California Supreme Court Establishes New Criteria for a Worker to be Classified as an “Independent Contractor”

California Supreme Court Establishes New Criteria for a Worker to be Classified as an “Independent Contractor”

By Robert L. Rediger, Esq.

On April 30, 2018, the California Supreme Court handed down a unanimous decision that will affect any employer that classifies a worker as an “independent contractor,” as opposed to an employee. The Court in Dynamex Operations held that it is the employer’s burden to prove the following three factors in the “ABC” test if it treats a worker as an independent contractor under the state’s Wage Orders:

(A) the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

(B) the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Misclassifying workers could result in class action lawsuits alleging violations of PAGA and the UCL being filed against a company.