Independent Contractors

Independent Contractor Analysis Gets Modified…Again

Further Clarification of the Employee vs. Independent Contractor Question

The distinction between employees and independent contractors is imperative to workers and businesses. Employees enjoy many more protections and benefits than independent contractors and therefore place a bigger legal burden on employers. Last year, in Dynamex, the California Supreme Court made the legal gray area of worker classification less hazy, and a new case, Garcia v. Border Transportation Group, provides further clarity.

Review of the Dynamex “ABC Test”

We covered Dynamex last year, but its importance to workers and businesses warrants a review. The Supreme Court set out a three-part legal standard (the “ABC test”) for independent contractor status. Part A requires independent contractors to be free from control by the contracting business. Part B requires contractors to perform work that is not in the normal scope of the contracting business. Finally, part C requires contractors to have their own independent business. If these qualifications are not met, the worker must be treated as an employee under Industrial Welfare Commission wage orders.

The Impact of Garcia

The ABC test does not apply to all areas of employment law, however. In Garcia, the Court of Appeal carves out important exceptions to this standard. The Dynamex decision only applies to wage orders, not other statutes or regulations. Wage orders require employers to pay the minimum wage, allow certain meal and rest breaks, provide itemized wage statements to employees, and other basic employment requirements. Other laws, such as Workers’ Compensation law to non-wage order claims don’t fall under the Dynamex standard. These statutes typically rely on a standard set in S. G. Borello & Sons, Inc. v. Department of Industrial Relations, which primarily relies on “whether the person to whom the service is rendered has the right to control the manner and means of accomplishing the result desired.”

Correct classification of workers can be make or break for both sides of employment relationships. Whenever a dispute arises, or when developing hiring practices, contact the Nuddleman Law Firm, P.C. to ensure compliance with the law.

Written by J.T. Keane for Nuddleman Law Firm, P.C.

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The Nuddleman Law Firm, P.C. represents employers and employees in a wide range of employment law matters. Much of his practice focuses on wage and hour issues, such as unpaid overtime, meal and rest break violations, designing or enforcing commission plans, and other wage-related claims. He also advises employers on how to avoid harassment and wrongful termination claims, and represents employees who have been victims of unlawful discrimination, retaliation or harassment. The Nuddleman Law Firm, P.C. helps employers develop good employment policies, and helps employers and employees with disability accommodation issues.