# Sandhu v. Bd. of Admin. of CalPERS

> California Court of Appeal · February 14, 2025

URL: https://www.frixlaw.com/law-library/cases/10800278

## Case

- **Court:** California Court of Appeal
- **Decided:** February 14, 2025
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

Filed 2/14/25
CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----

TARLOCHAN SANDHU, C100028

Plaintiff and Appellant, (Super. Ct. No. 34-2022-
80003801-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.

APPEAL from a judgment of the Superior Court of Sacramento County, James P.
Arguelles, Judge. Affirmed.

Law office of Scott N. Kivel, Scott N. Kivel; Redwood Public Law and Sky
Woodruff for Plaintiff and Appellant.

Law office of Scott N. Kivel, Scott N. Kivel; Redwood Public Law and Sky
Woodruff for Real Party in Interest and Appellant.

1
Renne Public Law Group, Arthur A. Hartinger and Maribel Lopez for League of
California Cities and California Special Districts Association as Amici Curiae on behalf
of Plaintiff and Appellant and Real Party in Interest and Appellant.

Matthew G. Jacobs, Renee Salazar, Elizabeth Yelland and Preet Kaur for
Defendant and Respondent.

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 public
agencies that contract with the Public Employees Retirement System (CalPERS) are
required to enroll all their common law employees in CalPERS. In this case, the Board
of Administration of CalPERS determined Tarlochan Sandhu worked for several cities as
a common law employee after he had retired from public service, in violation of rules
governing postretirement employment, and the trial court upheld that determination.
Sandhu 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 he was a common law employee,
and (3) CalPERS’s decision was based on underground regulations. We disagree with the
first two arguments and find the third was forfeited, and we thus affirm.
FACTUAL AND PROCEDURAL BACKGROUND
From 1989 to 2011, Sandhu worked for various public agencies as a finance and
accounting professional. Through his employment, he was a member of CalPERS and
was entitled to retirement benefits under the PERL. He retired in September 2011, and
began receiving a CalPERS retirement allowance in December 2011.

1 Undesignated statutory references are to the Government Code.

2
In February 2015, Sandhu was hired by Regional Government Services (RGS).
RGS hires people with prior public sector work experience and assigns them to work for
public sector agencies. RGS’s executive director explained RGS was formed “to provide
a way for smaller public agencies to obtain professional level . . . services in . . . the
quantity that they need[].”
Pursuant to the terms of Sandhu’s written employment agreement, he was an “at-
will” employee of RGS. RGS would assign Sandhu to “multiple clients” “to provide
finance advisory functions.” He was initially assigned to the City of Capitola (Capitola),
and he was thereafter assigned to the Town of Los Altos Hills (LAH), the City of
Alameda (Alameda), and the City of Union City (Union City) (collectively referred to as
“the Cities”). RGS paid Sandhu an hourly rate that fluctuated based on the type of work
and the scope of services he performed, and RGS, in turn, billed the Cities for the hours
he worked. To give one example, RGS paid Sandhu $75 per hour for the work he did for
Capitola, and it billed Capitola $100 per hour for Sandhu’s services.
RGS and Sandhu considered RGS to be Sandhu’s sole employer. RGS—not the
Cities—was responsible for providing Sandhu with workers’ compensation, disability
insurance, sick leave required by law, a 401(k)-type retirement plan, and “anything else
that the law might require that [an employer] provide to an employee.” He reported his
time using RGS’s online payroll software. As noted, he was paid by RGS, and RGS was
responsible for paying all employment-related taxes and issuing W-2s.
RGS entered in written agreements with each of the Cities for Sandhu’s services.
The agreements with Capitola, LAH, and Union City were similar and all provided, “It is
understood that the relationship of RGS to [the city] is that of 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 be performed, specify the location where services are to be
performed, or establish set hours or days for performance of services, except as set forth

3
in the” agreement. They also provided, “In the event that [the city], at any time during
the term of this Agreement, desires the reassignment of personnel, [the city] shall make a
request to RGS, and RGS shall meet and confer in good faith to consider reassigning such
person or persons.” Finally, they provided, “This agreement may be terminated by either
Party, with or without cause, upon 30 days written notice.” The Alameda agreement was
different. It provided: “City and [RGS] intend that the relationship between them created
by this Agreement is that of employer-independent contractor. The manner and means of
conducting the work are under the control of [RGS], except to the extent they are limited
by statute, rule or regulation and the express terms of this Agreement.” It also provided,
“City shall have the option, at its sole discretion and without cause, of terminating this
Agreement by giving seven (7) days prior written notice.”
All told, Sandhu worked for the Cities from February 2015 to May 2016.
Capitola
Sandhu worked for Capitola for approximately 9 weeks, from late February to late
April 2015. He worked a flexible schedule that varied from week to week depending on
his availability and Capitola’s needs. On average, he worked around 24 hours a week.
Capitola’s city manager, Benjamin Goldstein, testified he entered into a contract
with RGS because the finance director had given notice, and the city was “in the
beginning of a budget season” and needed someone who could continue the budget
process while “we were recruiting for a new finance director.” Sandhu worked for
Capitola until it hired a new finance director.
The contract between RGS and Capitola stated Sandhu would “provide Interim
Finance Director Services” and “related work as required.” Sandhu did some, but not all,
of the essential duties listed in the finance director’s job description. He prepared the
city’s annual operating and capital budget and revenue and expenditure forecasts, and
provided advice and assistance to the city council, the city manager, and other city staff
as asked. He testified he “work[ed] closely” with Goldstein and met with him “[a]t least

4
once a week” to update him on the budget process, but Goldstein did not give him “day-
to-day directions” about how to do the work.
Capitola utilizes what is known as “a city manager form of government.”
Goldstein explained that, under this form of government, the city council hires the city
manager, who functions as the city’s chief executive and oversees all city employees.
The Capitola Municipal Code provides, “It shall be the duty of the city manager and he or
she shall have the authority to control, order and give directions to all heads of
departments,” including the finance director.2 (Capitola Mun. Code, § 2.08.090.)

Goldstein testified he considered Sandhu to be an independent contractor. He was
asked whether he supervised Sandhu on a day-to-day basis, and he responded, “I don’t
know if supervise is the proper term, but I was the prime contact person for him on staff.
I was the person [for] whom he was preparing materials, submitting it for review, and
discussing what he was working on.” Goldstein testified he was ultimately responsible
for the presentation of budget documents to the city council, and although he relied on
“consultants or staff” “to do much of the work,” “at the end of the day, I’m responsible
for that work.” He agreed that, because he had “ultimate authority or responsibility” for
the city budget, he “exercise[d] some sort of authority or oversight over the people [he]
work[ed] with to prepare the budget.”
Goldstein introduced Sandhu to the city council as the “Interim Finance Director,”
and Sandhu was identified as “Staff” and “Interim Finance Director” at a meeting of the
city’s finance advisory committee. On a list of the city’s current finance advisory
committee members, Sandhu was identified as “Staff Representative” and “Finance
Director.” He was provided with a city e-mail address and a cubicle in city hall, where he
worked the “[m]ajority of the time.”

2 Sandhu’s request that we judicially notice portions of the Cities’ municipal codes
is granted.

5
Los Altos Hills
Sandhu worked for LAH from April 2015 to January 2016. RGS’s contract with
LAH stated Sandhu would “provide Interim Finance Manager services two (2) days per
week; and may perform services on a full time basis as needed.” His hours varied, and,
on average, he worked less than 60 hours a month.
LAH’s finance department had two “professional finance employees”—the
administrative services director and the finance manager—and one clerk. The city
manager, Carl Cahill, testified he entered into a contract with RGS because “we had a
vacancy . . . . The [administrative services] director . . . had left, and so I internally
promoted the finance manager [Pak Lin] to the position of [administrative services]
director.” In her new position as administrative services director, Lin supervised the
finance department. While LAH was recruiting for a new finance manager, it hired “RGS
and its employees . . . to . . . have somebody fill in and . . . maintain internal controls for
our public finances” and “to share in the financial management responsibilities.”
Sandhu did some, but not all, of the duties listed in the finance manager’s job
description. His major duties were “assisting . . . in the accounting functions and also
providing advice to the finance director on processing of accounts payable, payroll, and
those kinds of things.” He testified LAH did not dictate his work schedule, train him how
to perform his tasks, give him day-to-day directions, or evaluate his performance.
Cahill testified he viewed Sandhu as a consultant rather than an employee. He
also testified he did not supervise Sandhu’s “day-to-day” work. When asked whether
LAH had control over Sandhu’s work, he responded, “Depends on what you mean by
control. We certainly had expectations. My expectation is he is a professional public
finance expert, so I would have relied on things that he told me.” He testified if LAH
was not satisfied with Sandhu’s work, it would “call RGS and say we have a problem”
and “we need to sever this. We don’t want him back.” He also testified Sandhu would
have worked more closely with Pak Lin than with him.

6
Sandhu testified he met with Lin “at least once a week.” He also testified LAH
was “a very small outfit. And most of the work that was assigned to me, I was able to do
on my own without any direction.” Lin did not testify at the hearing, but she filled out a
questionnaire that was admitted into evidence that stated Sandhu reported to her, she
reviewed his work, and LAH had the right to control his work. She also stated Sandhu
performed “Interim Finance Manager duties while position was vacant,” and he “was
filling in for a vacancy for a few months. His role is to assist with daily operation, budget
prep & audit.” After a new finance manager was hired, Lin requested and received
permission to use Sandhu for another month or so in a “limited capacity” to help with the
transition.
Sandhu was identified as “Staff” and “Contract Finance Manager” at a city council
meeting. LAH provided Sandhu with a cubicle, a phone extension, an e-mail address,
and a badge, and he performed most of his work at city hall.
Alameda
Sandhu worked for Alameda from July to September 2015. The contract between
RGS and Alameda stated he would serve as “Interim Financial Services Manager,” and
would “[p]erform the functions normally assigned to the Financial Services Manager set
forth in the job description . . . which is attached hereto and incorporated herein by this
reference, as assigned by the Finance Director.” Sandhu generally worked three days a
week, although there were several weeks where he worked only one or two days.
Sandhu worked for Alameda while it was in the process of recruiting to fill the
financial services manager position, which was vacant. He testified the city “was getting
ready for the fiscal year-end close,” and he “was helping the staff to get ready for [the]
annual audit, and I was assisting them in preparing the audit paperwork” and
“documentation for their external audit.” He worked with the finance director, who was
“the next level at the city,” but he could not remember her name (and she did not testify
at the hearing). He testified the “majority of the time [he] did not need any direction” on

7
how to prepare the audit paperwork or documentation because he “had th[e] skills to do
so” without direction. He testified the city did not dictate his work schedule, train him, or
give him a personnel evaluation.
Alameda provided him with a cubicle in city hall, a phone, and an e-mail address.
Sandhu worked for Alameda at the same time he worked for LAH. He did not
request permission from either city to work for the other because he “was not their
employee. I was the employee of RGS and I was working with my supervisor at RGS to
work with different clients.”
Sandhu worked for Alameda until shortly after it hired a new financial services
manager. He helped the city during the selection process by “evaluating the technical
knowledge” of the applicants and he helped bring the new manager “up to speed.”
Union City
Sandhu worked for Union City from October 2015 to June 2016. The contract
between RGS and Union City stated he would “[p]erform Interim Finance Director
functions as assigned.” On average, he worked less than 30 hours a week.
Antonio Acosta was the city manager during the relevant time period. He testified
he entered into a contract with RGS because he “needed a subject matter expert and
experienced finance director type of person to fill in temporarily for a vacancy which had
been created” by a reorganization. Sandhu testified his “main function was to review the
adopted budget and make sure that it’s accurate and . . . give the feedback to the city
manager based on my evaluation, whether the budget makes sense or not based on my
evaluation.” He worked with Acosta “[a]t least weekly, every two weeks.”
Acosta stated he did not direct Sandhu’s day-to-day work, but asked “that he brief
me on any new and exciting development or on the status of his big project on a periodic
basis, every week or two. And if it was going fine, the meetings would be very quick. If
there were issues to resolve or clarification, I might talk about it for a little while.”
Acosta testified the finance director reported to the city manager, but Sandhu “performed

8
a very truncated finance director workload for the city . . . because we didn’t really need
. . . a hands-on interim finance director from outside the agency to manage the day-to-day
affairs.” When asked whether he had the authority to direct Sandhu on the manner in
which he did his work, he responded, “No. [¶] . . . [¶] Because that’s not the role he was
fulfilling in my mind. He came fully actualized and activated and, frankly . . . I didn’t
have time to hold hands or give explicit direction.” Acosta explained, “I never forgot that
. . . [Sandhu] was not my employee or the city’s employee. He was RGS’s employ[ee].
Our agreement with RGS made it very clear whose employee he was and who would
direct him, and it wasn’t me.”
Acosta introduced Sandhu to the city council as a “new hire” and stated “[h]e
work[ed] in the Finance Department as an Interim Finance Director.” Sandhu sent
several agenda items to the mayor and city council in which he identified himself as
“Interim Director of Finance.” Sandhu signed off on the city’s annual financial report,
and the report also stated it was prepared by Sandhu. The city provided Sandhu with a
cubicle, a phone, and an e-mail address, and he did most of his work at city hall.
As with the other three cities, Sandhu stopped working for Union City when a new
finance director was hired.
The Underlying Administrative Proceedings
In February 2018, CalPERS began investigating the nature of Sandhu’s
relationship with the Cities, and in January 2010, it determined he was a common law
employee, and his work for Capitola, Alameda, and Union City violated certain
postretirement employment rules.3

3 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 . . .

9
Sandhu appealed, and an evidentiary hearing was held before an Administrative
Law Judge (ALJ). There were two issues to be decided: (1) whether Sandhu was a
common law employee of the Cities, and (2) if so, whether his employment violated the
applicable postretirement employment rules. Following the hearing, the ALJ issued a
proposed decision finding Sandhu was a common law employee of all four Cities, and his
employment with Capitola, Alameda, and Union City violated the applicable
postretirement employment rules, and CalPERS adopted the ALJ’s proposed decision
with minor modifications.
The Trial Court Proceedings
Sandhu challenged CalPERS’s decision by filing a petition for writ of mandate
pursuant to Code of Civil Procedure section 1094.5, arguing the evidence did not support
the finding he was a common law employee (he did not challenge the finding that his
employment violated the applicable postretirement employment rules).4 The parties

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).) A person employed in
violation of these rules must reimburse CalPERS for “any retirement allowance received
during the . . . periods of employment that are in violation of law,” and must pay to
CalPERS “an amount of money equal to the employee contributions that would otherwise
have been paid during the period or periods of unlawful employment, plus interest
thereon.” (§ 21220, subd. (b).)
4 We note the trial court related this case with four other cases that also involved
CalPERS retirees who provided services to cities through RGS, and we grant CalPERS’s
request to judicially notice the order relating the cases. The petitioners in all five related
cases challenged CalPERS’s finding 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), and in favor of CalPERS in four of the cases, including this
case, and petitioners in those four cases have all filed notices of appeal. The other three
appeals are: (1) Estate of Douglas Breeze. v. Board of Administration of the Public

10
agreed the challenged decision implicated Sandhu’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 Sandhu was a common law employee
of the Cities. We will discuss the basis for the trial court’s decision below. Judgment was
entered denying the petition, and Sandhu filed a timely notice of appeal.

Employees’ Retirement System, No. C099877; (2) Dowswell v. Board of Administration of
the Public Employees’ Retirement System, No. C100027; and (3) Souza v. Board of
Administration of the Public Employees Retirement System, No. C099861.

Sandhu has asked us to judicially notice the trial court’s decision and the transcript
of the hearing in the Abid-Cummings case (i.e., one case where the trial court found in
favor of the petitioner), and CalPERS has asked us to judicially notice the trial court’s
decision in the other three related cases. We decline both requests because “only relevant
material may be [judicially] noticed,” and the trial court’s decision in the other four cases
is not relevant. (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”].) For a similar reason, we decline the requests by both parties to
judicially notice other CalPERS decisions that are nonprecedential, and we grant
CalPERS’s request to judicially notice one precedential decision. Finally, we also deny
Sandhu’s (fourth) request for judicial notice, which was filed several months after the
case was fully briefed and just one week before oral argument, on the ground that the
documents are not relevant to our analysis.
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.)

11
DISCUSSION
Sandhu makes two primary arguments on appeal: (1) the common law test for
employment is not applicable to the facts of this case, and (2) even if it is applicable, the
trial court misapplied the test and/or erred in finding he was a common law employee.
He also faults the trial court for failing to rule that CalPERS’s decision was based, at least
in part, on underground regulations. We discuss each argument in turn. We note at the
outset, however, that Sandhu’s briefs contain a total of 95 footnotes, and many of these
footnotes 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
Sandhu’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. Sandhu did not make this argument in the trial court, which would
ordinarily result in his forfeiting it on appeal. (See Howitson v. Evans Hotels, LLC
(2022) 81 Cal.App.5th 475, 489.) Sandhu and CalPERS, however, both cite the “settled”
rule that an appellate court has “discretion” to address questions of law even if they were
not raised in the trial court. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 24.)
We agree, and we elect to exercise our discretion to address the issue.

A. The relevant provisions of the PERL, as interpreted in Metropolitan Water Dist. v.
Superior Court
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

12
CalPERS governing board. (§§ 20022, 20460.)” (Metropolitan Water Dist. v. Superior
Court, supra, 32 Cal.4th at p. 499 (Metropolitan).) Here, all of the public entities that
Sandhu worked for prior to his retirement in 2011, and the four Cities that he worked for
after retirement, were contracting agencies.
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, supra, 32 Cal.4th 491, 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. (Id. 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

13
mandate, the appellate court denied the petition, and our Supreme Court granted review
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, “Unless 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.
Sandhu attempts to distinguish Metropolitan by noting (1) the workers in that case were

14
not retired annuitants, and (2) they provided long-term temporary services, while he
provided short-term and highly specialized temporary services. He fails to explain why
either of those facts would affect the purely legal issue decided in Metropolitan.
B. Sandhu’s Arguments
Despite Metropolitan’s holding that the PERL incorporates the common law test
for employment, Sandhu contends that test does not apply because sections 37103 and
53060 have effectively abrogated it in the circumstances of this case.6 (Metropolitan,
supra, 32 Cal.4th at p. 496.) Sandhu fails to convince.
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.”7 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

6 Sandhu 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.” He
states the Cities’ contracts with RGS “comported with this statutory authority,” but he
fails to demonstrate that section 54981 is applicable. A “local agency” “means any
county, city, city and county, or public district which provides or has authority to provide
or perform municipal services or functions,” and “municipal services or functions”
“includes, but is not limited to, firefighting, police, ambulance, utility services, and the
improvement, maintenance, repair, and operation of streets and highways.” (§ 54980,
subds. (b), (c).) Sandhu points to no evidence that establishes RGS is a “local agency”
within the meaning of section 54981. He simply states it is a joint powers agency
organized under the Joint Exercise of Powers Act (§ 6500 et seq.), and we note that amici
curiae acknowledge “there is no clear authority confirming that a [joint powers agency] is
to be recognized as a ‘local agency’ under . . . section 54981.”
7 Sandhu asks us to judicially notice some legislative history of section 37103
obtained from Legislative Intent Service. We decline the request because we do not find
the limited legislative history is relevant to our analysis. (See People v. Investco
Management & Development LLC (2018) 22 Cal.App.5th 443, 471, fn. 8.)

15
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.” Sandhu argues the Cities in this case exercised their statutory
authority to “contract” for “special services and advice in financial . . . matters” when
they entered into their respective contracts with RGS. This may be true, but it is not
relevant because nobody is contending the Cities lacked authority to enter into contracts
with RGS for Sandhu’s services. Moreover, nobody is contending Sandhu was not
“specially trained and experienced,” or that he 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 Sandhu was an employee within the meaning of
the PERL when he was performing those special services for the Cities.
Sandhu argues, variously, that: (1) sections 37103 and 53060 have somehow
“preempt[ed]” or “partially abrogated” or “modified” the common law test in the
circumstances of this case; (2) “[t]he power to contract for highly specialized services
necessarily means that the RGS contract describes the legal relationship [between the
Cities and Sandhu] even if one or more common law criteria of employment might exist”;
and (3) “[t]he plain language of . . . [section] 37103 grants the Cities the right to utilize
contracting rather than employment as a means to obtain specialized services from RGS
and its assigned employee, Sandhu.” Sandhu’s argument is not entirely clear. It appears,
however, that he 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.
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

16
providing those services is an employee. Indeed, Sandhu was hired by RGS pursuant to a
contract that identifies him as an employee, and RGS thus both contracted for Sandhu’s
services and employed him. 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 importantly, to recognize that a
person hired by a city pursuant to section 53060 may be an employee. (Italics added.)
Sandhu 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.
Sandhu 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 and
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.)
Sandhu 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

17
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
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).
Sandhu 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

18
[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.
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.
Sandhu 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).)

19
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
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
The Trial Court’s Conclusion Sandhu Was a Common Law
Employee Is Supported by Substantial Evidence
Sandhu next argues the trial court’s decision that he was a common law employee
is not supported by the evidence. 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 determination that Sandhu met the common law
test for employment 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

20
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
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.) Another “ ‘ “means of ascertaining whether or not this right to control exists is
the determination of whether or not, if instructions were given, they would have to be
obeyed.” ’ ” (Toyota Motor Sales U.S.A., Inc. v. Superior Court (1990) 220 Cal.App.3d
864, 875 (Toyota Motor Sales).)
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.)

21
B. The Trial Court’s Ruling
The trial court found the weight of the evidence supported CalPERS’s
determination that Sandhu met the common law employment test. It first found the Cities
had the right to control his work as evidenced by the fact that they could effectively
terminate his services without cause because they had the right to terminate their
contracts with RGS without cause. It acknowledged the contracts between RGS and the
Cities stated the Cities could not direct how Sandhu’s work was to be performed, but it
found “the parties’ actual conduct established otherwise. For example, Sandhu met
directly with Goldstein, Lin, and Acosta frequently concerning the work he was
performing, and both Goldstein and Lin provided feedback.” It thus found “the control
factor weighs in favor of an employee-employer relationship.”
The trial court then discussed the secondary factors.8 It found three secondary
factors weighed in favor of an employment relationship: (1) the work Sandhu performed
was part of the regular business of the Cities; (2) the work was usually done by a city
employee under the direction of the city; and (3) Sandhu 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 three secondary factors were either neutral or not
relevant in the circumstances of this case. In particular, it found (1) the skill required was
neutral because Sandhu was performing work that was typically performed by highly
skilled city employees; (2) who supplied the tools and the place of work was not relevant

8 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.) Sandhu does not discuss this factor other than to state the following: “That RGS
and its employee Sandhu had a distinct business performing governmental financial
management services based on RGS’ staff expertise is clear from both the employment
agreement between Sandhu and RGS and from the services agreements between RGS and
the Cities.” There is no citation to the record and no further discussion or analysis of this
factor, and we thus do not consider it further.

22
because the services Sandhu 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); and (3) the length of time the
services were to be performed was neutral because Sandhu’s services were only needed
until the Cities could fill a vacant position, and the timing of filling the position thus
“dictated the lengths of the Cities’ contracts, not the nature of the work that Sandhu was
performing.” Finally, the trial court “disregarded” the one factor that weighed in favor of
an independent contractor relationship—the belief or intent of the parties—because the
parties’ “actual conduct establishes a different relationship.”
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.)
Sandhu argues we must review the finding that he was an employee de novo,
giving “no deference” to either CalPERS’s or the trial court’s decision. We disagree.

23
“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
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 (2021) 62 Cal.App.5th 59, 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).
Sandhu contends the question of whether he 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
Sandhu’s first argument is that the trial court erred by failing to consider the
indicia of his employment relationship with RGS. Again, we must disagree.

24
The trial court noted, “the working relationship at issue is the one between Sandhu
and the Cities.” We agree. The issue in this case is whether a common law employment
relationship existed between Sandhu and the Cities, not whether a common law
employment relationship existed between Sandhu 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 Cities. As our Supreme Court has explained, “The possibility of dual
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
Cities, a particular worker could have “coemployers” who “share or allocate between
them certain responsibilities of employment.” (Metropolitan, supra, 32 Cal.4th at
p. 506.) The labor suppliers in Metropolitan, much like Sandhu does here, 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

25
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
contracting agency for purposes of the PERL. Thus, we agree with the trial court that the
only relevant question in this case is whether Sandhu was a common law employee of the
Cities, and we find no error in its failure to consider indicia of his employment
relationship with RGS.
ii. The trial court’s application of the common law test
Sandhu’s second argument is that the trial court “failed to apply the
uncontroverted evidence in a manner consistent with the law.” 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 Sandhu 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.) Sandhu is thus particularly
critical of the trial court’s finding that “the Cities could effectively terminate Sandhu’s

26
services with them,” which it found was “strong evidence” that it had the right to control
his work, and that this factor thus “weighs in favor of an employee-employer
relationship.” Sandhu argues, “To the contrary, the RGS contract shows that only RGS
held power to terminate Sandhu’s employment. . . . [Citation.] The Cities had no right to
terminate Sandhu; their only recourse was to terminate the RGS contract or to request
another RGS advisor.” (Fn. omitted.) That is essentially what the trial court found as
well: i.e., it found that the Cities “could effectively terminate Sandhu’s service with
them,” (italics added) even if they could not “terminate Sandhu’s relationship with RGS”
(italics added). The evidence supports the trial court’s findings.
Pursuant to their contracts with RGS, the Cities were expressly given the right to
terminate their agreements with RGS “without cause.” The Cities could also request
another advisor if they were not satisfied with Sandhu’s work. Sandhu asserts “[t]he right
to cancel the RGS contract is fundamentally different from the right to terminate
Sandhu’s services,” but he fails to explain why this is so. Instead, we agree that the Cities
could effectively terminate Sandhu’s services with them if they were not satisfied with his
work, either by terminating their contracts with RGS or by requesting a different advisor.
And the Cities’ right to terminate Sandhu’s services also gave them “ ‘the means of
controlling [his] activities.’ ” (Ayala, supra, 59 Cal.4th at p. 531.)
Here is another example that supports the trial court’s finding the Cities had the
right to control Sandhu’s work. Capitola’s city manager, Goldstein, testified Sandhu was
brought in because “I needed somebody to prepare the budget.” The Capitola Municipal
Code states, “It shall be the duty of the city manager to prepare and submit the proposed
annual budget to the city council” (Capitola Mun. Code, § 2.08.150), and Goldstein
testified he was ultimately responsible for preparing the budget and presenting it to the
city council, even though he had to “rely on the staff to do much of the work.” Goldstein
agreed that, because he had ultimate authority over the budget, he also had “authority or
oversight over the people [he worked] with to prepare the budget,” which would include

27
Sandhu. This evidence establishes the city manager had the right to control Sandhu’s
work.
Moreover, Sandhu testified he met with Goldstein “[a]t least once a week” to
“update [him] on the budget process” and “get his feedback” on “whether he agree[d]”
with Sandhu’s “professional advice.” And Goldstein confirmed he “reviewed all the
materials” Sandhu prepared and if there was anything he did not agree with he would
“consult” with Sandhu “to resolve those issues.” As noted above, one “ ‘ “means of
ascertaining whether or not th[e] right to control exists is the determination of whether or
not, if instructions were given, they would have to be obeyed.” ’ ” (Toyota Motor Sales,
supra, 220 Cal.App.3d at p. 875.) Maintaining such frequent contact with Goldstein on
the status of his work and soliciting Goldstein’s feedback and agreement strongly
suggests Sandhu would have been required to follow Goldstein’s instructions if they were
given, which demonstrates the right to control exists.
Finally, Goldstein was asked how his working relationship with Sandhu was
different than his working relationship with Capitola’s permanent finance director, and he
responded: “With an employee relationship, obviously if you are in a situation where you
disagree with the department head consistently, you would be in a position to potentially
look at termination, performance improvement plans. . . . [¶] With a consultant it’s just
different, right? When somebody comes in to prepare a specific task, you are going to
review it. You are not going to worry about their interpersonal skills, for example.”
Interpersonal skills aside, Goldstein was asked whether he “had the authority to terminate
the contract with RGS or ask for someone else to be assigned” if he was dissatisfied with
Sandhu’s work, and he responded “yes.” Again, the right to terminate Sandhu’s services
is “the strongest evidence of the right to control.” (Ayala, supra, 59 Cal.4th at p. 531.)
Sandhu spends much time arguing the evidence shows none of the Cities actually
exercised control over his 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

28
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 exercised, but that which may be exercised which is
determinative.” (Toyota Motor Sales, supra, 220 Cal.App.3d at p. 875.)
We also note that the lack of control actually exercised by the Cities in this case is
easily explained by the fact that the work Sandhu performed was typically performed by
a highly skilled employee with extensive experience in public finance. For example,
LAH’s Municipal Code provides the city manager has “the duty . . . to prepare and
submit the proposed annual budget.” (Los Altos Hills Mun. Code, § 2-3.219.) As LAH’s
city manager explained, however: “My background . . . is land use planning. I’m the city
manager, but my core competency is not finance. . . . So I absolutely need another
person, a finance professional, to . . . share in the financial management responsibilities.”
He also explained Sandhu had “finance manager competencies,” and he thus did not need
to provide Sandhu “with day-to-day direction” and instead “relied on [his] professional
expertise.” And as Sandhu himself acknowledged, even when he worked for various
public agencies before he retired (i.e., when he was admittedly an employee for purposes
of the PERL), he did not need much supervision or direction because he had “vast
experience” in finance and was thus “qualified” to do the work “without much help from
anyone.” It is thus not surprising that, when he worked for the Cities, the Cities did not
actually exercise control over his work.
Although there is some evidence to the contrary, the evidence is sufficient to
support the trial court’s conclusion the Cities had the right to control Sandhu’s work, even
if they rarely, if ever, exercised that right.
b. The secondary factors
Sandhu also challenges several of the trial court’s findings regarding the secondary

29
factors.9
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.
Henning, supra, 62 Cal.App.5th at p. 80.) The trial court found the work Sandhu did for
all four Cities was “usually done under the supervision of a higher-level City employee.”
Sandhu does not directly challenge this finding. Instead, he 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 Sandhu did was usually performed by a permanent city
employee under the direction and control of either the city manager or the head of the
finance department, and Sandhu was performing that work on an interim basis while the
position was vacant and until the city could hire a new employee to fill the position. For
example, Sandhu temporarily performed at least some of the duties of Capitola’s finance
director, who was the head of Capitola’s finance department. The Capitola Municipal
Code provides the city manager “shall be the administrative head of the government of
the city”; “[i]t shall be the duty of the city manager and he or she shall have the authority
to control, order and give directions to all heads of departments”; and “department heads
are expected to function in accordance with the instructions they receive from the city

9 He 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”].)

30
manager.” (Capitola Mun. Code, §§ 2.08.065, 2.08.090, 2.04.020.) Capitola’s city
manager thus testified that although he relied on staff “to do much of the work” of
preparing the city’s budget, “at the end of the day” he was “responsible” for that work,
and thus “exercise[d] some sort of authority . . . over” the people who did the work. The
municipal codes of the other cities are similar. Thus, the evidence established that, in city
government, the work Sandhu was doing on an interim basis was usually done by a city
employee under the direction and control of the city. Sandhu argues there is no legal
requirement that only a regular city employee may prepare a budget or audit paperwork.
He cites no legal authority for this proposition, and even if we assume it is true, it does
not change the fact that the work Sandhu was doing is usually performed by an employee
rather than an independent contractor. 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 Cities].” (Borello, supra, 48 Cal.3d at p. 351.) The
trial court found, “At each of the Cities, Sandhu did work that fell within the ambit of the
Cities’ financial departments, and which would have been performed by a City employee
if certain positions were not then vacant,” and that this secondary factor thus weighed in
favor of finding an employment relationship. Sandhu argues the Cities “provide[] a
broad range of services” and the trial court somehow “misconstrued” their “ ‘regular
business.’ ” His argument is difficult to understand. To the extent he argues the trial
court’s finding is not supported by the evidence, we disagree.
The regular business of the Cities is to provide a broad range of municipal
services, and each of the Cities has a finance department that is integral to their ability to
provide such services. Even Sandhu appears to acknowledge “the budget and audit
functions are ‘part of the regular business’ of a city.” Indeed, Capitola’s city manager
testified the finance department and the finance director are part of the city’s regular

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business. The trial court’s finding that the work Sandhu was performing was part of the
regular business of the Cities is supported by the evidence. Again, although this
secondary factor is not dispositive, it weighs in favor of finding an employment
relationship.
Finally, Sandhu argues the parties “conformed their relationship” to the terms of
the contracts, the contracts demonstrated the parties believed Sandhu was an independent
contractor rather than an employee of the Cities, and the contracts should thus define the
legal relationship between the parties. It is undisputed the contracts identify Sandhu as
RGS’s employee, not the Cities’ employee, and they state the Cities “shall have the right
to control RGS only insofar as the result of RGS’s services rendered” and “shall not have
the ability to direct how services are to be performed.” The trial court acknowledged this,
but it nonetheless looked behind the contracts and found an employment relationship
existed between Sandhu and the Cities.
As even Sandhu at least nominally acknowledges, a long line of authority instructs
that “the terminology used in an agreement is not conclusive” as to the existence of an
employment relationship. (Tieberg, supra, 2 Cal.3d at p. 952.) “Although the terms of a
contract may specify that a special employer retains the right to control the details of an
individual’s work or purports to establish an employment relationship, ‘the terminology
used in an agreement is not conclusive.’ ” (Kowalski v. Shell Oil Co., supra, 23 Cal.3d at
p. 176.) “The agreement characterizing the relationship as one of ‘client—independent
contractor’ will be ignored if the parties, by their actual conduct, act like ‘employer—
employee.’ ” (Toyota Motor Sales, supra, 220 Cal.App.3d at p. 877.) “[T]he label
parties attach to their relationship ‘is not dispositive and will be ignored if their actual
conduct establishes a different relationship.’ ” (Gonzales v. San Gabriel Transit, Inc.
(2019) 40 Cal.App.5th 1131, 1152.)
Despite this long line of authority, Sandhu’s position appears to be that if the
contracts between RGS and the Cities state he is an employee of RGS rather than the

32
Cities, then CalPERS is bound by that designation. He cites no authority for that
proposition, and we are aware of none. In this regard we note there was a dissenting
opinion in Metropolitan that, like Sandhu, believed the parties’ intent should govern. The
dissent noted “[l]eased workers present a new paradigm” that is based on “a three-sided
labor relationship” as opposed to the more traditional two-sided labor relationship.
(Metropolitan, supra, 32 Cal.4th at pp. 512, 514 (dis. & conc. opn. of Brown, J.).) It also
noted that when the common law employment test was developed, “employee leasing in
its purest form did not even exist. Thus, it differentiates only between employees and
independent contractors, not employees and leased workers.” (Id. at p. 514 (dis. & conc.
opn. of Brown, J.).) The dissent thought “[c]ommon law rules that evolved to address the
traditional two-sided labor paradigm are simply inapposite in this [new three-sided]
context,” and it suggested the common law test needed to evolve to specifically address
leased workers. (Ibid. (dis. & conc. opn. of Brown, J.).) In particular, it believed that, in
leased worker situations, the intent of the parties should be “the principal consideration in
determining plaintiffs’ employee status.” (Id. at p. 515 (dis. & conc. opn. of Brown, J.).)
A dissent, of course, is just that—a dissent—and it is axiomatic that dissents are not the
law. (See People v. Lopez (2012) 55 Cal.4th 569, 585.) Thus, contrary to Sandhu’s
argument, the parties’ characterization of their relationship is not determinative.
In sum, the trial court’s findings that the primary factor and three of the secondary
factors weigh in favor of an employment relationship are either supported by the
evidence or are not challenged by Sandhu. Moreover, Sandhu does not challenge the trial
court’s findings that three of the secondary factors are neutral or inapplicable in the facts
of this case. Finally, the one factor that weighs in favor of an independent contractor
relationship is not sufficient to overcome the other factors. We acknowledge there is
some evidence in this case that could support a conclusion Sandhu was not a common
law employee, however we also find the trial court’s contrary conclusion is supported by
substantial evidence.

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III
Sandhu Forfeited His Underground Regulations Argument
Sandhu’s final argument is that CalPERS’s decision was impermissibly based on
underground regulations. “ ‘An underground regulation is a regulation that a court may
determine to be invalid because it was not adopted in substantial compliance with the
procedures of the Administrative Procedure Act (Gov. Code, § 11340 et seq.) (APA).
[Citation.] To be deemed an underground regulation, [the purported regulation] must
meet two requirements: (1) the agency must intend it to apply generally rather than in a
specific case; and (2) the agency must adopt it to implement, interpret, or make specific
the law enforced by the agency.’ ” (Patterson Flying Service v. Department of Pesticide
Regulation (2008) 161 Cal.App.4th 411, 429.)
In his petition for writ of mandate Sandhu alleged “the challenged decision is
predicated on unlawful ‘underground regulations’ and, thus, is ultra vires.” No further
explanation was provided. In its decision denying the petition, the trial court stated in a
footnote that it “did not address” this allegation “since it was not raised in Sandhu’s
opening brief. Further, Sandhu states in his reply brief that his ‘underground regulation
allegation is simply noted.’ (Pet’r Reply 3, fn.1.)” The trial court’s description of
Sandhu’s briefs is accurate: he did not mention the underground regulation argument in
his opening brief, and he mentioned it only in passing, and in a footnote, in his reply
brief. The trial court acted well within its discretion when it declined to address this
argument. “[A]rguments raised for the first time in a reply will not be considered,” and
this is particularly true where the argument is raised only in a footnote. (Gormley v.
Gonzalez (2022) 84 Cal.App.5th 72, 82.) Moreover, “A court need not consider an issue
where reasoned, substantial argument and citation to supporting authorities are lacking.”
(Woods v. Horton (2008) 167 Cal.App.4th 658, 677.)

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Having failed to properly raise the underground regulation issue in the trial court,
Sandhu has “forfeit[ed] on appeal any claim of error based on that issue.” (Howitson v.
Evans Hotels, LLC, supra, 81 Cal.App.5th at p. 489.)
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/
MESIWALA, J.

/s/
WISEMAN, J.*

* Retired Associate Justice of the Court of Appeal, Fifth Appellate District, assigned
by the Chief Justice pursuant to article VI, section 6 of the California Constitution.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10800278. Public record. Not legal advice.