Advising And Defending Businesses

The Forum that Hears a Worker’s Claim Will Determine Employee or Independent Contractor Status

On Behalf of | May 20, 2021 | Employment Law

The determination of whether a particular worker is an employee or an independent contractor will depend on the administrative or judicial forum adjudicating the question. This week, the Associate General Counsel of the National Labor Relations Board issued an Advice Memorandum where she applied “the common-law agency test” to conclude that Uber drivers were independent contractors. The Acting Administrator of the U.S. Department of Labor’s Wage and Hour Division in an opinion letter dated April 29, 2019 applied “six factors” to conclude that service providers who worked for a virtual marketplace company were independent contractors, finding that they were not “economically dependent” on the employer.

In California, the Supreme Court in its 2018 Dynamex decision held that the (employee-friendly) “ABC test” must be used to determine a worker’s status. The Ninth Circuit Court of Appeal in Vazquez v. Jan-Pro Franchising International, Inc. held recently that the Dynamex test would be applied retroactively to determine a worker’s status in California. In an opinion letter dated May 3, 2019, counsel for the California Labor Commissioner made clear that the “ABC test” applies to claims made under an applicable Industrial Welfare Commission wage order. The California legislature is currently considering two opposing bills that would address the employee versus independent contractor conundrum.

Given the rebuttable presumption that a worker is an employee under California law, the unsettled state of the law in this area, and the legal standard that may be applied by a yet-unknown tribunal conducting a fact-specific inquiry regarding a worker’s claim, it behooves a prudent employer to re-examine any purported independent contractor relationship it believes it has with a worker.