What Is the Independent Contractor ABC Test for Status?

How to Qualify Workers as Independent Contractors

The Independent Contractor ABC Test was a method introduced by the California Supreme Court for determining whether a worker qualified for independent contractor status. You might ask—what does this have to do with New York since it relates to California law?

The answer is: the New York legislature has been discussing regulation of the gig economy. It is interested in developing a law similar to California’s ABC Test and perhaps even introducing collective bargaining law that would allow gig workers to unionize. (Reference: Employment Law Information Network)

Independant Worker

What is the Independent Contractor ABC Test?

When the California Supreme Court ruled in April 2018, it established a precedent now known as the Dynamex ruling. The ruling introduced a three-pronged test (the ABC Test). The test determined whether a worker was an employee or independent contractor. Unless the worker met all of the following three conditions, the worker was determined to be an employee and not an independent contractor:

  1. The worker must be free from the hirer’s control and direction regarding work performed, both under the contract and in fact.
  2. Work must be performed outside the usual course of the hiring company’s business.
  3. Usual work done by the worker must be customarily in an independently established trade, occupation or business of the same nature as the work being performed for the hiring entity.

Misclassified workers made employers liable for minimum wages and overtime along with meal and rest breaks. California has since that time extended the application of the law. It now also applies to workers’ compensation coverage, unemployment insurance, various benefits, paid sick days and family state leave.

(Reference: JD Supra)

When to Seek Legal Guidance

If questions or an employment dispute arise over worker classification, it is wise to seek legal guidance. At Stephen Hans & Associates, our attorneys advise employers regarding classification and other employment issues. You can rely on our skills and decades of experience, acquired from representing employers in employment litigation.

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