WJKA
Employment Law Group
AM I REALLY AN INDEPENDENT CONTRACTOR?
In April 2018, The California Supreme Court issued its opinion in Dynamex v. Superior Court, (4 Cal.5th 903) adopting a new test to determine whether workers are properly classified as “independent contractors,” rather than as “employees.” This question has great significance for workers and businesses for a variety of reasons. For example, if a worker is classified as an employee, the hiring business is responsible to pay federal Social Security, payroll, and unemployment insurance taxes. The employer also must provide workers compensation insurance and comply with numerous state and federal statutes that protect employees. This includes “wage and hour” laws that establish the minimum wage, require meal and rest breaks, and require payment of overtime wages.
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On the other hand, if workers are classified as independent contractors, the hiring business is not responsible for any of these expenses, and workers are not entitled to the numerous labor law benefits that are available to employees.
In Dynamex, the Supreme Court adopted a three-part test known as the “ABC test,” to determine whether a worker is properly classified as an independent contractor. The ABC test begins by presuming that all workers are employees, placing the burden on the hiring business to prove independent contractor status by demonstrating all three of the following conditions:
(a) that the worker is free from the control and direction of the hirer 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
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(c) that the worker is customarily engaged in an independently established trade, occupation, for business of the same nature as that involved in the work performed.
The apparent result of this ruling is that many California workers who previously have been treated as independent contractors are actually employees. And, if properly classified as employees, those workers would have been entitled to but may not have received the benefits of California’s wage laws. In such cases, workers may be entitled to compensation from their employers.
Since the Dynamex decision was released in April 2018, numerous business groups have lobbied the California Legislature, seeking the enactment of laws that would replace the “ABC” test with more employer-friendly rules. At the same time, pro-employee groups have also lobbied the Legislature, urging that no laws be enacted that would interfere with the Court’s ruling.
If you believe you have been incorrectly classified as an independent contractor, an experienced employment attorney can help to determine if you are eligible for compensation. Contact us to request a free evaluation.