Classifying Employees and Independent Contractors in California: What Businesses Need to Know

Posted by Frederic Douglas | Apr 19, 2023 | 0 Comments

As a business, it is important to understand the difference between an employee and an independent contractor. Misclassifying workers can lead to legal disputes and financial penalties. This is where the Borello test and the ABC test come in.

The Borello test is used to determine whether a worker is an employee or an independent contractor to assess vicarious responsibility on the employer for the employee's acts. The test considers various factors such as the skill required in the particular position, the method of payment, and whether the work is part of a regular business of the principal.

On the other hand, the ABC test presumes all workers to be employees and permits workers to be classified as independent contractors only if the hiring business meets all three conditions: (a) 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 the work and in fact; (b) the worker performs work that is outside the usual course of the hiring entity's business; and (c) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as involved in the work performed.

It is important to note that any person providing services or labor for remuneration is presumptively an employee. The hiring entity has the burden to prove independent contractor status.

Hiring entities should be aware of the legal implications of misclassifying workers. It is important to seek legal advice to ensure compliance with state and federal laws. A lawyer can help hiring entities navigate the complexities of worker classification and avoid costly legal disputes.

About the Author

Frederic Douglas

Frederic M. Douglas is an attorney practicing IP litigation. (949) 293-0442 @PhredDouglas In 1996, Mr. Douglas graduated from the University of California, Berkeley with a Bachelor of Science degree in chemical engineering. In 1999, he received his Juris Doctorate degree from the University of...


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