In May 2018, in the case of Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court replaced the old test for determining whether a worker is an employee or an independent contractor with the three-part “ABC” test. The “ABC” test requires the employer to establish the following:
- that 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 and in fact;
- that the worker performs work that is outside the usual course of the hiring entity's business; and
- that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
As a result, many businesses in California will need to examine their use of independent contractors, including any independent contractor agreements, to ensure compliance with the new California “ABC” test.