Written by Jeremy Mittman

In a case that may be helpful to California companies who engage models or actors for photoshoots, commercials, or advertisements, Walmart prevailed over a model’s California wage claims last week when the Ninth Circuit found in Hill v. Walmart, Inc. that the retailer had a “good faith belief”—and therefore a defense— that it appropriately classified her as an independent contractor.

Background

The plaintiff, a model for Walmart, was represented by a talent management agency that had a contract with the retailer. Walmart paid the agency a flat fee for each day of modeling, and the agency paid the model the fee plus a commission. Walmart received net-30 invoices for each day of modeling from the agency. Notably, the contract specified that the agency and its personnel were independent contractors.

At issue were ten photo shoots in nonconsecutive periods of one or two days. In total, the plaintiff modeled for Walmart for 15 nonconsecutive days in a 13-month period. When Walmart failed to pay her immediately after each photo shoot ended, the plaintiff alleged that the retailer violated California Labor Code § 203 (which provides for penalties consisting of one day of pay for every day an employee is not paid, up to thirty days) and sought over $540,000 in penalties.

District Court

Walmart filed for summary judgement on the defenses that the model was an independent contractor, and that a good-faith dispute existed about whether the model was an independent contractor. The district court denied summary judgement on the first defense that the model was an independent contractor, concluding that whether she was an employee was a triable issue. However, the court granted summary judgement on Walmart’s good-faith defense, concluding that it was objectively reasonable for Walmart to believe the plaintiff was not an employee.

Ninth Circuit

The plaintiff appealed, arguing that Walmart could not raise a good-faith defense based on misclassifying an employee as an independent contractor. The appeals court panel rejected this argument and held that nothing in the record suggested bad faith on Walmart’s part. To test the merits of Walmart’s good faith defense, the panel considered whether a reasonable jury could find that Walmart’s independent contractor defense was reasonable. The Court applied the Borello test, noting that the “ABC Test” set forth in the California Supreme Court’s landmark Dynamex decision does not apply to provisions of state labor law, and the plaintiff did not allege that Walmart violated any wage order.

While the plaintiff argued that Walmart exercised significant control over her activities, several facts would have lead Walmart to believe that the parties were not forming an employment relationship, one of the Borello factors. The model arranged for and paid for her own travel, did not receive a Form W-2 from Walmart, was free to provide modeling services for other companies, and the length of time she was employed argued against employment status. Additionally, the facts suggested that taking photographs of models was not part of the regular business of the principal, another Borello factor. Therefore, the panel concluded that there were reasonable grounds for Walmart to believe that the plaintiff was appropriately classified as an independent contractor, which was sufficient for a good-faith dispute, and affirmed the district court’s summary judgment to Walmart.