California Independent Contractors

Independent Contactors vs. Employees

 

On April 30, 2018, in the matter of Dynamex Ops. West, Inc. v. Superior Court of Los Angeles, the Supreme Court made changes to the classification of workers as either employees or independent contractor. The ruling states that workers are assumed to be employees unless the following facts can be proven:

  1. 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 such work and in fact;
  2. the worker performs work that is outside the usual course of the hiring entity’s business; and
  3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Please note that each of these requirements must be met to rebut the assumption that a worker is an employee, and for a court to recognize that a worker has been properly classified as an independent contractor.

Proper classification of a worker as an employee or independent contractor has considerable significance for workers and businesses. If a worker is classified as an employee, the employer has 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 state and federal statutes governing wages, hours, and working conditions of employees.

 

This ruling may result in changes that need to be made to the classification of your workers. Please consult your HR department or legal counsel for more information.