The ABC Test is a Win for Employees
May 1 marked International Workers’ Day. While the event was created to commemorate the Chicago workers who were killed during strikes calling for an eight-hour workday, the event is also used to celebrate all laborers and workers including employees misclassified as independent contractors.
At the end of April 2019, the California Supreme Court issued a new independent contractor test for determining whether a worker is an employee or an independent contractor. The following will discuss the landmark nature of this decision as well as some advice that Tipped Employees should follow when it comes to determining their status as employees as opposed to independent contractors.
The Importance of Employees v. Independent Contractor
The distinction between being classified as an employee and being classified as an independent contractor is important for a number of reasons.
While numerous bodies of federal and state law exist to protect the rights of employees, there are fewer laws that protect independent contractors. Therefore, to avoid compliance with minimum wage requirements, overtime pay, rest periods, and other important employee rights, many employers misclassify workers as independent contractors instead of employees.
While the independent contractor versus employee debate has been a hot topic for many years, with the advent of the gig economy and ride share companies, food delivery companies, exotic dance clubs, and many others utilizing independent contractors, there has been an increasing focus on this issue.
The National Restaurant Association reports that there is now a much higher percentage of part time as opposed to full time workers in the food service industry. By adopting a new test for deciding whether a worker is an employee or an independent contractor, however, the Supreme Court of California has offered at least one new approach to settle this ongoing debate.
The Holding of the Dynamex Case
In the Dynamex case, the California Supreme Court held that the appropriate test for deciding employee v. independent contractor is the “ABC” test under which a worker is only classified as an independent contractor if the employer is able to establish:
- The worker is free from the control of the employer in the performance of work
- The worker performs work outside the usual course of the hiring entity’s business
- The worker is engaged in an independently established profession of the same nature as the work being performed for the employer
As a result of this decision, many workers in the state of California are now presumptively classified as employees rather than as independent contractors. An employer in California will also now face the burden of proving that a worker is not an employee.
Advice for Workers After the Dynamex Decision
It remains uncertain what influence the California Supreme Court’s decision will have on other states.
As a result, if you are a worker who is uncertain about whether you should be classified as an independent contractor or an employee, it is important to remember that there are three factors often used to distinguish between these roles:
- Independent contractors often have the ability to determine how and when they do their work. The more that a worker’s schedule is fixed by an employer, the more likely that person will be found to be an employee. If your employer tells you what times each day you are supposed to come into a kitchen as well as how to perform your work, you are more likely to be viewed as an employee by a court of law.
- One of the defining characteristics of independent contractors is that they have the ability to work with more than one client. Additionally, independent contractors often provide their own equipment to perform a job. If you supply your own tools and have the ability to work with multiple clients, you are more likely to be found an independent contractor.
- Many independent contractors have a contractual agreement with clients regarding the type of work that they perform. These contracts often contain a strict term of employment and state that the contractor is not able to receive additional benefits. As a result, it is important to review the contract for your position to determine if any clauses seem like a position resembles more of an employer or an independent contractor relationship.
Speak with an Experienced Wage and Overtime Attorney Today
Do not let an independent contractor misclassification cost you your overtime pay. If you are a worker with questions about your wages or whether you have been misclassified as an independent contractor, contact the employee-focused attorneys at Herrmann Law to schedule an initial consultation. Call us at 817-479-9229 or submit your case online (here) and we will contact you.