Monday, June 4, 2018

Employee vs. Independent Contractor - A Civil Test

Businesses sometimes attempt to disclaim an employment relationship between themselves and the people who work for them.  Frequently, this is done by asserting that workers are independent contractors, rather than employees. Businesses see an advantage to classifying workers in this way because they may not have to provide benefits or pay for certain types of insurance - such as worker’s compensation insurance - for independent contractors.  Businesses also may not have to pay payroll, social security, and other types of taxes for independent contractors.  Statutes and regulations concerning wages, hours, and working conditions that apply to employees may not apply to independent contractors.  And, with only a few exceptions, a business might not be held vicariously liable – under a respondeat superior theory – for the tortious conduct of an independent contractor, while the same would not be true concerning the torts of an employee. 
Generally, the test for whether a worker is classifiable as an employee or independent contractor is heavily based upon whether the business maintains the right to control the work.  This is particularly true with regard to claims made by the worker against the hirer.  Blackwell v. Vasilas (2016) 244 Cal.App.4th 160, 168 [“A worker is an independent contractor when he or she follows the employer's desires only in the result of the work, and not the means by which it is achieved.”]. 
In a recent California Supreme Court case, Dynamex Operations West, Inc. v. Superior Court, the Court utilized a test called the “ABC test” to determine if an employee was an independent contractor for purposes of determining the worker’s wage and pay rights.  The ABC test requires an analysis of the following three factors:  (A) whether 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 such work and in fact; (B) whether the worker performs work that is outside the usual course of the hiring entity's business; and (C) whether the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, 916–917
It remains to be seen whether the Supreme Court’s adoption of the ABC test will impact the lower court’s analysis of what makes an employee vs. an independent contractor in context of other employees’ rights cases, or in cases of tortious injuries caused by workers