['Contingent Workforce']
['Independent Contractors']
06/14/2024
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California law requires employers to use a three-part ABC test when determining whether a worker is an employee or an independent contractor.
Employee: Any person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed.
Independent contractor: A worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
A worker must meet all three conditions of the ABC test to be hired as an independent contractor. Otherwise, the worker must be classified as an employee, and is due all the benefits provided to other employees of the employer (such as minimum wage, paid time off, and other benefits).
Employers who misclassify workers as independent contractors may be subject to penalties related to wage violations as well as civil penalties.
Some occupations and industries may apply a separate set of criteria, known as the Borello Test, when determining employee versus independent contractor status. These may be found in more detail at Cal. Lab. Code 2775 et. seq. (link below).
Related information
Citations
- Cal. Lab. Code 2275-2787
- Part 795 — Employee or independent contractor classification under the Fair Labor Standards Act
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