The Law at Work: California Supreme Court defines independent contractor narrowly
In a landmark unanimous ruling, the California Supreme Court just made it easier to distinguish between an employee and an independent contractor and harder to designate a worker as an independent contractor. In his The Law at Work column in the San Diego Union-Tribune, Shareholder Dan Eaton examines a case involving Dynamex, a nationwide same-day delivery service operating in California, where a driver sued on behalf of himself and other Dynamex drivers, claiming that he had been improperly classified as an independent contractor.
The California Supreme Court ruled against Dynamex and adopted a simple “suffer or permit” test under which the law presumes a worker to be an employee for the purpose of California wage rules. A worker is considered an independent contractor only if the hiring entity meets each part of an “ABC” test:
- A) The worker is free from the type and degree of control and direction the hiring entity typically exercises over its employees
- B) The worker performs work outside the scope of the hiring entity’s business, and whose work therefore would not ordinarily be viewed by others as working in the hiring entity’s business
- C) The worker is customarily engaged in an independently established trade, occupation, or business, taking such steps as incorporating his business, getting a business or trade license or advertising
According to Dan, in applying this ABC test, courts will look past the label a hiring entity places on its relationship with workers.
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