Independent Contractor or Employee?
On September 18, 2019, California Governor Newsom signed into law Assembly Bill 5 that establishes the minimum requirements to be classified as an “Independent Contractor;” otherwise effective January 1, 2020, these individuals will be deemed employees with all of the rights and benefits typically afforded to workers. The background for the new law stems from the California Supreme Court case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (Cal. Sup. Ct. Apr. 30, 2018).
This new legal standard mandates a three-prong test [the criteria], as follows: (1) the worker is free from the control over how to perform his/her services; (2) the tasks, job or services are outside of the usual and customary activities of the business; and (3) the worker is engaged in an independent and established workplace. The burden of complying with these requirements is on the employer [business entity], and if not, the worker has to be classified as an employee. Essentially, a worker is presumed to be an employee unless the business entity can establish it has met the three criteria above. Moreover, the U.S. Court of Appeals in the case of Vazquez v. Jan-Pro Franchising International, Inc. held the Dynamex decision to be applicable retroactively; this places an additional burden on employers for any claims that are made by workers for services they performed prior to the April 30, 2018 decision in the Dynamex case.
There are exceptions for certain fields of endeavor; however, that is beyond the scope of this blog and, if additional information, guidance or legal advice is desired, one should consult with an “Employee Rights Attorney.”