In California, you can be classified as an employee or an independent contractor. It is important that the differences between these two titles are understood and that those who are actually employees are not misclassified as independent contractors.
California’s Assembly Bill (AB) 5 went into place in Sept. 2019 and addressed how to determine employment status when a hiring entity claims that a worker is independent and not an employee. The bill now requires the use of the “ABC test” to determine if workers are independent contractors or employees under the Labor Code, Industrial Welfare Commission, and Unemployment Insurance Code wage orders.
What should you know about the ABC test?
The ABC test is special because it explains what makes a worker an employee or contractor in clear terms. It is made up of three parts, A, B and C.
Part A states that the hiring entity, or employer, must make sure that the worker is free of control, that the business doesn’t need to control the precise details or manner of the work and that the worker maintains control over their own business.
In Part B, it explains that the worker must perform work that is outside the employer’s usual course of business.
Part C requires evidence that the worker is also engaged in the same kind of business with others independently. For example, a plumber may run their own business and be hired in on contract to repair pipes at a retail location, gym, grocery store, hospital or other place without becoming an employee.
Does the ABC test always apply to workers in California?
No, interestingly, it does not. However, when it doesn’t apply, the Borello test is usually used instead.
What should you do if you think you’re classified incorrectly?
If you believe that you are classified incorrectly, it may be worth the time to speak with your employer or client as well as your attorney. If you are misclassified as an independent contractor when you are an employee, you could be entitled to benefits that you did not receive in the past as well as other reparations.