In 2004, Dynamex was a same-day delivery service. (It’s since been acquired and rebranded TForce Final Mile.) That was the year it “converted” all its drivers to independent contractors, to use the verb chosen by the California Supreme Court.
There are many reasons why a company would prefer to classify its workers as independent contractors. A company generally isn’t liable for the negligence of independent contractors, such as crashes caused by truck drivers rushing to meet a deadline. In addition, Dynamex freed itself from “the responsibility of paying federal Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, providing workers’ compensation insurance, and…. complying with numerous state and federal statutes and regulations governing the wages, hours, and working conditions of employees,” as the court said. Kind of makes you wonder why any company bothers with employees, doesn’t it?
It was easy enough for Dynamex to say its drivers were now independent contractors. It simply changed the wording of its contracts and altered its payroll practices, after which the newly “independent” drivers continued to take orders from Dynamex while wearing Dynamex uniforms, providing services to Dynamex customers at prices set by Dynamex.
But deciding the legal validity of the conversion wasn’t nearly so easy. No fewer than 35 lawyers entered their appearances in the California Supreme Court case. They were wrestling with an issue that has bedeviled American courts for many decades. As long ago as 1944, in a case involving newsboys, the United States Supreme Court declared: “Few problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship and what is clearly one of independent, entrepreneurial dealing.”