How do you determine whether an individual is an employee or an independent contractor? « Law Offices of Timothy Bowles | Top Employment Law Firm in Los Angeles

How do you determine whether an individual is an employee or an independent contractor?

State and federal laws provide detailed standards for employee and independent contractor classification. Misclassification of an employee as independent is a significant error. If that misclassing is intentional, a business may be severely fined.

With the rise of the “gig” economy, this is perhaps the most contested workplace issue in California. This state’s landmark 2018 supreme court decision in Dynamex Operations West, Inc. v. Superior Court) is imposed a highly restrictive three-part “ABC” test independent contractor classification: 

  1. Worker is free from the hirer’s control and direction in connection with the performance of the work, both under the contract and in fact;
  2. Worker performs work outside the usual course of the hiring entity’s business; and
  3. Worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Dynamex has generated at two major waves of legislation carving out exceptions to the ABC test, reinstating the more forgiving “balancing test” between control and independence factors of earlier court decisions.  See also, “What’s New in 2021: California’s Newest Independent Contractor Law Part I.”

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