DYNAMEX UPDATE: Are There Still Independent Contractors in California? 

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From JDSupraRobert Cooper and Carol Lucas discuss the Dynamex decision and the effect of the ABC test on the classification of physicians in California. Robert and Carol write:

However, misclassification itself is not a violation; failure to pay a misclassified employee what he or she should have been paid is the violation. If a re-classified employee would be an exempt employee, the issue may be largely moot, so one strategy might be to make sure that any physician independent contractor receives compensation at a level sufficient to insure exempt status (currently approximately $46,000 per year).

The Dynamex decision can be expected to have a profound effect on the health care industry, where a significant number of workers, especially physicians, are classified as independent contractors. No cases have yet interpreted the decision in the healthcare industry, so the decision’s practical effect is not yet known. The broad language of the decision suggests some interim conclusions, however:

  • Physicians who provide services on a full-time and exclusive basis to a single entity are at risk of re-classification (and always were, even before the Dynamex decision).
  • Physicians who are individually incorporated and provide services to a number of entities may satisfy the first and third prong, but may well fail the second, at least if they provide services squarely within the entity’s professional service offerings. However, in Curry v. Equilon Enterprises, LLC[1], the Court of Appeal for the Fourth Appellate district, in a case involving co-employment, seemed to be satisfied that there was an employer responsible for compliance with the wage orders and did not hold the asserted co-employer also to be liable. Curry may provide support for the proposition that where a bona fide employment relationship exists with one entity, that entity (which possibly could be a physician’s professional corporation) could still enter into an independent contractor arrangement for the physician’s services. It is not clear, at this point whether Curry will be interpreted in this fashion.
  • Physicians who provide administrative services, e.g., as a medical director in a hospital, may still be correctly characterized as independent contractors, especially if the physician otherwise maintains a medical practice.

Read the full story at  DYNAMEX UPDATE: Are There Still Independent Contractors in California? | Buchalter – JDSupra

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