Carry: California has some of the strictest wage payment laws in the country and has recently made it harder for companies to treat workers as independent contractors. Yet even in California, an employer can avoid liability for payment of wages when they honestly believe a worker was an independent contractor.
Walmart held 10 photoshoots in San Francisco between July 2016 and August 2017 in which a womenswear model appeared through a talent management agency. The model ran for a total of 15 days during this period, in non-consecutive increments of one or two days. She was photographed and measured during a casting meeting, and her information was passed on to a member of Walmart’s creative team.
Prior to each photoshoot, Walmart sent her instructions regarding her clothing, hair, nails, makeup, and general appearance. Walmart provided the clothes the model had to wear for the shoots, which included shoes, dresses, underwear, swimsuits and other items. Stylists, producers, photographers and other staff on location picked out her outfits and instructed her on how to pose. After the shoots, the model returned the clothes to Walmart.
Walmart had a contract with the talent agency in which it agreed to pay the agency a daily flat fee for each day of modeling services. This package included the model’s remuneration plus a commission to the talent agency. The contract required the talent agency to send invoices to Walmart for the work, which were payable within 30 days. The contract specified that the talent agency and its staff were independent contractors.
Despite the terms of that contract, the model claimed that Walmart should have paid her immediately after each photoshoot was completed and filed a lawsuit in San Francisco Superior Court, claiming that Walmart violated the Labor Code of California. She claimed more than $540,000 in wait time penalties.
Walmart referred the case to federal court due to diversity of citizenship. He also filed a third-party complaint against the talent agency. Walmart then sought summary judgment. The district court dismissed summary judgment on Walmart’s defense that the plaintiff was an independent contractor not protected by the relevant provisions of the Labor Code, finding that the plaintiff had raised a justifiable issue of fact as to whether she was an employee.
However, the district court granted summary judgment on Walmart’s defense that there was a bona fide dispute as to whether the plaintiff was an independent contractor, finding that the short duration of her work for Walmart and the fact that she had also worked for other companies. , among other factors, made it objectively reasonable for Walmart to believe that she was not an employee.
Plaintiff appealed the decision to the 9th US Circuit Court of Appeals. On appeal, the plaintiff argued that Walmart was precluded from raising a good faith defense because of its misclassification of its status as an independent contractor and its admission that it was entitled to the wages at issue, while not contesting when they were due.
The 9th Circuit recounted recent developments in California law limiting the classification of workers as independent contractors. A 1989 California Supreme Court decision defined independent contractor status based on whether the alleged employer had the right to control the worker in the manner and means of performing the work. In 1996, the California Industrial Welfare Commission (IWC) expanded the circumstances in which employment status could apply to a worker.
Beginning in 2010, the California Supreme Court began reinterpreting the CBI rules to make it harder for a worker to qualify as an independent contractor. He created the ABC test, which requires that an independent contractor be (A) free of control over the performance of the work, (B) perform work outside the usual course of business of the hiring entity, and (C ) ordinarily practices the trade or profession practiced.
These rulings applied to CBI wage and hour rules, but not to wage payment requirements. The California Legislature enacted the ABC test into law in September 2019, causing it to apply to wage payment requirements, but it did not apply retroactively. Because the photo shoots took place in 2016 and 2017, the ABC test did not apply to claims against Walmart.
Because the model only worked for Walmart for a very short time and worked in the modeling business, which is separate from Walmart’s usual course of business, Walmart had a good faith argument about her status as a entrepreneur. The 9th Circuit therefore upheld the denial of his claims.
Hill v. Walmart Inc.., 9th Cir., No. 21-15180 (April 26, 2022).
Jeffrey Rhodes is an attorney at McInroy, Rigby & Rhodes LLP in Arlington, Virginia.