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Total Articles: 6

The ABCs of the Employment Relationship: California’s High Court Adopts New Independent Contractor Test

In a landmark decision, the Supreme Court of California adopted a new test to determine whether a worker performing services for a company is an employee or an independent contractor under California’s wage orders. The new three-factor test, known as the ABC test, will determine whether a company “employs” a worker under the wage orders, which address certain requirements for minimum wage, overtime, and meal and rest periods, among others. The ABC test, which has long existed in other parts of the country in different forms, has not previously been used in California.

California Supreme Court Applies “ABC” Test When Assessing Independent Contractor Status

The California Supreme Court, in Dynamex Operations v. Superior Court, held that for purposes of claims under the California Wage Orders “engage, suffer or permit to work” determines employee status, thus requiring a defendant who disputes that a worker is an employee (rather than an independent contractor) to prove (A) the worker is free from control and direction of the hirer in connection with performing the work, both under contract and in fact; (B) the worker performs work outside the usual course of the hiring entity’s business; and (C) the worker customarily engages in an independently established trade, occupation, or business of the same nature as the work performed for the hirer.

California Announces a New Wage and Hour Independent Contractor Test

In a groundbreaking new decision, the California Supreme Court announced a significant change in independent contractor law, adopting a modified “ABC” test for determining whether an individual is an employee under the Wage Orders.1 This new independent contractor test is modeled on Massachusetts’ independent contractor statute, which has been considered the strictest in the country.

[CA] Independent Contractor Misclassification: The Hidden Trap of Outsourcing

It’s a beguiling option. Companies that classify workers as independent contractors receive a number of benefits, including elimination of payroll taxes, workers’ compensation insurance, and unemployment insurance withholdings. Additionally, independent contractors are not entitled to overtime, double-time pay, or meal and rest breaks. The appeal of classifying workers as independent contractors can’t be questioned.

Governor Brown Signs Bill Making Companies Liable for Employment Violations of Independent Labor Contractor Companies

This weekend, California Governor Jerry Brown signed Assembly Bill 1897. This bill creates new Labor Code section 2810.3, which applies to all but a very limited number of companies with 25 or more employees (i.e., the “client employer”) that obtain or are provided workers to perform work within their “usual course of business” from companies that provide workers (i.e., “labor contractors”).

Reporting New Employees And Independent Contractors

There has long been a requirement for California employers, and out-of-state employers with employees in California, to report the hiring of new employees working in California to the California Employment Development Department’s (EDD) New Employee registry. These reporting requirements were designed to assist the state in locating parents who are delinquent in their child support payments and to assist in the early detection and recovery of Unemployment Insurance benefit overpayments.
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