Legal Minute: Contractor Misclassification
Labor and Employment attorneys Linda Auerbach Allderdice and Michael Maroney break down independent contractor misclassification in the transportation industry. They explain that if you are doing business in Massachusetts, California, New Jersey or Illinois you likely will have to deal with the “ABC Test.” This test states that an individual providing services is presumed to be an employee unless the company can prove…
A) the individual is free from its direction and control
B) the individual performs services outside of the usual course of business for the company
C) the individual is customarily engaged in an independent occupation, trade or business
They offer a real-life example of this test in action; the California Supreme Court Dynamex Decision. This decision determined that the business does not need to control the exact details of the work in order to be found to have maintained the necessary control that an employer normally has of an employee. The hiring entity must establish that the worker is free of such control in order to establish ‘Part A’ of the ABC Test. They conclude by expressing the importance of companies being proactive and examining their delivery operations, marketing practices and their internal policies and procedures to ensure that they are consistent with independent contractor status.
Additional Contractor Misclassification Publications
- California Supreme Court: ABC Test for Contractors Applies Retroactively, January 19, 2021
- New California Law Excludes Some Industries from "ABC" Test for Independent Contractors, September 9, 2020
- New California Law Codifies – and Expands – Strict ABC Test for Independent Contractor Status, September 25, 2019
- Ninth Circuit: Dynamex "ABC" Test Unquestionably Applies Retroactively, May 3, 2019