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Date: 10-06-2017

Case Style: Darnice Linton v. DeSoto Cab Company, Inc.

Case Number: A146162

Judge: Dondero

Court: California Court of Appeals First Appellate District Division One on appeal from the Superior Court, San Francisco County

Plaintiff's Attorney: Mary Colleen Ryan

Defendant's Attorney: Shannon Michele Seibert

Description: Plaintiff Darnice Linton appeals from a judgment in favor of defendant DeSoto
Cab Company. Defendant initiated the trial court proceeding after the Labor
Commissioner found in favor of plaintiff on his claim for unpaid wages. Plaintiff had
alleged defendant violated certain wage and hour laws by requiring him to pay a set fee
(known as a “gate fee”) in exchange for obtaining a taxicab to drive for each of his shifts.
After a bench trial, the court concluded plaintiff was not entitled to recover the gate fees
because he was an independent contractor and not an employee of defendant. In so
ruling, the court determined that several relevant cases, including the Supreme Court’s
seminal case S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989)
48 Cal.3d 341 (Borello), are not controlling under the circumstances at issue here. We
conclude the court erred in its legal analysis. The judgment is therefore reversed. Our
conclusion renders moot defendant’s appeal of the court’s order denying its claim for
costs.
2
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. Background
Defendant has a fleet of about 230 taxicabs in San Francisco. Plaintiff drove its
taxicabs from September 2008 to August 2012. Plaintiff initiated the relationship with
defendant by filling out an Application for Lease. The application requested his social
security number. He was required to show he was eligible to work in the United States.
He also had to bring in his driver’s license, a DMV printout, and his “A” card, which is
currently issued by the San Francisco Municipal Transportation Agency (SFMTA). An
“A” card allows individuals to drive a taxicab in San Francisco. Subsequently, he was
retained by Greg Cochran, defendant’s operations manager.
On September 5, 2008, plaintiff signed a 15-page Taxicab Lease Agreement
(Agreement) that was drafted by defendant. The content on the form is preprinted, and
plaintiff did not negotiate any of its terms. The Agreement includes language disclaiming
any employment relationship between the parties. Either party could cancel with 30
days’ notice, or without notice in the event of a breach. After the Agreement was
executed, plaintiff gave defendant’s cashier a security deposit of $500. He also attended
an orientation that lasted about three hours, during which Cochran explained the
company’s procedures, including advice on how drivers should treat their customers.
Cochran testified that defendant could not operate as a business without the taxicab
drivers who lease and drive its cabs.
In order to begin a shift, taxi drivers check in with the cashier and are assigned a
cab. Drivers receive the cab’s keys, a taxi medallion, and a “waybill.” The bottom of
each waybill states: “DRIVE CAREFULLY. DRESS NEATLY. BE COURTEOUS.”
At the end of a driver’s shift, he or she returns the cab, the medallion, and the waybill,
and pays the cashier the gate fee for the leasing of the vehicle. Drivers keep the fares and
tips that they receive from their passengers, and they are not required to account to
defendant for their fares. Defendant’s only income under the Agreement is the gate fee.
3
Plaintiff initially was given day shifts from 3:00 a.m. to 1:00 p.m., Monday
through Friday. He was required to lease the cab for 10 hours each shift. He would drive
different vehicles, depending on availability. The gate fee was about $100 per day.
Plaintiff also would often tip dispatchers and cashiers when he picked up and dropped off
the cab. He did not believe he had the ability to negotiate the gate fee, which was set by
defendant. His goal was to take home at least $200 per shift after the gate fee and gas.
About three or four times a year he would lose money on a shift, or just break even.
Sometimes defendant asked him to return a cab before his shift ended. This happened on
about six or seven occasions.
When plaintiff was working, defendant’s dispatch would relay requests from
customers and radio the customers’ locations. Plaintiff and other drivers could then
respond with their locations. Dispatch would assign the closest driver to pick up the
customer. Plaintiff was free to reject or accept dispatch calls. Defendant does not control
how much money drivers make during their shifts. It does not require drivers to check in
during their shifts or report when they take breaks. However, defendant’s cabs are
equipped with GPS tracking. The cabs also have audio and video recording devices that
are mounted on the windshield and record video inside and outside of the cab.
About 60 percent of plaintiff’s fares came from customer street hails. Dispatch
radio calls accounted for around 35 to 40 percent of his fares, with about 2 percent
coming via his personal cell phone. About once or twice a month, defendant asked him
to accept a discounted fare, such as when he would transport a blood specimen from
Blood Centers of the Pacific to a hospital. Defendant had a contract with the blood bank
for this purpose. Drivers were paid a flat rate to transport blood specimens. Plaintiff did
not set the flat rate.
After plaintiff was involved in an accident in October 2011, he received a warning
letter from defendant’s general manager. He was told that if he had another accident the
lease agreement could be cancelled. He received a notice of termination on August 18,
4
2012, shortly after he was accused of obtaining a passenger’s credit card information and
making repeated charges on her account.
II. The Labor Commissioner’s Order
On August 5, 2013, plaintiff filed a claim with the Labor Commissioner’s office
contending that he had been misclassified as an independent contractor instead of as an
employee. The claim alleged plaintiff was owed: (1) Wages for the period from
August 5, 2010 to August 15, 2012, in the amount of $65,445, (2) wages for the period
from August 15 to September 14, 2012, in the amount of $2,583, (3) overtime wages
earned from August 2010 to August 2012, at $7,632 per year, and waiting time penalties
pursuant to Labor Code sections 201 and 203,1
at the daily rate of $215.32.
On June 2, 2014, the Labor Commissioner issued an order holding that plaintiff
was an employee and assessing wages, interest, and waiting time penalties against
defendant under sections 221, 98.1, subd. (c), and 203. Defendant was ordered to
reimburse plaintiff for gate fees paid from August 2010 to August 2012, in the amount of
$50,180.2 Plaintiff was also awarded $9,018 in interest on this amount and $6,459 in
penalties for nonpayment of wages.
In its findings of fact, the Labor Commissioner found that plaintiff had exercised
complete discretion in the manner in which he operated the taxicabs. However, the Labor
Commissioner concluded plaintiff had provided services to defendant as an employee,
based on the factors set forth in Borello, supra, 48 Cal.3d 341, as well as our opinion in
Yellow Cab Cooperative, Inc. v. Workers’ Comp. Appeals Bd. (1991) 226 Cal.App.3d
1288 (Yellow Cab).

1 All further statutory references are to the Labor Code unless otherwise indicated.
2 The Labor Commissioner dismissed plaintiff’s overtime wage claim.
5
On June 18, 2014, defendant filed a notice of appeal of the Labor Commissioner’s
decision pursuant to section 98.2. That section provides for a de novo proceeding in the
superior court. (§ 98.2, subd. (a).)
III. Proceedings at Trial
Plaintiff’s claims are based on sections 201,
3 203,4
and 221.5 These statutes are
found in Division 2 of the Labor Code (§ 200 et seq.), entitled “Employment Regulation
and Supervision.”
6 A bifurcated court trial was held to first address the issue of whether
plaintiff was an employee of defendant or an independent contractor. In its trial brief,
defendant argued that plaintiff was never an employee, but was instead a lessee whose
remedies were limited to the remedies provided for under the leasing provisions of
California’s Commercial Code at section 10501 et seq. After the close of evidence and
concluding arguments, the trial court orally issued a tentative ruling against plaintiff,
finding he was not defendant’s employee.
IV. The Statement of Decision
On May 5, 2015, plaintiff submitted a request for a statement of decision including
a total of 64 separate issues to be addressed.

3 Under section 201, if an employee is discharged, “the wages earned and unpaid
at the time of discharge are due and payable immediately.” (§ 201, subd. (a).)
4 Section 203 provides for the assessment against an employer for failure to pay
wages as required by law. It provides, in part: “If an employer willfully fails to pay . . .
in accordance with Section[] 201 . . . any wages of an employee who is discharged . . .,
the wages of the employees shall continue as a penalty from the due date thereof at the
same rate until paid or until an action therefor is commenced . . . .”
5 Section 221 provides: “It shall be unlawful for any employer to collect or
receive from an employee any part of wages theretofore paid by said employer to said
employee.”
6 During trial, plaintiff raised a theory under section 2802 for reimbursement of his
business expenses. The trial court did not expressly rule on this claim, but concluded it
would be governed by the same legal principles as plaintiff’s other statutory claims. (See
our decision in Arnold v. Mutual of Omaha Ins. Co. (2011) 202 Cal.App.4th 580, 587
(Arnold) [common law test of employment applies to section 2802].)
6
On May 29, 2015, the trial court executed and filed a 34-page proposed statement
of decision prepared by defendant.
On June 10, 2015, plaintiff filed a 32-page pleading containing 99 objections to
alleged “omissions and ambiguities” contained in the proposed statement of decision.
On June 24, 2015, plaintiff submitted further objections to defendant’s statement
of decision.
On June 26, 2015, the trial court issued a revised 39-page statement of decision.
In its ruling, it concluded that Borello and its taxicab-related progeny Yellow Cab and
Santa Cruz Transportation, Inc. v. Unemployment Ins. Appeals Bd. (1991)
235 Cal.App.3d 1363 (Santa Cruz) are not controlling, rationalizing that these cases were
distinguishable because plaintiff’s claims do not concern worker’s compensation or
unemployment insurance benefits.
On July 13, 2015, the trial court filed its judgment. The court declined to award
defendant costs, citing to section 98.2 and Code of Civil Procedure section 1032,
subdivision (d).
On August 31, 2015, plaintiff filed an appeal from the judgment.
On September 28, 2015, defendant filed an appeal from the portion of the
judgment denying it costs.
DISCUSSION
I. Standard of Review
A trial court’s findings and judgment “must be sustained if they are supported by
substantial evidence, even though the evidence could also have justified contrary
findings.” (Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547,
557.) However, “when the trial court’s order involves the interpretation and application
of a constitutional provision, statute, or case law, questions of law are raised and those
questions of law are subject to de novo (i.e., independent) review on appeal. [Citation.]
7
It is an abuse of discretion for a trial court to misinterpret or misapply the law.”
(Prigmore v. City of Redding (2012) 211 Cal.App.4th 1322, 1333–1334.)
II. The Trial Court Erred in Failing to Adhere to Borello
As noted above, in its statement of decision the trial court explicitly concluded that
Borello, Yellow Cab, and Santa Cruz are not controlling because they involved worker
compensation and unemployment insurance claims instead of wage claims. We believe
reliance on that distinction did not negate the relevance of these decisions in this case.
The trial court’s conclusion was error.
A. Governing Principles
The seminal case regarding the difference between employment and independent
contractor relationships in California is Borello, supra, 48 Cal.3d 341. In the context of
workers’ compensation laws, our high court set out the basic principles that govern such
disputes. (Borello, at p. 349.)
The court in Borello first observed that the common law on vicarious liability
distinguishes between employees and independent contractors based on an assessment of
the extent to which the hirer had a right to control the details of the service provided.
(Borello, supra, 48 Cal.3d at p. 350.) The court reasoned that “the concept of
‘employment’ embodied in the [Workers Compensation Act] is not inherently limited by
common law principles.” (Borello, at p. 351.) This is because “[t]he common law and
statutory purposes of the distinction between ‘employees’ and ‘independent contractors’
are substantially different.” The “common law tests were developed to define an
employer’s liability for injuries caused by his employee . . . .” (Id. at p. 352.) In
determining whether the employer should be vicariously liable for acts of a person it
hired, the extent to which it had the right to control the activities performed by that
individual was “ ‘highly relevant.’ ” (Id. at p. 350.) But “ ‘the basic inquiry in
compensation law’ ” is different. There, the question is “ ‘which injuries to the employee
should be insured against by the employer.’ ” (Id. at p. 352.)
8
In cases involving workers’ compensation and other protective, remedial
legislation, courts have declined to apply the control test “rigidly” or “in isolation.”
(Borello, supra, 48 Cal.3d at p. 350.) Instead, “the ‘control-of-work-details’ test for
determining whether a person rendering service to another is an ‘employee’ or an
excluded ‘independent contractor’ must be applied with deference to the purposes of the
protective legislation. The nature of the work, and the overall arrangement between the
parties, must be examined to determine whether they come within the ‘history and
fundamental purposes’ of the statute.” (Id. at pp. 353–354, italics added.) Here, the goal
of both workers’ compensation law and the Labor Code’s wage and hour provisions is to
protect a class of workers who otherwise would not enjoy statutory protections.
Accordingly, we conclude the principles annunciated in Borello apply to this case.
In addition to the control analysis, the Borello court endorsed various
“ ‘secondary’ indicia of the nature of a service relationship” that, in addition to the issue
of control, may be considered. (Borello, supra, 48 Cal.3d at pp. 350–351.) “Thus, we
have noted that ‘[s]trong evidence in support of an employment relationship is the right to
discharge at will, without cause. [Citations.]’ [Citations.] Additional factors have been
derived principally from the Restatement Second of Agency (Restatement). These
include (a) whether the one performing services is engaged in a distinct occupation or
business; (b) 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;
(c) the skill required in the particular occupation; (d) whether the principal or the worker
supplies the instrumentalities, tools, and the place of work for the person doing the work;
(e) the length of time for which the services are to be performed; (f) the method of
payment, whether by the time or by the job; (g) whether or not the work is a part of the
regular business of the principal; and (h) whether or not the parties believe they are
9
creating the relationship of employer-employee.”7 Additionally, these “ ‘individuals
factors cannot be applied mechanically as separate tests; they are intertwined and their
weight depends often on particular combinations.’ ” (Borello, at pp. 350–351; see
Arnold, supra, 202 Cal.App.4th at p. 584.)
In Yellow Cab, we held that a taxi driver who leased his taxi from a San Francisco
taxi company was an employee, not an independent contractor, for the purpose of
workers’ compensation law. After discussing Borello, we determined the taxi company
exercised a sufficient level of control over its drivers to conclude that the drivers were
employees. While the lease agreement between the driver and the company, like the
Agreement at issue here, stated that the driver was self-employed, we found that to be
nondispositive because the parties’ actions determine the relationship, not the labels they
use. (Yellow Cab, supra, 226 Cal.App.3d at p. 1297.) In that case, the evidence showed
drivers were trained on how to conduct themselves, including adherence to rules of good
driving behavior. Similar to the arguments advanced by defendant below, the company
stressed that its drivers possessed a large degree of independence, with freedom to not
take radio calls, or to use the cab to carry family members rather than paying passengers.
We found such freedoms were inherent in the nature of the work, because economic
reality dictated that a cab driver would need to carry paying passengers during the lease
timeframe. In addition, the company exercised control over the drivers by prohibiting
them from driving for other companies, and possessed the ability to terminate leases
based on write-ups or customer complaints. We noted: “Liability to discharge for
disobedience or misconduct is strong evidence of control.” (Id. at p. 1298.) We also

7 The Borello court also noted several additional factors developed by other
jurisdictions that are derived from the Fair Labor Standards Act. (Borello, supra,
48 Cal.3d at pp. 354–355.) As the law currently stands, it is unclear whether these
additional factors are to apply in the wage context. (See Ayala v. Antelope Valley
Newspapers, Inc. (2014) 59 Cal.4th 522, 532, fn. 3 (Ayala).)
10
rejected the argument that the reversed “ ‘flow of payment’ ” was determinative, calling
it “at most an equivocal consideration.” (Id. at p. 1300.)
Likewise, the appellate court in Santa Cruz applied both common law rules and
Restatement factors to analyze whether there was substantial evidence to support a
finding of independent contractor status of a taxi driver/benefits claimant. (Santa Cruz,
supra, 235 Cal.App.3d at pp. 1371–1372.) There, the issue was whether the plaintiff was
entitled to unemployment/disability benefits as an “employee.” The appellate court first
considered the common law test for “ ‘right to control the means by which the work is
accomplished’ ” (id. at p. 1371) and then proceeded to the secondary Restatement factors
as laid out in Borello in concluding the taxi driver was an employee for purposes of
obtaining disability benefits. In the course of its opinion, the court observed that “Yellow
Cab is not merely in the business of leasing taxicabs and collecting rent akin to Hertz
Rent-A-Car and like enterprises. It owns the taxicabs and municipal taxicab license;
customers call it for taxicab service, and it arranges for performance of the service; and
the taxicabs bore Yellow Cab’s identity.” (Santa Cruz, at p. 1376.) These observations
can also be applied to the instant case.
B. The Trial Misconstrued Ayala
Here, as evidenced by the statement of decision, the trial court failed to properly
apply the Borello analysis in finding plaintiff provided services as an independent
contractor. The court apparently determined Borello, Yellow Cab and Santa Cruz were
limited to the workers’ compensation and unemployment insurance context. The trial
court instead concluded that the “common law” test set forth in Ayala, supra, 59 Cal.4th
at p. 531 applied to this dispute because the division of the Labor Code that contains
sections 201, 203, and 221 does not provide a statutory definition of “employee.”
Contrary to the trial court’s understanding, Ayala did not disavow Borello. Both Borello
and Ayala set forth a unified analysis with respect to whether a worker should be
classified as an employee or independent contractor.
11
In Ayala, the Supreme Court revisited the common law definition of an employee
relationship in evaluating whether a class could be certified in a wage and hour action
alleging the defendant had misclassified its employees as independent contractors. The
trial court had denied the plaintiffs’ motion to certify the putative class of newspaper
carriers hired by the Antelope Valley Press to deliver its newspaper after finding common
issues did not predominate. (Ayala, supra, 59 Cal.4th at p. 529.) The trial court reasoned
Borello’s common law test for an employment relationship would require “ ‘heavily
individualized inquiries’ ” into the newspaper’s control over the carriers’ work. (Ayala,
at p. 529.) Because the plaintiffs had proceeded under the common law definition, the
Supreme Court limited its discussion to whether the plaintiffs’ claims were susceptible to
proof on a classwide basis under that test. (Id. at pp. 530–531.) Ayala concluded the trial
court should have focused on the “differences in [the defendant’s] right to exercise
control,” rather than “variations in how that right was exercised” (Ayala, at p. 528) when
it concluded individual issues predominated. “What matters is whether the hirer ‘retains
all necessary control’ over its operations.” (Id. at p.531, quoting Borello, supra,
48 Cal.3d at p. 357.) The Supreme Court then affirmed the Court of Appeal’s judgment,
overturning the trial court’s order and remanding the case for reconsideration of the
motion under the correct legal standards. (Id. at p. 540.)
In a footnote responding to a concurring justice’s concerns about the application of
the “common law” test,8
the majority of the court stated: “As Justice Chin’s concurrence
notes, Borello recognized ‘the concept of “employment” embodied in the [Workers’
Compensation] Act is not inherently limited by common law principles’ [citation] and

8 The Ayala court’s reference to the “common law” did not necessarily exclude
Borello’s principles: “[W]e glean that our Supreme Court’s and other courts’
applications of both primary and secondary criteria of employment determinations are in
the process of becoming part of the common law of this state . . . .” (Messenger Courier
Assn. of Americas v. California Unemployment Ins. Appeals Bd. (2009) 175 Cal.App.4th
1074, 1091.)
12
identified a handful of other considerations that might ‘overlap those pertinent under the
common law’ [citation]. Strictly speaking, however, those further considerations are not
part of the common law test for employee status. The concurrence’s assertion they are
relevant here [citation] rests on the legal assumption they play a role in deciding
employee status for wage claims, an assumption we decline to embrace, leaving for
another day resolution of its validity.”9
(Ayala, supra, 59 Cal.4th at p. 532, fn. 3, italics
added.) A close reading of Ayala suggests this conclusion pertains to the additional
factors noted by Borello that are derived from the FLSA, and not to the secondary factors
derived from the Restatement of Agency.10

Given the discussion in Ayala, there can be no doubt that Borello sets forth the
common law test now applicable in our courts, and that the test involves a multipurpose
inquiry that looks not only at the right to control work details, but also at additional
secondary factors derived from the Restatement of Agency. (See, e.g., Ali v. U.S.A. Cab
Ltd. (2009) 176 Cal.App.4th 1333, 1347–1348 (Ali); Estrada v. FedEx Ground Package
System, Inc. (2007) 154 Cal.App.4th 1, 10–11 (Estrada); Cristler v. Express Messenger
Systems, Inc. (2009) 171 Cal.App.4th 72, 85–87 (Cristler).) Borello arose in the context
of workers’ compensation, and both Yellow Cab, supra, 226 Cal.App.3d 1288 and Santa
Cruz, supra, 235 Cal.App.3d 1363 dealt with unemployment and disability insurance
coverage for workers. However, the cases of Ali, Estrada, and Cristler are among the

9
In Dynamex Operations West, Inc. v. Superior Court (review granted Jan. 28,
2015, S222732), the issue on review is: “In a wage and hour class action involving
claims that the plaintiffs were misclassified as independent contractors, may a class be
certified based on the Industrial Welfare Commission definition of an employee as
construed in Martinez v. Combs (2010) 49 Cal.4th 35, or should the common law test for
distinguishing between employees and independent contractors discussed in [Borello]
control?” (Italics added.)
10 Justice Chin had argued that “the record does not support limiting our analysis
to the common law test for employment and ignoring the FLSA factors.” (Ayala, supra,
59 Cal.4th at p. 550, conc. opn. of Chin, J.)
13
several cases that deal with wages and expense-related issues. Yet Borello, supra,
48 Cal.3d 341, was the principal Supreme Court decision with which these appellate
courts were concerned. Recently the Supreme Court commented on Borello, observing:
“As we explained in [Borello], the common law test of employment is not always
appropriate beyond the tort context in which it was originally developed. [Citation.]
Outside of tort, rather than ‘rigidly’ applying the common law test, we look to the
‘ “history and fundamental purposes” ’ . . . of the statute at issue to determine whether the
Legislature intended the test to apply.” (People v. Superior Court (Sahlolbei) (2017) 3
Cal.5th 230, 235.)
In any event, the trial court’s apparent conclusion that wage and hour laws are not
remedial is unsupported by case law: “ ‘[I]n light of the remedial nature of the legislative
enactments authorizing the regulation of wages, hours and working conditions for the
protection and benefit of employees, the statutory provisions are to be liberally construed
with an eye to promoting such protection.’ ” (Brinker Restaurant Corp. v. Superior
Court (2012) 53 Cal.4th 1004, 1026–1027.) Borello itself indicates its holding has
application to wage and hour cases: “A conclusion that the sharefarmers are
‘independent contractors’ under the Act would suggest a disturbing means of avoiding an
employer’s obligations under other California legislation intended for the protection of
‘employees,’ including laws enacted specifically for the protection of agricultural labor.
These include the Agricultural Labor Relations Act [citation], statutes requiring the
licensure and bonding of farm labor contractors [citation], laws governing minimum
wages, maximum hours, and . . . employment of minors [citation] . . . .” (Borello, supra,
48 Cal.3d at p. 359, italics added.)
As noted above, Borello’s principles have been extended to unemployment
insurance obligations, which, like wage and hour laws, reflect social policy designed to
protect workers. Additionally, one reviewing court has recently held that because the
Labor Code does not expressly define “employee” for purposes of section 2802, the
14
common law test of employment applies to that section. (Estrada, supra,
154 Cal.App.4th at p. 10.) That court also went on to discuss the “principal” and
“additional factors” of the common law test as articulated by the Supreme Court in
Borello, supra, 48 Cal.3d 341, and summarized above. (Estrada, at p. 10.) In sum, the
trial court’s reasoning in the statement of decision is not supported by Ayala.
11
III. Burden of Proof
Plaintiff also asserts the trial court erred by failing to apply the presumption of
employment and not shifting the burden to defendant as the party attacking the
relationship. We agree.
The trial court concluded that plaintiff did not prove defendant had the right to
control the details of his work, and also did not prove defendant exercised control over
the manner and means of how he accomplished a desired result. The court also found
defendant did not have the right to control how plaintiff performed the task of driving a
taxicab.
It is established that “[o]ne seeking to avoid liability has the burden of proving that
persons whose services he has retained are independent contractors rather than
employees.” (Borello, supra, 48 Cal.3d at p. 349.) Plaintiff also relies on section 3357,
which he acknowledges is found in the division of the Labor Code addressing workers’
compensation. That section provides: “Any person rendering service for another, other
than as an independent contractor, or unless expressly excluded herein, is presumed to be
an employee.” This presumption is contained in Division 4 of the Labor Code, and
section 3350 provides that the definitions set forth therein apply to that “division.”
Plaintiff’s case does not concern the workers’ compensation statutes set forth in
Division 4, but rather the wage and hour statutes set forth in Division 2 of the Labor
Code. However, we agree with Lujan v. Minagar (2004) 124 Cal.App.4th 1040, 1048

11 Indeed, the Ayala court remanded the matter with directions to consider
Borello’s secondary factors. (Ayala, supra, 59 Cal.4th at p. 540.)
15
and Cristler, supra, 171 Cal.App.4th at page 83, to the extent those cases hold that the
rebuttable presumption of employment in section 3357 applies to actions brought under
Labor Code provisions falling outside workers’ compensation.
Defendant contends it did not bear the burden of proof because plaintiff did not
prove he rendered service to defendant. This contention is weak. As we noted in Yellow
Cab: “[T]he essence of [Yellow Cab’s] enterprise was not merely leasing vehicles. It did
not simply collect rent, but cultivated the passenger market by soliciting riders,
processing requests for service through a dispatching system, distinctively painting and
marking the cabs, and concerning itself with various matters unrelated to the lessor-lessee
relationship. . . . [¶] . . . The drivers, as active instruments of that enterprise, provide an
indispensable ‘service’ to Yellow; the enterprise could no more survive without them
than it could without working cabs.” (Yellow Cab, supra, 226 Cal.App.3d at pp. 1293–
1294.)
IV. The Trial Court Failed to Properly Analyze Borello’s Principles
In addition to failing to properly allocate the burden of proof, to the extent that the
trial court did consider Borello, its analysis is demonstrably inadequate. The court’s
statement of decision, while long, omits a proper discussion of the Borello factors that are
germane to the issues. As noted above, both Borello and Ayala discuss the issue of
control and the secondary factors derived from the Restatement in order to assess whether
a plaintiff is an employee. While the trial court expended considerable effort in detailing
the facts, it failed to conduct an actual analysis of how these facts relate to the key factors
that the Supreme Court requires courts to consider in these types of cases.12 We believe

12 To the extent the trial court’s statement of decision does address the secondary
factors, plaintiff argues the court’s findings on several of the secondary employment
factors are not supported by substantial evidence. Specifically, he asserts that the court
erred in finding that he had an independent business of transporting passengers. He also
challenges findings that the work of driving a taxicab requires “specialized skill,” arguing
this finding “belies the undisputed evidence and defies common sense.” Additionally, he
16
there is a qualitative distinction between the facts in a case and the legal factors that
underpin the Borello decision and its progeny.
Control is the most important consideration in deciding whether an individual is
serving as an employee or independent contractor. The right of control need not extend
to all details of the work. It is true plaintiff could do much on his own, including
deciding which passengers to pick up and how much actual work time he engaged in
during his shifts. However, this is not the end of the discussion. (See Borello, supra,
48 Cal.3d at p. 357.) That a degree of freedom is permitted to a worker, or is inherent in
the nature of the work involved, does not automatically lead to the conclusion that a
worker is an independent contractor. (See Air Couriers Internat. v. Employment
Development Dept. (2007) 150 Cal.App.4th 923, 934.) The key issue is how much
retained control the employer has the right to exercise in the work relationship. (See
Ayala, supra, 59 Cal.4th at p. 533.) The court below did not address this key distinction.
Significantly, the evidence suggests defendant retained ultimate control, namely,
the right to terminate the employment at will. Plaintiff was terminated based on an
allegation that, it appears, was never fully investigated. Nor was he allowed to contest
the allegations against him before he was terminated. This factor alone presents strong
evidence of an employment relationship: “Liability to discharge for disobedience or
misconduct is strong evidence of control.” (Yellow Cab, supra, 226 Cal.App.3d at
p. 1298; see Borello, supra, 48 Cal.3d at p. 350 and Ayala, supra, 59 Cal.4th at p. 531.)
In fact, Ayala calls this factor the strongest evidence of control, “often of inordinate
importance” (Ayala, at p. 539, italics added), yet there is no discussion of this factor in
the trial court’s statement of decision. (See Narayan v. EGL, Inc. (9th Cir. 2010)

contends that “a taxicab company and the drivers who drive its taxicabs are in the same
business and . . . their work is integrally related.” While he concedes “employees do not
typically earn wages from third parties,” he observes defendant “unilaterally determined
the flow of money in the Agreement.”
17
616 F.3d 895, 900 (Narayan) [the right to discharge at will is the most important factor
for determining whether an employment relationship exists].)
The Agreement indicates the parties are described as having an independent
contractor relationship, and the trial court relied on this feature considerably for its
decision. However, plaintiff testified he had to sign the Agreement as stated because
otherwise defendant would not have provided him with a job. The Agreement was
drafted by defendant and plaintiff had no say in its content. The Agreement thus has the
appearance of an adhesion contract in that it was not the product of bargaining between
the parties. There are several cases that note the mere fact the employment agreement
characterizes the relationship of the parties in a particular way is not determinative of the
actual legal status of the parties. (Borello, supra, 48 Cal.3d at p. 349; Estrada, supra,
154 Cal.App.4th at pp. 10–11.) Rather than assume the relationship from the content of
an agreement that was drafted exclusively by defendant, the court was obligated to delve
deeper into the parties’ actual conduct and the economic realities of their relationship.
Additionally, it can reasonably be concluded that there is no skill other than
driving a car that is required in this case. Plaintiff was not operating a semi-truck or
engaging in substantial analytical tasks when driving a cab. The length of time for which
the services were performed was ongoing over at least a four-year period.13
Plaintiff paid
his gate fee at the end of each day, not after completing a specific, prolonged task. The
work he performed is part and parcel of what defendant does, which is operate cabs in
San Francisco. A strong argument can be made that without plaintiff and others like him,
the service defendant provides could not be accomplished.

13 The Agreement had an automatic renewal clause; every 30 days it was
automatically renewed. Plaintiff’s agreement was renewed over a four-year period. This
automatic renewal feature is another indicator of an at-will employment relationship.
(See Gonzalez v. Workers’ Comp Appeals Bd. (1996) 46 Cal.App.4th 1584, 1593; State
Compensation Ins. Fund v. Brown (1995) 32 Cal.App.4th 188, 203; Narayan, supra,
616 F.3d at pp. 902–903.)
18
The trial court also made questionable distinctions between what plaintiff did and
what defendant did; however, it appears undisputed that both parties were engaged in the
task of providing taxicabs to customers to take them from place to place. Furthermore,
the tools used by plaintiff on a daily basis over the years he worked were always provided
by defendant, including the cab and the tool to collect fares. Defendant also provided the
insurance needed to place the cabs on the road, as well as the required work insurance
costs such as workers’ compensation.
V. City Taxicab Regulations
Finally, on the issue of control, much was made of the impact of SFMTA
regulations. A putative employer does not exercise any degree of control merely by
imposing requirements mandated by government regulation. (N.L.R.B. v. Friendly Cab
Co., Inc. (9th Cir. 2008) 512 F.3d 1090, 1097, fn. 7 (Friendly), citing Sida of Hawaii, Inc.
v. N.L.R.B. (1975) 512 F.2d 354, 359; see Gov. Code, § 53075.5, indicating the
Legislature’s policy on regulation of the taxicab industry.) Yet these municipal controls
of the taxicab industry are in place to ensure public safety and an employer is under a
special obligation to see that drivers follow these requirements. (Secci v. United
Independent Taxi Drivers (2017) 8 Cal.App.5th 846, 861 (Secci) [“[I]f a franchise taxi
company were to decline to carry out its obligations under the franchise agreement, it
would place itself at risk of losing its franchise to the city.”].)14 As plaintiff points out,
we have instances in this record where defendant imposed additional “controls” beyond
the dictates of the SFMTA regulations, presumably to ensure driver compliance. For
example, he argues that the SFMTA regulations do not require defendant to conduct

14 Our singular reference to Secci, supra, 8 Cal.App.5th 846 is simply to indicate
the import of governmental regulations on the cab industry. Municipal regulations can,
as they did here, trigger motivation for employer control of their drivers. We make no
further comment on the analysis in Secci.
19
safety reviews. Additional restrictions or modifications made to government regulations
can be another indicia of employer control.
In Friendly, augmentation of government regulations imposed by the employer
that exceeded a City of Oakland ordinance was found to have created further control over
the drivers, indicating the parties had an employer/employee relationship: “While the
incorporation of government regulations into a company’s manual is not evidence of an
employer-employee relationship, [citation], the NLRB reasonably found that Friendly’s
training requirements exceed those required by the City of Oakland’s ordinance and
constitute some degree of control over the drivers.” (Friendly, supra, 512 F.3d at
p. 1101.)
VI. The Error Was Prejudicial
In assessing prejudice from errors, we apply settled rules. In particular, we
presume the judgment to be correct. (Denham v. Superior Court (1970) 2 Cal.3d 557,
564.) Plaintiff has the burden of affirmatively demonstrating prejudice, that is, that the
errors have resulted in a miscarriage of justice. (Cal. Const., art. VI, § 13; Code Civ.
Proc., § 475; Cucinella v. Weston Biscuit Co. (1954) 42 Cal.2d 71, 82; Paterno v. State of
California (1999) 74 Cal.App.4th 68, 105 [appellant bears the duty of spelling out in his
brief exactly how the error caused a miscarriage of justice].) “ ‘[A] “miscarriage of
justice” should be declared only when the court, “after an examination of the entire cause,
including the evidence,” is of the “opinion” that it is reasonably probable that a result
more favorable to the appealing party would have been reached in the absence of the
error.’ ” (Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d
752, 770, overruled in part on other grounds by Freeman & Mills, Inc. v. Belcher Oil Co.
(1995) 11 Cal.4th 85, 102–103 and Della Penna v. Toyota Motor Sales, U.S.A., Inc.
(1995) 11 Cal.4th 376, 393, fn. 5.)
As our discussion thus far demonstrates, the trial court’s findings were prejudicial
to plaintiff. After setting forth its ruling that plaintiff had not met the burden of proving
20
he rendered service to defendant or that defendant had the right to control the details of
his work, the court perfunctorily indicated that it would have reached the same
conclusions “even taking into account the additional factors and burden-shifting
presumption applied in Borello and its progeny. . . .” The court then made 82 separate
findings of fact, without setting forth a reasoned analysis as to why these points support
its ultimate conclusions. Furthermore, the court omits a cogent analysis of the factors
that courts must consider under Borello. Additionally, under Ayala, failure to properly
assess the secondary factors is a legal misstep. Reviewing the secondary factors in those
cases points to the weakness of the court’s review here. In light of the above, it is
reasonably probable that plaintiff would have received a more favorable ruling had the
trial court properly allocated the burden of proof and undertaken a reasoned analysis of
the secondary Borello factors.
VII. Reversal and Remand is Required
The trial court’s determination of employee or independent contractor status is one
of fact if it depends upon the resolution of disputed evidence or inferences. (Borello,
supra, 48 Cal.3d at p. 349.) “ ‘Even in cases where the evidence is undisputed or
uncontradicted, if two or more different inferences can reasonably be drawn from the
evidence this court is without power to substitute its own inferences or deductions for
those of the trier of fact . . . .’ ” (Jonkey v. Carignan Construction Co. (2006)
139 Cal.App.4th 20, 24.) The question is one of law only if the evidence is undisputed.
(Borello, at p. 349.)
Plaintiff sets forth evidence supporting the conclusion that defendant had the right
to control, evidence that he characterizes as “undisputed,” including that: (1) defendant
terminated the Agreement based on a passenger complaint, (2) defendant monitored
plaintiff’s driving by video review, (3) defendant required his social security number and
maintained his personal information, (4) plaintiff could not negotiate the gate fee, (5) he
was required to return the taxicab on request and his vehicle could be leased to another
21
driver if he was late, (5) defendant’s waybills included communications to drivers
regarding how to drive, (6) he did not represent himself as an independent business and
could not drive a taxicab independent of defendant or for another taxicab company,
(7) defendant controlled all the taxicab advertising and display, (8) defendant issued a
written warning to plaintiff, and (9) defendant created a driver “help book.” Defendant
argues that these facts, and others plaintiff draws to our attention, were, in fact, disputed.
These contentions can be addressed on remand.
We agree with plaintiff that the trial court failed to properly analyze and weigh the
evidence under the factors required by Borello. However, we decline his invitation to
determine his employment status in the first instance as a matter of law, and remand the
matter to the trial court to address the facts in light of the principles set forth in this
opinion.
VIII. Defendant’s Appeal
Defendant appeals from the trial’s court’s ruling denying its request for costs
under Code of Civil Procedure section 1032.15
As we have concluded the judgment must
be reversed, defendant’s appeal is moot.

15 This section provides: “Except as otherwise expressly provided by statute, a
prevailing party is entitled as a matter of right to recover costs in any action or
proceeding.” (Code Civ. Proc., § 1032, subd. (b).)

Outcome: The judgment is reversed.

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Defendant's Experts:

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