You were hired as an independent contractor, but you feel like an employee. So which are you? Sometimes it’s hard to tell the difference. The California Supreme Court tried to clarify this issue in a case this past year, Dynamex Operations West v. Superior Court. The court laid out a test to help employers and employees, alike, properly classify their employment relationships. The case narrowed the definition of a contractor, forcing many employers to re-evaluate their business models. The “ABC” test consists of the following three parts:
- Control of your work. Does the contract state that you work under your own control and direction while performing the work? Does it actually work out that way in reality? This factor is not new and has generally been the basis for determining if someone is an independent contractor in the past.
- Outside the normal course of business. To be an independent contractor, the company must hire you to do work that they do not normally engage in. In other words, if you are doing the same job as a regular employee at the company, they will have a harder time arguing you are an independent contractor, while the other worker is a regular employee.
- Established trade or business. Other companies must regularly employ you to do the same work you are doing for your current company. In other words, if other companies have not hired you to perform the same work, your current company may not be able to show that you have chosen to run your own independent business. Simply calling you an independent contractor for their purposes is insufficient.
All three of these factors must apply you for you to be an independent contractor, and the burden is on the company to prove that they do apply. The test will probably have the largest effect on businesses in the gig economy, a growing sector of California’s labor force that is highly reliant upon contractors.
The advantages of employment
Employees have certain protections that independent contractors lack, including minimum wages and overtime pay, paid breaks and family and medical leave. Many employers offer other benefits, as well, such as paid vacation and holidays, healthcare benefits and 401(k) plans.
If you think the company you work for misclassified you as an independent contractor, you may have a wage and hour claim under California law for unpaid overtime. You can file a claim with the California Division of Labor Standards Enforcement.