Posted August 2019 by S. Ward Heinrichs
What is an Independent Contractor in California?
An Independent Contractor is a worker, other than an Employee, who performs services for a business or person.That begs this question: how does California define “employee”? Lasts year, in April of 2018, the California Supreme Court changed the definition of “employee” in a case known as Dynamex. After that, many workers, who had been labeled as independent contractors, were actually employees.
The Dynamex decision created a new test to determine who was an employee. It’s called the ABC test. The name is very appropriate because it has three different factors used to determine which workers are employees and which ones are independent contractors. If a business can prove all three factors, then California will consider the worker to be an independent contractor. If it fails to prove any one of them, the worker is an employee.
The three factors are:
A. The business does not control or direct the work performed by the worker.
B. The worker performs work outside the usual course of the business.
C. The worker customarily engages in work of an independent trade, occupation, or business.
Why did the California Supreme Court use this new test? The legislature has historically said that it wants to provide broad protections for California workers. The Supreme Court supported that notion by saying that the sweeping language defining the term “employee” must cover many workers.
So, in my opinion, the Supreme Court was trying to provide “Gig Economy” workers with the same protections enjoyed by California employees. I consider the Dynamex opinion the California answer to whether Uber and Lyft workers are employees. Uber and Lyft maintain that their workers are independent contractors. Under the ABC test, I think they are employees.
The Dynamex case only applied the ABC test to the Wage Orders. Those are regulations that govern things like minimum wage, overtime, and meal periods. The Supreme Court limited the ABC test to the wage orders because it said that the definition of “employee” in the orders was very broad. It said that other laws might not have been drafted as broadly, and in those cases, the ABC test might not apply.
This year, the California legislature is developing a law that will broadly apply the ABC test to many, if not all, employment laws in California. One thing for sure, assuming it passes, it will apply to more laws and regulations than just the wage orders.
S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 408-7543 (fax)