In April the California Supreme Court upended years’ worth of precedence in adopting the “ABC” test for determining whether workers are independent contractors or employees. Most recently, an appeals court ruled that decision applies to wage cases.
The ABC test ruling came out of a case involving delivery drivers who sued claiming they were misclassified.
In its decision on the case — Dynamex Operations West Inc. v. The Superior Court of Los Angeles County — the California Supreme Court abandoned a decades-old “Borello” standard and adopted the ABC test , which presumes all workers to be employees. Workers can only be classified as independent contractors if all these conditions are met:
A. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
B. The worker performs work that is outside the usual course of the hiring entity’s business; and
C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
In a later ruling, a California Superior Court judge ruled the ABC test could be applied retroactively , meaning companies that had followed the letter of the pre-ABC ruling law when making worker classification decisions could now be at risk of a misclassification finding.
In a new decision, Garcia v. Border Transportation Group LLC, an appellate court held whether the Dynamex ABC ruling should be applied to a case depends on whether the case is a wage-order claims case. According to the California Employment Law Report , the Dynamex ruling assuming employment status was in relation to a wage-order case. The ruling did not address what standard applies in other cases.