CA Supreme Court Makes It More Difficult to Classify Workers as Independent Contractors

The California Supreme Court has issued a decision in Dynamex Operations West, Inc. v. Superior Court that broadens the scope of workers who will qualify as employees as opposed to independent contractors for purposes of California’s wage and hour regulations set forth in the Industrial Welfare Commission’s (IWC) Wage Orders, including regulations regarding minimum wage, overtime, and meal and rest breaks.

In Dynamex, delivery drivers sued a nationwide package and document delivery company alleging that the company had misclassified its delivery drivers as independent contractors rather than employees. When the case got to the California Supreme Court, the Court set out a new test called the “ABC test” to be used in evaluating whether a worker is an employee or an independent contractor for purposes of the IWC wage orders.  Under the ABC test, a worker is presumed to be an employee unless the hiring entity establishes all of the following:

(A) 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) The worker performs work that is outside the usual course of the hiring entity’s business; and

(C) 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.

The ABC test makes it much more difficult than before to prove that a worker is an independent contractor as opposed to an employee, particularly if the worker is doing work that is within the usual work done by the hiring entity (e.g., a delivery driver working for a delivery company).

In light of this new decision, employers must be even more cautious before classifying workers as independent contractors.  For more information about this decision or any other employment-related matters, please contact a Bernstein & Friedland, P.C. attorney at 818-817-7570.

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The above summary has been prepared for general informational purposes only and is not intended as legal advice.  

Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters.  Please visit our website at www.laemploymentcounsel.com to learn more about us.

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