Important Changes in Determining Whether Employees are Misclassified as Independent Contractors
For years, the question of whether a worker was improperly classified as an independent contractor was determined by looking at the “Borello Factors”. The Borello test looked at characteristics of the relationship such as the right to discharge at will, and without cause; whether the one performing the services is engaged in a distinct occupation or business; whether the work is usually done under the direction of the principal or by a specialist without supervision; the skill required in the occupation; whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work the length of time for which the services are performed; the method of payment, such as by the time or by the job; whether the work is part of the regular business of the principal; etc.
The ABC Test
On April 30, 2018, the California Supreme Court in Dynamex v. Superior Court, adopted a new “ABC” test for wage and hour disputes. The court held that the Wage Orders definition of “employ” must be interpreted broadly to encompass many employees who traditionally were included in a group of independent contractors, except for those who have traditionally been viewed as genuine independent contractors who are working only in their own independent business.
Under the ABC test, a worker will be properly considered an independent contractor only if the hiring entity establishes: (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 such work and in fact; (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 for the hiring entity.
If each of these factors is met, the worker may be considered an independent contractor. Wage Orders may not apply, and may affect claims for wages, reimbursements, breaks, etc. If you have questions regarding your status as an independent contractor, you should speak to an employment law attorney.
Sacramento, CA 95821