As reported here and here, California recently enacted new legislation – Assembly Bill 5 – that expanded the scope of an “employee” under state law. Beginning January 1, 2020, the answer to whether a person providing services in California is an independent contractor (as opposed to an employee) under the California Labor Code, the Industrial Welfare Commission (“IWC”) Wage Orders, and the California Unemployment Insurance Code, will generally depend on whether they satisfy all three prongs of the so-called ABC Test:
- The worker must be free from the control and direction of the hirer in connection with the performance of the work.
- The worker must perform work outside the “usual course” of the hirer’s business.
- The worker must be customarily engaged in an independent established trade, occupation, or business of the same nature as the work performed.
There are a myriad of occupational and industry exemptions to the application of the ABC Test, many of which are highlighted here.
Having tightened independent contractor classification standards, the next big target for the state legislature may be joint employer liability.