The vast majority of the time, California law assumes that workers are the employees of who they work for. If a worker is going to work as an independent contractor, the hiring company must prove that they qualify under the law.
This is important because employees are entitled to many more benefits and protections than independent contractors. For example, employers typically provide, or are required to provide, employees with:
- Payment of part of any payroll taxes
- Income and federal tax withholdings
- Employer-sponsored health insurance and other voluntary benefits
- Paid time off
- Workers’ compensation insurance
- Disability insurance
- Unemployment insurance
- Family and medical leave
- Parental leave
- All required work equipment
- Reimbursement of work-related expenses
Did AB 5 make all ‘gig workers’ unemployment contractors?
Not necessarily. The law, which went into effect in 2020, changed the rules somewhat about who can be considered an independent contractor vs. an employee. It required courts to use a specific test, the “ABC test,” when classifying workers as independent contractors. The ABC test has previously been adopted in many situations.
The ABC test basically weighs three factors when determining whether a worker can lawfully be considered an independent contractor:
- The worker is free from the control and direction of the hiring entity in the performance of the work – both contractually and in fact
- The work performed is outside the usual course of the hiring entity’s business
- The worker is customarily engaged in an independently established trade, occupation or business of the same nature of the work being performed for the hiring entity
If all three of those statements are not true in regard to a particular worker, that worker is legally an employee unless subject to a specific exception. However, there are some occupations where a different test, the Borello test, is used to classify workers, or where a special examination under the California Business and Professions Code is used.
You can find out what test applies to your job situation by discussing it with an employment law attorney.
I think I should be classified as an employee. What options do I have?
If you think you have been misclassified as an independent contractor, a lot is at stake. You could be missing out on significant pay and benefits. You should discuss your situation with an attorney in order to minimize the potential for unlawful retaliation or other harm to your reputation.
If you have a good claim, you could file a wage claim with the Labor Commissioner’s Office, a report of labor law violation with the Labor Commissioner’s Office for widespread violations affecting groups of workers, and/or a lawsuit.
Leigh Law Group represents workers in classification cases throughout California.