Court Rules California’s “ABC” Test for Independent Contractors Must Be Applied Retroactively

In May, the Ninth Circuit Court of Appeals ruled that employers in California must retroactively use the recently-adopted “ABC” test if they are responding to a claim regarding the misclassification of independent contractor status for violations of the Industrial Welfare Commission (IWC) Wage Order.

What Is the ABC Test?

Last year, in the case of Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, California’s Supreme Court extended the definition of “employee” in the context of the IWC Wage Orders when conducting analysis to determine if a worker is an employee or an independent contractor.

Under the ABC test, employers must prove the following if they want to classify a worker as an independent contractor:

  • The work being performed is separate and free from the control and direction of the company.
  • The worker performs a job that is outside the scope of the company’s usual business operation.
  • The worker is skilled in an independently established trade, occupation, or business of the same nature of the work being performed.

Effects of the Ruling

Now that the Ninth Circuit has ruled employers must retroactively apply a version of the ABC test that is friendlier to employees, the decision is expected have a major impact on companies across the state of California that currently rely on independent contractors, particularly for businesses that use a franchise model or independent contractor model. Employers in California that routinely draft independent contractor arrangements need to take the time to review these contracts and retroactively apply the ABC to identify any potential violations.

Speak to an Employment Law Attorney

Do you think you have been misclassified as an independent contractor? Do you have questions about your rights as a worker in the state of California? If so, contact our dedicated legal team at Limonjyan Law Group to discuss your situation with one of our skilled employment lawyers today. We are familiar with a wide range of employment law cases, and we have the extensive resources and legal insight that you need on your side to secure the justice you deserve.

Call (213) 277-7444 today to request your initial consultation so we can get to work for you.