The ABC test has given employers a three-pronged definition to categorize a worker as either an employee or an independent contractor. More than 20 states have enacted elements of the ABC test, which was initially introduced after a 2018 court case in California established its new criteria. The criteria lay out three elements that must be evaluated to determine the status of a worker. If the worker meets all three criteria, the employer may classify the worker as an independent contractor. If any of the criteria falls short, the worker will default to the status of an employee. The burden is on the employer to prove that the worker meets all the defined criteria.
What is Affected by the Classification?
The classification as an employee allows the worker certain benefits, such as social security payouts and Workers’ Compensation coverage. Some states use the test to set standards for minimum wage, overtime rules, work-hour statutes, and the eligibility for unemployment insurance. Other states apply the conditions in the test only to jobs in specific industries.
What are the Three Elements?
As defined in the California case of Dynamex Operations West, Inc., v. Superior Court, the classification of employees must be evaluated with regard to three employment conditions. The worker must meet all three of the following conditions to be classified as an independent contractor:
- The worker is free from the control of the employer involving the performance of the work
- The worker performs work that differs from the employer’s usual course of business
- The worker is normally involved in an independently established trade, occupation, or business similar to the work previously performed
In order to understand the ABC test criteria, it may help to breakdown each of the three elements used to designate a worker as an independent contractor.
Control and Direction of Work
The first prong lays out the arrangement as it relates to control and direction. In other words, the worker is an independent contractor if they are free to do the work as they see fit with no training or oversight from the employer.
Work Outside of the Employer’s Business
The second prong relates to the essential business functions of the employer. If the worker performs tasks furthering the essential business, they cannot be considered an independent contractor. A teacher at a school could not be considered an independent contractor, but a plumber servicing the pipes at the school could.
Independently Established Work
The third prong has to do with whether the worker performs similar duties for other entities or under other circumstances. Presumably, the plumber mentioned above might also perform plumbing jobs for other clients. Licensed professionals with their own practice fall under this category.
California Employment Classification Lawyers at Miller Shah, LLP Advocate for Misclassified Workers
If believe you are a misclassified worker and your work contributions have been misrepresented, you may be due compensation from your employer. If you are a business owner, you may benefit from guidance to avoid misclassification liability. The experienced California employment classification lawyers at Miller Shah, LLP can help. Contact us online or call us at 866-540-5505 for an initial consultation. Located in Pennsylvania, New York, California, Florida, New Jersey, and Connecticut, we serve clients nationwide.