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Court Embraces Worker-Friendly Test for Determining Independent Contractor Status Under California Wage Orders, Broadening Definition of “Employee”

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Former Associate
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On Monday, the California Supreme Court ruled in a unanimous decision to reject 30-year old precedent which focused the inquiry on the amount of control the company exercises over the worker, embracing a new test for determining whether a worker is properly classified as an independent contractor for wage order claims.

In Dynamex v. Superior Court, docket number S222732, the California Supreme Court adopted the three-alternative definitions of employment, concluding that to “employ” or to be an “employer” means to control the wages, hours, or working conditions of the worker, or to suffer or permit the worker to work, or to engage the worker, thereby creating a common law employment relationship.

Focusing exclusively on the “suffer or permit” standard, the court ruled that a company seeking to justify contractor status bears the burden of proving the worker is running their own business by satisfying the “ABC” test: (a) that the worker is free from the company’s control and direction” in connection with the performance of the work, including contracting and actually performing such work; (b) that the work is “outside the usual course of the hiring entity’s business”; and (c) that the worker is customarily engaged in an independent occupation or business of the same type the worker is performing for the company.

Previously, independent contractor status was determined only by the common law multifactor test, which considered, among other factors, the worker’s skill, the nature of the business, and the length of time for which the services were to be performed.