Have you ever wondered how to figure out if someone who works for you should be considered an employee or an independent contractor?
Well, the rules just became more clear and more restrictive at the same time. Now we have a simple test.
The California Supreme Court recently held that the appropriate test of whether someone is an employee or an independent contractor under California law is the “ABC” test.
Under this new independent contractor test, a worker is properly considered an independent contractor (to whom the wage order does not apply) if the hiring entity / employer establishes: (A) that the worker is free from 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 hiring entity’s usual course of 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.
It should be noted that the court specifically stated that the assumption is that anyone providing services is an employee unless the hiring entity is able to establish all 3 parts of the new independent contractor test.
If you need help making this determination (as we all do) or with making sure you’re taking all the steps necessary to protect yourself from employee related issues don’t hesitate to contact us about our wide variety of preventative legal services for your business.