From JDSupra, Richard Reibstein discusses a recent case in which the parts supplier’s inspectors who worked at the aerospace manufacturers facilities were misclassified as independent contractors. Richard writes:
A California state appeals court, applying the multi-factor Borello test, has concluded that Vendor Surveillance Corporation, a company that provides source inspectors to aerospace and defense manufacturers, misclassified inspectors as independent contractors and not employees. Source inspectors typically inspect, at the supplier’s facility, component parts that are provided by suppliers and are used by aerospace manufacturers in producing aircrafts. The company maintains a database of qualified inspectors and subcontracts with its parent company to provide qualified inspectors to clients for part-time, project based engagements. The company appealed from an adverse judgment of the San Diego County Superior Court where it sought a refund of $278,692 in unemployment insurance taxes assessed by the California Employment Development Department (EDD) following an audit covering calendar years 2011 through 2013 during which time the company was found to have misclassified the inspectors as ICs. Before the Superior Court level, the EDD asserted that the ABC test used in Dynamex applied retroactively to unemployment insurance assessments even though Dynamex covered wage orders and had not yet been decided during the audit years. The company maintained that the more favorable test in Borello applied. The Superior Court applied both tests and concluded that under either of them, the inspectors were misclassified as independent contractors.