In West Hollywood Community Health and Fitness Center v. California Unemployment Insurance Appeals Board, ___ Cal.App.4th ___ (December 5, 2014), the California Court of Appeal (Second Appellate District, Division Eight) reversed the judgment of the Los Angeles County Superior Court (Judge Lavin) in favor of the California Unemployment Insurance Appeals Board (the “Board”) against an employer.
Applicant was employed as a massage therapist who left his employment and then filed a claim for unemployment benefits against his former employer, which was granted. The employer appealed, however, arguing that applicant was an independent contractor, not an employee, and therefore was not entitled to such benefits. Nevertheless, both an administrative law judge and the Board agreed with Applicant. The employer appealed to the state’s Superior Court but the court granted the Board’s motion to strike all allegations concerning Applicant’s employment status, concluding that it could not review the Board’s decision on that issue because to do so would violate the state’s constitutional and statutory rules prohibiting a court from enjoining the collection of a tax – in this case, employment taxes. The employer appealed again.
The appellate court agreed with the employer. Although the court acknowledged that a party may not seek judicial review of a tax in advance of paying the tax but a party may challenge a benefit decision. In this case, the subject of the appeal was “not a tax refund but a challenge to charges to the [employer]’s reserve account.” The court went on to address First Aid Services of San Diego, Inc. v. California Employment Development Dept., 133 Cal.App.4th 1470 (2005), which held that if the net result of the relief sought would be to restrain the collection of the tax allegedly due, the action must be treated as one having that purpose and, therefore, not subject to review: “ . . . here there is no allegation or evidence subject to judicial notice that the action is one to restrain the collection of a tax allegedly due, or imminently due. Therefore, at this early state in the proceedings, we must assume that no tax was assessed or was allegedly due.” Accordingly, judgment was reversed.