by Lee Miller and Ilana Kaufman | July 29, 2018 6:09 pm
In April of this year, the California Supreme Court handed down its much anticipated opinion in Dynamex Operations West, Inc. v. Superior Court, an opinion that clarifies when workers in California should be classified as employees or as independent contractors.
Prior to the California Supreme Court’s ruling in Dynamex, the Borello test prevailed. Under the Borello “economic realities test,” courts first evaluated whether the person to whom service is rendered has the right to control the manner and means of accomplishing the results desired. Then, a number of additional factors are taken into consideration, none of which are dispositive on its own, but all of which are evaluated in the totality of the circumstances. These factors generally included:
The Supreme Court in Dynamex reevaluated the multi-factor Borello test, and as a result there is a new, three-factor “ABC” test used when evaluating whether a worker has been properly classified as an independent contractor. The Court held that the analysis begins with the rebuttable presumption that a worker is an employee and that an entity classifying a worker as an independent contractor bears the burden of rebutting the presumption by establishing each of the following three factors:
(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Failure to satisfy any of the three factors of the ABC test results in a finding that the worker is an employee and not an independent contractor.
The new ABC Test provides a more rigid framework for compliance and less flexibility in the “grey” areas. As a result, hiring entities should be cautious when classifying workers as independent contractors to ensure that the worker’s classification will satisfy the ABC test. Hiring entities are encouraged to seek the advice of experienced legal counsel whenever classifying certain workers as independent contractors.
Source URL: http://www.socalprofessional.com/2018/07/independent-contractor-vs-employee-easy-as-a-b-c/
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