Hall v. Cultural Care, Inc.

Background

The court had previously granted the plaintiffs summary judgment on whether they were misclassified as independent contractors by Cultural Care, Inc. The defendant sought reconsideration of that ruling. The court granted leave to file the motion, treated it as a motion for reconsideration, and requested responsive briefing.

The dispute concerned which California employment-classification test applied. The plaintiffs argued for the ABC test, while Cultural Care argued that the Borello test applied because the California Legislature had created an exception for local childcare coordinators in the State Department’s au pair visa program. The court’s earlier constitutional holding concluded that retroactive application of that exception could not take away wages earned under the law in effect when the work was performed.

Clarification of the Earlier Order

The court clarified that the earlier constitutional holding was limited to Wage Order claims. Before the relevant statutory changes, the ABC test applied to Wage Order claims, while the Borello test applied to non-Wage Order Labor Code claims. The court agreed that the earlier order did not establish that the ABC test applied to all Labor Code claims or to affirmative defenses responding to those claims.

Modifications to Summary Judgment

The court modified the earlier order to deny summary judgment to the plaintiffs to the extent their claims arose under the Labor Code and were governed by the Borello test. The court explained that the parties had not addressed the test on a claim-by-claim basis in the earlier summary-judgment proceedings.

The court rejected Cultural Care’s argument that the plaintiffs’ inaccurate wage-statement claim was a non-Wage Order claim. Although the claim relied on California Labor Code section 226, it also relied on section 7 of Wage Order 4. The court therefore treated it as rooted in, or overlapping with, a Wage Order obligation and held that the ABC test applied for periods when the Legislature had not provided otherwise prospectively.

The court also addressed work performed after the statutory exception took effect. It stated that the earlier order had addressed only retroactive application of the exception and had not decided any constitutional challenge to ordinary prospective application. The court therefore modified the order to make clear that the Borello test applies to the plaintiffs’ claims for work performed after the statutory exception became effective.

Borello Summary Judgment

The Borello test primarily examines whether the alleged employer had the right to control the manner and means of the work. It also considers factors such as whether the worker operated a separate business, the skill required, who supplied tools and the workplace, the length and payment method of the work, whether the work was part of the alleged employer’s regular business, and whether the parties believed they were creating an employment relationship.

The court ruled that neither side was entitled to summary judgment under Borello. Evidence supported the plaintiffs’ position that Cultural Care exercised control and that other employment factors favored employee status. Evidence also supported Cultural Care’s position that the plaintiffs controlled their hours and time off, exercised control over how they performed much of the work, and filed taxes as independent contractors. Because the Borello analysis requires weighing contextual facts, a jury could decide the classification issue.

Disposition

Judge Orrick clarified and modified the prior order. For wages earned before the statutory exception, the ABC test governs Wage Order claims and Borello governs non-Wage Order Labor Code claims. For wages earned after the exception took effect, Borello governs. The earlier grant of summary judgment to the plaintiffs remains unchanged for claims governed by the ABC test. For claims governed by Borello, summary judgment on misclassification is denied to both parties, and affirmative defenses follow the same framework.