California Supreme Court Decides New Employee Classification Test
The California Supreme Court dramatically narrowed the scope of who can qualify as an independent contractor under the state’s wage orders. The new test for distinguishing employees from individual independent contractors — known as the “ABC Test” — is a standard many employers will find very difficult to meet. Under the new standard established in Dynamex v. Superior Court, an employment relationship exists unless the purported employer proves all of the following:
- The employer does not control or direct the manner in which the work is performed.
- The work is “outside the usual course” of the employer’s business.
- The worker “is customarily engaged in an independently established trade, occupation, or business” in the same line of work performed.
Gina Roccanova, Principal and Chair of Meyers Nave’s Labor and Employment Practice Group, published an article in the Daily Journal that goes beyond a simple explanation of what the court decided and tackles some weighty unanswered questions. Please click here to read Gina’s article.
Gina also discussed the case in a Daily Journal podcast. Please click here for her analysis beginning at the 46 minute mark.
HOW DOES THE ABC TEST APPLY TO THE JOINT EMPLOYER CONTEXT?
A few weeks after the California Supreme Court’s Dynamex decision, a California Court of Appeal provided critical guidance in Curry v. Equilon Enterprises to help joint employers understand how to apply the ABC test to shared employees. The Equilon decision is a welcome clarification for employers as it not only limits the applicability of the far-reaching ABC test but also enables employers to structure business relationships in a way that limits liability for another hiring entity’s employees. Please click here to read Gina’s client alert explaining the Curry decision.