Do you have Independent Contractors working with your company? If so, the rules in California that designate someone as an Independent Contractor vs an Employee radically changed with a new ruling by the California Supreme Court on Monday. The decision in Dynamex Operations West, Inc. v. Superior Court involving delivery drivers for a Southern California company, may lead to many more California workers being classified as employees, with the higher pay and legal protections that classification entails. Previously, there was a multi-factor (20 question) test in use that met the federal requirements. Now companies must meet a simpler “ABC” standard (also used in New Jersey and Massachusetts) to establish independent contractor status. Under this new test, a worker is considered an employee unless the employer can establish that all three of the factors verify that the worker is indeed an independent contractor.
- 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;
- the worker performs work that is outside the usual course of the hiring entity’s business; and
- the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
What can you do? We recommend you complete a thorough review to re-evaluate the classification of any Independent Contractors currently working with your business to ensure full compliance with the law. Pro Back Office provides Outsourced HR Services. We have HR expertise available to help you with the 1099 reclassification and any other HR compliance and transactional needs. Including hiring handbooks and employee evaluations. To learn more about PBO HR services.
Please contact us at firstname.lastname@example.org or 858-622-1681.