The California Supreme Court recently issued a ruling that will make it even more difficult for companies to prove that an individual is an independent contractor. Since 1989, Courts have used a multi-factor test that focuses mostly on how much “control” the employer had over the way the worker performs. In the case Dynamex Operations West v. Superior Court, the California Supreme Court has now embraced the “ABC” test that is used in New Jersey and Massachusetts
Under the new ABC test, to establish that an individual is an independent contractor, the business must show that the worker is “free from the control and direction” of the employer, performs work that is outside the company’s core business, and customarily engages in “an independently established trade, occupation or business”. The Court emphasized that the hiring entity has the burden to prove all three parts of the ABC standard.
We have always counseled our clients to avoid classifying an individual as an independent contractor, except for very specific circumstances. Improper classification can lead to major penalties and damages.
Please call or write with any employment related issue you are facing. Let’s be proactive together.
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