
PEÑA, J.
WE CONCUR:
HILL, P. J.
DETJEN, J.
29.