New Test for Independent Contractors



On April 30, 2018, the California Supreme Court issued an important decision called Dynamex Operations West, LLC v. Superior Court of California.  The decision establishes a new test for whether workers qualify as employees or independent contractors under California’s wage orders.  Under the new test, called the “ABC test,” workers will be considered employees instead of independent contractors unless the employer proves the following:

A. The worker is free from the control and direction of the employer;

B. The worker performs work outside the usual course of the employer’s business; and

C. The worker is engaged in an independently established trade, occupation or business of the same nature as the work performed.

The employer bears the burden of proof on each of these factors.

The Dynamex decision will have far-reaching implications for workers who are now treated as independent contractors.  For example, many workers in the real estate, insurance, and financial services industries are classified as independent contractors.  As a result, they do not receive the protections afforded to employees under California law, such as overtime pay and minimum wage, meal and rest breaks, and most importantly, reimbursement of business expenses.  The Dynamex decision will allow these workers to recover up to four years of wages they did not receive because they were misclassified as independent contractors.  The amount of recovery could be substantial.

For a free consultation about your rights under the new Dynamex decision, please contact attorney Marita Lauinger at mlauinger@clapplegal.com or fill out the form below.

 

 Check if you accept the terms of use.