Super Lawyers
Expertise.com
yelp badge
Lawyers of Distinction
Pasadena Top Attorneys 2022
American Immigration Lawyers Association

The New ABC’s of Properly Classifying a Worker as an Employee or Independent Contractor

Thomas M. Lee

The California Supreme Court issued a landmark decision in the matter of Dynamex Operations West, Inc. v. Superior Court of Los Angeles earlier this year establishing a new and employee-friendly test in determining whether an employee has been misclassified as an independent contractor.

In particular, the Court embraced a standard presuming that all workers are employees instead of contractors, and placed the burden on any entity (business, corporation, or person, etc.) classifying an individual as an independent contractor of establishing that such classification is proper under a newly adopted “ABC test.”

Under the ABC test, a worker will be deemed to be an employee and not an independent contractor unless the entity proves:

(A) that 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;

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Note that each of these requirements need to be met in order for the presumption that a worker is an employee to be rebutted, and for a court to recognize that a worker has been properly classified as an independent contractor.

The question of whether an individual worker is properly classified as an independent contractor or an employee has considerable significance for workers, businesses, and the public generally. If a worker is classified as an employee, the employer bears the responsibility of paying Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, providing worker’s compensation insurance, and of course, complying with the myriad of state and federal statutes governing the wages, hours, and working conditions of employees.

As a result of this case, any businesses operating in California that treat workers as independent contractors should confer with their legal counsel to review the relationship under the “ABC test” and determine whether any or all such workers should be reclassified.

For example, prong B of the ABC test is particularly troublesome for any businesses that use independent contractors to deliver or provide their core product or service. In applying the ABC test, the Court noted that delivery drivers could be considered as employees because the question of whether the delivery drivers were performing outside the usual course of the entity’s business would be resolved in the employee’s favor is the core of the business is based on deliveries.

Client Reviews

Mr. Lee is extremely knowledgeable when it comes to employment law. I was amazed by his tenacity and skill and in the end, I walked away with a settlement I was very happy about. I highly recommended him to anyone.

- Sarah G.

Earlier this year I was very confused about a legal employer/employee situation and needed professional advice. In my desire to move quickly on my situation I spent hours signing up for legal services (e.g. legal shield...

- Richard H., Los Angeles, CA

Hands down, the best immigration lawyer in Los Angeles that you could possibly find. Period. After an extremely poor experience with another law firm, which had come highly recommended by one of my company's attorneys...

- Robert K., Beverly Hills, CA

My old company was breaking some labor laws and I decided to look for some legal advice. I went to Tom to see what course of action I can take and when we sat down to talk about the details, I decided to hire him and his...

- Ethan Y., Orange, CA

It's quite rare to find a lawyer that sincerely cares about your best interest. Most employment lawyers are extremely hungry for business which makes them naturally have their best interest not mine. However, Tom truly...

- Jen T., Central LA, Los Angeles, CA

Get in Touch

  1. 1 Free Consultation
  2. 2 Decades of Experience
  3. 3 High Success Record
Fill out the contact form or call us at (213) 251-5533 to schedule your free consultation.

Leave Us a Message