Menu Close

Yang Li was “the sole owner” of Imperial Foot Spa, which was identified on her City of San Jose business license as “a massage parlor.”

Deputy Labor Commissioner Margaret Flanders and her partner conducted an inspection of Imperial Foot Spa on August 20, 2015. They were directed to see Li, the owner.

Flanders asked Li for her workers’ compensation insurance information. Since Li could not show that she had a valid workers’ compensation insurance policy, Flanders issued a “Stop Order, Penalty Assessment . . . in the amount of $9,000 for having six employees working without a valid workers’ compensation insurance policy.” Flanders also gave Li a “Notice to Discontinue Labor Law Violations.”

Li appealed the order and assessment the following day.

On August 23, 2015, Flanders paid a follow-up visit to Imperial Foot Spa, and observed the business was open at 9:23 a.m. and a woman was working folding towels in a massage room.

The hearing on Li’s appeal was held on August 26, 2015. The only witnesses who testified at the hearing were Li and Flanders. Li testified that the workers at her business were not her “employees” but her “co-collaborators.” She explained that she had “written collaboration agreement[s] with those people who work there where collaborators were not employer-employee kind of relationship.”

Li submitted into evidence contracts between her and Helen, Judy, Jenny, and James. Each of these contracts provided that Li and the worker “belong to collaborative, not employment relationship.”

The hearing officer found that Li had six employees working for her. The written findings expressly applied the multi-factor test set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).

Li filed a petition for mandate with the Court of Appeal. The hearing officer was affirmed in the unpublished case of Li v. Cal. Dept. of Industrial Relations.

Generally, . . . 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.)