On January 1, 2020, a new law will go into effect which may impact how California employers may classify workers as either employees or independent contractors. In 2018 the California Supreme Court established what became known as “the ABC Test” in a case known as Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. The ABC Test essentially provides workers are considered employees, and not independent contractors unless the employer can show all three of the following requirements:
The worker is free from control and direction of the hiring authority in connection with the work, both as defined by the contract and in actual fact.
The work performed is outside the usual course of the employer’s business.
The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work being performed.
The new law (AB 5) simply codified the ABC Test as defined by the Dynamex court. With this new statute, the ABC Test is necessary to determine the appropriate worker classification in most occupations. California has launched a new website which should help answer any and all questions as they relate to worker classification and application of the ABC Test: www.labor.ca.gov/employmentstatus.
For more information please contact Blumberg Law Group LLP.