New ABC Test for Independent Contractors in California

By Kelsey Basten

Published on May 22, 2018

The California Supreme Court issued a new “ABC” test for employers in California April 30, 2018. This test is meant to assist in determining whether to classify workers as employees or independent contractors under the California Industrial Welfare Commission (IWC) Wage Orders.

The test presumes all workers are classified as employees unless the company can demonstrate all three ABC factors are met:

  1. The worker is free from the control and direction of the hirer in connection with performing the work
  2. The worker performs work outside of the usual course of the hiring entity’s business
  3. The worker is usually engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity

All three of these above factors must be met for a worker to be considered an independent contractor. Failure to meet even one element of this ABC test would result in classifying the worker as an employee.

This Labor Law News Blog is intended for market awareness only, it is not to be used for legal advice or counsel.

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