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Employee v Independent Contract Determination

employee-contractor-test-california
Generally, a person performing services for another is presumed to be an employee pursuant to Labor Code section 3357. Borello & Sons v DIR (1989). This means that unlike in most wrongful termination or discrimination cases, where the burden of proving a violation is on the aggrieved employee, in claims for misclassification an employer carries the burden of proving a valid independent contractor status.  

The widely discussed. recent California Supreme Court decision in Dynamex Operations West v Superior Court of Los Angeles makes it clear that properly classifying a worker as a contractor now is even more difficult than before, under the the new "ABC" test. Under this test, a workers is presumed to be an employee unless the employer proves that: (A) 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; and
(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 all of the above three factors have to be proven in order for a worker to be properly classified as a contractor. 

Satisfying this tests is going to be particularly difficult because of factor (B). For instance, any professional, such as a recruiter who works for a recruiting agency, an accountant who works for an accounting firm, or a consultant who workers for a company which is in consulting business will not fit into factor (B) and is therefore an employee, since they do the same work that the company itself offers. The same applies to drivers of trucking, transportation and delivery companies, since these drivers do exactly that which the company offers as its service.  

So, who can safely be classified as a contractor under this ABC test? If, for instance, you have any type of business and you hire a firm to do a financial audit at your office, that firm regularly provides audit services, you don't control their work in any way, i.e. you don't tell them when to come in, where to work out of, and how to do their job, and you just pay their invoice, then a proper contractor relationship likely exists because the above factors are easily satisfied. 

When it comes to employees in the computer / software industry, the moment the court or DLSE learns that the employee in question had set hours, had to report to the office, used employer's equipment (i.e. desk, computer, etc.) and had a manager who supervised / directed his work, it will be very hard, if not impossible, to show a valid contractor relationship. And, the fact that there is a signed independent contractor agreement in place is of little importance, and will not make much difference. 

Consequences of Misclassification  

If an employee is improperly misclassified as a contractor, he will be entitled to any unpaid overtime, unpaid social security and other payroll taxes, any payments and penalties associated with unemployment insurance and workers comp insurance if applicable.  Any employer who is not sure about whether they can classify a particular worker as a contractor should run their specific situation by a competent employment attorney to make sure they don't set themselves up for liability where it can and should be avoided. 

​If you are thinking about complaining to your employer about being possibly misclassified as an independent contractor, be sure to read this posting. 

Watch The Video Below About Common Misclassification Of Employees In The Tech Industry 

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Law Office of Arkady Itkin

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Law Office of Arkady Itkin - San Francisco & Sacramento Injury and Employment Lawyer
We represent employees and employers in employment and wrongful termination cases, as well as victims of serious injuries in San Francisco, Oakland, Sacramento, San Jose, Palo Alto, San Mateo and throughout Northern California. We all represent businesses and start-ups in a wide range of business and employment issues and disputes. 


57 Post Street, Suite 812, San Francisco, CA 94104; Tel. (415) 295-4730; Fax. (415) 508-3474; [email protected]
  • Home
  • Employment Law
    • Wrongful Termination >
      • At-Will Employment
      • Termination After Unfair Warnings and Write-Ups
      • Union Grievance, Workers Comp and Wrongful Termination
      • Labor Code 970 Claims
      • Promissory Estoppel and Employment Contracts
      • Implied Contract Claims
    • Discrimination >
      • Proving Discrimination
      • Age Discrimination
      • Disability Discrimination >
        • Protected Disabilities
        • Medical Leave / Disability Accommodations
        • Job Reassignment As A Disability Accommodation
        • SSI Disability Benefits and Your Court Case
        • Sample Request for Reasonable Accommodation
      • Pregnancy Discrimination
      • Race Discrimination
      • Sample Discrimination Complaint
      • DFEH and EEOC Investigations
    • Retaliation >
      • How to Prove Retaliation
      • Dealing with Retaliation While Still Employed
      • Retaliation for Complaining
      • Whistleblower Retaliation
    • Harassment
    • Defamation at Workplace
    • Prof. License Defense
    • Leaves of Absence >
      • Medical Leave as Reasonable Accommodation
      • FMLA Entitlement and Reinstatement to Work
      • CFRA Leave
      • Employers' FMLA Notice Obligations
      • Paternity Leave (FMLA)
      • Sample FMLA Leave Request
    • Wages / Overtime Claims >
      • Wage Claims
      • Employee or Contractor
      • Exempt / Non-Exempt >
        • Admistrative Exemption
        • IT Support Specialists Compensation
        • Computer Professional Exemption from Overtime
        • Recruiters / Account Executives Exemption
        • Complaining About Being Misclassified
      • Vacation Pay / PTO
      • On-Call Time Compensation
      • Deductions fr. Commissions
    • Unempl. Benefits Appeals >
      • Tips for EDD Phone Interview
      • Unemployment Benefits Appeal Hearing Representation
      • CUIAB Hearing Tips
    • Employment Law Blog
    • For Employers
  • Personal Injury
    • Five Tips For Injury Cases
    • Slip-and-Fall Injuries
    • Assault and Battery
    • Recorded Statements
    • Repairing Your Vehicle
    • Unpaid Medical Bills
    • Injury Law Blog
    • Medical Malpractice
    • Police Excessive Force
  • Practice Areas
  • About
  • Results
  • Submit Case
  • Contact
  • Resources
    • Consultations
    • Workplace Rights Checklist
    • Deposition Tips
    • Mediation Tips
    • Effective Mediator
    • Suing Current Employer
    • Severance Agreements
    • Workplace Investigation
    • Arbitration
    • Statutes of Limitations
    • Healthy Litigation Mindset
    • Trial Tips
    • Working Remotely
    • How To Find The Right Lawyer For Your Case