Souza v. Board of Adminstration of the Public Employees' Retirement System CA3 (2025) · DecisionDepot
Souza v. Board of Adminstration of the Public Employees' Retirement System CA3
California Court of Appeal May 30, 2025 No. C099861Unpublished
Filed 5/30/25 Souza v. Board of Adminstration of the Public Employees’ Retirement System CA3 NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento) ----
MARGARET SOUZA et al., C099861
Plaintiffs and Appellants, (Super. Ct. No. 34-2022- 80003802-CU-WM-GDS) v.
BOARD OF ADMINISTRATION OF THE PUBLIC EMPLOYEES’ RETIREMENT SYSTEM,
Defendant and Respondent;
REGIONAL GOVERNMENT SERVICES,
Real Party in Interest and Appellant.
Twenty years ago, in Metropolitan Water Dist. v. Superior Court (2004) 32 Cal.4th 491, our Supreme Court held the Public Employees’ Retirement Law (PERL) (Gov. Code, § 20000 et seq.)1 incorporates the common law test for employment, and that
1 Undesignated statutory references are to the Government Code.
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public agencies that contract with California’s Public Employees’ Retirement System (CalPERS) are required to enroll their common law employees in CalPERS. In this case, the Board of Administration of CalPERS determined Margaret Souza worked for the City of Hughson as a common law employee after she retired from public service, in violation of rules governing postretirement employment, and the trial court upheld that determination. Souza appeals, arguing (1) the Legislature has abrogated the common law test for employment in the circumstances of this case, (2) if the common law test applies, CalPERS and the trial court both erred when they found she was a common law employee, and (3) CalPERS’s decision was based on underground regulations. We reject all three arguments and thus affirm. FACTUAL AND PROCEDURAL BACKGROUND2 From 1975 to 2010, Souza worked as a finance director for the cities of Turlock, Newman, and Patterson. Through her employment, she was a member of CalPERS and was entitled to retirement benefits under the PERL. She retired in October 2010, and began receiving a CalPERS retirement allowance in December 2010. A. Souza’s Postretirement Work for the City of Hughson In February 2011, a few months after she retired, Souza began working for the City of Hughson (the City). Bryan Whitemyer was the city manager at the time. He testified the City’s “financial situation was very, very discouraging. We were running deficits” and “we had to lay-off at least five to eight people.” Whitemyer thought the City’s finance director was “not qualified for the position,” and she ultimately retired. Whitemyer did not immediately begin recruiting a new finance director because “[t]he
2 Much of the factual background is taken from the underlying administrative decision and the trial court’s decision in this case. Both decisions contain numerous factual findings, most of which Souza does not challenge. Indeed, she cites both decisions extensively in her briefs.
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City was in such disarray financially, there was tremendous pressure from the unions and others, how can you hire highly paid executives when you’re laying off all the lower paid staff?” Nonetheless, Whitemyer “still needed to balance the budget,” and he “needed to find someone to help with that critical, urgent task.” Whitemyer had previously worked with Souza when he was the assistant city manager and then the interim city manager for the City of Patterson and she was the finance director. Whitemyer had a very high opinion of Souza and believed she was “one of the best Finance Directors” he had ever worked with. Whitemyer thus reached out to Souza for help with the City’s budget. According to Souza, Whitemyer approached her and said, “he was shorthanded at the moment and . . . needed to have the budget prepared and analyzed because of [the City’s] dire financial straits.” She understood Whitemyer was not offering her a full-time position and she “was not interested in . . . getting a full- time position. I just wanted to help him for a short-term situation until they were able to find another Finance Director.” Souza worked for the City pursuant to two different contractual arrangements. She initially worked pursuant to a written “Part-Time Finance Director Employment Agreement” between the City and Souza. The agreement provided Souza would “serve as a part-time interim finance director for the City and . . . perform all services appropriate to that position, as well as such other services as may be assigned by the City.” It also provided the parties “understand and agree that the employment relationship between them is at-will which may be terminated by either party at any time with or without notice and with or without cause.” Finally, it provided Souza would be paid $45 per hour for up to 1,000 hours of work during any fiscal year. Whitemyer testified that, pursuant to this contract, Souza was a “temporary” and “at-will” “employee.” Approximately eight months after Souza began working for the City, Whitemyer still had not begun recruiting for a permanent finance director because the City’s finances
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were still poor. He wanted Souza to continue working on the City’s budget, but he was aware of recent changes to postretirement employment rules and did not want the City to violate them. After consulting with the city attorney, Whitemyer decided it would be best for the City to contract with Regional Government Services (RGS) for Souza’s services. RGS is a joint powers authority created by the Association of Bay Area Governments and the City of San Carlos. According to RGS’s Executive Director Richard Averett, it was formed “to provide a way for smaller public agencies to obtain professional level . . . services in . . . the quantity that they needed, the amount that they needed, so that they were able to get top level talent without going to the market and hiring that top level talent.” Contracting with RGS for Souza’s continued services involved two separate contracts: (1) an “Agreement for Management and Administrative Services” between the City and RGS entered into on September 28, 2012; and (2) an “Employment Agreement” between RGS and Souza entered into on October 31, 2012. The “Agreement for Management and Administrative Services” between RGS and the City provided RGS would assign “an RGS employee or employees to serve as the [City’s] Director of Finance.” The assigned employee would “[b]e reasonably available to perform the services during the normal work week, for approximately 900 hours each . . . year,” would “[m]eet regularly and as often as necessary for the purpose of consulting about the scope of work performed,” and would perform “[o]ther [d]uties” that were part of the “job description” for the position. The job description for the City’s director of finance was attached to the agreement. The City would pay RGS $58.57 an hour for this employee’s services. The agreement also provided: “It is understood that the relationship of RGS to [the City] is that of an independent contractor and all persons working for or under the direction of RGS are its agents and employees and not agents or employees of [the City]. . . . [¶] . . . [¶] [The City] shall not have the authority to direct how services are to
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be performed, specify the location where services are to be performed, or establish set hours or days for performance, except as set forth [herein].” It also provided: “RGS shall assign only competent personnel to perform services pursuant to this Agreement. In the event that [the City], in its sole discretion, at any time during the term of this Agreement, desires the reassignment of such person or persons, RGS shall consider reassigning such person or persons.” Finally, it provided either party could terminate the agreement “with or without cause, upon 30 days written notice.” The “Employment Agreement” between RGS and Souza provided Souza was an “at-will” employee of RGS. It also provided RGS would assign her to “a variety of clients, including the City of Hughson,” to perform duties “not yet delineated,” and would pay her $45 an hour. Souza worked for the City pursuant to the RGS contract from approximately October 2012 to July 2015. During this time, she considered herself to be an employee of RGS, not of the City. She reported her time using RGS’s online payroll software. RGS paid her, and in turn, billed the City for the hours she worked. RGS provided her with a W-2. She acknowledged receiving RGS’s personnel rules, and she considered herself bound by those rules, not the City’s rules. RGS—not the City—was responsible for providing her with workers’ compensation, disability insurance, sick leave required by law, and “anything else that the law might require that [an employer] provide to an employee.” Souza’s work for the City was the same under both sets of contractual arrangements. She testified she only worked on the City’s budget and on “activities associated with budgeting,” and she did not perform the other duties listed in the finance director’s job description. She typically worked under 20 hours a week. She testified Whitemyer was her “contact,” but he did not guide her work, and, “He didn’t tell me what to do. He just told me what he wanted.” She also testified that when she worked as finance director for the cities of Turlock, Newman, and Patterson she reported to the city
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manager, but the city manager did not give her direction on preparing the budget because she had “been working in city finance for 40 years, so you get it down pretty good.” The budget process she followed when she worked for the City was no different than the budget process she followed when she worked for the cities of Turlock, Patterson or Newman, and her interactions and working relationship with Whitemyer were the same as her interactions and working relationships with the city managers of those cities. Whitemyer testified he did not “act as [Souza’s] supervisor,” did not direct her “as to what steps she needed to take in order to prepare and reconcile the City budget,” and he was “most interested in the end product.” He did not have the experience to prepare a budget, and no other City employee had that experience either. He had no intention of having Souza perform all the duties of the finance director, just those relating to the budget. Souza had a City e-mail address. She was identified in the minutes of city council meetings and in various reports as “Interim Finance Director,” “Director of Finance,” or “Finance Director.” She was identified as “Director of Finance” on the City’s Web page. On the City’s 2012-2013 organizational chart, she was identified as “Interim Finance Director P/T.”3 Whitemyer was asked why Souza was referred to as interim finance director or finance director, and he explained it was “based on expediency” because “the quickest way to get something to the [City] Council was to use what had already been in place, which was the Finance Director job description.” He also thought it was important to utilize “titles that people were familiar with” because he was afraid if he referred to Souza as a “consultant” people would say, “this is frivolous spending.” Finally, he
3 On draft organizational charts for 2013-2014 and 2014-2015, the finance director position was identified as “vacant,” and next to that was a box that stated, “Reg Gov Solutions, Margaret Souza.”
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explained that referring to Souza as finance director would give her “credibility” with the city council and the community. Souza worked for the City until it hired a new finance director in mid-2015. All told, she worked for the City from approximately February 2011 to July 2015, or for over four years. B. The Underlying Administrative Proceedings In February 2018, CalPERS began investigating the nature of Souza’s relationship with the City, and in January 2020, it determined she was a common law employee and her employment violated certain postretirement employment rules. Souza appealed, and an evidentiary hearing was held before an administrative law judge (ALJ) from the Office of Administrative Hearings. Following the hearing, the ALJ issued a proposed decision finding Souza was a common law employee of the City and her employment violated the applicable postretirement employment rules,4 and CalPERS adopted the ALJ’s proposed decision in its entirety. C. The Trial Court Proceedings Souza and the City challenged the decision by filing a petition for writ of mandate pursuant to Code of Civil Procedure section 1094.5. They argued the evidence did not
4 Briefly, the PERL provides, “A retired person shall not serve, be employed by, or be employed through a contract directly by, a public employer in the same public retirement system from which the retired person receives the benefit without reinstatement from retirement, except as permitted by this section.” (§ 7522.56, subd. (b).) “A person who retires from a public employer may serve without reinstatement . . . upon appointment by . . . a public employer . . . because the retired person has skills needed to perform work of limited duration,” but such appointments “shall not exceed a total for all employers . . . of 960 hours . . . in a . . . fiscal year” and “[t]he rate of pay for the employment shall not . . . exceed the maximum, paid by the employer to other employees performing comparable duties.” (Id., subds. (c), (d).) The ALJ found Souza violated the postretirement employment rules because her hourly rate was greater the maximum rate authorized for the City’s finance director position, and Souza does not challenge that finding.
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support the finding that Souza was a common law employee and the ALJ “made numerous errors of law” that were effectively adopted by CalPERS. They also sought a judicial declaration that the challenged decision “is predicated on unlawful ‘underground regulations’ and, thus, is ultra vires.” The parties agreed the challenged decision implicated Souza’s fundamental vested right to receive a retirement benefit, and the trial court was thus authorized to exercise its independent judgment on the evidence.5 Applying its independent judgment, the trial court found the evidence supported CalPERS’s determination that Souza was a common law employee of the City. We will discuss the basis for the trial court’s decision below. Judgment was entered denying the petition, and Souza, the City, and RGS filed a timely notice of appeal. Although not directly relevant to this appeal, we note the trial court related this case with four other cases that also involve CalPERS retirees who provided services to cities through RGS.6 The petitioners in all five related cases challenged CalPERS’s finding that they were common law employees. The trial court found in favor of the petitioner in one of the cases (Abid-Cummings v. Board of Administration of the Public Employees’ Retirement System, Super. Ct. Sac. County, 2023, No. 34-2022-80003798 (Abid-Cummings)), and in favor of CalPERS in the other four cases, including this case,
5 “Section 1094.5 of the Code of Civil Procedure provides the basic framework by which an aggrieved party to an administrative proceeding may seek judicial review of any final order or decision rendered by a state or local agency.” (Bixby v. Pierno (1971) 4 Cal.3d 130, 137, fn. omitted.) Where it is claimed the agency’s findings are not supported by the evidence, two standards of review apply at the trial court level: the independent judgment standard and the substantial evidence standard. The independent judgment standard applies in cases where the agency’s decision affects a fundamental vested right, and the substantial evidence standard applies in all other cases. (Id. at pp. 143-144.) 6 Both parties have asked us to judicially notice the related case order. We deny both requests as unnecessary because that order is already part of the record and thus does not need to be judicially noticed.
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and the petitioners in those four cases have all appealed. The other three appeals are: (1) Sandhu v. Board of Administration of the Public Employees’ Retirement System, No. C100028; (2) Estate of Douglas Breeze v. Board of Administration of the Public Employees’ Retirement System, No. C099877; and (3) Dowswell v. Board of Administration of the Public Employees’ Retirement System, No. C100027. In February 2025, we issued a published decision affirming the judgment in the Sandhu case (and we note that Souza raises many of the same arguments that we resolved in the Sandhu case). In her briefs, Souza relies extensively on the trial court’s decision in the Abid- Cummings case. Like Souza, Linda Abid-Cummings worked for the City of Hughson after she retired, and she worked pursuant to the same contract between the City and RGS that Souza worked pursuant to. Unlike Souza, however, the trial court found Abid- Cummings was not a common law employee of the City. It thus granted Abid- Cummings’ petition for writ of mandate and entered judgment in her favor, and CalPERS did not appeal. Souza spends much time arguing the facts in this case are “almost identical” to the facts in Abid-Cummings and criticizing the trial court for “contradicting” its analysis and findings in that case. She also asks us to judicially notice the trial court’s decision and the transcript of the hearing in Abid-Cummings. We deny the request because “only relevant material may be [judicially] noticed,” and the trial court’s decision in Abid-Cummings is not relevant to our resolution of this appeal. (Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, disapproved on other grounds in In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276; see also Pereira-Goodman v. Anderson (1997) 54 Cal.App.4th 864, 872, fn. 5 [declining to take judicial notice of superior court decision and noting such decisions “do not have precedential value”].) One of the primary issues in this case is whether the trial court’s finding that Souza was a common law employee is supported by substantial evidence, not whether it is consistent with a contrary finding in another case. Accordingly, the trial court’s finding that Abid-
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Cummings was not a common law employee—which finding was not appealed—is not relevant to this appeal.7 DISCUSSION Souza makes three arguments on appeal: (1) the common law test for employment is not applicable to the facts of this case; (2) even if it is applicable, the trial court misapplied the test and/or erred in finding she was a common law employee; and (3) CalPERS’s decision was based, at least in part, on underground regulations. We discuss each argument in turn. We note at the outset that Souza’s briefs contain a total of 92 footnotes, many of which contain arguments not raised in the body of the briefs. “Footnotes are not the appropriate vehicle for stating contentions on appeal” (Sabi v. Sterling (2010) 183 Cal.App.4th 916, 947), and we thus have not considered arguments raised only in footnotes (Requa v. Regents of University of California (2012) 213 Cal.App.4th 213, 226, fn. 9). I The Common Law Test Applies Souza’s first argument is that the common law test for employment does not apply because, under the circumstances of this case, it has been abrogated by sections 37103 and 53060. We disagree. Pursuant to the PERL, CalPERS provides retirement benefits to its “members,” who include “not only state employees but also employees of ‘contracting agencies,’ that is, public entities . . . that have chosen to participate in CalPERS by contract with the CalPERS governing board. (§§ 20022, 20460.)” (Metropolitan Water Dist. v. Superior
7 For similar reasons, we deny CalPERS’s request for judicial notice of the trial court’s decision in the other related cases and both parties’ requests for judicial notice of other nonprecedential CalPERS decisions. We also deny Souza’s (third) request for judicial notice on the ground that the document is not relevant to our analysis.
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Court, supra, 32 Cal.4th at p. 499 (Metropolitan).) Here, all of the cities that Souza worked for prior to her retirement in 2010 were contracting agencies, as is the City of Hughson. The PERL defines a “ ‘[m]ember’ ” as “an employee who has qualified for membership in this system and on whose behalf an employer has become obligated to pay contributions” (§ 20370, subd. (a)), and an “employee[] of a contracting agency” (§ 20383), and it defines an “ ‘[e]mployee’ ” as “[a]ny person in the employ of any contracting agency” (§ 20028, subd. (b)). “Membership in [CalPERS] is compulsory for all employees.” (§ 20502, subd. (a)(3).) “As these provisions indicate, only an agency’s employees—not those performing services for the agency on other terms—may be enrolled in CalPERS. The PERL makes this rule explicit in section 20300, subdivision (b), which excludes from CalPERS membership ‘[i]ndependent contractors who are not employees.’ ” (Metropolitan, supra, 32 Cal.4th at p. 499.) In Metropolitan, our Supreme Court held the PERL incorporates the common law test for employment to distinguish employees from independent contractors. Like this case, Metropolitan involved a public agency that contracted with CalPERS to provide retirement benefits to its employees, and also contracted with several labor suppliers to provide it with temporary workers. (Metropolitan, supra, 32 Cal.4th at pp. 496-497.) The agency considered the workers to be consultants rather than employees and it did not provide them with benefits that were contingent on employment. (Id. at p. 497.) A group of workers sued the agency, arguing they were employees and were entitled to all employment-related benefits, including membership in CalPERS, and the trial court permitted CalPERS to intervene in the action. (Id. at pp. 497-498.) Prior to trial, the trial court decided a threshold issue and ruled the agency was required to enroll all common law employees in CalPERS. (Metropolitan, supra, 32 Cal.4th at p. 498.) The parties sought review of that ruling by petition for writ of mandate, the appellate court denied the petition, and our Supreme Court granted review
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to decide what it deemed a “purely legal” issue: whether the PERL required a contracting agency “to enroll in CalPERS all workers who would be considered [its] employees under California common law.” (Metropolitan, at p. 496; see id. at p. 498.) The agency argued, “it may exclude from enrollment workers, such as plaintiffs, who are paid through private labor suppliers, even if they would be employees under the common law test.” (Id. at p. 496.) The court disagreed, holding, “the PERL incorporates common law principles into its definition of a contracting agency employee and that the PERL requires contracting public agencies to enroll in CalPERS all common law employees except those excluded under a specific statutory . . . provision.” (Ibid.) The court began its analysis by noting, “As to contracting agencies, the PERL gives the term [‘employee’] no special meaning, stating simply that an ‘employee’ means ‘[a]ny person in the employ of any contracting agency.’ (§ 20028, subd. (b).)” (Metropolitan, supra, 32 Cal.4th at p. 500.) It then explained, “In this circumstance—a statute referring to employees without defining the term—courts have generally applied the common law test of employment,” and, “[u]nless given reason to conclude the Legislature must have intended the term to have a different meaning in section 20028, subdivision (b), we also can only adhere to the common law test.” (Id. at pp. 500, 501.) Finally, it concluded, “the PERL’s provision concerning employment by a contracting agency (§ 20028, subd. (b)) incorporates a common law test for employment, and . . . nothing elsewhere in the PERL . . . supports reading into the PERL an exception to mandatory enrollment for employees hired through private labor suppliers.” (Id. at p. 509.) RGS is analogous to a labor supplier that provides temporary workers to contracting agencies, and Metropolitan teaches that if those temporary workers meet the common law test for employment, then they are employees for purposes of the PERL. Despite Metropolitan’s holding that the PERL incorporates the common law test for employment, Souza contends that test does not apply because sections 37103 and
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53060 have effectively abrogated it in the circumstances of this case.8 (Metropolitan, supra, 32 Cal.4th at p. 496.) Souza is incorrect. Section 37103 provides a city “may contract with any specially trained and experienced person, firm, or corporation for special services and advice in financial, economic, accounting, engineering, legal or administrative matters.”9 Similarly, section 53060 provides any public or municipal corporation (which includes a city) “may contract with and employ any persons for the furnishing . . . [of] special services and advice in financial, economic, accounting, engineering, legal, or administrative matters if such persons are specially trained and experienced and competent to perform the special services required.” Souza argues the City exercised its statutory authority to “contract” for “special services and advice in financial . . . matters” when it entered into its contract with RGS. This may be true, but it is not relevant because nobody is contending the City lacked authority to enter into a contract with RGS for Souza’s services. Moreover,
8 She also cites a third statute, section 54981, which provides, “The legislative body of any local agency may contract with any other local agency for the performance by the latter of municipal services or functions within the territory of the former.” However, she never discusses this statute or explains its applicability to this case, and we thus do not address it. 9 Souza asks us to judicially notice some of the legislative history of section 37103. Although legislative history is subject to judicial notice, we deny the request because Souza makes no attempt to explain how this legislative history is relevant or how it helps us interpret section 37103. (See People v. Investco Management & Development LLC (2018) 22 Cal.App.5th 443, 471, fn. 8 [denying request to judicially notice legislative history because it is “not relevant to a material issue in this case”].) Indeed, Souza’s sole mention of this legislative history is in a footnote where she states only that she “has obtained the legislative history of Government Code § 37103.” It is not our job to comb through the legislative history to develop an argument on Souza’s behalf. (See Alvarez v. Jacmar Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1206, fn. 11 [“It is not our responsibility to develop an appellant’s argument”].) Souza also asks us to judicially notice the legislative history of section 7522.56, but she never mentions this legislative history in her briefs or explains its relevance to this case, and we thus deny that request as well.
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nobody is contending Souza was not “specially trained and experienced,” or that she did not provide “special services and advice in financial . . . matters” within the meaning of those sections 37103 or 53060. Instead, the issue in this case is whether Souza was an employee within the meaning of the PERL when she was performing those special services for the City. Souza argues, variously, that: (1) sections 37103 and 53060 have preempted, abrogated, or modified the common law test in the circumstances of this case; (2) “[t]he power to contract for specialized services necessarily means that the RGS contract describes the legal relationship [between the City and Souza] even if one or more common law criteria of employment might exist”; and (3) “the plain language of Government Code § 37103 grants [the City] . . . the right to utilize contracting rather than employment as a means to obtain specialized services from RGS and its assigned employee, SOUZA.” Souza’s argument is not entirely clear. It appears, however, that she contends the fact that sections 37103 and 53060 use the word contract—i.e., a city “may contract . . . for special services”—means that any person providing such special services is, ipso facto, an independent contractor. Not so. The fact that cities are authorized to contract for special services says nothing about whether the person providing those services is an independent contractor or an employee. And as our Supreme Court has held, “ ‘the employment relationship is fundamentally contractual.’ ” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 335.) Thus, contracting for special services is perfectly compatible with finding the person providing those services is an employee. Indeed, Souza was initially hired by the City pursuant to a contract that identified her as an employee, and she was later hired by RGS pursuant to a contract that identified her as an employee. The City and RGS thus both contracted for Souza’s services and employed her. Moreover, section 53060 provides a city may “contract with and employ” a person to furnish special services, which appears to acknowledge that a person may be employed by contract, and, perhaps more
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importantly, to recognize that a person hired by a city pursuant to section 53060 may be an employee. (Italics added.) Souza cites case law that holds the common law is inapplicable when it has been modified by statute. (See, e.g., Lowman v. Stafford (1964) 226 Cal.App.2d 31, 39 [“when modified by state statutes, the common law is inapplicable in California”]; Monterey Club v. Superior Court (1941) 48 Cal.App.2d 131, 145 [“In California the common law is inapplicable where . . . it has been modified by our statutes”].) This is true, but there is nothing in the language of sections 37103 and 53060 that suggests either statute modifies the common law test for employment for purposes of the PERL. Souza also cites the statement in Metropolitan that, “[u]nless given reason to conclude the Legislature must have intended the term [‘employee’] to have a different meaning . . . , we . . . can only adhere to the common law test.” (Metropolitan, supra, 32 Cal.4th at p. 501.) Again, however, nothing in the language of sections 37103 or 53060 gives us reason to conclude the Legislature must have intended to modify the meaning of the term “employee” for purposes of the PERL when a city contracts for special services. Indeed, we note that section 37103 does not contain the term “employee” or any variation thereof, much less define the term, and section 53060 uses the term “employ” without further definition and would thus appear to be governed by Metropolitan’s holding that when a statute refers to employment without defining the term, “courts have generally applied the common law test.” (Metropolitan, at p. 500.) Souza argues we must harmonize the PERL with sections 37103 and 53060 and must give effect to each statute. We agree. As our Supreme Court has emphasized, “ ‘A court must, where reasonably possible, harmonize statutes, reconcile seeming inconsistencies in them, and construe them to give force and effect to all of their provisions.’ ” (Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles (2012) 55 Cal.4th 783, 805.) Here, however, we find no inconsistency or conflict between the PERL’s utilization of the common law employment test, and a city’s authority to contract
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for special services pursuant to sections 37103 and 53060. Instead, we harmonize and give effect to all of these statutory provisions as follows: If a contracting agency contracts with a person or a firm for special services as authorized by sections 37103 and 53060, then the common law employment test is used to determine whether the person providing those services is an employee for purposes of the PERL (in which case the person must be enrolled in CalPERS), or an independent contractor (in which case enrollment is not required). Souza cites Handler v. Board of Supervisors (1952) 39 Cal.2d 282 and Kennedy v. Ross (1946) 28 Cal.2d 569, for the proposition that “[p]ersons performing specialized services on a temporary basis have been held to be neither officers nor employees of the governmental body.” Neither case stands for the proposition that a person performing specialized services can never be deemed an employee, and neither case deals with the issue raised here. In Handler, a county entered into a contract with an attorney and an engineer to assist the district attorney on a discrete project, and one of the issues was whether the attorney and the engineer could be hired by resolution of the board of supervisors, or whether they had to be hired pursuant to ordinances governing the employment of what the court referred to as “officers and regular employees.” (Handler v. Board of Supervisors, supra, 39 Cal.2d at p. 286; see id. at pp. 283-284.) The court noted counties were authorized by law to contract with and employ persons to provide special services and advice in legal and engineering matters, and it held such persons could be hired by resolution. In so holding, the court noted in passing that “[p]ersons performing specialized expert services do so on a temporary basis and are neither officers nor [regular] employees, nor do they hold a position with the county. They are more akin to independent contractors.” (Id. at p. 286.) The court did not hold that all persons performing specialized services on a temporary basis are independent contractors rather than employees for purposes of the PERL.
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In Kennedy, a city entered into a contract with an engineer to furnish plans and specifications for a public works project. Someone filed a lawsuit against the city to restrain it from paying the engineer “on the ground that . . . the [engineer] had not been exempted by the civil service commission pursuant to certain provisions of the city charter.” (Kennedy v. Ross, supra, 28 Cal.2d at p. 571; see id. at pp. 570-571.) As a result of the lawsuit, the city controller refused to pay the engineer, and the engineer sought a writ of mandate directing the controller to pay him. The controller argued the contract was illegal because it did not comply with the “civil service employment system” established by the city charter. (Id. at p. 571.) The city’s civil service commission opined the engineer “was an independent contractor” and was not “subject to the civil service provisions of the charter.” (Id. at p. 572.) The court agreed, noting that, “[t]he provisions of the charter do not foreclose the [city] from entering into contracts with individuals for the performance of professional services as independent contractors,” and the civil service system created by the charter only applies “ ‘to persons employed in permanent positions in municipal departments.’ ” (Id. at pp. 572, 573.) As in Handler, the court did not hold that all persons performing specialized professional services for a city are independent contractors rather than employees for purposes of the PERL. Souza also cites an Attorney General opinion for the proposition that section 53060 permits a public agency to employ persons with special skills to provide special services when those services cannot be provided by the agency’s own employees. The issue in that case, however, was whether the special services could be provided by the agency’s employees, not whether persons providing special services are employees or independent contractors. (19 Ops.Cal.Atty.Gen. 153, 155 (1952).) The Handler and Kennedy cases and the Attorney General opinion contain no discussion of the common law test for employment, no discussion of the meaning of the term “employee” in the PERL, and no discussion of any other issue that is relevant to this case, and it is axiomatic that “case[s] [are] not authority for propositions not considered
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and decided.” (Picerne Construction Corp. v. Castellino Villas (2016) 244 Cal.App.4th 1201, 1214-1215.) In sum, we find nothing in sections 37103 and 53060 affects the holding in Metropolitan that contracting agencies are required to enroll all common law employees in CalPERS. II Substantial Evidence Supports the Trial Court’s Conclusion that Souza Was a Common Law Employee Souza next argues the trial court’s finding that she was a common law employee is not supported by the evidence. We disagree. We first describe the common law test and the trial court’s application of that test. We then discuss the applicable standard of review. Finally, we explain why the trial court’s finding that Souza was a common law employee is supported by the evidence. A. The Common Law Test “The distinction between independent contractors and employees arose at common law to limit one’s vicarious liability for the misconduct of a person rendering service to him. The principal’s supervisory power was crucial in that context because ‘ . . . [the] extent to which the employer had a right to control [the details of the service] activities was . . . highly relevant to the question whether the employer ought to be legally liable for them. . . .’ [Citations.] Thus, the ‘control of details’ test became the principal measure of the servant’s status for common law purposes.” (S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 350 (Borello).) “Following common law tradition, California decisions . . . uniformly declare that ‘[t]he principal 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.’ ” (Ibid.) Our Supreme Court has emphasized that “what matters under the common law is not how much control a hirer exercises, but how much control the hirer retains the right to
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exercise.” (Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 533 (Ayala).) “Perhaps the strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because ‘[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent’s activities.’ ” (Id. at p. 531.) Although “the right to control work details is the ‘most important’ or ‘most significant’ consideration,” courts also consider “other factors” or “ ‘secondary’ indicia of the nature of a service relationship.” (Borello, supra, 48 Cal.3d at p. 350.) These other factors 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 creating the relationship of employer-employee.” (Id. at p. 351; see also Tieberg v. Unemployment Ins. App. Bd. (1970) 2 Cal.3d 943, 949 (Tieberg).) These factors “ ‘cannot be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations.’ ” (Borello, at p. 351.) B. The Trial Court’s Ruling The trial court found the weight of the evidence supported CalPERS’s determination that Souza was a common law employee. It first found the City had the right to control her work as evidenced by the fact that it could terminate her services without cause. As the trial court noted, the City’s contract with Souza expressly stated her employment was “ ‘at-will’ ” and the City could terminate her at any time “ ‘with or without cause.’ ” And, pursuant to the terms of the City’s contract with RGS, it could
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effectively terminate Souza’s services without cause because it had the right to terminate its contract with RGS without cause. The trial court acknowledged the contract between RGS and the City stated the City could not direct how Souza’s work was to be performed, but it found, “the parties’ actual conduct established otherwise. For example, Whitemyer told Souza what the City Council wanted, Souza presented Whitemyer with the budget, and he had to agree with it.” It thus found, “the control factor weighs in favor of an employee-employer relationship.” The trial court then discussed the secondary factors.10 It found four secondary factors weighed in favor of an employment relationship: (1) the work Souza performed was part of the regular business of the City; (2) the work was usually done by a City employee under the supervision of the City; (3) the length of time Souza provided services to the City (over four years); and (4) Souza was paid by the hour rather than by the job (although it found this factor weighed only “slightly in favor of an employee- employer relationship”). It also found two secondary factors were either neutral or not relevant in the circumstances of this case: (1) the skill required was neutral because Souza was performing work that was typically performed by a highly skilled City employee; and (2) who supplied the tools and the place of work was not relevant because the services Souza was providing were intellectual and case law teaches “the factor of ownership of tools is of little importance where the service to be performed is an intellectual endeavor.” (Tieberg, supra, 2 Cal.3d at p. 954.) Finally, the trial court disregarded the one factor that weighed in favor of an independent contractor
10 The only secondary factor it did not discuss was “whether the one performing services is engaged in a distinct occupation or business.” (Borello, supra, 48 Cal.3d at p. 351.) Souza does not discuss this factor other than to state the following: “That RGS and its employee SOUZA had a distinct business of consulting based on RGS’ staff expertise is clear from both the SOUZA employment agreement and RGS contract.” There is no citation to the record and no further discussion or analysis of this factor, and we thus do not consider it further.
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relationship—the belief or intent of the parties—because “[c]ourts ignore the parties’ characterization [of their relationship] if their actual conduct establishes a different relationship.” (Vendor Surveillance Corp. v. Henning (2021) 62 Cal.App.5th 59, 84.) C. Standard of Review In a case such as this one, “[w]here the trial court has independently reviewed an administrative agency’s factual findings, an appellate court applies the substantial evidence test to the findings of the trial court.” (Davis v. Civil Service Com. (1997) 55 Cal.App.4th 677, 686, italics added.) “In applying the substantial evidence test, ‘[the] appellate court focuses on the findings of the trial court, rather than those of the administrative agency.’ ” (Hittle v. Santa Barbara County Employees Retirement Assn. (1985) 39 Cal.3d 374, 388, fn. 9.) The substantial evidence test is deferential. “We must uphold the trial court’s findings unless they are ‘ “ ‘so lacking in evidentiary support as to render them unreasonable.’ ” ’ ” (Molina v. Board of Administration, etc. (2011) 200 Cal.App.4th 53, 61.) “[W]e must draw all legitimate and reasonable inferences in favor of the trial court’s decision.” (Bell v. Department of Motor Vehicles (1992) 11 Cal.App.4th 304, 309.) “ ‘The judgment will be upheld if there is any substantial evidence in support of each of the trial court’s essential findings; all contrary evidence will be disregarded on appeal.’ ” (Hittle, at p. 388, fn. 9.) Souza argues we must review the finding that she was an employee de novo, giving “no deference” to the trial court’s decision. We again disagree. “The determination of employee or independent-contractor status is one of fact if dependent upon the resolution of disputed evidence or inferences, and the [agency’s] decision must be upheld if substantially supported. [Citation.] If the evidence is undisputed, the question becomes one of law [citation], but deference to the agency’s view is appropriate.” (Borello, supra, 48 Cal.3d at p. 349.) Numerous cases hold, “[t]he question whether one is an independent contractor on the one hand or an . . . employee on the other, is ordinarily one of fact, the determination of which by the trial court on
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substantial evidence will be binding on the reviewing tribunal.” (Rogers v. Whitson (1964) 228 Cal.App.2d 662, 672, italics added; see also Vendor Surveillance Corp. v. Henning, supra, 62 Cal.App.5th at p. 75 [“Determining whether a person is an employee or an independent contractor is generally a question of fact if it depends on resolving disputes in the evidence” (italics added)]; Brose v. Union-Tribune Publishing Co. (1986) 183 Cal.App.3d 1079, 1081 [“Whether a person is an employee or an independent contractor is ordinarily a question of fact” (italics added)].) The question of whether a person is an employee or an independent contractor becomes a question of law “only if the evidence is undisputed” (Becerra v. McClatchy Co. (2021) 69 Cal.App.5th 913, 948), or if the evidence supports only one credible conclusion (Borello, at p. 349), or “if from all the facts only one inference may be drawn” (Brose, at p. 1081). Souza contends the question of whether she was an employee or an independent contractor is one of law because the evidence in this case is undisputed. We acknowledge that much (but not all) of the evidence is undisputed. However, this is not a case where only one inference or conclusion may be drawn from the evidence. Our task is thus to decide whether the trial court’s decision is supported by substantial evidence. D. Analysis i. Indicia of RGS employment Souza’s first argument is that the trial court erred by failing to consider the indicia of her employment relationship with RGS. She misunderstands the issue. The trial court noted, “the working relationship at issue is the one between Souza and the City.” We agree, and thus the issue in this case is whether a common law employment relationship existed between Souza and the City, not whether a common law employment relationship existed between Souza and RGS. In this regard, we note that a long line of case law recognizes that dual employment or coemployment may exist when an entity like RGS supplies workers to clients such as the City. As our Supreme Court has explained, “The possibility of dual
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employment is well recognized in the case law. ‘Where an employer sends an employee to do work for another person, and both have the right to exercise certain powers of control over the employee, that employee may be held to have two employers.’ ” (Kowalski v. Shell Oil Co. (1979) 23 Cal.3d 168, 174; see also Martinez v. Combs (2010) 49 Cal.4th 35, 76 [noting there may be “situations in which multiple entities control different aspects of the employment relationship. This occurs, for example, when one entity (such as a temporary employment agency) hires and pays a worker, and another entity supervises the work”].) Indeed, in Metropolitan itself, our Supreme Court recognized the possibility that, in a case such as this one, where an entity like RGS supplies workers to clients like the City, a particular worker could have “coemployers” who “share or allocate between them certain responsibilities of employment.” (Metropolitan, supra, 32 Cal.4th at p. 506.) Much like Souza does here, the labor suppliers in Metropolitan argued, “the PERL . . . should be construed to recognize coemployment,” and to hold that “labor suppliers, rather than their clients . . . should be deemed the employers for purposes of the PERL, thus excluding workers they supply from the public retirement system.” (Ibid.) The court rejected this argument, holding, “No legitimate basis exists . . . for finding a coemployment exception to the PERL.” (Ibid.) It also noted the Legislature has recognized that leased workers are “a special case in certain contexts,” but has not “provided in the PERL for any coemployment exception to a contracting agency’s duty to enroll [common law] employees in CalPERS. The only relevant legislative choice to date has been to require enrollment of all persons in the ‘employ’ of the contracting agency.” (Ibid.) And, as discussed above, it held the PERL incorporates the common law test of employment. We note there was no suggestion in Metropolitan that indicia of a common law employment relationship between the leased workers and the labor suppliers was relevant to the issue of whether the leased workers were common law employees of the
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contracting agency for purposes of the PERL. Thus, we agree with the trial court that the only relevant question in this case is whether Souza was a common law employee of the City. ii. The trial court’s application of the common law test Souza’s second argument is that the trial court “failed to apply the uncontroverted evidence in a manner consistent with the law.”11 We understand this to mean either that the trial court misapplied the common law test, or that its findings about the various factors are not supported by substantial evidence, or both. We start with the trial court’s finding on the primary factor—the right to control—and then consider its findings on those secondary factors that Souza discusses. a. The Primary Factor–the Right to Control As noted above, “ ‘[t]he principal 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.’ ” (Borello, supra, 48 Cal.3d at p. 350.) As also noted above, case law teaches, “[p]erhaps the strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because ‘[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent’s activities.’ ” (Ayala, supra, 59 Cal.4th at p. 531.) As discussed above, Souza initially worked pursuant to a “Part-Time Finance Director Employment Agreement” between herself and the City. The agreement refers to Souza as “Employee” and it describes the relationship between the parties as an “employment relationship.” It also states the parties understand Souza’s “employment” is “at-will” and “may be terminated by either party at any time with or without notice and
11 Souza also argues the trial court failed to apply the evidence “in a manner consistent with . . . Abid-Cummings.” As discussed above, the trial court’s decision in Abid-Cummings is not relevant.
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with or without cause.” The City thus had a contractual right to terminate Souza without cause, which is “[p]erhaps the strongest evidence of the right to control.” (Ayala, supra, 59 Cal.4th at p. 531.) As for the period of time that Souza worked for the City pursuant to the RGS agreements, she argues that the City had no power to terminate her employment—only RGS had that power. If the City was not satisfied with her services, its only recourse was to terminate the RGS contract or request another RGS advisor. That is essentially what the trial court found as well: i.e., it found that the City could effectively terminate Souza’s relationship with it, even if the City could not terminate Souza’s relationship with RGS. The evidence supports the trial court’s findings. The City/RGS Agreement provided it could be terminated by either party “with or without cause,” and also provided the City could request another advisor if they were not satisfied with Souza’s work. Souza asserts, “The right to cancel the contract is fundamentally different from the right to terminate SOUZA’s employment,” but she fails to explain why this is so. In either event, Souza would no longer be providing services to the City. We thus agree that, pursuant to the terms of the City/RGS Agreement, the City could effectively terminate Souza’s services with it if it was not satisfied with her work, either by terminating its contract with RGS or by requesting a different advisor. And the City’s right to terminate Souza’s services also gave it “ ‘the means of controlling [her] activities.’ ” (Ayala, supra, 59 Cal.4th at p. 531.) Souza argues the evidence shows the City did not actually exercise control over her work. This may be true, but it is not dispositive (or even particularly relevant). As noted above, “what matters under the common law is not how much control a hirer exercises, but how much control the hirer retains the right to exercise.” (Ayala, supra, 59 Cal.4th at p. 533.) “ ‘If the employer has the authority to exercise . . . control, whether or not that right is exercised with respect to all details, an employer-employee relationship exists.’ ” (Tieberg, supra, 2 Cal.3d at p. 949.) “[I]t is not the control actually
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exercised, but that which may be exercised which is determinative.” (Toyota Motor Sales U.S.A., Inc. v. Superior Court (1990) 220 Cal.App.3d 864, 875.) We also note that the lack of control actually exercised by the City in this case is easily explained by the fact that the work Souza performed was typically performed by a highly skilled employee with extensive experience in public sector budgeting and with little supervision. Souza acknowledged that when she worked for the cities of Turlock, Newman, and Patterson she did not receive direction on how to prepare the budget because she had “been working in city finance for 40 years, so you get it down pretty good.” And Whitemyer testified he did not have the experience to prepare a detailed municipal budget. It is thus not surprising that Whitemyer did not actually exercise much, if any, control over Souza’s work and instead relied on her decades of experience in budget preparation. The evidence is thus sufficient to support the trial court’s conclusion the City had the right to control Souza’s work, even if they rarely, if ever, exercised that right. b. The Secondary Factors Souza also challenges several of the trial court’s findings regarding the secondary factors.12 One of the secondary factors is “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.” (Borello, supra, 48 Cal.3d at p. 351.) As the trial court accurately recognized, “This factor focuses on how the work ‘is usually done’ in a given locale, not how the work was done in this particular case.” (Vendor Surveillance Corp. v.
12 Souza does not challenge all of them, and we will assume any finding that is not challenged is supported by substantial evidence. (See, e.g., Cameron v. Sacramento County Employees’ Retirement System (2016) 4 Cal.App.5th 1266, 1278 [“factual findings not contested must be accepted as true”].)
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Henning, supra, 62 Cal.App.5th at p. 80.) The trial court found the work Souza did for the City was “usually done under the supervision . . . of a higher-level City employee.” Souza does not directly challenge this finding. Instead, she argues general supervision is insufficient to establish control, because even true independent contractors may be generally supervised. This may be true, but the trial court’s finding that this factor weighed in favor of an employer-employee relationship is supported by the evidence. It is undisputed the work Souza did was usually performed by the City’s finance director, and the finance director is a permanent City employee under the direction and control of the city manager. The City’s municipal code provides, “It is the duty of the city manager, and he or she has the authority, to control, order, and give directions to all heads of departments.” (Hughson Mun. Code, § 2.08.060.)13 The municipal code also provides, “The city manager is the finance officer of the city, and it is his duty to, and he shall have the authority to, control, regulate, and authorize the . . . fiscal management activities of the city.” (Hughson Mun. Code, § 2.08.110.) And the finance director’s job description (which was attached to the City/RGS Agreement) states the finance director is the head of the finance department and “[r]eceives administration direction from the City Manager.” The evidence thus establishes: (1) Souza was performing at least some of the finance director duties on an interim and part-time basis; and (2) the city manager had the authority and the duty to control the finance director’s activities. Although this secondary factor is not dispositive, the trial court’s finding that it “weighs in favor of an employee- employer relationship” is supported by the evidence. Another secondary factor is “whether or not the work is a part of the regular business of the principal [here, the City].” (Borello, supra, 48 Cal.3d at p. 351.) The trial court found the work Souza did “fell within the ambit of the City’s financial department,
13 Souza’s request that we judicially notice portions of the City’s municipal code is granted.
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and . . . would have been performed by the City’s Finance Director if the position was not vacant,” and that “Souza’s work on the City’s budget is not distinct from the City’s regular business.” The trial court found this secondary factor weighed in favor of finding an employment relationship, and this finding is supported by the evidence. Indeed, we note that Souza’s counsel acknowledged at the hearing “that preparing a budget is part of the City’s regular business.” In sum, the trial court’s findings that the primary factor and four of the secondary factors weigh in favor of an employment relationship are either supported by the evidence or are not challenged by Souza. Moreover, Souza does not challenge the trial court’s findings that two of the secondary factors are neutral or inapplicable in the facts of this case. Finally, she does not challenge the trial court’s finding that the one factor that weighs in favor of an independent contractor relationship—the intent of the parties— is not sufficient to overcome the other factors. We therefore find the trial court’s conclusion that Souza was a common law employee is supported by substantial evidence. III The Underground Regulations Argument Souza’s final argument is that CalPERS’s decision was impermissibly based on underground regulations and is thus “ultra vires.” We reject this argument as well. The Administrative Procedure Act (APA) (§ 11340 et seq.) establishes detailed procedural requirements that state agencies must follow when adopting regulations, including providing the public with notice of any proposed regulations, giving interested parties the opportunity to comment thereon, and responding to comments in writing. (§ 11346; see generally §§ 11346.2, 11346.4, 11346.5, 11346.8, 11346.9.) The APA defines the term “ ‘[r]egulation’ ” broadly to include “every rule, regulation, order, or standard of general application or the amendment, supplement, or revision of any rule, regulation, order, or standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it, or to govern its procedure.”
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(§ 11342.600.) A rule subject to the APA thus has two identifying characteristics: (1) “the agency must intend its rule to apply generally, rather than in a specific case”; and (2) “the rule must ‘implement, interpret, or make specific the law enforced or administered by [the agency], or . . . govern [the agency’s] procedure.’ ” (Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571 (Tidewater).) A rule that meets this definition is a regulation and is subject to the APA even if the agency calls it something different like a “guideline,” a “policy,” or a “bulletin,” and even if it is unwritten. (Cal. Code Regs., tit. 1, § 250, subd. (a) [APA applies to any “guideline, criterion, bulletin, manual, instruction, order, standard of general application, or other rule” that meets definition of regulation]; Morning Star Co. v. State Bd. of Equalization (2006) 38 Cal.4th 324, 336 [policy need not be written in order to be subject to APA because “[w]e decline to endorse an approach that would allow an agency to avoid APA requirements simply by driving its regulations further underground”].) A regulation that is adopted without following the APA’s procedures is known as an “underground regulation” (Missionary Guadalupanas of Holy Spirit Inc. v. Rouillard (2019) 38 Cal.App.5th 421, 432), and underground regulations are void and may not be used or enforced by the agency (§ 11340.5, subd. (a); Tidewater, at p. 572). Souza argues that CalPERS is utilizing “unwritten and undefined common law criteria” and/or “[a]n unwritten agency interpretation” of the law. We presume she contends CalPERS’s use of the common law test to determine whether someone is an employee or an independent contractor is improper because it has never adopted a regulation stating it uses that test and identifying the criteria it considers when applying that test. Assuming this is her argument, we reject it. CalPERS uses the common law test because our Supreme Court has interpreted the PERL and held it incorporates that test to distinguish employees from independent contractors. (Metropolitan, supra, 32 Cal.4th at p. 496.) “[A]n agency is mandated to follow the judicial interpretation of a statute.” (Capen v. Shewry (2007) 155 Cal.App.4th 378, 390.) CalPERS is thus required
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to apply the common law test. Moreover, a long line of California cases explains how to apply the common law test and what factors to consider. (See, e.g., Borello, supra, 48 Cal.3d at p. 350; Ayala, supra, 59 Cal.4th at pp. 531-533; Tieberg, supra, 2 Cal.3d at p. 949.) Given this clear legal mandate and authority, CalPERS does not have to promulgate a regulation in order to apply the common law test. Souza also complains about CalPERS’s use of an “employment relationship questionnaire.” CalPERS uses this questionnaire to obtain information from workers and public agencies in order to help it determine whether a particular worker is a common law employee. It contains questions like the following: “How were you hired?” “To whom do you report?” “Do you perform services pursuant to a formal job description or duty statement?” “For the services in question, did the agency provide you with any training?” “Is your work directed, supervised or reviewed by anyone?” “Does the agency have the right to control how you do your work?” And, “Who pays you?” Souza states the questionnaire “meets the APA’s definition of a regulation, and as such, is fundamentally flawed.” That is the extent of her argument on this issue. An “appellant must present meaningful legal analysis supported by citations to authority . . . . [Citations.] When a point is asserted without argument and authority for the proposition, ‘it is deemed to be without foundation and requires no discussion by the reviewing court.’ ” (In re S.C. (2006) 138 Cal.App.4th 396, 408.) We need not consider “conclusory claims” (ibid.), or claims made without “intelligible legal argument” (Berger v. Godden (1985) 163 Cal.App.3d 1113, 1117), and would thus be well within our right to simply ignore this particular argument. Even if we were to consider it, we note Souza cites no legal authority that holds a questionnaire meets the definition of a regulation. The APA expressly states it does not apply to “[a] form prescribed by a state agency or any instructions relating to the use of the form.” (§ 11340.9, subd. (c).) Although the term “form” is not defined, we find a questionnaire is analogous to a form (see, e.g., Tidewater, supra, 14 Cal.4th at p. 572
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[noting with approval that courts have held a checklist used by officers when administering intoxilyzer test is not a regulation]), particularly in the absence of any contrary legal authority from Souza. Souza also asserts—again with no analysis—that the questionnaire fails to define critical terms like “ ‘control,’ ‘supervision,’ ‘reporting,’ and ‘training,’ ” and is thus “void for vagueness.” She fails to explain how the use of undefined terms (that are not particularly vague) makes the questionnaire an underground regulation. The void for vagueness doctrine arises out of the due process clause—not the APA. (See In re Sheena K. (2007) 40 Cal.4th 875, 890 [“the underpinning of a vagueness challenge is the due process concept of ‘fair warning’ ”].) “To satisfy due process, a statute must be sufficiently clear to provide adequate notice of the prohibited or required conduct referred to therein. [Citations.] Thus, a statute will be deemed void for vagueness if it either forbids or requires the doing of an act in terms so vague that persons of common intelligence must necessarily guess as to its meaning and differ as to what is required.” (Nisei Farmers League v. Labor & Workforce Development Agency (2019) 30 Cal.App.5th 997, 1012-1013.) Souza cites no cases applying the vagueness doctrine to a questionnaire, and she cites no cases holding vague terms can make a questionnaire an underground regulation. Souza’s final argument is that CalPERS’s application of the common law “is inconsistent and arbitrary,” and she asks us to judicially notice three nonprecedential CalPERS decisions that she contends demonstrate this inconsistency. We deny the request to judicially notice these decisions for two reasons. First, Souza fails to explain how these three decisions are evidence that CalPERS applies the common law test in an inconsistent manner, because each decision was written by a different ALJ from the Office of Administrative Hearings. Second, and perhaps more importantly, in each case the ALJ applied the common law test to the evidence introduced at the administrative hearing, and it is well settled that “interpretations that arise in the course of case-specific
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adjudication are not regulations.” (Tidewater, supra, 14 Cal.4th at p. 571; see also Capen v. Shewry, supra, 155 Cal.App.4th at p. 387 [“If the interpretation arises in the course of an enforcement proceeding involving the adjudication of a specific case it is not a regulation subject to the APA”].) Souza’s bigger argument may be that the common law test itself can lead to inconsistent and unpredictable results.14 This may be true. In the words of one court, “ ‘It is often a very elusive question whether a person under a given state of facts is an [employee] or an independent contractor,’ ” and “the difference between the two ‘is not a line at all but a twilight zone filled with shades of gray.’ ” (Richardson v. APAC- Mississippi (1994) 631 So.2d 143, 149.) As a result, courts “on quite analogous factual situations [have] reached opposite conclusions.” (Ibid.; see also Carlson, Why the Law Still Can’t Tell an Employee When It Sees One And How It Ought to Stop Trying (2001) 22 Berkeley J. Emp. & Lab. L. 295, 335 [“However courts state the test of employee status, they routinely concede its failure to produce predictable results for many workers whose status is ambiguous”].) Some inconsistency may be inevitable given that the common law test is a multi-factored test, and case law teaches, “ ‘the individual factors cannot be applied mechanically as separate tests; they are intertwined and their weight depends often on particular combinations.’ ” (Borello, supra, 48 Cal.3d at p. 351.) Thus, even a slight change in the facts can lead to different results. (See, e.g., Harger v. Structural Servs., Inc. (1996) 121 N.M. 657, 667 [916 P.2d 1234, 1334] [“ ‘Every case presents its own combination of facts, from which the resultant must be arrived at. A fact found controlling in one combination may have a minor importance in another’ ”].)
14 Amici curiae made a similar argument in the Sandhu case when they stated the common law test “disincentivize[s]” “experienced retired annuitants and CalPERS contracting agencies . . . from entering into independent contracting agreements” “due to the risk” they will be deemed employees. Souza asks us to judicially notice the amicus brief and CalPERS asks us to judicially notice its answer thereto, and we grant both requests.
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Indeed, our Supreme Court has noted that some courts and commentators contend one of the “significant disadvantages” of the common law test is the fact “that a multifactor, ‘all the circumstances’ standard makes it difficult for both hiring businesses and workers to determine in advance how a particular category of workers will be classified, frequently leaving the ultimate employee or independent contractor determination to a subsequent and often considerably delayed judicial decision. In practice, the lack of an easily and consistently applied standard often leaves both businesses and workers in the dark.” (Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903, 954.) The Legislature is free to amend the PERL to require CalPERS to apply a different and more predictable test, or to provide that workers providing services to public agencies through contracts with third parties like RGS are not employees of the public agencies. Unless and until it does so, however, we are bound by our Supreme Court’s determination that “the PERL requires contracting public agencies to enroll in CalPERS all common law employees” as determined by application of “the established common law test of employment.” (Metropolitan, supra, 32 Cal.4th at pp. 496, 508.) DISPOSITION The judgment is affirmed. The parties shall bear their own costs on appeal. (Cal Rules of Court, rule 8.278(a)(5).)
/s/ EARL, P. J.
We concur:
/s/ HULL, J.
/s/ KRAUSE, J.
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AI Brief
AI-generated · verify before citing
Holding. The court held that the Public Employees' Retirement Law (PERL) incorporates the common law test for employment, and that the City of Hughson's statutory authority to contract for special services does not exempt such arrangements from the common law test for determining whether a worker is a CalPERS-eligible employee. Consequently, the court affirmed the determination that the appellant was a common law employee of the City in violation of postretirement employment rules.
Issues
Whether the common law test for employment applies to determine if a retiree is a CalPERS-eligible employee when the public agency contracts for services under Government Code sections 37103 and 53060.
Whether the trial court's finding that the appellant was a common law employee of the City is supported by substantial evidence.
Whether the CalPERS decision was based on unlawful underground regulations.
Disposition. affirmed
Quotations verified verbatim against the opinion
“the PERL’s provision concerning employment by a contracting agency (§ 20028, subd. (b)) incorporates a common law test for employment”