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Careful Whom You Call An Independent Contractor

We’re talking employment law again because the California Supreme Court issued a big decision this week.

The Court unanimously declared a new test for classifying workers as employees versus independent contractors under the state’s wage orders. Those are the laws and regulations that say you have to pay a minimum wage; you have to pay overtime; and you have to give meal and rest breaks, among other things, to your employees.

The Court replaced a test that weighed ten factors on a case-by-case basis. The most important factor was whether the business controlled how the work was done, but the test looked at nine others like the intent of the parties to the relationship. This test had been the law for thirty years until Monday. It still applies in contexts outside of wage orders.

The new test presumes that any worker is an employee unless the business meets each of the following three conditions:

  1. The worker is free from control or direction over how to do the work;
  2. The work is outside the company’s usual course of business; and
  3. The worker does that kind of work as an independent trade, occupation, or business.

That can make a big difference. Here’s more coverage from the L.A. Times.

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