Before the case went to trial, two separate state agencies had a crack at the issue. The Employment Development Department determined Bennett was an employee, but the Unemployment Appeals Board reversed, finding he didn’t meet the common-law control test. CalPERS, on the other hand, determined Bennett was an employee. An appeal was heard by an administrative law judge (ALJ), who found that various elements of the common-law control test cut in different directions. Ultimately, the ALJ found the district had the burden of proving Bennett wasn’t an employee and it hadn’t satisfied that burden by a preponderance of the evidence.
One of Bennett’s claims at trial was that he had been fired for being a whistleblower, in violation of Labor Code Section 1102.5. To sue under that section, he was required to prove he was in fact an employee. However, the trial judge determined, based on the CalPERS ruling, that the district was barred from presenting evidence that Bennett was an independent contractor under a doctrine referred to as “collateral estoppel.” That doctrine is intended to prohibit the relitigation of issues that have previously been decided.
The court of appeal reversed because CalPERS had placed the burden on the district to prove Bennett was an employee, while Bennett was required to prove he was an employee to make his case in court. Because the burdens of proof were different, the issue decided by CalPERS wasn’t identical to the issue before the court.
The district also argued that it should have prevailed because, under the law, Bennett wasn’t an employee since he hadn’t “obtained a duly authorized employee position in compliance with the [district’s] applicable statutory and regulatory procedures.” More specifically, it argued that it didn’t “employ” Bennett within the meaning of Labor Code Section 1102.5 because he hadn’t been “duly hired pursuant to [its] Administrative Code and Employee Policy & Procedure Manual.” That argument was based on the view that under a public-sector merit system, there’s a specific procedure for how employees are hired.
The court of appeal disagreed, relying on Metropolitan Water District of Southern California v. Superior Court, the leading California Supreme Court case holding that the common-law test applies to employee classification under the Public Employees Retirement Law, to conclude that the term “employee” isn’t defined by Labor Code Section 1102.5. Importantly, however, the court reinforced other cases in which courts have held that when the term “employee” is defined by a statute or charter, the common-law test doesn’t apply. In particular, the court cited Holmgren v. County of Los Angeles and Estrada v. City of Los Angeles, two cases in which courts didn’t apply the common-law test because the term “employee” was defined by statute. The court distinguished those cases because there was no statute that defined “employee” in Bennett’s case.