Independent Contractor – Not likely!
Insight from Brenda Allison, CEO & Broker
Years after AB 5 went into effect, I am surprised that California employers still believe they can continue hiring independent contractors to do the same work they do. Here is a brief overview of the rules and resources.
California’s Independent Contractor Law Effective July 1, 2020, created a presumption that an entity’s workers are employees rather than independent contractors for workers’ compensation purposes unless the hiring entity can show that the worker meets three conditions, known as the “ABC Test”:
The “ ABC ” Test:
- The person 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 person performs work that is outside the usual course of the hiring entity’s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. Exemptions: California’s Independent Contractor Law provides an extensive list of occupations that are conditionally exempt from the application of the ABC Test.
Occupations that are exempt from the “ABC” Test may instead be governed by the 11 factor test found in the California Supreme Court’s decision in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. A list of occupations and the criteria needed to qualify for an exemption can be found in the California Labor Code or in one of the resources listed below.
Resources:
• The pertinent sections of the California Labor Code and Unemployment Insurance Code may be accessed at http://leginfo.legislature.ca.gov
• You may access the California Labor & Workforce Development Agency webpage at https://www.labor.ca.gov/employmentstatus/employers for more information
This content is for informational purposes only, should not be considered professional, financial, medical or legal advice, and no representations or warranties are made regarding its accuracy, timeliness or currency. With all information, consult with appropriate licensed professionals to determine if implementing any recommendations would be in accordance with applicable laws and regulations or to obtain advice with respect to any particular issue or problem.