Is the LAWCLERK Model Compatible with the Dynamex Ruling?

A recent decision of the California Supreme Court has Attorneys and Lawclerks alike asking whether the LAWCLERK model is compliant with California labor laws. The decision, Dynamex Operations W. v. Superior Court^[1], seemingly established a new framework to classify a worker as an employee or independent contractor. Most strikingly, the Court recognized a presumption in favor of the employee label and imposed a three-part test, the so-called “ABC Test”, for classification. Under the ABC Test workers are classified as independent contractors only if the employer demonstrates that the worker satisfies each of three conditions:

(a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.^[2]

And while there is a certain degree of reassurance from the presence of a bright line rule for independent contractor classification, there is also justifiable concern that this bright line is in the shape of an all-encompassing circle.

So, does Dynamex impact the LAWCLERK business model in California? The short answer — no, it does not.

First, Dynamex is limited in scope. The new standard is applied only “in one specific context:” classification of independent contractors concerning wage orders of California’s Industrial Welfare Commission.^[3] Thus, the Dynamex standard is limited to “obligations relating to the minimum wages, maximum hours, and a limited number of very basic working conditions . . . of California employees.”^[4]

The Court reaffirmed the common law employment test set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations^[5] for other purposes.^[6] Pursuant to Borello, “[t]he principle test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.”^[7] Dynamex affirmed this finding generally, but emphasized that Borello’s primary importance was the principle that independent contractor classification is primarily driven by the statutory context in which the question is asked.^[8]

While the current sample size is small, most courts addressing Dynamex so far have recognized this limit on the ruling’s application. As stated by the Ninth Circuit, “Dynamex did not purport to replace the Borello standard in every instance where a worker must be classified as either an independent contractor or an employee for purposes of enforcing California’s labor protections.”^[9]

Therefore, concerning misclassification claims outside of wage orders,^[10] labor code violations,^[11] and joint employment cases,^[12] the common law standard of Borello should still predominate.

Second, even when the ABC Test is applied to the LAWCLERK model, Lawclerks maintain their independent contractor status.

Part A mirrors the common law standard under Borello. Under that standard, the Lawclerk clearly operates as an independent contractor, as the Attorney, once making the hire, does not portend any actual control over the hour-to-hour and day-to-day work of the Lawclerk on the particular project. The LAWCLERK model establishes a flat fee for the production of a specific product; the Lawclerk’s means and efforts for producing the desired work are not a part of the structure, and thus, there is no control exerted over the Lawclerk’s performance in the manner that an employer monitors an employee’s particular actions.

Part B requires the closest inspection concerning the LAWCLERK model. The Dynamex Court provides the following elaboration concerning this section of the test: “Workers whose roles are most clearly comparable to those of employees include individuals whose services are provided within the usual course of the business of the entity for which the work is performed and thus who would ordinarily be viewed by others as working in the hiring entity’s business and not as working, instead, in the worker’s own independent business.”^[13]

On the one hand, the products produced by Lawclerks are clearly the same as those which would typically be created by an associate attorney or perhaps a paralegal (depending on the depth or substance of the project) under the standard law firm model. LAWCLERK’s promotional materials for Attorneys say just as much: “The use of freelance lawyers brings the dated associate model into the modern world[.]”^[14]

The key distinction between the associate model and the LAWCLERK model, however, is found in the structure of the new Attorney model and that of the Lawclerk. Concerning the latter, the LAWCLERK model supports a distinct independent business of the worker, who, herself or himself, is unmistakably the owner or operator of that entity. The LAWCLERK model makes the Attorney a client of the Lawclerk who takes the order of the Attorney and creates a custom product with her or his own resources. Under this model, the Attorney’s business is centered much more on client relations and control, litigation and business consultation and management, and procuring the documentation and other products necessary to support this work. As LAWCLERK’s promotional materials attest: “Newsletters, podcasters, speakers, and publications have been preaching the same warnings for years – ‘the business of law is changing,’ ‘the billable hour is dying,’ and ‘quality of life is replacing partnership track.’”^[15]

Aside from its broad, flexibly interpretable language, Dynamex provides only three simplistic scenarios to demonstrate employees versus independent contractors, which, in the case of LAWCLERK, are not particularly informative. However, as this guidance is as specific as the Court gets, it is worth some consideration.

For the independent contractor model, the Court cites the scenario of a retail store hiring an outside plumber or electrician to fix a bathroom leak or electrical issue within the store. The type of work therein is not the usual course of the retail store’s business.^[16] However, “when a clothing manufacturing company hires work-at-home seamstresses to make dresses from cloth and patterns supplied by the company that will thereafter be sold by the company[,] . . . or when a bakery hires cake decorators to work on a regular basis on its custom-designed cakes . . . , the workers are part of the hiring entity’s usual business operation[.]”^[17]

The LAWCLERK model is distinct from each of these examples, whether independent contractor or employee. First, a Lawclerk is not at all like a laborer fixing the infrastructure of a physical store; that example would relate more to an information technology professional being hired to set up the Attorney’s office network. So, the example of an independent contractor in Dynamex is not particularly useful.

The primary distinction between the LAWCLERK model and the employees described in Dynamex (i.e., the seamstresses and cake decorators) is the matter of control over the means and materials of production. A Lawclerk is not brought into the Attorney’s firm to provide hourly services, as is the case with cake decorators. Lawclerks are akin to an independent bakery; taking an order from a customer for a custom cake, and then gathering their own flour, eggs, sugar, etc. and baking the cake for that client. The Attorney does not provide an office, a word processor, Westlaw, or the other tools and ingredients needed to do the job.

And while, like a clothing manufacturer, the Attorney provides “patterns” and directions for the ultimate product to be made by the work-at-home Lawclerk, the LAWCLERK model is one where the Lawclerk is providing her or his own materials to produce the order. Furthermore, the work-at-home Lawclerk has discretion to control the means of production, i.e., how the basic materials are to transform into the final product desired by the client.

In essence, the LAWCLERK model closer resembles the bid structure of the contractor/subcontractor model than the examples provided by the Court in Dynamex. An Attorney takes on a project from clients, works with clients to establish expectations of the representation, and then allows outside parties to bid on performance of specific tasks and the creation of particular products necessary to the representation. A subcontractor and contractor certainly have overlap in the type of work they perform, and a subcontractor is typically involved in the “usual course” of a contractor’s work. However, a subcontractor does not become an “employee” of the contractor for performing a particular task within a larger project (especially where the particulars of the performance are done within the discretion of the subcontractor using the subcontractor’s own resources), and so too does the Lawclerk not become an employee of an Attorney by performing tasks and creating products that are typically part of the “usual course” of an attorney-client relationship.

So, the LAWCLERK model inhabits a niche that lies outside the employee models under consideration in Dynamex.

Part C requires the worker to be part of “an independently established trade, occupation, or business of the same nature as that involved in the work performed.”^[18] The Lawclerk operates her or his own business and specializes in the jobs available on LAWCLERK: specifically, performing legal research and drafting tasks according to her or his background and ability. As a Lawclerk, one is able to ply their trade to numerous clients/customers in numerous markets without being burdened by the ups and downs of one particular firm or market.

As previously described, the LAWCLERK model is akin to that of a contractor and subcontractor. Where a contractor requires the work of a specific tradesman, so does the Attorney require the expertise of a particular type of Lawclerk with a specific background. Just as a contractor does not hire the subcontractor as an employee, so does not an Attorney take on the Lawclerk as an associate; the purpose is to utilize that Lawclerk’s independently-established trade for the production of one particular output.

To summarize, Dynamex may appear far-reaching upon first glance, but a closer look at the decision’s limited scope and LAWCLERK’s particular business model reveals that, at this point, there is no reason to fear that the LAWCLERK model is not compatible with California labor law.