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Home » Employee Classification » ABC test for determining employee vs. independent contractor

ABC test for determining employee vs. independent contractor

There are many owners of businesses and companies in California. However, there are many, many more people who work for these businesses. People who work for other people are generally either employees or independent contractors. These people may work side by side doing the same work, but there are some important differences between the two. That is why worker classification can have a major effect on how they are treated by the company.

Employees have many more protections than independent contractors. Employees are protected by wage and hour laws, discrimination laws, Family and Medical Leave laws, unemployment benefits, workers’ compensation benefits and others. However, independent contractors do not enjoy those protections.

The trade off is many times independent contractors earn more money per hour or on a contract, but they also have to pay their own taxes. They also are suppose to have the freedom to do their work when they want, where they want and in a manner they see fit. This does not always occur though. However, many independent contractors do not realize the freedoms they are entitled to. Many independent contractors can be treated as an employee instead, which means they should have the protections listed above.

In California, there is a test used to determine whether an independent contractor is classified incorrectly and really should be treated as employee. The test is referred to as the ABC test. The test assumes every worker is an employee and not an independent contractor unless the company can prove the following conditions:

  • The worker is free from the control and direction of the company for how the work is completed.
  • The work being completed is different than what the employees are doing.
  • The worker normally performs the work that they are performing for the company.

Based on the ABC test, many independent contractors in California are really employees. This means that they should be entitled to the employees’ protections, but many do not. Employee classification is important and consulting with an experienced attorney could be beneficial.