Court Opinion

ID: 9851689
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:17:43.566317+00
Date Added: 2024-06-11T09:22:12.538921
License: Public Domain

LUCAS, J.
I respectfully dissent.
The majority’s construction of Labor Code section 2750.5 permits an unlicensed independent contractor to assert his improper failure to obtain a license as a means of securing workers’ compensation benefits otherwise unavailable to such persons. In my view, the purpose of the penultimate paragraph of section 2750.5 was to preclude the contractor (and not his employer) from asserting his independent contractor status whenever he fails to obtain the requisite contractor’s license. The provision was certainly not intended to reward unlicensed contractors with compensation benefits available by law only to bona fide employees. The majority’s holding sanctions a clear misuse of public funds.
The correct analysis is set forth in Acting Presiding Justice Kaufman’s vacated opinion for the Court of Appeal, Fourth Appellate District, in this case. That opinion, with appropriate additions and deletions,* reads as follows:
[] The statutory law governing workers’ compensation cases is set forth in divisions 4 and 4.5 of the Labor Code, commencing with section 3200. [All statutory references will be to the Labor Code unless otherwise specified.] Workers’ compensation benefits are provided for “employees” (§§ 3351, 3357) but not for “independent contractors” (§ 3353; see Tieberg v. Unemployment Ins. App. Bd. (1970) 2 Cal.3d 943, 949-953 [88 Cal.Rptr. *19175, 471 P.2d 975]; Mission Ins. Co. v. Workers’ Comp. Appeals Bd. (1981) 123 Cal.App.3d 211, 217 [176 Cal.Rptr. 439] passim). Section 3353, which is part of division 4, defines independent contractor: “‘Independent contractor’ means any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.” Manifestly, the evidence [] establishes as a matter of law that in remodeling Warren Chichester’s residence applicant was acting as an independent contractor under section 3353. (Cf. Germann v. Workers’ Comp. Appeals Bd. (1981) 123 Cal.App.3d 776, 783 et seq. [176 Cal.Rptr. 868]; Mission Ins. Co. v. Workers’ Comp. Appeals Bd., supra, 123 Cal.App.3d 211, 217 et seq.)
The workers’ compensation judge’s (WCJ’s) and the board’s conclusions to the contrary were based on the interpretation of the penultimate paragraph in section 2750.5 in Travelers Ins. Co. v. Workers’ Comp. Appeals Bd. (Taylor) (1983) 147 Cal.App.3d 1033, 1037-1038 [95 Cal.Rptr. 564].) The WCJ and the board quite properly followed the Taylor decision as they were required to under the doctrine of Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455 [20 Cal.Rptr. 321, 369 P.2d 937], However, it is apparent to [me] that the interpretation and application of section 2750.5 in Taylor was incorrect and that properly construed and applied, section 2750.5 does not preclude what would otherwise be the only reasonable determination that applicant in this case was an independent contractor rather than an employee.
Section 2750.5 [] [fn. omitted] purports to do two separate and distinct things. (See Foss v. Anthony Industries (1983) 139 Cal.App.3d 794, 797 [189 Cal.Rptr. 31].) All of its paragraphs and subparagraphs except the penultimate paragraph prescribe and deal with a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to chapter 9 of division 3 of the Business and Professions Code or who is performing such services for a person who is required to have such a license is an employee. In the words of the decision in Foss, the penultimate paragraph “absolutely denies independent contractor status to a person required to have such a license who is not licensed.” (Ibid.)
The penultimate paragraph of section 2750.5 reads: “In addition to the factors contained in subdivisions (a), (b), and (c), any person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors’ [sic] license as a condition of *20having independent contractor status. ” (Italics added.) In the Taylor case the court interpreted this provision as prohibiting a determination the workers’ compensation applicant was an independent contractor regardless of the weight of the other evidence and as establishing conclusively that the applicant was an employee covered by the workers’ compensation law. (Travelers Ins. Co. v. Workers’ Comp. Appeals Bd. (Taylor), supra, 147 Cal.App.3d at pp. 1037-1038.) The court said in pertinent part: “We hold this paragraph means that no person who performs any work for which a contractor’s license is required shall be found to be an independent contractor unless such person holds a valid contractor’s license. This holding comports with the plain meaning of this statute. The Court of Appeal for the Fourth Appellate District recently reached the same conclusion in dictum: ‘The section [§ 2750.5] also absolutely denies independent contractor status to a person required to have such a license who is not licensed.’ (Foss v. Anthony Industries (1983) [supra] 139 Cal.App.3d 794, 797 [189 Cal.Rptr. 31].)” (Ibid., italics added.)
In [my] view the Taylor court was mistaken in several respects. First, neither the Foss decision nor the quoted language from Foss furnishes substantial support for the interpretation made or the result reached in Taylor.
Foss was a wrongful death case in which one of the defendants sought to avoid vicarious liability on the theory that the active tortfeasor was an independent contractor rather than its employee. The Foss court’s applying the penultimate paragraph of section 2750.5 to deny independent contractor status to the active tortfeasor had the effect of extending liability to the other defendant on the theory of respondeat superior. That result appears wholly consistent with the history and purpose of section 2750.5 as explicated in Foss. (Foss, supra, at pp. 797-798.) The court explained in part: “[S]ection 2750.5 codifies the general tort standard for independent contractor status .... [T]he basic provisions of the Labor Code on employee status are not limited to cases involving disputes between employer and employee because those provisions were originally in the Civil Code and were transferred to the Labor Code when it was created in 1937 in order to group all provisions on employment status in the same code (1 Witkin, Summary of Cal. Law (8th ed. 1973) Agency and Employment, § 3, p. 645). This has long been recognized as courts have cited the Labor Code on employment status in tort cases involving injuries to third parties. [Citation omitted.]” (Id., at p. 798.) The court also noted: “Furthermore, section 2750.5 is not in the divisions' of the Labor Code dealing with workers’ compensation but rather is in division 3, the scope of which is set by section 2700 . . . .” (Ibid.)
Even more significantly, the application of section 2750.5 in Foss did not result in a benefit or reward of any kind to the unlicensed defendant; it *21benefited a third party by permitting him to rely on the doctrine of respondeat superior. The analysis in the Taylor decision leads to the anomalous result of rewarding the person acting as a contractor without a contractor’s license, extending to him or her workers’ compensation benefits to which he or she would not otherwise be entitled under section 3353. The case at bench is a perfect example. Applicant was clearly acting as an independent contractor without a license. Contracting without a license is a misdemean- or. (Bus. & Prof. Code, § 7028.) To reward the commission of an unlawful act punishable as a crime by extending to the malefactor benefits he or she would otherwise be denied by a specific provision of the workers’ compensation law would be both anomalous and inconsistent with the purpose of the licensing laws. (Cf. Fillmore v. Irvine (1983) 146 Cal.App.3d 649, 657658 [194 Cal.Rptr. 319].) [Fn. omitted.]
State [Compensation Insurance] Fund [State Fund] suggests the somewhat peculiar language of the penultimate paragraph of section 2750.5 indicates that what the Legislature had in mind was to preclude the person acting without a required license from claiming or asserting the status of an independent contractor. That would certainly be a reasonable interpretation of the language that “any person performing any function ... for which a license is required . . . shall hold a valid . . . license as a condition of having independent contractor status.” “[A]s a condition of having . . . status” does seem to connote a claim or assertion of the status by the person acting without a license. Had the Legislature meant that in no event or circumstances should a person acting without a required license be found or determined to be an independent contractor, it would probably have said that in so many words rather than speaking of the requirement “as a condition of having [that] status.”
The interpretation suggested by State Fund would also be consistent with the decision in Fillmore v. Irvine, supra, 146 Cal.App.3d 649 [] and the language in Foss v. Anthony Industries, supra, 139 Cal.App.3d at page 797, that “[t]he section also absolutely denies independent contractor status to a person required to have such a license who is not licensed.” (Italics added.)
However, we are not required to determine definitively the precise meaning of the penultimate paragraph in section 2750.5. Section 2700 and a portion of the legislative history of section 2750.5 unmistakably indicate that the penultimate paragraph of section 2750.5 was not intended in workers’ compensation cases to transform a person who would otherwise be an excluded independent contractor into a covered employee.
As originally enacted in 1978 (Stats. 1978, ch. 1246, § 1, p. 4058) the final paragraph of section 2750.5 read: “For purposes of workers’ compen*22sation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of Section 3353 of the Labor Code. ” (Italics added.) Section 3353 [] it will be remembered is the section that defines “independent contractor” and is found in division 4 of the Labor Code dealing expressly with workers’ compensation. The original wording is rather persuasive that the Legislature did not intend by enacting section 2750.5 to transform one who would otherwise be an independent contractor under section 3353 into an employee. [Fn. omitted.]
In 1979 the final paragraph of section 2750.5 was amended to read: “For purposes of workers’ compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5. ” (Stats. 1979, ch. 605, § 1, p. 1879, italics added.) The purpose and intent of the 1979 amendment is obscure and somewhat perplexing. It is difficult to perceive how a presumption of employee status could possibly “lessen the coverage of employees under Division 4 and Division 5.”
The Legislative Counsel’s Digest of Assembly Bill No. 1758, which was enacted as chapter 605, read: “Existing law provides that there is a rebut-table presumption affecting the burden of proof that a worker is an employee rather than an independent contractor, and specifies factors which must be proven to show independent contractor status. Such provisions specify that for purposes of workers’ compensation, such presumption is a supplement to existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of a specified provision of the workers’ compensation law. [¶] This bill would provide that such presumption is not intended to lessen the coverage of employees under the workers ’ compensation law and worker safety laws. ” (Italics added.) The italicized language suggests a housekeeping or clarifying type of amendment not intended to effect any real substantive change. But, of course, the “specified provision” of the then existing law referred to in the Legislative Counsel’s Digest was section 3353 and its coverage is not of employees except in a backhanded way; it characterizes an independent contractor as distinguished from an employee.
In any event, however, the 1979 amendment does little to dilute the strong inference from the original language that the provisions of section 2750.5 were not intended to supersede or effect a pro tanto repeal of section 3353.
Finally, and most conclusive, section 2750.5 is, as previously noted, part of division 3 of the Labor Code, the scope of which is limited by section *232700. (See Foss v. Anthony Industries, supra, 139 Cal.App.3d 794, 797.) Section 2700 reads: “The provisions of this division shall not limit, change, or in any way qualify the provisions of Divisions 4 and 4.5 of this code, but shall be fully operative and effective in all cases where the provisions of Divisions 4 and 4.5 are not applicable.” (Italics added.)
Section 3353 defining “independent contractor” is within division 4 and is, of course, applicable. Accordingly, no provision in division 3, of which section 2750.5 is a part, may limit, change or in any way qualify the provisions of section 3353.
The rebuttable presumption portion of section 2750.5 is, of course, applicable to determinations made under section 3353 (see, e.g., Mission Ins. Co. v. Workers’ Comp. Appeals Bd., supra, 123 Cal.App.3d 211, 217). However, the rebuttable presumption is but a procedural provision affecting the burden of proof (see Foss v. Anthony Industries, supra, 139 Cal.App.3d at p. 799); it effects no limit upon, change in, or qualification of the substantive provisions of section 3353. Indeed, the burden of proving an applicant was an independent contractor rather than an employee has been that of the alleged employer since at least 1937. (§ 5705; Germann v. Workers’ Comp. Appeals Bd., supra, 123 Cal.App.3d 776, 783.) The penultimate paragraph of section 2750.5, by contrast, is a substantive provision of law (Foss, supra, at pp. 799-800) and would limit, change, and qualify the substantive provisions of section 3353 if applied to compel a determination that every person performing services for compensation without a required contractor’s license is an employee. Thus, section 2700 precludes the application to the applicant here of the penultimate paragraph of section 2750.5.
In view of this conclusion we are not required to address State Fund’s contention that an unlicensed contractor is estopped from asserting his unlicensed status. [End of Court of Appeal opinion.]
I would annul the WCAB’s order and decision.

Brackets together, in this manner [], are used to indicate deletions from the opinion of the Court of Appeal; brackets enclosing material (other than the editor’s parallel citations) are, unless otherwise indicated, used to denote insertions or additions. (Estate of McDill (1975) 14 Cal.3d 831, 834 [122 Cal.Rptr. 754, 537 P.2d 874].)