New law exempts veterinarians from restrictive independent-contractor court ruling
Relief veterinarians and the practice owners who rely on them in California scored a reprieve when Gov. Gavin Newsom signed AB5 into law in September. For months, it looked like California clinics would have a hard time hiring relief veterinarians as independent contractors rather than employees, because of a state Supreme Court decision handed down in April. AB5 codifies the court's ruling and carves out many exceptions, including for veterinarians.
"I am relieved that the new law in California will allow our organization to hire relief veterinarians as independent contractors instead of having to hire them as employees," said Dr. Crystal Heath, who is employed as a full-time veterinarian and also does relief work in Berkeley. "I also am relieved that I will be allowed to take on extra work as an independent contractor for other businesses and organizations. I think this is a better situation for everyone involved."
The ruling that changed how California businesses must determine whether to treat a hired person as a contractor or as an employee was Dynamex Operations West Inc. v. Superior Court of Los Angeles County. The case stemmed from a lawsuit filed against Dynamex, a delivery company, by two of its drivers. The company had classified the drivers as independent contractors. The drivers claimed they should be classified as employees, with the benefits and protections that come with that designation. The court sided with the drivers and established three mandatory conditions, known as the "ABC" test, for classifying workers as independent contractors:
- The worker is free from the control and direction of the hirer in connection with the performance of the work.
- The worker performs work that is outside the usual course of the hiring party's business.
- The worker customarily engages in an independently established trade, occupation or business of the same nature as the work performed for the hirer.
The decision was viewed as delivering a significant blow to the gig economy and companies such as Uber. Relief veterinarians were caught in the crossfire.
Relief or locum veterinarians fill in on a temporary basis at hospitals; for example, covering for staff who are out for illness and vacations. Providing veterinary services at a veterinary hospital alongside other veterinarians makes condition B almost impossible to satisfy.
Heath described how the rule played out in a real-world scenario. She was looking for a relief veterinarian to cover for her while she was on vacation. She learned from her human resources department that under California law (as a result of Dynamex), anyone who filled in for her would have to be brought on as an employee. This was no small thing.
"Because of the size of our organization, relief veterinarians would all have to complete sexual harassment training and be added to the payroll. Our organization is charged by the payroll company per employee, no matter how rarely they are there, and the workers compensation insurance is affected," Heath told the VIN News Service. "I wanted to take off an additional day at the end of the month and none of the current relief doctors we have on payroll could cover for me. After I found another one who was able to cover me that day, I was told we could not hire any more people because it would be too expensive. So I could not take that day off. That also means that someone who wanted to work that day would not get a job."
The new law removes that obstacle for veterinarians as well as for people in other occupations, including physicians, lawyers, architects and commercial fishermen. Heath said practices need substitute support staff, too, to cover for vacations. But the law doesn't make an exception for relief veterinary technicians.
"The exception means that rather than having the ABC test regulate veterinarians, the 'pre-Dynamex' case of Borello will apply," Raphael Moore, general counsel for the Veterinary Information Network, explained on a VIN message board. A California Supreme Court case from 1989, S. G. Borello & Sons, Inc. v. Dept. of Industrial Relations, sets out a multipart "economic realities" test to determine if someone is an employee or contractor.
"So for the most part we are back to just the way it was for relief veterinarians in California," Moore wrote. "If you met the [Borello] test in the past, you are still an independent contractor. If you did not, you are an employee. If the clinic for which you work has been abusing the system, they are still abusing it. If you are a ‘real' relief vet offering services to a multitude of clinics, you may still be an independent contractor."
According to an explanation on the California Department of Industrial Relations, the most significant factor to be considered is whether the person to whom service is rendered has control or the right to control the worker in terms of the work itself and how it is performed. Additional factors are:
- Whether the person performing services is engaged in an occupation or business distinct from that of the principal
- Whether the work is part of the regular business of the principal
- Whether the principal or the worker supplies the tools and the place for the person doing the work
- Who pays for the equipment or materials required to do the work
- Whether the service rendered requires a special skill
- The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision
- The worker's opportunity for profit or loss depending on their managerial skill
- The length of time for which the services are to be performed
- The degree of permanence of the working relationship
- The method of payment, whether by time or by the job
Unlike the Dynamex ABC test, the Borello test is not black and white. "These are called ‘gray' tests," Moore wrote. "It is not a matter of how many elements you satisfy, but the overall picture when you apply all of the standards. A ‘real' relief vet fills in for multiple clients when their employees are on vacation, on medical leave, etc. On the other hand, those who are stepping in for lengthy ‘assignments' because of general shortage at a hospital or because a clinic can't find good help and are essentially substituting for an additional doctor, are really employees."
VIN News Service commentaries are opinion pieces presenting insights, personal experiences and/or perspectives on topical issues by members of the veterinary community. To submit a commentary for consideration, email email@example.com.